Business Idea: Exporting Dominican Avocadoes to Germany

Massiel Pérez Olivero

Business Communication

Pamela Archer

August 2, 2018
 Table of Content

Executive Summary

Brief explanation of the product and nature of the business

Variables to consider when exporting from Dominican Republic to Germany

How to enter the avocado market in Germany

Market research

Competition
 Executive Summary

According to the current Minister of Agriculture, Luis Ramón Rodríguez, Dominican

Republic has had a steadily growth of a 30% in the production of organic foods in the last

six years, which gives the island the title of the global leader in commercialization of this

type of eatables. The main regions were avocado is produced in the Dominican Republic,

is both in the South and North area. Exports to Germany, by the 2007, were valued in

USD$187.23 millions, placing itself in the 3rd country were Dominican Republic exports

the most, according to the Centro de Exportación e Innovación de la Republica

Dominicana (the national exporting center in the Dominicana Republic). Germany is the

country that has the longest organic agricultural tradition and commercialization of

dietetic products, which means a market opportunity to the island; also, Germany

occupies the 4th place as the top countries that most import (7.9%) and export (4.7%)

tropical fruits, as well as Dominica Republic, which occupies the 3rd place as the country

that most export tropical foods, based on information provided by The Observation of

Economic Complexity (OEC), and the 3rd place as the country with the largest avocado

production, according to José Rosa, president of the Avocado Producers Cluster.

 1. Brief explanation of the product and nature of the business

a. Business

GUACATÍN, which is stablished since 2010, was only a Dominican LLC with an

ethnocentric view that produces and commercializes avocado within the country;

GUACATÍN its showing to have an interest in having a more global focus to 2020, on its

10th anniversary, by becoming a multinational enterprise with a geocentric posture that

also exports fresh avocadoes worldwide, maintaining its headquarters in the Dominican

Republic.

b. Product

The product that is going to be exported initially is Hass avocados, which is a smaller and

black type of avocado, and considered as a gourmet fruit due to its high quality and

amount of healthy and natural oils; 15% of avocado production in the Dominican

Republic belongs to Hass exclusively for exporting, according to Brian Rudert, a

Dominican journalist. AGUACATÍN Hass Avocados usually weights 80 grams, so we will

be charging € 1.6 per avocado. AGUACATÍN Hass Avocados are sowed in the South area

at Cambita, San Cristóbal (which is one of the main avocado production counties in the

island). An important fact is that, in order to magnificently seed AGUACATÍN Hass

Avocados, it is necessary to have 2.100 mm of rain, temperatures between 25,8 ºC y 26 °

C, and in the summer (which is the best time to successfully sow avocados).
 2. Variables to consider when exporting from Dominican Republic to Germany

a. Political

Germany is a democratic, federal parliamentary republic, and federal legislative power is

vested in the Bundestag (the parliament of Germany) and the Bundesrat (the

representative body of the Länder, Germany's regional states). Lately, there’s global

pressure to move German Chancellor Angela Merkel for at least three reasons – all of

them political, not economic. Germany has a strong interest in international co-operation

in many areas, from immigration to energy security. Making concessions on

macroeconomic policy could lead to co-operation in other fields. For Ms. Merkel, a

“Germany first” approach, akin to U.S. President Donald Trump’s “America First”

strategy, would be counterproductive. That would be an important factor to consider when

exporting to Germany.

b. Cultural

Germans place a high priority on structure, privacy and punctuality. The German people

embrace the values of thriftiness, hard work and industriousness and there is great

emphasis on making sure that "the trains run on time." According to Passport to Trade

2.0, an online business etiquette guide by the University of Salford in Manchester,

England, Germans are most comfortable when they can organize and compartmentalize

their world into controllable units. Time, therefore, is managed carefully, and calendars,

schedules and agendas must be respected.

Germans are stoic people who strive for perfectionism and precision in all aspects of their

lives. They do not admit faults, even jokingly, and rarely hand out compliments. At first

their attitude may seem unfriendly, but there is a keen sense of community and social

conscience and a desire to belong.

 c. Religious

Christianity is the dominant religion, with 65 to 70 percent of the population identifying

themselves as Christian. That number includes 24 million Catholics, according to CBS

News. Muslims make up 3.7 percent of the population, according to Angelo State

University, while 28.3 percent are unaffiliated or have a religion other than Christianity

or Islam. So, if AGUACATÍN is planning to do any promotions or public relation efforts,

will need to keep in mind the vast variety of religions and not to offend anyone.

d. Regulatory

According to the Import Promotion Desk and the Centre for the Promotion of Imports,

Ministry of Foreign Affairs, some regulatory measures are necessary to export avocados

to Germany, such as:

 Labelling: Enables traceability of individual lots, for example with trace codes.

