ABSTRACT

A Case Study on the

internationalization
of the start-up Sweet
Amsterdam. A Dutch
company that is
eager to concur the
world with their
stroopwafels.

Nynke van
SWEET AMSTERDAM Koningsveld
Ilya Gorbounov
Diana Lopez
Maud Ebbers
INTERNATIONALIZATION Topics in International
Business – Hogeschool
Utrecht
INTO ESTONIA
A Case Study
Table of Contents
Executive summary....................................................................................................................................... 2

1. Market research................................................................................................................................... 3
1.1. Food culture...........................................................................................................................................3
1.2. Trends of food consumption and distribution.......................................................................................3

2. Distribution plan................................................................................................................................... 5
2.1. Market Entry strategy...........................................................................................................................5

3. Marketing strategy............................................................................................................................... 6

4. Financial plan....................................................................................................................................... 7

5. References........................................................................................................................................... 8

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Executive summary
For this case study we have to develop an internationalization strategy for Sweet
Amsterdam. Sweet Amstedam wants to expand and we have to help them do so by
developing a market entry strategy. A market entry strategy must address the following
questions:
 Which foreign market(s) to enter (market assessment)?
o Sweet Amsterdam wants to expand to Estonia. A market research on Estonia
will be covered in chapter one.
 When to enter a foreign market (timing)?
o The best timing to enter the Estonian market will also be covered in chapter
one.
 On what scale to enter a foreign market?
o This will be discussed in chapter two.
 How to enter a foreign market (market entry mode)?
o This will also be discussed in chapter two.
 How to market the product in the foreign market (international marketing strategy)?
o The marketing strategy will be covered in chapter three
We will conclude our internationalization strategy with a financial plan. This plan can be
found in chapter 4.

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1. Market research
Sweet Amsterdam has chosen Estonia as the country that they want to expand to. After they
presented themselves online via Amazon.com, they now see a chance in this Baltic state.

Estonia is a country in north-eastern Europe, located on the eastern coast of the Baltic Sea.
Together with Latvia and Lithuania it forms the Baltic States, with Estonia as its most
eastern. Estonia was long reign by the Soviet Union after World War II. After the Singing
Revolution that started in 1987, Estonia gained their independence back in 1991. Now
Estonia is a democratic unitary parliamentary republic divided into fifteen counties, with
capital Talinn. Also, Estonia is a member state of the European Union and uses the official
European currency since 2011. The population of the country is 1.3 million and thereby one
of the least populous members of the European Union.

1.1. Food culture

Estonia’s food culture goes back to the middle ages, where over the years habitants of the
Estonian land formed what we now call the Estonian forefathers. Estonia is a Nordic country,
which says a lot about the Estonian cuisine: eating habits, food and ways of cooking for
example. There is a considerable contrast between seasons, because the weather in this
country changes massively during the year. It also says that Estonians are closer to nature
than the average European. How, what and where Estonians eat is largely dependent of the
length and warmth of the day. Dark, frosty winter days bring sauerkraut and roast, brawn
and black pudding, thick soup and stew to the table. In summertime, people seem to survive
mainly on warmth and sunlight, together with everything light and fresh that gardens and
forests have to offer.

As said before Estonia is located right by the sea. Therefore, fish is an important food source
for the Estonians, and many local dishes are made with fish. Other much used meats are
chicken and ram. Potatoes, bread, beetroot, pumpkin and rye bread are foods that are fairly
eating by locals as well. As for snacks and sweets, the food industry has started providing
‘nostalgia products’ such as ice cream, curd snacks and various types of sausages. These
nostalgia products are made without any preservatives. These products go back to the
Soviet-era. Another famous sweet delish is Shrove buns, a bun topped with whipped cream.
(Kambek, Pitsi, Eha, & Gluškova, 2013)

1.2. Trends of food consumption and distribution

In the European Union the market for organic product increased by 18 percent (Scott, 2020).
That is a market share of 45.4 billion dollars. In Estonia the focus is high on organic farming,
because those products that are highly produced. Over the last years organic farming is a
high priority for the country. And they do well, over 18 percent of Estonia’s farmland is
under organic control. That is the third highest percentage in the European Union. Also, the
number of organic producers and processors more than ten times over de past ten years.
(Kobuszunska, 2019)

