STORCK: BRAND LAUNCH IN INDIA

Abstract:

Content

1. Introduction -

1 page

2. About the Company 3 pages a. General Information (history, mision, vision, employees, etc.) b. Our Brands (short description of each one, usp, target group) c. Brand Situation (promotion, market share, competitors d. Distribution (retailers where we sell in Germany) e. Around the World (subsidiaries) 3. Target a. b. c. d. e. Country: India - 3 pages Overview (General info brief- about India) Import Trends Confectionery market food retail sector Usage and attitudes regarding candies and chocolates in India 1 page

4. Differences and similitude to the German Market a. Brief description of the German market 5. y y y y Systematic Launch Plan Launch Objectives - 2 pages Target group Brand Promise Brand Introduction strategies - 5 pages i. Product strategy ii. Distribution Strategy iii. Pricing strategy iv. Promotion

6. Budget Estimate costs - 1 page

7. Action Plan- Time Line 1 page

8. Summary

1. Introduction

2. About the company 2.1 General Information August Storck KG is a German sweets producer with headquarters in Berlin , one of the world's major candy companies. Its subsidiary in the UK is since 1988 the Bendicks company in Winchester. The main facility of Storck in Germany is in Halle, North Rhine -Westphalia, one is located in Skanderborg, Denmark and another one in Ohrdruf, Germany. August Storck KG was founded in 1903, has a very long tradition with its 4800 employees worldwide. Storck produces annually 250 000 tones of sweets , of which about 45% are exported. R evenue is now estimated at 1.5 billion per year.

Company Perspectives: FOCUS IS ON PEOPLE. This principle is consistently followed by Storck throughout all levels of the company. It is the basis for everything that m akes Storck different, special and successful. And its concrete results can be seen in our closeness to the consumer, our responsibility to our employees, our understanding for our trading partners, our trust in our suppliers, and most of all, the high lev el of credibility of our brands. Storck produces and sells confectionery products that are treasured by people in all corners of the world. Through their quality and uniqueness, our brands give people the good feelings of security, warmth and comfort.

The company has sales subsidiaries in 20 countries, with distribution partnerships in 63 countries. Principal Subsidiaries: Bendick's of Mayfair (U.K.); Elvirasminde A/S (Denmark); OOO Storck (Russia); Storck (Schweiz) GmbH (Switzerland); Storck Asia Pacific Pte Ltd (Singapore); Storck BV (Netherlands); Storck BVBA; Storck Canada ; Storck Ceska Republika sro; Storck Danmark A/S; Storck doo (Slovakia); Storck Hungaria Kft; Storck Iberia Slu (Spain); Storck Mitarbeiter Beteiligungsgeschellschaft; Storck Slovens ko; Storck Sverige AB (Sweden); Storck USA LP (United States).

Key Dates: 1903: August Storck -Oberwelland opens a small candy workshop in the town of Werther, Westfalia, Germany, called Werther's Sugar Confectionery Factory. 1909: The company begins produ cing caramel cream candy, later known as Werther's Original.

1934: The company's launches its first branded candy, Storck 1 Pfennig Riesen, which remains its sole product for nearly 20 years. 1949: The company opens a new factory in Halle, Westfalia, Germa ny. 1953: Mamba candy brand is launched; the company begins exporting its candies. In 1953, Storck began exporting its candies for the first time, finding eager markets internationally that included the United States and Hong Kong. 1954: The company begins producing chocolate and operating its own dairy production. 1962: Vitamin-enriched nimm2 is introduced; the company opens its first foreign sales subsidiary in Austria. 1967: A Berlin production facility is opened. 1969: Caramel cream, called Werther's Echte, is relaunched. 1973: A new hit with the launch of Toffifee, which combined caramel, hazelnuts, and chocolate. 1977: A sales subsidiary in the United States is established. 1981: The company acquires Germany's Dickmann and its brands. 1988: The company acquires U.K.-based Bendick's of Mayfair and its Winchester, England, factory. 1995: The company opens its first Asian Pacific subsidiary in Singapore. 1998: The company globally rebrands Werther's as Werther's Original. 2003: The company celebrate s its 100th anniversary with the launch of Chocolate Pavot brand.

