Breaking through

Above: Rahul Kale, head of international sales at Typhoo Tea Ltd, says private label products account for 20 percent of his company's business. Photo by Yao Jing / China Daily

Several overseas food and drink suppliers are trying to sell their distinctive brands in China

Times are tough for Typhoo Tea Ltd, the London-based tea brand. Sales in Europe have dropped because of the recession. Costs are rising.

Two years ago, it introduced its Typhoo brand to China through a distributor in Shanghai, but in a nation where tea is the national drink, success did not come immediately.

This hasn't deterred the company, which runs 10 brands, including Typhoo, Lift, Health & Heather. In addition to these brands, it is attempting to introduce its private label products in China for retailers such as Carrefour.

It already produces private label products for more than 10 retailers in the United Kingdom, including Tesco, Marks & Spencer and Harrods.

"Private labels account for 20 percent of our total business," says Rahul Kale, head of international sales at Typhoo. "Private labels can save us some costs, about 10 percent, mainly in promotion and logistics."

Several overseas food and drink producers are following in the same model of introducing their brands to China and slowly building their businesses by supplying Chinese suppliers with private label products.

Typhoo claims its income in China has been increasing 10 percent annually since its debut two years ago, and that the success of its branded products has given it confidence in the Chinese market. Four of the company's brands are sold in Shanghai's Jiuguang Department Store and in other city boutiques. The average price for 30 grams of its tea is 35 yuan ($5.60; 4.30 euros).

Its distributor, Well Ocean Foods (Shanghai) Co Ltd, says it is in touch with Carrefour and other major retailers to promote Typhoo's private labels.

"For branded products, the difficulty mainly exists in the expensive fee of getting into those retailers. But the private label does not have the problem, and we have to grab the opportunity for our partner," says Yang Dajun, assistant sales manager of Well Ocean Foods.

Yang says that the fruit tea is very popular, while the black tea is popular with white-collar workers. But the British tea maker, he says, doesn't have an advantage in the traditional tea category in China.

Romania-based S.C. Orlando Import Export 2001 SRL, which sells dried fruits, has distributors in Beijing and Guangzhou. Its products can be found in Chinese stores but it is also in partnership with retailers in the country to produce private label products, says Anamaria Popa, the company's marketing director.

In Europe, its main market, Orlando works directly with 11 retailers, including France-based Auchan and Carrefour, and Germany-based Metro.

"Europe is closer than Asia, and we do not provide the service for less than one container," she says.

Popa says that because of the relatively small size of the Chinese market, it is much easier for the company to team up with distributors because they can buy one container's load for several retailers.

The company, she adds, began its private label business 16 years ago - four years after the establishment of its own brand.

"For us, the strategy is that first we have our products on the shelves, and then, retailers (from China) contact us and ask us to make private labels for them," Popa says. "Usually, the sales prices of our private label products are cheaper because our own packaging is at a premium. Retailers don't have this kind of packaging."

She says that the company is now looking for local producers to make products for them. "For us, a private label can sustain the growth of our company, improve the quality of our products because you get to know the global standards in the process of working with different buyers," she says.

Two Danish food suppliers are not finding it as easy as S.C. Orlando. Like Typhoo, who is trying to broaden the palate of Chinese consumers, Fynba, a 10-year-old producer of jams, is looking for a break in the Middle Kingdom.

Fynba's products account for 90 percent of Denmark's market share in terms of private labels. It is working with all of the main retailers in Denmark. It is currently trying to find a Chinese retailer to introduce its brands in China, but no deal is imminent.

"Because the retailer structure is very fragmented in China, there are many small chains, and jam is not a product that is easily found at the breakfast tables of Chinese consumers," says Richard Fynbo, general manager and founder of Fynbo.

The company's turnover was about 200 million yuan in 2012. The price for a jar of Fynbo jam is about 30 yuan and the company founder says if he places the product on the shelves of imports at a supermarket, consumers will likely pay more for it. But as a private label, Chinese consumers may not accept the price.

"Sales of our own brand total one-third of the revenue, but in China, we will be patient to expand the private label business until the product category is big enough," Fynbo says.

Amanda Seafoods A/S, a company with a history of nearly 100 years famous for its cod roe dorschrogen pastete (a kind of codfish roe salad), is having as second crack at China.

"We tried to export to China two years ago, but we did not get any feedback from the market," says John Steen Mikkelsen, company export manager.

Amanda Seafoods achieved sales revenue of 18 million euros ($23.40 millions) in 2012, but Mikkelsen says because the product is unique, they cannot realistically expect to China customers to accept it when its first introduced.

Knowing full well that the private label market in China is developing, the company is focusing on promoting its own brand. Priced at 2.5 euros in Denmark, Mikkelsen says the price in China will be 15 percent higher because of customs and transportation costs.

Jiang Haoting, sales manager of Pica Manufacturing Solutions in Shanghai, says he is very interested in the seafood company.

"Although the product is closely connected with the habits and customs of Danish people, these imported products are slowly gaining acceptance among young people," Jiang says.

He says that since Denmark is a country famous for its environmental protection measures and food quality, it may be easier to persuade Chinese consumers, who pay more attention to food safety when buying the products.

"We have made a verbal agreement. We will contact the company later, and if it works, we will help them look for sales channels in China," Jiang says.

yaojing@chinadaily.com.cn