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The Advantages, Risks and Best Practices for Expanding Internationally as a Food and Beverage Business

The Advantages, Risks and Best Practices for Expanding Internationally as a Food and Beverage Business

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The Advantages, Risks and Best Practices for Expanding Internationally as a Food and Beverage Business

Jan 18, 2022

Jack Payne
A conceptualization of the globe with many points connected by lines.

For food and beverage businesses that are successful in scaling up their operations and establishing a presence on a national scale, going international can seem like the next logical step. It’s an exciting prospect ripe with opportunity, and if growth has been steady so far, it’s easy to assume that success will carry over across borders.

Of course, the matter isn’t as simple as that. There are a host of additional considerations that come with becoming a global company. Assuming that your products will succeed with distinct new consumer bases can lead to resources and time being wasted if the proper steps aren’t taken to tailor the approach and optimize results given differing circumstances.

So, let’s weigh the potential benefits as well as the risks of expanding internationally. And take a look at how an organization can prepare for the process and position itself to achieve its goals in foreign markets.

The Advantages of International Expansion

The first and most obvious reason for a food and beverage business to consider extending operations internationally is for the abundant avenues for growth. There’s a whole world of potential customers out there, but in the case of those outside your borders, you have to bring your products to them.

The process can also give new life to stagnant lines, especially in areas where your company’s offerings are unique in the marketplace. If you can be the first to introduce a novel item to a receptive audience, you can very quickly seize a significant—if not dominant—share of the sales in your category for the region.

Additionally, the fact that demand for seasonal products varies from location to location represents an opportunity to keep revenue steady throughout the year. This is true for fresh foods like fruits and vegetables as well as manufactured products like baked goods, snacks and sauces.

Finally, a less tangible benefit of expanding internationally is the greater brand recognition that can be achieved by becoming a global organization. Many of the top names in the industry—from Tyson and Nestle to Kraft Heinz and Mondelez—have grown in prestige as they’ve increased their reach around the world.

The Risks of International Expansion

The first risk to consider when your business is contemplating going international is the possible supply chain complications. As the journeys of your raw materials and products become longer and more complex, the potential for traceability and food safety issues is compounded, and that’s a major liability with the costs of recalls on a global scale significantly higher than those contained within one country.

There’s also the uncertainty of exchange rates, which can fluctuate at any time of day due to factors outside your company’s control. When your assets are crossing borders and customers are paying in foreign currency, your business will be subjected to potentially unfavorable conversions if not timed in accordance with current market conditions, which puts pressure on your staff to constantly be on top of the latest information.

What’s more, customs and compliance laws are different in other parts of the world, so while you might be in the clear with regards to your home nation’s paperwork and regulations, there’s a good chance you may need to take additional measures to satisfy the requirements of another country. In some instances, that can be costly, but it will always demand additional due diligence on the part of your decision makers.

Lastly, there are the more human elements of language and cultural barriers that could prevent your organization from getting the results you’re hoping for in new territories. If you can’t communicate effectively with your new customers or lack understanding of their customs, your products may be dismissed as mere novelties or misaligned for the types of consumers you’re dealing with.

What Your Business Needs to Go Global Successfully

Solid plans for international expansion always start with thorough market research. Whether or not your products will be viable in foreign markets will remain in question until you can prove that your offerings have distinct advantages over the options that already exist—or that there is a ready and willing audience for something entirely new.

In your investigations you may discover that the current configurations of your items aren’t compatible with the tastes of a certain consumer base, but with a few tweaks it’s possible to gain traction and attract buyers. It might have to do with the packaging, flavor or even portion sizes, but you’ll need to tailor what you’re putting on store shelves according to local preferences to maximize your chances of success, and Coca-Cola is a good example of a brand finding success this way.

Next, there’s the matter of making sure you have the personnel and expertise necessary for operating globally. If no one on your internal teams has experience with making the move to cross-border trade, you may need to hire someone who does or at least seek the services of a third-party consultant. And of course, with growth comes the need for more workers across a number of different essential functions, so it may be a matter of finding dozens or even hundreds of new folks.

Closely associated to the above consideration is the question of whether or not your company will need to open new plants or warehouses in the countries that you’re expanding to. While that could entail a substantial outlay of funds, the expense will be well worth it if you know that market is receptive, and your supply chain costs within that territory will be lower due to shorter distances.

The final key to your preparations for expanding internationally is having the right technological foundation in place to do so. Enterprise resource planning (ERP) systems have become the most popular platforms for businesses in food and beverage because they can help an organization effectively execute on several mission-critical objectives:

  • Achieving complete traceability with bidirectional tracking all along the supply chain

  • Managing inventory effectively through real-time database updates and reliably accurate stock levels

  • Applying recipes and formulas precisely with specialized tools suited to the purpose

  • Ensuring quality and compliance standards are met through automated checks

  • Analyzing financial data and assessing profitability of various items and lines

  • Keeping products completely safe with allergen controls and automatically scheduled sanitation and maintenance

With the right solution in place, your food and beverage company will be much better equipped to launch a global growth initiative.

Excellence with Aptean

Here at Aptean, we know the challenges food and beverage businesses face because we are actively helping our clients overcome them each and every day. What’s more, we’re an international company ourselves, so we understand the special considerations that come with operating around the world.

That’s why we’ve built Aptean Food & Beverage ERP to not only be as powerful a platform as possible, but also highly flexible for a variety of circumstances. Parameters for differing compliance regulations can be configured within the system, while all currency and measurement conversions are handled automatically by the technology.

We designed our solution to be highly accessible through both a user-friendly interface as well as the option for cloud-based deployments that allow employees to work from anywhere so long as they have a web browser and WiFi connection. And beyond that, the robust planning and forecasting tools that our solution offers can be leveraged for important insights into foreign market conditions now and in the future.

All of this comes within a cutting-edge Microsoft Dynamics 365 framework and backed by dedicated IT teams for dependable support. Plus, we’ve been recognized for how our solution excels, as we were awarded Frost and Sullivan’s 2022 Product Leadership Award in North American ERP Software for the Food and Beverage Industry.

These are just a few of the advantages that come with Aptean products. After all, it’s our mission to make sure our clients have all the tools they need to succeed, including features that facilitate expanding around the world.

Ready to hear more about Aptean Food & Beverage ERP and how it can help your business successfully expand internationally? Contact us today.

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