2.2 Our Brands

Principal Competitors:

Nestl S.A.; Mars Inc.; Cadbury Schweppes PLC; Wilbur Chocolate Company Inc.; Taiwan Sugar Corporation; Parmalat S.p.A.; Orkla ASA; CSM N.V.

2.3 Around the world While August Storck itself accounts for a major proportion of the production of the popular candy, it is also produced or marketed, and sometimes both, under license in a large number of foreign markets--for example, by Alexander Stuart in Australia and by Morinaga in Japan. August Storck has a number of other strong candy brands as well, including the popular Storck Chocolate Riesen, a revival of the company's first branded candy; nimm2, launched in the 1960s as one of the first "vitamin-enriched" candies; Campino gummi bears; Mamba fruit chews; merci gift chocolates; and Chocolate Pavot, launched in 2003 to mark the company's 100th anniversary. Headquartered in Berlin, Storck operates production facilities in Halle, Berlin, and Ohrdruf in Germany as well as in Winchester in England and Skanderborg in Denmark. The company has sales subsidiaries in 20 countries, with distribution partnerships in 63 countries. In 2002, the company's total production topped 250,000 tons. August Storck remains privately held and controlled by the founding Oberwelland family. Axel Oberwelland took over as company president--and majority owner--in 2003.

3. Target Country: India

3.1 Overview

Though the Indian economic reform process commenced in 1991, it is only in the last five to seven years that the countrys GDP has accelerated well past the 7 to 8 per cent per annum growth rate. There is clear evidence of discernible increase in purchasing power in many parts of the country and rising affluence in many urban pockets. Globalisation, urbanisation, relaxation of import policies, rising income, growth of organised retailing, economic growth, impact of visual media and changing lifestyles and food habits have opened the doors for the entry of imported food products from across the globe. With increasing propensity to spend, the Indian urban consumer now has the willingness and means to try new products. Today, retail outlets ranging from small grocery stores to large retail chains in most urban cities sell imported food products. From Washington apples and Australian Kiwifruit to Swiss chocolates, French cheese and Italian pasta, a wide variety of imported products are available in the Indian market. Apples, pears, chocolates, juices, pasta, olive oil, sauces and salad dressings are some of the prime categories of imported products. The recent global financial crisis has cast its shadow over the Indian economy. However, the Indian economy is expected to weather the storm much better than its compatriots thanks to the well diversified and strong domestic economy and appropriate monetary and fiscal policy responses from the Central Government. The economy is expected to close the fiscal year 200809 with a GDP growth rate around 6.0 per cent and forecasts for 200910 are in a similar range. The economy is expected to revert to a higher growth trajectory by 2010. Recent data tends to suggest that the impact of the downturn on the domestic fast moving consumer goods sector has been much lower than other sectors. Brand owners are also making strong forays into the vast rural hinterland creating fresh demand for their products and services. The negotiations between India and Australia to sign a FTA will further create

new opportunities for Western Australian exporters. Import trends The usage of imported products that started as a fad some decades back has now become a habit amongst a small but rapidly growing urban populace. Import of food products has now become one of the well traded segments. Growing at a CAGR of 23 per cent, Indias total import of food products reached US$3.6 billion in 200708, up from US$1.3 billion in 200203.

Confectionery Imported confectionery, an early entrant to the Indian market, continues to be well sought after and is now widely available. While the import of chocolate confectionery increased by 39 per cent from 200506 to 200708, the import of sugar confectionery increased by 51 per cent during the same period. Imported confectionery has gained wide appeal owing to distinctive taste, attractive packaging and extensive distribution networks. While chocolate confectionery is primarily imported from China, Singapore, UAE, Malaysia, UK and Switzerland, nearly 53 per cent of the sugar confectionery is imported from China. Toblerone, Snickers, Lindt, Mars and Bounty are some of the few well known brands in the Indian market. Confectionery
The confectionery market largely consists of chocolates, hard -boiled sugar confectionery, toffees, gums, mints and lozenges, lollipops, fruit rolls, e tc. In 200607, the Indian confectionery market was estimated at US$0.6 billion, an increase of 12.8 per cent over the previous year.

