Business Proposal

Business Proposal

Internationalization of Me Late Chocolate

October 2015.

X-Culture 2015.

Business Proposal

Abstract
In this work can be found all about the internationalization of the chocolate company
called Me Late Chocolate, is the information of the company, portfolio, speaks also of the
most relevant competitors to the company, opportunities, threats, weaknesses and strengths of
Me Late Chocolate, within the document there are strong points for the internationalization of
the company to the United States, about the country to which you are exporting can find
culture, rules for product entering the destination country, packaged, marketing, product
prices in destination country and the distribution of products.

Table of Contents

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Milestone 3.............................................................................................................
Me Late Chocolate history...................................................................................
Products..............................................................................................................
Main Competitors................................................................................................
SWOT..................................................................................................................
Milestone 4.............................................................................................................
Target Market Characteristics............................................................................10
Competitors....................................................................................................... 10
Cultural............................................................................................................. 10
Packaging.......................................................................................................... 11
Marketing.......................................................................................................... 11
Demographic factors......................................................................................... 12
Milestone 5........................................................................................................... 12
Me Late Chocolate competitors in Chile............................................................13
Strengths........................................................................................................... 14
Me Late Chocolate competitors in United States...............................................15
Milestone 6........................................................................................................... 17
Major concerns............................................................................................... 17
The staffing policy............................................................................................. 18

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Milestone 7........................................................................................................... 19
Design, Packaging and Branding.......................................................................19
Pricing and Costs............................................................................................... 21
Cost Structure................................................................................................ 21
Benchmark..................................................................................................... 21
Pricing and Costs Proposal................................................................................ 22
Milestone 8........................................................................................................... 23
Promotion and Advertising................................................................................ 23
Distribution........................................................................................................ 24
Bibliography......................................................................................................... 27

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List of Tables

Table 1 trade map................................................................................................. 16

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Milestone 3
Company Information
Me Late Chocolate history
Me Late Chocolate was founded in November, 2010. It is a 100% Colombian,
manufacturer and seller of handmade products based on chocolate. The Company is located in
Medellin, and they offer corporate (to be given as gifts to clients or employees) chocolates
and services for social events. For these clients different options are available such as
personalized chocolates for new brands and products release, and buffet tables (or individual
courses) of deserts and candies for fairs, restaurants and hotels. The company currently
employs 8 people who are distributed as follows: 2 in production, 5 in sales and 1 in
management. The company is not international, but it is looking to reach other countries with
the lines of chocolate bars and truffles, including Pralines. (Me Late Chocolate)
Products
Me Late Chocolate offers a large portfolio of products, the great added value of Me Late
Chocolate and differentiates us from larger competitors that exist in Colombia is the artisan
chocolate made with high quality cocoa. The company brand is based on emotional and
healthy balance of chocolate. They focus on some specific segments, such as: The store

Personalized chocolate:
Events (Birthday, Bridal, Baby Showers, marriage proposals, etc.);
Corporate chocolate gifts

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Its main products are listed on the website: desserts, cakes, cookies, truffles, breads, hot
and cold drinks, coffee and a small line of bakery products (savory). The site also has an
electronic trade. (Me Late Chocolate)
Main Competitors
In Colombia chocolate industry is strong because of the huge demand it has around the
world.
The principal competitor is called Compaia Nacional de Chocolates. They produce at
least 60% of the chocolate in Colombia having many categories of it.
The main products which compete with Me Late Chocolate are these the famous chocolate
jet can find in any store, supermarket, they have a large market. Another competitor is the
Montblanc brand, this is the Nutresa group, these are chocolates with cereals and nuts, this
type of chocolate is more exclusive, ie people with a higher purchasing power are the
consumers of these chocolates. Casa Luker is another great competitor with Italo Chocolates.
All above mentioned competitors are large industries which gives us an advantage over it
and the Chocolate Me Late Chocolate is completely handmade. (Vademcum Empresarial,
2010)
SWOT

Strengths

Specialized product knowledge

Brand positioning
Installed capacity
Knowledge of the local market

Weaknesses

Small business, small production.

