Brief Synopsis of the Issue
This business report looks into the most desirable export strategies for Vital Camel Milk Ltd. can apply to start exporting camel milk products to the UK. The company was established in 2005 in Nanyuki, Kenya, and it currently exports various camel milk products to South Africa, Latin America, and the United Arab Emirates. The company has developed a portfolio of camel-based products, including whole milk, Yoghurt, and milk powder (Products 2016). Camel milk is three times richer in vitamin C than cow milk, and it also has a higher content of other nutrients than cow and goat milk.
The U.K is one of the nations in the European Union that has demonstrated a positive response to the introduction of camel milk to the retailing market (Barnard 2013). The increasing demand for camel milk in the nation has led to the entry of the Camelicious brand to the market, and it is recording high profits because it is a first mover. Vital Camel Milk Ltd. has the chance to become one of the suppliers of affordable camel milk products in this market. The growing demand for camel milk and the low competition in the U.K presents an opportunity for Vital Camel Milk Ltd. to venture into the market, but it needs a feasible export strategy.
Recommendations
The country of choice is the U.K because it presents a unique opportunity for Vital Camel Milk Ltd. because the availability of camel milk in the market depends on the exporting companies from different nations. The current market only has one major producer of camel milk products, Camelicious, and it is apparent that Vital Camel Milk Ltd. has the potential to provide alternative products at a competitive price that will influence the development of a large market share. Vital Camel Milk Ltd exports its products directly to different states across the world, and it has partnered with retailing supermarkets to distribute its products.
The U.K has various retailing companies that are potential business partners for the company. The various supermarkets selling Camelicious products are potential partners for Vital Camel Milk Ltd. The U.K. is subject to the trade policies developed by the European Union, and the authorities in the Union have recently allowed the importation of camel milk products as long as the required health and safety standards are met by the exporters from different nations (Barnard 2013).
This implies that Vital Camel Milk Ltd. only has to demonstrate that its products are healthy and safe for consumption to venture into the market. Trading directly in the U.K. market is a feasible approach because the company has a local supply of camel milk, which is processed and packaged for exportation. The entry method of choice should be the development of partnerships with the local retailers in the U.K. Supermarkets and coffee shops in the U.K. are potential business partners for the company.
Background
Vital Camel Milk Ltd is among the pioneering camel milk processing companies in East African, and it has established a continental presence through partnering with retailers in different countries within the East African and South African Region. The company also has a global presence as it exports various camel milk products to the Latin American countries.
The company has a farm of camels and other regional suppliers, especially from Ethiopia and Somalia, where there is a high population of camels. This implies that the company has a rather affordable supply of raw milk. The company was established in 2005, and it has established a processing and packaging entity in Nanyuki, Kenya (Company 2016).
The U.K. market has become highly receptive to agricultural products associated with the enhancement of health outcomes. The camel milk products are particularly associated with boosting the health of people suffering from various lifestyle-related illnesses, including diabetes; hence, there is a growing demand for camel milk in the European nations.
Most companies supplying camel milk in the U.K. have been doing so on a trial basis, but the market has responded quite positively. Additionally, most of the companies source raw milk from other parts of the world; hence, their products are quite expensive. This implies that since Vital Camel Milk Ltd. has a fairly cheap supply chain, its products will harness a larger market share in the U.K. because of its affordability (Company 2016).
Research on the Assessment Topic
The development of health-related products goes hand-in-hand with the requirement for the associated companies to invest in international ventures. Most of the large companies producing camel milk across the world have been compelled by the low demand for the product in their local markets to look into establishing new markets across the world. The necessity of attaining growth on an international level is because the consumers of the associated products are scattered across the world, and it is only through the provision of the products in respective markets that the companies can attain growth.
The direct trade option is viable for nations that have a limited supply of a product. For instance, there are no companies in the U.K. that produce camel milk products; hence, the market is open for producers from different parts of the world. The fact that camel milk products have only been recently introduced to the European market indicates that there is a high potential for growth for the first movers in the business (Barnard 2013). This is especially true when considering the responses of camel milk consumers in European countries. Vital Camel Milk Ltd can expand to other markets in the region once it establishes a successful hold in the U.K. retail market.
Arguments against the Recommendations
One of the main barriers for this venture is that the health and safety standards in the United Kingdom are highly considered before a food-related product is approved in the market. The standards are further reinforced by the thorough scrutiny applied to such products at the union level, which implies that the political environment will have to be considered when venturing into the market.
It is apparent that there are special licences required by companies exporting milk products into the U.K. and it will involve a hectic process to gain the required certification for the Vital Camel Milk Ltd. The authorities in the U.K will also enforce laws that dictate the production process of the products to ensure the required ethical considerations are applied (The Food Standards Act 1999 2016). The growth rate of the industry is also relatively slow compared to the number of companies that are looking to increase the volume of camel milk products exported into the U.K.
Arguments for the Recommendations
The U.K. and Kenya have long-term political and economic relationship history. The two countries have engaged in the development of policies that facilitate direct trade in various industrial sectors, including the agricultural sector. It is apparent that the long history and the policies developed to influence the attainment of mutual objectives in business will facilitate an easy entry into the U.K market for Vital Camel Milk Ltd. The economic Partnership Agreement (EPA) between the EU and several African states, including Kenya, has facilitated the ability for the associated partners to engage in free trade and controlled trade with minimal tariffs on various products (Sarmadi 2014). This implies that the Kenyan company can engage in direct trade in the U.K. if it acquires the required certifications. Both nations are also members of the WTO.
Implementation of Recommendations
Tariffs on agricultural products imported into the U.K. are highly standardised in the European Union market; however, the company requires a license from the Food Standards Agency of the United Kingdom to export milk products to the retailing market in the nation (Food Information Regulation 2016). Venturing into the U.K. market requires the company to partner with various supermarkets in the distribution of the products.
Vital Camel Milk Ltd primarily transports its products to various parts of the world by air. This is because the products are not bulky, and they have a relatively short expiry. Once the products are flown into the U.K, they will be distributed to the various retailing stores by the respective partners. The U.K. market provides a unique opportunity for the company to expand its growth in the European Union, and a positive response to the associated products may result in the expansion of the company to other European nations.
List of References
Barnard, L 2013, Europe approval gives a boost to Dubai camel milk brand. Web.
Company. 2016. Web.
Food Information Regulation. 2016. Web.
Products. 2016. Web.
Sarmadi, D 2014, EU-Africa free trade agreement ‘destroys’ development policy, says Merkel advisor. Web.
The Food Standards Act 1999. 2016. Web.