The sales of hard boiled candies and toffees proved the most lucrative in the confectionery market and in 2007; these se ctors were valued at 40 100 tonnes, equivalent to a combined market share of 35.9 per cent of the markets overall value. This was followed by the gums,

mint and lozenges sector, which was valued at 29 100 tonnes, equivalent to 13 per cent of the confectionery market.
Hard Boiled

Chocolates The organised chocolate market in India was estimated at US$0.3 billion in 200607 and in terms of volume it was estimated at 35 700 tonnes for the same year. The per capita consumption of chocolates in the country is 300 g as against 1.9 kg in developed countries. With the urban population accounting for 70 per cent of the total chocolate consumption, this market is growing at about 15 per cent per annum. Western India accounts for the major market share for chocolates followed by North, South and East. Table 3.15 Major types and brands of chocolates Type Brand Moulded chocolates Dairy Milk, Truffle, Amul Milk Chocolate, Nestle Premium, Nestle Milky Bar, Nestle Classic, Chunky Count lines 5 star, Perk, Kitkat, Picnic, Munch Panned products Gems (Panned products), Nutties, Marbles (Nestle) Source: MCG Compilation The two major players who dominate the chocolate segment in India are Cadbury India and Nestle. Cadbury leads the market with a share of 72 per cent, followed by Nestle at 25 per cent and Amul with a share of 2 per cent. Other MNCs who have entered the market in recent years and have gained significant market share are Perfetti India and Wrigley India. In 2007, a joint agreement was formed between Godrej Beverages and Foods Ltd and Hersheys, Americas chocolate and confectionery giant, to manufacture and distribute chocolates across India. Today, this new entity named Godrej Hershey Foods and Beverages Ltd is slowly competing with Cadburys and Nestle.

The processed food industry has evolved into a modern industry from a traditional, small-scale production system. This industry today caters to the diverse needs and tastes of Indian consumers. Over the last decade there has been a d rastic increase in the demand for processed food in India and some of the factors which have helped this increase include rapid change in the lifestyle of Indians particularly urban dwellers, rise in disposable incomes, increase in the number of working wo men, growth of nuclear and double income families, increase in the number of jet setters, explosion of the information and communication sector, etc. Other factors which have also helped in the growth of the food processing industry include favourable demo graphy and economic factors, stable democracy and raw materials supply. Owing to factors such as increase in literacy rate, rapid growth in urbanisation, rising per capita incomes, relatively cheap workforce, etc. there are significant opportunities for developing vast underlying markets in the country. In addition to these factors, the geographical location of India helps in giving it the competitive advantage of being able to cater to major consumption centres. Some of the key drivers of the processed foo d sector include: expanding product variety; improvements in the supply chain; improvements in the food retail sector such as emergence of organised food retailing; growing awareness of health and food safety; upgrading and modernisation of food processing units; enhanced packaging facilities; increasing importance of food standards and labelling laws; liberalised government policies such as 100 per cent foreign direct investment in the key food segments, reduction in the excise duty, etc.; emergence of niche market opportunities in exotic product categories;

Key drivers and trends

increasing acceptance of India as a global sourcing partner; increase in the demand for processed food has led to the rise in the share of processed food in international trade. In ternational trade also offers a large potential to increase value-addition to a food product than unprocessed products. Some of the emerging trends of the processed food sector are: Greater demand for ready -to-eat and ready-to-cook food. Increasing preference for western food. Rise in the presence of multinational companies in the food processing sectors. Increasing recognition of regional and foreign brands. Increase in the number of mergers and acquisitions. Emerging investment opportunities i n infrastructure development, technology, testing and inspection, marketing, packaging, etc. Change in food consumption patterns. A shift is being witnessed towards the consumption of higher value products across all income levels. A growing demand for different food attributes which include health, safety, convenience and the manner in which the food is grown is being witnessed in the country. A large potential for imported products mainly among urban consumers. The factors that have helped in increasi ng the awareness of imported products in India include increase in overseas travel, rising income levels, international exposure, changes in food habits, changes in spending patterns of consumers and the retail revolution.

