Building your brand across multiple markets at half the cost
Thankfully, American pecans have several key supports in place. The American Pecan Council and the U.S. Pecan Growers Council are both dedicated to advancing the industry. Studies and subsequent marketing campaigns highlighting the health benefits of pecans are underway, and there is a collaborative effort to strengthen awareness, both at home and abroad.
For those in the industry that are active exporters, or want to be, there are additional forms of export assistance available. The USDA’s Foreign Agricultural Service (FAS) offers programs and funds to help U.S. companies promote their brands internationally. Through the Market Access Program (MAP) and the newly created Agricultural Trade Promotion (ATP) program—which is part of the recent trade mitigation package for agriculture—growers, shellers, export management companies and farmers cooperatives can apply for 50 percent reimbursement of certain expenses to build their brand(s) in foreign markets.
MAP and ATP are administered by four State Regional Trade Groups (SRTGs): Food Export Association of the Midwest, Food Export USA – Northeast, the Southern U.S. Trade Association (SUSTA) and the Western U.S. Agricultural Trade Association (WUSATA). Each State Regional Trade Group has a board of directors that is made up of the Commissioners and Secretaries of Agriculture in their member states. Interested suppliers apply based on the location of their headquarters.
“SUSTA has been a critical partner in our efforts to promote our brands overseas. Without the support they provide, the costs of developing a foreign market would be far too risky,” said RG Lamar, owner of Lamar Pecans.
Lamar Pecans sits on 2,300 acres in Hawkinsville, Georgia. The family-owned pecan grower and sheller sells both inshell and shelled pecans either wholesale or under the brand Front Porch Pecans. They started applying for these programs through SUSTA in 2008 because the international market was too great to ignore but too expensive to penetrate without assistance. They now sell in Asia, Europe, and South America.
Pecans are grown commercially in 15 states, most of which fall in SUSTA’s and WUSATA’s regions. “Whether it is pecan pie or pralines, many typically Southern dishes and desserts incorporate the pecan. It is part of our food culture,” said Bernadette Wiltz, Executive Director of SUSTA. “In the international marketplace, products that conjure American imagery often find a niche.”
Andy Anderson, Executive Director of WUSATA, added, “Pecans are an important crop in the western region. WUSATA has several pecan exporters that apply for 50 percent reimbursement of their international promotions and are having great success.”
So how exactly are these U.S. pecan companies using MAP and ATP to grow their export sales? Before a company makes an export sale, they first have to connect with buyers in the international marketplace. A great way to do this is by exhibiting at international trade shows. A company can apply through MAP and ATP for 50 percent reimbursement of their trade show booth fee, travel for two employees or company representatives (flight, lodging, meals, and incidentals per diem), freight for shipping samples and marketing materials, point of sale material and more. Relieving small companies of half of the financial burden of a trade show can make the difference between getting on the airplane or staying home. Furthermore, trade shows are great places to sit down with existing customers to bolster relationships.
Once a company has distribution in a foreign country, they will need to promote their brand, just like they would if they were entering a new state or region in the U.S. The company (or their foreign distributor) might do this by advertising in grocery circulars, through Facebook or Google ads, or even on TV. Or they may want to sample their pecans at the foreign grocery where they are being sold. Advertisements—including the cost of design and translation—and in-store sampling are also eligible for 50 percent reimbursement and are a great way to build a brand.
“Ag products are sold in a highly competitive global marketplace—pecans are no different. As a shelled pecan exporter, we utilize WUSATA programs to help us diversify into new markets and also find new customers in existing markets. WUSATA has multiple programs available for connecting U.S. companies with international buyers, and we particularly enjoy that their market access programs allow us to design a custom marketing program specific to the needs of our company,” explained Lucas Schmidt, Sales Director of New Aces Pecan Co.
The key is that the company applying for MAP and ATP has to be promoting a brand, rather than promoting pecans as an industry. They also have to apply for funding before incurring the expenses (the exception being trade show booths and related travel). In the application for funding, the company let the State Regional Trade Group know in what countries they plan on promoting their products, what kinds of eligible promotions they’ll be doing, and how much it will cost. Once the promotion concludes, they submit their expense claims for 50 percent reimbursement.
But what about China? A company may ask why they export when circumstances out of their control can effectively kill an export market overnight. The simple answer is that exporting increases revenue. From the year 2000 to 2017, the value of pecan exports (inshell and shelled combined) grew by over 1,000 percent! In 2000, we exported a little over $53 million, and in 2017, the U.S. exported over $650 million in pecans.1 There is unquestionably an appetite for this tree nut outside of the United States. During that period, the pecan industry proved that we are best at feeding the demand based on our consistency, quality, and ability to deliver the quantity.
Then we compare the first half of 2018 to that same period in 2019, and the value of inshell pecan exports dropped by 42 percent, clearly demonstrating the risk involved in exporting.1 Most of that decline is due to new tariffs in one market—China.
“We work with many growers that were instrumental in building China as an export market for pecans. It is important to note that while they applied to SUSTA for 50 percent reimbursement of promotions in China over the years, they were also applying for funds to promote their pecans in other Asian countries, the Middle East, Europe…all over the world,” said Wiltz, SUSTA’s executive director. “Other markets exist for our pecans, and we are working to develop those markets. One of the greatest lessons learned over the last year is the importance of diversifying.”
One market will not replace “the big kahuna,” and that is probably best. An international marketing strategy that includes several markets is the most stable approach to exporting. And sharing the cost of implementing an international marketing strategy with an SRTG reduces that risk even more.