Boomerang Juice Company: A Taste for International Market Research

Thirsty for Expansion Located in Perth, Australia, Boomerang Juice is a small enterprise that specializes in exotic organic fruit juices. It was founded by four employees who capitalized on the local market and grew to 26 employees in the first two years. The company markets its beverages successfully within Australia as high-end products, targeting middle-class, health-conscious adults. The juice products are distributed by organic food markets, juice bars and an Australian retail supermarket chain. The company uses recyclable, single serve bottles for most of its products, but has begun to offer one-litre Tetra Pak containers for supermarkets. Six years into its venture, Boomerang Juice now employs 95 staff and is looking to globally expand its product distribution. Sarah Grant, the company CEO and marketing director, decided to send staff to participate in food and beverage trade shows to exhibit the range of company products. Over two years, company representatives participated in five such events throughout southeast Asia and learned that there were very few foreign companies specializing in organic juice. By providing samples to trade show participants and conducting taste tests, the team concluded there was an appetite for its product. Squeezing Out the Details Back in Perth, Sarah initiated market research to determine the optimal location for export. The company was not in a financial position to dramatically alter its labelling or packaging, and it needed to identify a suitable local distributor. The team had made contact with potential local distributors at trade shows in Japan, Hong Kong and Singapore. Boomerang Juice determined that its research budget would allow for a team of in-house researchers to carry out secondary research over one month, compiling and organizing data on each of these three markets to decide which would be the best suited for its initial expansion. There was no budget to purchase data reports, hire an outside research firm or conduct extensive taste testing in any of these markets.

Feasibility of International Trade Module Situational Analysis

The research results yielded promising conclusions for Boomerang Juice. All targeted countries offered some potential. Key research findings and conclusions for each potential market were: In Japan: The United States supplies 38 percent of Japan's fruit juices, followed closely by Mexico and Brazil. The distribution and sales channels for fruit juices are held by the large manufacturers; significant hurdles exist for securing a channel for the short to medium term. A large part of the sales of beverages comes from vending machines, but selling its organic fruit juice through this channel would be difficult due to a vending machine surplus and crowded supplier market. Some cultural behavior studies showed that Japanese families tended not to drink juice at breakfast time, but indicated an appetite for low-priced organic products. The research team determined that its higher-priced product could not be sold competitively in this market. In addition, its limited marketing budget prohibited competition with the American, Brazilian and Mexican companies already established in the Japanese marketplace. In Hong Kong: Australia ranks among the top three exporters of juice. Regulations for the labelling of pre-packaged foods allow for English, Cantonese or both. Market trends revealed that high-end products relying on a perception of prestige or quality used English packaging over Cantonese. There are more than eight hundred supermarkets in Hong Kong, dominated by two chains. They rarely import food and beverages from overseas, preferring to purchase from local distributors to save operational costs. The research team concluded that the market potential in Hong Kong was more promising than in Japan. However, it felt that the company would require consumer understanding of its product quality and differentiation to make decisions on product labelling. With no budget to conduct further consumer research or determine the most suitable Cantonese names for its products, the team was less certain of Hong Kong's potential. The nature of the supermarket trade, the fact that Boomerang Juice had weak contacts with Hong Kong distributors and that it could not identify any immediate potential for partnership within that market made the market less attractive. In Singapore: Australia ranks among the top three exporters of juice. Singapore is a relatively small country with a population concentrated in one city and it has an affluent and health-conscious demographic that contains a large number of English-speaking expatriates. Growth in fruit juice consumption in all categories continues to rise. The average consumer is more aware of the attributes of pure fruit juice (as opposed to fruit-based beverages that contain a lot of sugar) and is willing to pay the price.

Feasibility of International Trade Module Situational Analysis

Distributors in Singapore import juice products for national consumption but also re-export to neighboring countries such as Malaysia, Brunei and Hong Kong. The research team identified Singapore as the ideal market to explore Boomerang Juice's expansion. The product was well suited to the market and no significant changes were required to existing labels. Could Boomerang Soar to New Heights? Boomerang Juice determined that the most cost-effective option to ease into the Singaporean market would be to form a partnership with a local distributor. It would continue to participate in food and beverage showcases in Singapore to generate interest with distributors and buyers. The plan was to look for an established distributor to get products onto shelves in this new market. The team agreed that the research generated on the Singaporean market and the opportunities to establish direct contacts in the market provided by the food and beverage showcases justified the decision to abandon attempts to enter the Hong Kong and Japanese markets for the short term and focus exclusively on Singapore.

Learning Outcomes This case study relates to the following learning outcomes from the module Situational Analysis in the course Feasibility of International Trade: Screen potential international markets to identify priority markets. Design the research plan and conduct the designated research.

Feasibility of International Trade Module Situational Analysis

1. Based on the summary points of each of the three potential markets, what general types of market intelligence did Boomerang Juice carry out during its in-house research? What general types of market intelligence were not conducted? 2. How did Boomerang use market intelligence to make its decision to partner with the distributor in Singapore? 3. Based on the evidence provided, did Boomerang's researchers thoroughly investigate the market potential within Singapore?