Current import scenario Since the beginning of economic reforms, India has transformed itself on the global market. Though still considered a developing economy, little remains the same in the Indian food market. Globalisation and liberalisation have opened doors for the entry of imported food products from across the globe. Gone are the days where one could purchase imported products only when they travelled abroad. With the relaxation of the import policies, the Indian market is flooded with products from across the world. From Washington apples and Australian Kiwifruit to Swiss chocolates, French cheese and Italian pastas, almost all kinds of imported products are available in the Indian market. Chocolates, cookies, juices, pasta, olive oil, honey, sauces and salad dressings and certain fruits are the prime categories of import. Growth of organised retailing, economic growth, rising income, urbanisation and changing lifestyles have provided momentum to the imported food and beverage sector. Over the years the quality of food consumed by Indians has also undergone tremendous change. Indian consumers now have both the willingness and ability to try new products. Urban residents are by and large the major consumers of imported food in India. The urban populations have higher incomes when compared to their rural counterparts and spend over 40 per cent of their income on food alone. Apart from the urban elite consumers, hotels and restaurants are the other major consumers of imported food products in India. Imported food products are no longer restricted for sale in only select retail stores across the country. Today almost all the stores ranging from small departmental stores to big retail chains sell imported food products. The modern retail formats also have a big role in boosting impulse purchase among customers. As a common practice, these imported products find their way into the Indian market through importers who in turn supply to distributors, local retailers, stores and other institutions. On a new product arrival, retailers initially sell them on a trial basis and if the product is well accepted and sales pick up they continue to stock more. Imported products such as chocolates, juices and pastas have penetrated the Indian market to such an extent that some of the foreign manufacturers are considering setting up production units in India. For example: Kraft Foods International is considering manufacturing Tang (orange beverage) in India. While the imported food products may not completely replace the Indian brands, they will definitely serve as add-ons to the Indian brands. 4.2 Key drivers and trends

 Urbanisation Rapid growth in industrialisation and robust growth of the IT industry have paved way to more employment opportunities and marked an increase in the concentration of people in urban areas. In 2007 the urban population accounted for nearly 30 per cent of the total population in India. With a large working population the need for convenience is on the rise and as a result products that simplify urban lifestyles are high in demand. The consumption pattern of these urban dwellers is also changing by the day with a clear shift of expenses from basic to luxury products. It is this change in attitude and lifestyle that has boosted the demand for imported food products. Rising income levels With higher disposable incomes the upper-middle income urban elites are an important customer base for imported foods in India. Increasing incomes and personal freedom have attracted young customers wanting to move away from traditional lifestyles. Rising affluence of the middle income group has led to changes in eating and spending habits. Exposure to global culture With an increase in the number of jet setters, cable television and internet penetration (60.7 per cent and 5.3 per cent respectively), more Indians are now on the lookout for imported food products. International exposure is creating better brand awareness and product knowledge resulting in easier penetration of imported products into the country. People have also become more health conscious and hence prefer branded packaged food. Retail revolution Rising consumer spending, greater need for convenience and product variety and favourable government policies have fuelled the growth of organised retailing in India, making it a land of retail opportunities. Growing number of Indians now have the desire and ability to shop in organised retail stores and buy quality products. This new retail environment has resulted in the emergence of a large number of malls and modern supermarkets offering imported food products greater visibility and shelf space. Growth of specialty restaurants The concept of eating out has caught on in India due to increasing number of nuclear families, dual income families, increase in disposable income and willingness to experiment. This has translated into the mushrooming of different types of cuisines from across the world. Hotels and restaurants are therefore one of the major demand drivers of imported food products. Relaxing of import regulations In a bid to boost the Indian food market, the Government of India relaxed its restrictions on the import of food and beverages. Most of the products now fall under Open General Licence (OGL) and Special Import Licence (SIL). Free Trade Agreement between India and Australia India and Australia have been negotiating a FTA that will mutually benefit both the countries. The FTA will lower the trade barriers and create more trade opportunities for German exporters.

Confectionery
Imported confectionery has been one of the early entrants in the Indian market and continues to be one of the most sought after and widely available segments in the imported food market. Import of confectionery has been constantly on the rise. While the import of chocolate confectionery inc reased by 39 per cent from 2005 06 to 200708, the import of sugar confectionery increased by 51 per cent during the same period. The market is flooded with brands such as Toblerone, Mars, Lindt, Bounty, Snickers, Ferro Rocher, Foxs and so on. These brand s have gained popularity largely owing to their distinctive taste, attractive packaging and extensive distribution network as a result of which they are found in small departmental stores to big retail outlets. The sale of imported chocolates has become eq ual or even outpaced the domestic brands in some of the retail stores.