English language needs to be used for labelling, and labels must include the

following: Product name, including name of the variety or Class (Extra, I or II),

Batch code, Name and address of exporter, Size of fruits (minimum and maximum

weight or by count) o Number of units, Net weight in metric units, Recommended

storage conditions. If the product is an organic product, it also needs to include

the Name/code of the inspection body and certification number. Also, organic

avocados should remain physically separated from conventional avocados.

 Legislative: Legal requirements are the minimum requirements which must be

met by products marketed in the EU. Products which fail to meet these

requirements are not allowed on the EU market. EU legislation sets the basis for

legal requirements in the EU, which is generally implemented fully in Germany.

Some of the EU legislations that need to be followed are: General food law

(Regulation EC 178/2002), Maximun Residue Levels, Contaminants in Food

 (Regulation EC 1881/2006), Microbiological Contamination of Food (Regulation

EC 2073/2005), etc.

 Non-legislative: Additional, non-legal requirements reach beyond legislation, as

companies can go further in their requirements than legislation. The main

categories of additional requirements are environmental requirements and social

(labour) requirements, such as: Global Good Agricultural Practice (Global

G.A.P.), The Business Social Compliance Initiative (BSCI), Food Safety

Management, etc.

e. GDP and Per Capita Income

Germany’s Gross Domestic Product, is USD$3.467 trillions, and its Per Capita Income

is $49,530 PPP dollars (purchasing power parity), both by 2016.

In regards to avocados, German per capita consumption of avocados is approaching the

European average, showing a growth trend during 2008-2012. Due to positive forecasts

in GDP and the ongoing health and exotic fruit trends, among other reasons, this increase

is expected to continue in the coming years. In general, as people’s incomes rise, their

purchases of more expensive exotic fruits, like avocado, are also expected to increase.
 3. How to enter the avocado market in Germany

AGUACATÍN is planning to enter the Germany’s market through exporting activities. In

order to do so, the company will have to follow the next steps: Register your firm in

registry of industries in your state, apply for PAN card for your firm, ISO certification,

Open a bank account in nationalized bank having foreign exchange facility, Apply for

IEC code, Based on the products you can join APEDA (Agricultural & Processed food

products export development authority), Get your product samples certificated in the

laboratories authorized by above organizations, and Finally check with the above

organizations for any additional compliances to be followed.

The avocados will be sell individually, however, they will be shipped in single layer

(fruit) crates, trays or cartons, sometimes with padding. It will be shipped through air, and

it will take them between four and ten days to get to the Europe. The crates will weight

approximately 11.5kg (25lb).

Example of the distribution channel that is going to be used by AGUACATÍN

based on distribution channels of other companies that export to Germany.
 4. Market research

In order to export AGUACATÍN Hass Avocados, AGUACATÍN will do some primary

research by hiring ESOMAR, a prestigious international market research company;

ESOMAR will carry out both primary quantitative and qualitative research, such as

surveys, focus group, observation, and interviews, in order to determine whether it would

be feasible to export Dominican Hass avocados. AGUACATÍN also had and will benefit

from secondary data, such as the CIA World Factbook, and research papers from others

market research companies and will benchmark with the experience other exporting

companies have had.

 5. Competition

The majority of fresh avocados in the European market are sold through large

supermarket chains, even more so in Northwestern Europe. The buyer power of large

supermarkets is very strong, so their buyer requirements are very important. The

negotiating position of suppliers towards European importers is gradually improving, but

the probability of receiving a fair price continues to depend on strong retailers and the

negotiation skills of their direct suppliers.

The worldwide production of avocados is increasing and competition is fierce.

Temporary shortfalls in supply or demand (e.g. through border closures or climate) have

a huge impact on prices. Mexico is the largest producer with almost 1.5 million tonnes in

2013. The Dominican Republic, Colombia, Peru and Indonesia all produce between 0.2

and 0.4 million tonnes of avocados. All are increasing their supply to Europe while the

demand is still growing. Competition from other countries is determined by the supply

season, showed in the table below.

 6. Conclusion

The avocado market is one that has been steadily increasing and seems to be continuing

like that even though there is some negative backlash due to a new obsession millennials

have about the consumption of avocadoes toasts. Some might feel this could be something

negative, but it’s actually an opportunity for producers of avocado to exploit the fruit and

properly market the product to gain more profit. Due to Dominican’s avocadoes being of

such high quality, it’s a good investment idea for AGUACATIN to export to Europe.
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