America is open for business
“America is open for business”
With uncertain global economy and financial stress hitting households, a commonly asked question to Green Seed North America is “should we launch our retail brand in the US today?”
The answer is YES – America is definitely open for business.
Some businesses might think this is counterintuitive given the persistent talk of a recession, however, our view is that strong global brands, with differentiated, great tasting foods will succeed in this market. And if they can succeed now, then they will thrive once the economy gets back into stronger growth.
For brands to realize success, they will require careful planning, patience and investment.
So, why are we so bullish on the US?
Premium Innovation is still relevant: Consumers continue to look for innovation in the marketplace and following the pandemic retailers are increasingly looking to brands to make the shopping experience more exciting. Premium food and beverage retail will strengthen as consumers shift spending from restaurant dining to in-home dining where the price of a high quality dinner and bottle of wine is significantly less than at a restaurant. We witnessed this in the 2008 downturn, and expect to see it again in 2023.
Retailers need ideas (not just pricing) to fuel growth : While inflation is running at double digit in Europe and the UK, the US is seeing inflation cool off in recent months, and local economists are describing a “soft landing” for US investors and businesses. Newspaper headlines are no longer focussed on the cost of energy or grains as they were 8-12 months ago, and while certain consumer goods segments might see a continued uptick in pricing, we do not expect to see this continue broadly for retail food and beverage. Retailers are stocking brands that can growth their categories and consumers are spending on brands that are delivering genuine value to them.
Brands can adopt a “test and learn” approach to the market : The US is a highly fragmented trade, with many large, medium and small retail chains, and many classes of trade like natural, specialty, club and mass. This allows brands to test and learn their value proposition on a regional basis, a in specific channels (i.e. Natural) or even with a specific customer. And importantly, test markets in the US represent material scale given the sheer size of the market. Many successful brands are using this tougher economic climate to fine-tune their offering with an eye towards scaling in 1-2 years.
A US business can become a profit driver for international businesses : A strengthening US dollar means that the sales contribution from the US deliver stronger financial results to the international business. While the cost of trading in this market are higher, the returns are much greater. With a considered approach to planning, and a tight launch strategy, a US market launch can be extremely lucrative in both the medium and longer term.
Our firm view is that to realize market success, brands require careful planning borne out of a deep understanding of the market. Businesses that understand the US retail and competitive landscape, US consumer needs and wants, and the financial and operational ways of working in the US and apply this thinking into a staged launch plan are set up to succeed.
Green Seed North America is here to help you on your growth journey. Please feel free to reach out if you would like to discuss how your brand can launch into this market.