Challenges faced
Despite gaining wide acceptance in the Indian market, the market for imported foods continues to face certain hurdles. Some of the challenges faced are the following: Despite a gradual increase in the demand for imported products, the market is still relatively small as the demand for such products is mainly from the upper income groups; however, this is anticipated to change as incomes increase in line wit h Indias economic growth. The prices are forced to remain high owing to the high import duties ranging from 20 per cent to over 60 per cent. Lack of consistent supplies of brands is another major issue faced by retailers in India. Very few importers deal with particular brands for a long period of time. Most of them buy products that are fast moving and shift to other brands or products in a short span leaving the Indian consumers to remain one time buyers of most imported products. A number of imported food products do not adhere to the basic guidelines of the Prevention of Food Adulteration (PFA) Act such as stating the vegetarian and non-vegetarian symbols on the package, spelling out the manufacturing and expiry dates, not giving directions for us e and other information in English and so on. The high cost of transportation is another major bottleneck. Infrastructure challenges such as lack of sufficient cold storages, poor development of ports and related infrastructure in India is a hindrance to the import of food products, especially the ones with a shorter shelf life. Adherence to the various food laws prevalent in India, especially the ones related to labelling requirements, packaging, use of colours and additives, shelf life, sanitary and phytosanitary requirements, is also a cause of concern among the importers.

Overview of the food retail sector in India

India is the fifth largest retail destination globally and is rated as the second most attractive emerging market for retail investments in the 2008 Global Retail Development Index (GRDI). Retail is one of the fastest growing sectors in the Indian economy and the country is witnessing the launch of a large number of malls, supermarkets and departmental stores. The retail industr y accounts for about 35 per cent of Indias GDP and employs around 21 million people.

Growth of retail in India

At over 12 million, India has one of the largest number of retail outlets in the world. There is one retail outlet for approximately 90 people i n India. The available mall size of about 30 million sq feet is expected to increase to 100 million sq. feet by 2010. The total retail

market was valued at US$335 billion in 2008 of which organised retail accounted for only US$25 billion. However, organise d retail is forecast to increase to at least 12 per cent of all retail sales by 2010.

Organised retailers Table 5.2 Types of organised retailers Type of store Example Hypermarket Big Bazaar, Trent Supermarket Food World, Spencers Daily, Reliance Fresh, More Department store Lifestyle Speciality chain Spar Discount chain Subhiksha Cash N Carry Metro Petro conversions In and Out, Shell To be successful in food retailing in India essentially means to draw away shoppers from the roadside hawkers and convenience stores to supermarkets. This transition can be achieved to some extent through pricing, so the success of a food retailer depends on how best he understands and gets the maximum out of his supply chain. The other major factor is that of convenience of shopping and ambience, an area where the supermarket has an edge over traditional convenience stores. On an average, a supermarket stocks up to 5000 to 7000 units against few hundreds stocked at an average kirana (convenience) store. With the entry of large corporate houses like Reliance, Bharti, etc. and with the large scale expansion plans of Spencer, Food World, etc. this modern format of food retail is expected to have a wide reach. Growth in imported food An average urban Indian spends a significant portion of his income on food, and with food consumption increasing by about 10 per cent each year, food retailing is gaining popularity in India. One of the key factors driving this sector is changing food consumption patterns, others being better infrastructure, increasing disposable incomes, increasing exposure to the outside world, etc. Changing lifestyles and the boom in organised retailing have resulted in a growing demand for imported food and beverages in India. The market for such specialty foods is growing briskly. With the relaxation of import regulations, many business houses such as Godrej, Reliance and Pantaloon have moved into the market by opening specialty food stores and sell imported foods such as cheese, pasta, cookies, olive oil, chocolates, dried fruits, sauces and cereals. Other factors behind the growing popularity of imported foods are rising incomes

and increased foreign travel. Speciality hotels and multi-cuisine restaurants have also fuelled the demand for exotic imported food ingredients. Some examples to illustrate the growth of imported food:

Distribution structure

The importers usually appoint city specific or regional distributors to deliver the products to the retail stores. A few intermediaries may be needed before the products reach the retail chains. The channels of distribution vary based on the type of products concerned.

