Running head: ME LATE CHOCOLATE 1 Me Late Chocolate: Colombian Chocolate in the Danish Market X-Culture: Team 57 Page Count: 47 Submitted: March 24th, 2016 Abdulaziz Alowaymir USA Research Abraham Campos Rios Mexico Research Yilin Guan China Research Co-Leader: Research, Writing, Editing, Thomas Maxwell Kachur Canada Formatting, Citations Stephanie O’Bryan USA Research Co-Leader: Research, Executive Summary, Lauren Wakefield USA Editing, Formatting ME LATE CHOCOLATE 2 Executive Summary Company Analysis: This section covers the company history and a SWOT analysis for Me Late Chocolate which was founded and is currently located in Medellin, Columbia. The company manufactures and sells artisanal, high-quality chocolates made with entirely Colombian ingredients. Although Me Late Chocolate may be small, it is extremely interested in expanding abroad. Market Success Criteria: This section contains information on the several key factors that were used to identify the market with the most potential for Me Late Chocolate. The five key factors used were income levels, ease of doing business, political and legal systems, cultural tastes based on indulgence, and climate. All countries were considered and eliminated based on the five outlined criteria, using Colombia as a benchmark. Market Selection and Analysis: Based on the market success criteria, five potential markets were identified as being similar or favorable to the Colombian market: Denmark, the United Kingdom, Sweden, and Australia. Denmark was selected as the most viable country to expand to, and this section provides an in-depth analysis on the Danish market. Entry Mode and Distribution: Me Late Chocolate’s products should be directly exported with the assistance of a Danish distribution team. Three potential distributors were selected, and ScanChoco was identified as being the best potential distributor to work with. Contractual considerations are also outlined in this section. Pricing: This section offers a cost analysis considering various margins that distributors and retailers may apply, in order to gain an understanding of potential price points for a Me Late Chocolate chocolate bar in the Danish market. In order to maintain existing profit from each chocolate bar sold, the selling price will be between 125 and 198 DKK, allowing the product to be positioned as premium. Utilizing even-pricing, bundling, and wholesaler discounts will contribute to the perception that this product is affordably indulgent and high-quality. Marketing: This section provides a feasible marketing strategy, with a modest budget of $7200 USD and a recommended budget allocation. By strengthening Me Late Chocolate’s branding, website, social media usage, and festival attendance, the company will be able to promote a consistent, premium brand. Regulations and Policies: This section discusses the policies and regulations that Me Late Chocolate needs to be aware of when doing business abroad. Considerations outlined include Colombian export requirements, Danish import requirements, and distributor contract agreements. ME LATE CHOCOLATE 3 Table of Contents Company Analysis .........................................................................................................................4 Market Success Criteria ................................................................................................................9 Market Analysis and Selection ...................................................................................................12 Market Demographics and Cultural Environment .....................................................................13 Legal and Political Environment ................................................................................................15 Economic Environment and Trade & Labour Regulation ........................................................15 Competitive Landscape ..............................................................................................................17 Entry Mode and Distribution .....................................................................................................18 Direct Exporting .........................................................................................................................18 Distributors .................................................................................................................................20 Contractual Agreement ..............................................................................................................23 Pricing ...........................................................................................................................................24 Total Landed Costs .....................................................................................................................25 Distributor Margin and Retail Mark-ups ....................................................................................26 Implications ................................................................................................................................28 Additional Considerations ..........................................................................................................29 Marketing .....................................................................................................................................30 Branding .....................................................................................................................................30 Website .......................................................................................................................................31 Social Media ...............................................................................................................................32 Festivals and Promotion .............................................................................................................33 Budget and Allocation ................................................................................................................35 Regulations and Policies ..............................................................................................................37 Colombian Export Requirements ...............................................................................................38 Danish Import Requirements ....................................................................................................38 Distributor Agreements .............................................................................................................39 Conclusion ....................................................................................................................................40 Bibliography .................................................................................................................................41 ME LATE CHOCOLATE 4 Company Analysis After years of planning, on November 26th, 2010, Me Late Chocolate opened up its first store in Mendellin, Colombia (Rendón, 2015). Me Late Chocolate is an artisan chocolate store, focused on providing consumers with high quality, real, Colombian chocolate products. It sells products such as chocolate bars, truffles, pralines, pastries, cakes, and hot drinks, ranging in price from approximately $4 - $11 USD (Rendón, 2015). In a webinar presented by one of Me Late Chocolate’s owners, Verónica Rendón (Rendón, 2015), explains how Me Late Chocolate was met with a positive response in the local market. She acknowledges that until this point, there were no specialty chocolate shops in Mendellin, which allowed Me Late Chocolate to begin with a strong position. In fact, throughout her education, Rendón knew what she wanted to do, so she was able to be begin drafting an effective business plan early on. She adds that the Me Late Chocolate team had a clear vision mind; they didn’t want to only provide chocolate, but they wanted to provide customers with the experience of enjoying real, Colombian chocolate. According to a review from James Martinez, each product from Me Late Chocolate “is made with a lot of mysticism and passion that represents the chocolate” (Martinez, 2013, p. 3). Martinez also describes the chocolate as being legendary in Colombia. The company operates on a small scale. With a total of 8 staff members, it currently has the production capacity to produce 1,600 chocolates per day on average (Rendón, 2015). Rendón states that because it is artisan made and uses only high quality ingredients, Me Late Chocolate’s product is able to gain a 60% margin on sale. She points out that although the price points for its products are not as low as mass producers’, the business’s competitive advantage comes from its ability to create added value for the customer through attention to detail, quality, and overall ME LATE CHOCOLATE 5 design. While the company is currently operating from one physical store location, Rendón is looking to expand both nationally and internationally by opening carefully selected distribution channels. For an in-depth analysis of Me Late Chocolate’s current competitive position, see Figure 1.1. In her webinar, Rendón (2015) recognizes that the chocolate market is by no means a niche market. She adds that because of this, Me Late Chocolate attempts to gain market share by catering to 4 distinct “psychological” groups: chocoholics, social consumers, gift givers, and socially responsible consumers. Rendón suggests that the company distinctly