They do not have an online store.
High fixed costs and expenses
Their brand is not as strong as the big

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Alliances and networks

Products wholly handmade made of

providing higher quality product

Variety of products
National coverage
Opportunities

An opportunity for the agricultural

Threats

sector of cacao and for the

players (Godiva, Lindt)

Low control on operations
Limited capital resource
Inefficient cost and inventory system

Local competitors
There are in Medellin several
specialized chocolate houses, such as:

development of this industry

Possibilities to merge with chocolate

The Chocolate House, Medelln De

specialties Colombia as it is the cafe

Chocolate. Moreover, there are stores

to make the product an exquisite

that sells recognized chocolate brand,

flavor.

such as: Godiva, Lindt.

Fitness trend - Substitute products
Sugar price

Milestone 4
The first key market characteristic is the new market consumers preferences and tastes.
This factor is considered a key to success because the chocolate flavors need to attend the
consumers taste. Having the right amount of sugar or milk, for example, can help the
company reach more consumers inside a specific market. Therefore, the chocolate produced
to expand into new market needs to be adapted to reach its preferences and tastes.
Some concerns to Me Late Chocolate at the time of internationalize are the following
aspects:

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Exchange rate
Legislative
Potential market
Competitors (direct and indirect)
Cost to export
Export product, service or both?
Culture (language, consumption, behavior, family`s size, percentage of foreign)
Local resources

We have been thinking and the country where we are going to export is United States. If
we want to have success in a new market we need:
Target Market Characteristics
Had a profile of the customer, is known that in USA consumers are getting more used to a
gourmet flavor almost a 60% of the consumers are preferring chocolate beside cheese, oil, and
other products also called gourmet. Because it is a handmade chocolate we need a medium
high-income consumer and in that market we can have it because the consumers age are
between 25 and 65 years.
Competitors
In USA Nacional de Chocolates has a big participation and is the biggest competition to
Me Late Chocolate is in Colombia so we need to consider them. Also there are many
recognized brands of chocolate but not many homemade so we have an advantage in that
particular market.
Cultural
The consume in USA of chocolate is likely to be in bars, truffles and sweet-candies
presentation and that could be a great opportunity for me late chocolate because people in

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Colombian are still prefer drinking chocolate rather than eating it. The company has a huge
portfolio to offer to the consumer in USA.
Packaging
when we talk about food packaging it is one of the most complex as it needs to comply
with certain phytosanitary rules, environmental impact and other factors, we have a package
to facilitate its transport and conservation because they will be grouped for easy distribution
what more when used in packaging chocolates are carton boxes. (ProexportColombia , 2003)
Considering this, another decision must be evaluated. Where will the packaging be done?
It is possible to develop the packages for long distance distribution to send to the other
country. Another option is sending big batches of unfinished product, and establish a
packaging operation locally on the new country prior to local distribution. (Institucin
Universitaria Esumer, 2010)
Marketing
The first is that we must have innovative and attractive packaging for customers and
differentiate us from competitors, we must establish a promotional campaign designed to final
consumers and seeking customer loyalty. Our campaign seeks: to present all products, create a
new market the company image, and create brand loyalty.

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Demographic factors
People with purchasing power medium- high, men or women. The weather is
irrelevant since most people consume chocolate whatever the weather. We need
people who love chocolate and that quality is an important aspect.
Considering the idea of expanding to the United States, a very fundamental
demographic aspect is the difference between bigger cities and regions, and
smaller ones where community behaviors differently and in more united form.
These two demographic scenarios require different strategies for capturing
consumers attention, and specially their loyalty.

Milestone 5
we decided to choose two countries near Colombia, the decision
because they are too nearby countries where culture is very similar to that
of Colombia where the company, Me Late Chocolate is a small company
and we believe that the best option is to start with nearby home markets.
The countries that chose to internationalization were:

Chile
United States

Chile had in 2013 a chocolate market estimated in 528 million dollars.

The chocolate market is growing in estimated rates of 4% volume per year
and 8% value per year (Central America Data, 2014). Each consumer in
the Chile Market spends about 30,1 dollars per year in value and eats 3

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kilos in volume. According to Central America Data, Chile is demanding for

more gourmet chocolate. The consumers are refining their tastes,
therefore normal chocolate is not attending the demand. The consumers
are paying more attention to quality and percentage of Cacao present on
the chocolates. In this matter, a new labelling law for products with high
percentage of sugar that demands more clear labels is under consideration
in Chile. This is expected to result in a negative impact on sales, but also
create opportunities for better made chocolates such as Me Late. (Central
America Data , 2015)