Processed food products (chocolates/pasta/jams/preserves) A wide range of processed food, chocolates, etc. are imported into India. The distribution structure of these products is as follows: Within the port cities (Chennai, Mumbai, Ahmedabad, etc.) the distribution structure is as per Figure 6.3: Figure 6.3 Distribution structure for processed food products within port cities. Outside the port cities the distribution structure is as per Figure 6.4: Figure 6.4 Distribution structure for processed food products outside the port cities. In the port cities of Chennai, Mumbai, etc. after the products arrive, the importer usually supplies them directly to retail chains and stores. He may use his warehouse or cold storage facility if needed. Several regional distributors are appointed to reach the products to nearby cities. The distributor in turn sells the products to retail stores in his region. In this case, both the distributor and importer have either own or rented warehouses. Normally, cold storage or special refrigerated vans might not be required for these products.

Tariffs and duties of imported foods India, traditionally has maintained high tariffs and import restrictions on food items. The basic duties are levied while importing products into India and these include: Basic dutyThe Government of India considers the basic import duty as the main levy. This duty can either be a percentage rate applied to the value of the goods (valued at Cost, Insurance and Freight (CIF)) or a specific rate based on unit of measurement. Different rates of duty apply for different products, as this duty is commodity specific.

The Central Government may also, through notification, exempt goods specified in the notification partly or wholly from basic customs duty. The basic customs duty can be as high as 100 per cent for agriculture and food products Additional duty of customsAlso known as countervailing duty, it is calculated on the assessable value of imports plus the basic customs duty. This is equivalent to the rate of excise duty that would have been charged had the imported item been manufactured in India. Depending on the product, these excise duties can be as high as 24 per cent. Moreover, this duty is applied to the total value of the goods, calculated as the value at CIF plus the basic customs duty. Education cessThis is charged as a percentage of all duties and taxes levied by the central government except the additional duty of customs. The education cess paid on imported inputs cannot be set off against any duty/cess payable on manufactured items Special additional dutyThe special additional duty is a rate that differs by product. This duty is levied on the total value of goods, computed as the value at CIF, along with the basic customs duty and the additional duty of customs. Apart from the four duties, additional levies such as antidumping duties and safeguard duties may also be applied. Anti-dumping duties are levied on specific goods imported from specified countries in order to protect the indigenous industry. Sales Tax/Value Added Tax
Central Sales Tax (CST) is levied on interstate sale of goods, i.e. where the sale occasions movement of the goods from one state to another. This is levied by the state from which the movement of goods commences. Local sales tax/Local VAT are levied on sale of goods within the state, i.e. where the movement of goods as a result of the sale commences and terminates within the state itself.

Processed food A crucial step for an exporter from any country to India is to get an approval for their processed food products from Central Food Technological Institute (CFTRI), Mysore. Samples of all imported processed food items (vegetarian) will have to be sent to (CFTRI) for testing. CFTRI has the required state -of-the-art facilities to test cereals, pulses, plantation products, dairy products, oils and fat, processed fruits and vegetables, confectioneries, and other processed food. The products are tested for nutrition labelling, amino acid profile, vitamins, fatty acid composition, contaminants such as pesticide residues, food additives and adulterants. Samples received from the ports are analysed as per the specifi cations. Only after getting an approval from CFTRI, the goods will be handed over to the importers for distribution. The test report from CFTRI takes a minimum of two weeks.

Documentation The important documentation procedures to be followed by importers in the country include: . In the prescribed bill of entry format, importers must furnish an import declaration, disclosing the value of imported foods. This must be accompanied by the following documents: Import permit original A permit authorised by the Plant Quarantine Officer for the import of fresh fruits/vegetables, and processed food is mandatory. The importer has to clearly state the specified quantity intended to be imported. The Import Permit issued shall be valid for six months from the date of issue and valid for multiple port access and multiple part shipments provided the exporter, importer and country of origin are the same for the entire consignment. For frozen/processed meat products and frozen/processed marine products a permit is required from Animal Quarantine and MPEDA respectively. Phytosanitary certificate (original) issued at the country of origin or PSC. Re-export format, in case of re-exported consignment along with attested copies