The Estonian people are also growing more interest in organic products. According to
Pehme, Luik and Liivaauk (2007) 60 percent of their questioned Estonian consumers prefer
organic products because they contain fewer additives than conventional products. From

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that the conclusion can be drawn that the awareness of buying organic foods is growing.
Kobuszanka (2019) completes this statement with stating that: “More and more Estonians
perceive that organic food is more healthful than conventional foods and that belief spurs
demand, particularly in urban areas.” Both these reports also state that the average Estonian
also believes that the price for organic product is quite high. There is a price gap between
organic and conventional products, and this drives the Estonian consumer. This also evolves
that organic products are mostly bought from the farm itself (84 percent) or the farmer sells
the organic products to organic retailer (65 percent), caterers (24 %) or small shops (22 %).
(Peetsmann, Luik, Kall, Vetemaa, Mikk & Peepson, 2009)

Next to organic food the Estonian consumer is also more and more interested in vegetarian
foods. Various articles such as the one from BalticTravelNews.com (2017) state that there is
a growing focus of restaurants and retailers on fresh, healthy and ecological foods. Mainly is
the capital Talinn. Also, the interest in foods from all over the world is growing. Another
article from BalticTravelNews.com (2014) and an article in the journal Approaches to Culture
Theory (2017) both state that more and more restaurant and pop-up restaurants are
opening in Talinn with global influences.

In 2018 GlobalData stated that the market for sweet biscuits grow at a rate of less than 2% a
year. A report from the World Health Organization (Kambek, Pitsi, Eha, & Gluškova, 2013)
shows that the consumption of sweets grew over ten percent between 2006 and 2010.

Maybe add:
 Competitors
 Research about cookies @Ilja has sources, so please put in 😊

Companies that successfully expanded to Estonia:

 Carlsberg (Danish beer) (Carlsberg Group)
 Fazer (Finnish cookies) (Fazer Group)
 Food Union (Latvian ice cream)
 Lallemand (Canadian yeast, bacteria and specialty ingredients)
 Lantmännen (Swedish sewing and harvesting knowledge)
 Olvi (Finnish drinks)
 Orkla (Norwegian supplier of branded customer goods to the grocery, out-of home,
specialized retail, pharmacy and bakery sectors)
 PRFoods (Finnish fish farming and production company)
 Saarionen (Finnish food industry company and one of Finland’s leading food
manufacturers)
 Valio (Finnish food and dairy ingredients market leader)

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2. Distribution plan
Based on Dunning’s Eclectic Paradigm (Dunning, 2020) the best options for Sweet
Amsterdam is to either export their product or start licensing their product to others.
We will discuss the licensing option and discuss a few options in depth to enter the Estonian
market via export. The four export options to be discussed are:
 Selling online
 Sell to retailers
 Sell to coffee shops
 Sell the product as (business) gifts

2.1. Licensing
Sweet Amsterdam can expand to Estonia by licensing. This means that contractual
arrangements that grants a company the rights to use an intellectual property of another
company in exchange for a fee will be made. Sweet Amsterdam would be the Licensor,
anyone in Estonia would be the Licensee. This means that for example, an Estonian bakery
could buy a license from Sweet Amsterdam to make and sell their cookies.

We could not find any good sources to be able to give a good advice on this matter. That is
why we will not discuss the licensing any further.

2.2. Selling online

Sweet Amsterdam can sell their products online. They already sell their products via
Amazon. They ship worldwide from there.

Sweet Amsterdam can also sell their products on websites for expats. For example,
dutchexpatshop.com or hollandforyou.com. On there you can buy all sorts of Dutch products
and ship them anywhere. This way Dutch people in Estonia could buy them and raise brand
awareness in Estonia

Selling from their own website doesn’t really add anything, because their website refers to
Amazon, so that would be double work.

2.3. Selling to retailers

Another way to get more noticed in Estonia is by selling via local grocery stores. Because
Sweet Amsterdam’s stroopwafels are packed individually, selling the cookies at train stations
would also be a good idea. Sweet Amsterdam can also put them in vending machines. Then
they have to sell the cookies to larger companies that administer those machines.