Another point is that in a total volume of 43.000 tons of chocolate in

Chiles Industry these last years, 55,8% is commercialized in supermarkets
and 44,2% in other channels such as kiosk, chocolate stores and other
small to medium establishments. That means that besides the fact that we
might deal with big competitors like Nestl or Arcor, there is a market
space for Me Late Chocolate (Central America Data , 2015), (Central
America Data , 2014).
Me Late Chocolate competitors in Chile
YAKS chocolate it is a company with an extensive catalog of products such as truffles,
pralines, chocolate fruits, packaged ready to give away. But also they sell chocolate for cake is

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to say coverage ready to decorate cakes. The company has spent many years in the market and
is recognized. (Yak's chocolates)

Barry Callebaut the company has 50 factories worldwide, the company has great portfolio
product of the highest quality ranging from cocoa beans to chocolate ready for consumption.
(Barry Callebaut, 2013). The company is also in the United States then there also is a
competitor
Varsovienne is a company with 60 years of experience, one of the most recognized brands
in the Chilean market, its products are unique and have great portfolio, and online store also
features. (Varsovienne chocolateria)
Bozzo this company with over 100 years experience, is one of the most recognized brands
in Chile. It has 13 stores in Chile, has a great and unique portfolio within this is found
corporate chocolates. (Bozzo Chocolates).
Empresas Carozzi SA, the main competitor, has a current value share of 37% in 2014.
The companys success is related to brands with high positions in the rankings as a result of
high coverage of the national territory, and the presence of a variety of brands that makes
possible to compete in different opposite scenarios like high quality and low prices. (Cazzori
S.A)
Strengths

The same language

Cultural is similar to Colombia
In Chile is growing chocolate market
Colombia has free trade agreement with Chile

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According to the Index of doing business Chile I advance in the index opening
business place 62 to 27. (Fernadez, 2012)

Me Late Chocolate competitors in United States

The United states is also near to Colombia country and has a large market that is attractive
to us, United States consumption of gourmet chocolate has increased this is because people
care more about their health and figure, this country it is attractive because in the United
States there are many markets where me Late Chocolate can play a great way thus leaving a
good profit. The only challenge is the language and strict about rules for product revenue this
country.
The chocolate confectionery market consists of boxed chocolate, chocolate courtliness,
chocolate straight lines, molded bars, novelties and other chocolates. The market is valued
according to retail selling price (RSP) and includes any applicable taxes. Any currency
conversions used in the creation of this report have been calculated using constant 2012
annual average exchange rates. (Marketline, 2013)
The US chocolate confectionary market had total revenues of $18,006.0m in 2012,
representing a compound annual growth rate (CAGR) of 1.9% between 2008 and 2012.
(Marketline, 2013)
Chocolate confectionery in the US continues to be characterized by two companies. In
2014, Hershey and Mars accounted for a combined 65% share of overall value sales. No other
company in the category maintains a share of higher than 5%. (Euro Monitor , 2014).

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Word consumption, USA ranks: 9th. 9,5 lbs. of chocolate/year

Price of cocoa is raising, however the US money is getting stronger, making cheaper to
import.
1.7% growth
322 million Americans, in 2015 - GDP increased 2.3% 2 quarter
Hersheys chocolate dominate the market: 44% market share
Table 1 trade map

Code

Description of the product

'1806 Chocolate and other food

preparations containing cocoa.

Imported
value 2011
1.958.577

Imported
value 2012
2.032.484

Imported
value 2013
2.123.797

Imported
value 2014
2.276.680

Note Source: Trade map Trade statistics for international business development monthly, quarterly and annual trade data. Import
and export values, volumes, growth rates, market shares, etc. List of products imported by the United States of America Metadata
Aggregating at the same level as the product 1806 Chocolate and other food preparations containing cocoa.

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Milestone 6
Me Late Chocolate for the best alternative entry mode is through direct export and provide
a direct sale. In order to have less risk, fewer resources are needed and they receive help from
governments in the case of Colombia this country has a trade agreement with the United
States that leads to the elimination of tariffs this favors the exporting company in this case is
Me Late Chocolate.
Some advantages of direct export are:

Greater control over the export process

Direct Market Information
Higher profits
Greater knowledge of customers and the market (Vallejo, 2011)

Currently the Colombian government is very interested in promoting the country's exports
and it has specific institutions to help this, these entities facilitate the process, help market
research, and has easy access to credits with low-interest in order to promote such exports, for
that reason the best entry mode for Me Late Chocolate is the direct export.
Major concerns

Job visa
American culture - might not be open to new products
Target market - Select group of consumers
Bureaucratic problems
Exchange rates
Resources - a few or all resources coming from Colombia.