of PSC issued from the country of origin. Customs bill of entry (duly endorsed). Shipping/airway bill. Invoice and Packing list. Madras Consultancy Group 74 Fumigation certificate (if required). Certificate of Origin. Bill of lading. . A certification from the port health authority is needed for the clearance of imported food products at the port of entry. This certificate conforms to the standard and regulations of the PFA (Prevention of Food Adulteration Act). As most ports have very limited testing facilities, this certification is based mostly on visual inspection and records of past imports. Therefore, many importers face unnecessary delays in clearing their products. Depending on the product and experience of the importer, the custom clearance period may last between one day and one month. An appeal can be filed by the importer at the Customs office at the port of entry in case of a dispute or rejection of the consignment Packaging requirements There are many requirements that an import must conform with, while importing products. Given below are some of them: . Per Notification No. 44 (RE-2000)/1997.2002, issued by the Department of Commerce on 24 November 2000, all packaged commodities imported into India should carry the following declarations: Name and address of the importer. Generic or common name of the commodity packed. The name of the manufacturing company and contact details of the manufacturer. Net quantity using standard units of weights and measures. All weights or measures to be reported in metric units. Certain commodities can only be packed in specified quantities (weight, measure, or number). These include baby food, weaning food, biscuits, bread, butter, coffee, tea, vegetable oils, milk powder, and wheat and rice flour. If the net quantity of the imported package is given in any other unit, its equivalent terms of standard units shall be declared by the importer. Month and year of packaging in which the commodity was manufactured, packed, or imported. The MRP at which the commodity in packaged form may be sold to the ultimate consumer. This price shall include all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertising, delivery, packing, forwarding, and the like. Labels must be printed in English or Hindi (Devnagari Script). Every package of vegetarian food must bear a symbol in green colour on the principal display panel just close to the name or brand name of the food. Similarly, every package of non-vegetarian food must bear a symbol in red colour. Details of ingredients as per PFA. Madras Consultancy Group 75 Imports of certain products, including some food products (milk powder, condensed milk, infant milk foods, milk-cereal based weaning foods) and food additives, must comply with mandatory Indian quality standards. All manufacturers and exporters whose products are sold in India are required to

register with the Bureau of Indian Standards. . Shelf Life: Notification No. 22 (RE-2001) 1997.2002, dated 30 July 2001, is sued by the Department of Commerce, states: eImports of all such edible/food products, domestic sale and manufacture of which are governed by the PFA shall also be subject to the condition that, at the time of importation [emphasis added], these products are having a valid shelf life of not less than 60 per cent of its original shelf life. Shelf life of the product is to be calculated, based on the declaration given on the label of the product, regarding the date of manufacture and the due date of expiry. f . Per notification GSR 388 (E), issued by the Department of Health, on 25 June 2004, states that, every package of food which contains permitted artificial sweetener shall carry the label eCONTAINS ARTIFICIAL SWEETENER AND FOR CALORIE CONSCIOUS f, along with the name or trade name of the product. . Per notification GSR 339 (E), dated 27 May 2005, issued by the Department of Health, states that: eNo containers or label relating to infant milk substitute or infant food shall have a picture of infant or women or both. It shall not have picture or other graphic materials of phrases designed to increase the saleability of the infant milk substitute or infant food. The terms gHumanised h or gMaternalised h or any other similar words shall not be used. The package and/or any other label of infant milk substitute or infant food shall not exhibit words, gFull Protein Food h, gEnergy Food h, gComplete Food h, or gHealth Food h, or any other similar expressions. f . The PFA Rules, 1955, includes a positive list for the presence of pesticide residues in various commodities and food (manufactured/imported) products, and their respective tolerance levels. Of the 189 pesticides registered for regular use in India, only 121 have Maximum Residue Limits (MRLs) notified. There are 27 pesticides that do not require MRLs. For the remaining pesticides, MRLs have not yet been established. CODEX Alimentarius MRLs may be accepted for imported foodstuffs only for those pesticides not included in India fs own positive list of pesticides. . All imported foods are randomly sampled at the port of entry for their conformity to PFA standards. On 16 June 2004, with immediate effect, the Ministry of Commerce and Industry published a list of ehigh risk f food items, imports of which are subject to 100 per cent sampling. This list includes edible oils and fats, pulses and pulse products, cereal and cereal products, milk powder, condensed milk, food colours, and food additives, among other items. The import of product samples via express mail or parcel post is allowed, contingent on obtaining prior permission from the Directorate General of Foreign Trade. Mail order imports are not allowed. Once the products enter the domestic market, they are to be monitored randomly at the retail and wholesale level by the respective regulatory authorities. Product Launch Market entry strategy: India Any well thought of country strategy would need to take into account: products that can be exported from the country of origin food products that are in demand (a threshold level) in the destination country current demand (volume and value) for the selected products and their future growth potential competition from other exporting countries and pricing local tastes and preferences local distribution systems and commercial practicesstrengths and limitations laws of the land (home and destination countries). In the ensuing paragraphs, an attempt has been made to present strategic direction and options for entering the Indian market. These are alternatives and options for discussion and