Examples of grocery store chains in Estonia (Wikipedia contributors, 2020):

 Coop Estonia
 Rimi
 Selver
 Maxima

Example of kiosks in Estonia:

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  R-kiosk
Example of vending machine administrators:
 Sanitex

2.4. Selling to restaurants and coffee shops

A great way to sell stroopwafels in Estonia is to sell them to coffee shops and restaurants.
Coffee shops can also sell the individually packed ones but could also serve little ones with a
cup of coffee. The latter could also be done by restaurants. But to make this work Sweet
Amsterdam has to start manufacturing these smaller, one-bite, variants of their cookies. The
question is if they are willing to do so.

2.5. Selling the product as (business) gifts

A last way for Sweet Amsterdam to enter the Estonian market is to sell the cookies as
business gifts. This way companies will put them in for example, Christmas gifts. This way
their employees get to know Sweet Amsterdam’s cookies in a simple way.

2.6. Conclusion
Our conclusion is that the best option for Sweet Amsterdam to expand to Estonia is to do so
via retailers. We recommend the first step to be selling to a few local grocery stores in
Tallinn. Preferably larger grocery stores that have multiple stores across the country as well
and have service for online orders. The latter is necessary for step 3. If this step is working
out, step two is to start selling to kiosks in Tallinn as well. If the target group in Tallinn is
responding well to the stroopwafels, step three will then be to make the cookie available in
the online services of the larger grocery stores across the country.

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3. Marketing strategy
The main objective of our campaign is to involve Estonia’s population with our delicious
Stroopwafels and get people used to them even though they are not from their culture.
According with a little market study we made, some Estonians native people have informed
us that this product is not typical there, but it is sold and people like it. They love these kinds
of flavors so, it may have success. Another advantage is that there is no many competence in
this country. We expect to be well placed in the market in 8 months as deadline, otherwise
we will back out.

The principal strategy to get to our target customer will be offering free samples at the
grocery stores where they will be sold, of that way they will taste the stroopwafels and will
want to buy them at that moment. There will also be other marketing strategies as
announcements, social media, etc that we will explain then, but this is the principal one.

Our target customer is people of all age from 3 years old kids to elderly people(still with
teeth), it is not for an specific social class but as there are cheaper desserts or cookies it is
possible that low-income people don’t buy them very often, and middle-income people are
the biggest customers. We expect that the most of our customers will be people who care
about their weight, health and environment, as this is all what our product offers.

3.1. 4 P’s(Product, Price, Placement, Promotion)

Product
European cookie with a chewy caramel filling inside a layer of waffles. This sweet Amsterdam
Stroopwafel is made with clean, organic ingredients and is gluten, wheat, dairy and soy free.
There are both individually packed cookies.
It is a delicious dessert for people who likes sweet flavors and or take care of the sugar they
ingest. The main difference from other companies is its unique and quality flavor equivalent
to its friendly price.

Price
The price of the individual package is – for our online sellings, and - to retaialers. It is
considerated that the price will be reasonable for all our kind of clients thus it is similar to
the competence’s price and equivalent to the product’s quality.

Placement
Online: www.dutchexpatshop.com, www.hollandforyou.com, www.amazon.com. It is
already available on these web pages.
Retailers: Selling via local grocery stores and thru their own websites.
Restaurants
Coffee shops
Vending machines: These would be in a distant future if we succeed during our first phase.

Promotion
 Free samples (100 daily during 3 months) will be offered at the grocery
stores where they will be sold as Coop Estonia, Rimi, Selver, Maxima,
R-kiosk and Sanitex. This will help to get people involved with our

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 product and when they taste it they will have the facilitate to buy it at
that moment. 50 daily will be offered in coffee shops and 50 at
restaurants.
 Social media: We will pay announcements in facebook, twitter and
Instagram to be shown to people who lives in Tallin and places near of
it. Social media’s algorithms will facilitate this.
 There will be paid 10 big announcements around the city; they will be
principally on the important streets and at downtown. There will also
be some little ones pasted on walls near of schools, churches,
downtown, etc with a picture of the stroopwafel, the price, location
and slogan’s company.

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4.Financial plan
Before deciding on whether or not expanding to Estonia is financially a sound strategy, we
had to create a financial plan. The first and most important part in forming a financial plan is
determining the appropriate consumer price in the targeted market.

Sweet Amsterdam will be selling their individually packaged stroopwafel products to

Estonian retailers, such as grocery stores, train stations, kiosks and perhaps even vending
machines.