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The staffing policy

We are thinking to export the service and the final product, so we will send some people
from Colombia to USA to be able to train the employee and to give the service similar to the
one they had in Colombia.
As we suggest the best way to capture all the market is arriving to the supermarkets located
in strategic cities; the employees are going to be from that city, giving people opportunities
and making a real social responsibility.
Our main concern is with the US regulation, such as: American visa, minimum wage,
working hours. Moreover, to preserve the essence of the company, the recruitment process
needs to be rigorous, making sure the person is aligned to the company.

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Milestone 7
Design, Packaging and Branding
The strategy adopts two main concepts: Healthy chocolate and artisanal chocolate.
Regarding the healthy concept, we believe that the segment that fits the product
characteristics and the company capacity is the "healthy consumer". The segment includes
people who are worried about what they eat and how it affects their health. These costumers
always read the packages looking for the product information before buying. Therefore, it is
important to show the healthy benefits of the products on the package design, not only the
percentage of cocoa, but also the quality of it and the amounts of sugar and milk (if they are
low). All of these can be good information to promote a healthier brand.
It is also important to point out that this segment frequently go to healthy supermarkets
(like Whole Foods), where they can find more options products. With this in mind, Me Late
Chocolate could also explore selling the products on those supermarkets, to reach only the
consumers that are going to be interested on having the brand we are proposing.

However, while regarding the artisanal concept, we should focus on type of chocolate very
similar to what they already sell today, that enhances Colombian design and flavors, without
leaving the health appeal aside.

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USA Packaging standards

The USA standards requires compliance to the following rules, forcing some changes to
the product.

In the package, everything must be in English

United States requires that the packaging where the product is said this should be

anywhere from less based packaging was manufactured.

You must have the product name
You must have a statement of net contents
You must have the list of ingredients and nutritional table
Name and address of the responsible
Must have information for any type of claim (Proexport, 2012)

It could handle a more handcrafted package that perfectly describes the product of Me Late
Chocolate. We decided to leave the same name. We must consider that Green is associated
with confectionery. The black, as in Europe, is the color of death.
With the expanding strategy to USA, Me Late Chocolate needs to choose a segment of
chocolate consumer that best fits with the product offer. We believe that the segment that fits
good with the product characteristics and the company capacity is the "healthy consumer".
The segment includes people who are worried about what they eat and how it affects their
health. Theses costumers always read the packages. They look for the product information
before buying. It is important to focus the package on promoting the healthy benefits of the
products. Not only the % of cacao, but also the quality of it, the amounts of sugar and milk (if
they are low) can also be a good information to promote. The segment frequently go to
healthy supermarkets (like Whole Foods), where they can find more options of healthy

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products. Me Late Chocolate could also explore selling the products on those supermarkets, to
reach only the consumers that are going to be interested on having the branding we proposed.
Pricing and Costs
Cost Structure
Costing of course in the United States would be different from that in Colombia. In the
United States, chocolate can range from $12-$48 depending on the brand and whether it is a
box, carton, or pallet. In Colombia, a box of chocolates with 10 is about 30.000 Colombian
Pesos.
There are several ways of absorbing these indirect costs. For example, they could be
absorbed among different chocolate bar lines according to the floor space that each line takes
up in the factory, or according to the sales revenue of each line, or by some other method.
Using such an approach the direct costs can then be divided up into the various production
lines and then into the number of units coming off the line. (Business Case Studies)

Benchmark
As for the markup, most of the biggest chocolate brand in the world, such as Hersheys and
Kraft, are going to have profit margins that reflect the higher costs of their larger scale of
operations. Hersheys in 2012 had a production line working 24 hours a day, increasing its costs.
On that specific year, Hersheys net profit margin was about 9.19% of the revenue. Moreover,
others brand such as Cadbury and Mika had a 7.55% of net profit margin. (wikipedia, 2015)

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The profit margin of these market players are not that attractive. On the other side, small
can be good when it comes to profit margins for chocolate enterprises. In its company
assessment from 2010, artisan chocolate company Cowgirl Chocolates says it strives to attain
an average gross profit margin of 65% in its retail business, after ingredients and packaging.
The company specializes in truffles in assorted flavors and box sizes, chocolate bars and
dessert sauces. Different products by Cowgirl range between 58 percent and 72 percent gross
profit margin. (wikipedia, 2015)
Pricing and Costs Proposal
After analyzing all the data that we were able to find, the group estimates that the profit
margin can be between 40-50% of the revenue. This profit margin is high comparing with the
industrial chocolates. Our strategy is to sell to a specific group of consumer, as said before,
our gross margin profit will be higher than industrial chocolate but smaller than handmade
chocolate.