further detailed investigation would be necessary to firm up some of the actions. Identifying target product segments and regions Target product segments The demand for select imported products is growing well in India and it would be beneficial to focus on these segments, shown in Table 2.2. This list is not exhaustive and depending on the volume of export planned, other product may be selected. (Refer import of food products.xls attached.) Target markets Major markets for imported products in India are the large metros such as Ahmedabad, Chennai, Cochin, Bangalore, Hyderabad, Kolkata, Mumbai, New Delhi and Pune. There is also significant demand in other cities such as Bhubaneshwar, Bhopal, Coimbatore, Chandigarh, Jaipur, Lucknow, Nagpur and Vadodara and Vishakapatnam. It is also important to target major tourist destinations that attract overseas visitors, such as Goa, Kerala and Rajasthan. As imported food products are increasingly being used by four and five star hotels, a separate strategy needs to be worked out to reach the decision makers in these hotels. Distribution dimension The success of any export initiative depends on finding the right distribution partner; clearly, in the Indian context appropriate due diligence needs to be carried out prior to the selection of importers or appointment of distributors. In India, the business of importing food products as well as their distribution is largely carried out by small and medium sized firms, usually managed by their respective owners. The structure of these private owned firms would be either incorporated as a private limited company, a partnership or a proprietorship. The financials of these companies are not available in the public domain and hence, an exporter needs to ensure that a secured payment mode is in place. In the long term, some of the strategic options that can be considered are to establish tie-ups with reputed partnersfor branded products, it might be worthwhile to explore tie-ups with medium and large size Indian companies in the food sector. While co-branding will help the Indian firms expand their product range, it will enable Western Australian products to gain easier consumer acceptance and market share. Promotional strategy The long term marketing objective could be to establish brand Storck in the mind of the Indian consumer and some of the options are: Set up an India centric website giving details about Storck products and where they are sold in India. Site visitors can be tracked and automated responses to inquiries can be generated. Buy databases of prospective customers such as hotels and send them direct mailers with relevant details and promotional messages. A limited advertising campaign to reach a larger audience and create awareness of Storck products, may be attempted, subject to the availability of funding. Taking part in major trade shows and expos in India, such as Food Pro and Aahar will help in promoting the products and establishing direct contact with the potential customers. Point of sale promotional materials in the stores to attract customer attention, is an inexpensive promotional tool in the Indian context; comments have been made by distributors and retailers that promotional materials would help. Commercial aspects As securing the payment is of high importance in the Indian context, it would be preferable to operate with a confirmed and irrevocable letter of credit till the financial

credibility of the importer is established. According to the trade in India, while processed food products are generally imported by opening a Letter of Credit (LC), fresh fruits are usually sold on a Documents against Acceptance (DA) basis. Importers very often demand supplies on a consignment basis, wherein the payment is made to the exporter after selling the fruits in the market. However, offering unsecured credit to Indian importers is fraught with grave risk Effective consolidation of cargo at the Germany end can facilitate export as importers do frequently face the problem of filling up a container load. Consolidation of cargo is one of the most practical options to save on too many intermediaries and freight charges, especially while developing and expanding in a new market. Consolidation of cargo eases the cash flow issues at the importers end. While consolidation of cargo from Gemany has commenced, it needs to be more extensively adopted and this could lead to a much faster growth of German export of food products to India. To conclude, the Indian economy is expected to continue in its growth trajectory over the next decade and will offer growing opportunities for marketing food products. As the domestic food processing industry is not yet well developed, there is significant potential to be exploited by processed food manufacturers elsewhere in the world. An entry into the Indian market has to be carefully orchestrated to ensure that it is a win-win situation for all stakeholders, viz German exporters, Indian importers, distributors, retailers and most importantly the Indian consumer.