A number of factors were used when determining the appropriate consumer price. First of
all the $1,5 Amazon price for single stroopwafels targeted towards the American market is
useful to use, because it has already taken into account every single factor from retail prices,
wholesale prices to freight costs on the wide-spanning supply chain and manufacturing
process that takes the product to reach its designated American customers.

This price however, has to be adjusted to purchasing power parity of the average Estonian
consumer.

To determine the appropriate for the Estonian market, we used OECD annual wage statistics
for comparison between the US and Estonia. With the average American earning a $63 093
annual salary on average, and the Estonian one being $26 898, the Estonian customer has
42% purchasing power parity of the American one, therefore the price has to be adjusted. By
this calculation, a single stroopwafel cookie should cost $0,6 in Estonia.

[ CITATION OEC20 \l 1035 ]

A second factor that was used to calculate the correct consumer price for the Estonian
market is the cost comparison to the single competitor and their product that was found in
Estonia.

This competitor is Biona that also sells organic stroopwafels in Estonian retail stores. The
cost of their product is $3,56 and weight 175g. With the average stroopwafel weighing 35
grams, we can determine that this package contains 5 pieces stroopwafel cookies. Dividing
the total price by five, we receive a $0,712 for a single stroopwafel. Despite the similarity of
the products, there are a few distinct advantages that Sweet Amsterdam stroopwafels have
over the product of their competitor.

[ CITATION Str20 \l 1035 ]

First of all Sweet Amsterdam’s products are marketed as distinctly Dutch delicacies, with
Biona’s products having no such marketing distinctions. And secondly, Biona can boast of
only possessing a honey flavoured product, that contains trans-fats such as palm oil. In
Sweet Amsterdam’s case, there is a wider selection in favlours, and the base ingredients are
healthier, as they do not contain any trans-fats.

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These two factors will justify a slightly higher consumer price Sweet Amsterdam’s products,
such as $0,75. It will remain in a sensible pricing range for Estonian customers, and still being
able to compete in the Estonian market.

Price setup calculation

PRICE SETUP PERCENTAGE Price Percentage

Buying price 0,0796875 17%

Duties 7,7%

Freight costs 4%

Buying commission 4%

Landed price 0,1640625 35%

Goodwill 2,0%

Transportation&Distribution 2,5%

Rent&Labor 14,5%

Marketing expenses 8,5%

Overheads 2,5%

Total cost per unit 0,3046875 65%

Gross margin for BLM 0,1640625 35%

Wholesale price 0,46875 75%

Distributor margin 0,15625 25%

Retail price 0,625 100%

VAT 0,125 20%

Consumer price 0,75 120%

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3. References
Kambek, T., Pitsi, T., Eha, M., & Gluškova, N. (2013). Dietary habits of adolescents in Estonia:
equity and social determinants. Copenhagen, Denmark: World Health Organization.

Kobuszynska, M. (2019). Estonian Organic Food Market. Warsaw, Poland: Fas Europe.

Kull, K., Lang, V., & Tasa, M. (2017). Body, Personhood and Privacy: Perspectives on the
Cultural Other and Human Experience. Approaches to Culture Theory, 217-244.

Peetsmann, E., Luik, A., Kall, K., Vetemaa, A., Mikk, M., & Peepson, A. (2009). Organic
marketing in Estonia. Agronomy Research (706-711).

Scott, E. (2020). Good Prospects for US Organic Exports in the EU. Berlin: Fas Europe.

Tourism.tallinn.ee. (2014, 10 10). Estonia’s first street food restaurant Foody Allen.
BalticTravelNews.com.

visittallinn.ee. (2017, 04 25). Food trends in Tallinn and in the World. BalticTravelNews.com.

Dunning, John H. (2000). The Eclectic Paradigm as an Envelope for Economic and Business
Theories of MNE Activity. International Business Review 9, pp. 163-190.

Wikipedia contributors. (2020, March 15). List of supermarket chains in Estonia. Retrieved
from https://en.wikipedia.org/wiki/List_of_supermarket_chains_in_Estonia?
oldformat=true
OECD. (28. March 2020). OECD.Stat. Noudettu osoitteesta https://stats.oecd.org/Index.aspx?
DataSetCode=AV_AN_WAGE#

Lainatut lähteet
OECD. (28. March 2020). OECD.Stat. Noudettu osoitteesta https://stats.oecd.org/Index.aspx?
DataSetCode=AV_AN_WAGE#

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