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Milestone 8
Promotion and Advertising
The group developed two main strategies for promotion and advertising, Free Samples
Distribution and Social Media interaction.
Giving free samples is a great start for a new market. We would have to design a specific
product for that, contract people for the work and decide the best places for this kind of
promotion. Since the beginning, we thought of Wholefoods way of promoting/selling
products. When a new brand arrives, there is always a place for the costumer to try it or to get
information. The social media would come together as to focus on information, and the free
sampling would help for people to getting to know the taste and quality of chocolate before
buying it.

As for the social media mentioned earlier, there is a trend for brands to use Instagram and
Facebook pages to promote themselves. It`s a low cost investment and it can reach a huge
quantity of costumers. Since we are working with a healthy and quality focused brand,
Instagram would be a way to show to our costumer how our chocolate is produced, the
Colombian aspects of it, where they can find our products, etc. It is important to have all the
publications aligned to the marketing positioning. The company may also look for related
pages and try to have partnerships with resellers on the social media. The publications need to
be interesting for the followers/Facebook users, and it can be a very useful tool to have more
clients. The company could also look for publishing sponsored advertising on Facebook and

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Instagram, according to the users preferences. That policy may reach the potential customers
and be more effective for the company.

Another aspect is the website that works very much like a social media. Nowadays,
websites are more like an ID for a brand then a potential channel for selling (except for
online shopping). Me Latte Chocolate already have a great and well-designed website, but we
would have to focus a little more on the branding idea of Colombian/healthy chocolate.
Distribution
Me late Chocolates should distribute through some of these successful supermarkets.

The gourmet stores have had a very positive impact and have grown very
significantly.
As these stores do not need large volumes, but by contrast quality, innovation, new
tastes among other attributes, there is an opportunity. It is estimated that there are

12,000 gourmet stores in the United States.

Retail distribution channels, they provide us access to large areas of supermarkets
and that is the main idea we have in mind. (Proexport, 2012)

According to our strategy of promotion through social networks, we also want to sell the
product Me Late Chocolate online and this is done through retail distribution channels.
This can be achieved through direct, infomercials, marketing and purchase telephone, and
internet. These channels are for people with higher purchasing power, and who are using
credit cards to pay for the chocolate.
Focusing on the retail channel, it can be divided into several groups where we can find:

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The mass distribution is where the big supermarkets and surfaces with Me Late
Chocolate want to have access to all consumers for this reason we decided that the

product should also be distributed in supermarkets.

In the United States there are also some ethnic stores or supermarkets this is for
people interested in Colombian products Me Late Chocolate is a 100% Colombian,

for that reason we want to enter these stores.

There are also gourmet or organic stores these have emerged thanks to new
consumer trends that are aimed at healthy and functional foods that help the
healthcare, Me Late Chocolate is a completely handmade chocolate that does not
affect our salvation idea to sell the brand and promote it to consumers as chocolates
that do not affect health and has all natural ingredients.

Today, there are some major supermarkets in the United States like Kroger Co.,
Brookshires Co., Stop & Shop. Safeway & Ahold and many others. We decided that.
(Proexport, 2012)

We want to reach the largest supermarkets in the US such as Walmart Stores, Costco,
Delhaize, Fiesta Mart, Food Lion, H Mart, HEB, Kmart, Kroger, Lowe's, Mi Pueblo Food
Center, Office Depot, Publix, Sprouts, Target Corporation, Vons and Whole Foods Market. We
want our product to be highly recognized by our natural taste and quality of our chocolates.
In order to reach them, we will show that our chocolates are a unique and exquisite flavor
that will attract many customers. Beginning them will send you a catalog with all our lines of

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products and samples for you to try and take the decision to distribute our products to the
population.

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