May was an active month for Intrix, especially in the food sector. One of our consultants participated in the Fispal Latino Show in Miami, the biggest fair for Latin food in the United States. The event was from the 4th to 6th and companies from Brazil, Argentina, Chile, Ecuador, Peru, Uruguay, and Spain participated, displaying a broad diversity of Latin and Mediterranean flavors. The demand for Latin flavors in the US is growing and there are great opportunities in the sector. 

The Chilean Olive Oil Sector, following the wine path.  There is another sector, which Chile can master and follow in the steps of the wine in the international market. The Mediterranean climate of Chile's central region's lands and the right combination of heat and humidity are the ideal conditions for producing flavorful and aromatic olive oils. Besides the natural conditions, the production economics are favorable also. The European subsidies are drying up and decreasing competitiveness from that market; and the level of consumption in the US is growing because of the product's health benefits. In addition, production costs in Chile are much lower than its European competitors.

Chilean olive oil exports to the United States surged to US$100,000 from basically zero during the first half of 2004; annual olive oil exports should grow to 7,000 tons by 2010, according to Chile's National Association of Olive and Olive Oil Producers (Chile Oliva). Today there are around 22 companies in the sector compared with two just five years ago.  The sector will continue its growth, attracting foreign investors, such as Aceites Borges. This company, a Spanish olive oil producer that sold $227 million during the first quarter of 2004 and exports to 60 countries, saw potential in Chile. It is spending $19 million to farm 40,000 hectares of olive plantations throughout the country.

Chilean producers offer a high quality Extra Virgin Oil, targeting selective niche markets. Extra-virgin oils account for 15% of the global market. The producers know that they have more chances competing in this segment with high quality and moderate volume. One interesting niche is the organic sector, where Olave (an Intrix's client) is building a strong reputation in the US market, as mentioned in the New York Times on May 25th.

The quality of the Chilean products has been recognized in several European contests. The sector is using modern technology and international technical assistance, especially from Italy. The main challenge is the brand-recognition that the producers will have to build. They are competing against olive oils from well-recognized markets such as: Italy, Greece, and Spain.  This situation is not new for Chileans, who faced the same challenges in the wine industry, where many of the current olive oil producers originated.  Intrix has no doubt that the sector will overcome the challenges and position the Chile Oliva brand in the international market, thus joining the well –recognized Chilean wine. 

Latin flavor is in high demand.  The preference for Latin flavor is increasing in the US market. The trend is favoring the exports from the South/Central Hemisphere. The growing Hispanic population nostalgically looks for its traditional food and the increasing numbers of Americans who are adopting the Latin flavors are the two main reasons for this phenomenon.

In the US there are 40 million Hispanic people, a segment that consumes US $581 billion.  The large corporations are no longer the only importers; small and medium buyers also need to stock their shelves with Latin flavors and products.

There are products that are already being incorporated on the table of the typical American family such as the tortillas, bananas and the dulce do leite. The US imports 10,000 tons of bananas per year and the dulce do leite has increased in imports by 60% during the last 5 years.

The demand will continue growing, and not only in regions with high concentration of Hispanic population such as: Florida, California, Texas or New York. The president of Fispal Latino, Oscar Dominguez, affirmed: "There is still an unsatisfied demand, a friend that lives in Chicago can only find Mexican food there, but almost nothing from the rest of the region".

The American consumers act as a gastronomic sponge, commented Oscar Dominguez.  At the beginning of the 20th century they adopted the Italian food. The same is going to happen in this century with the Latino American food, not only is the flavor good it is also healthy.

Doing business in the Russian Federation.  Understanding the cultural and business issues that may serve as barriers to communicating with a potential Russian partner or customer is a key to doing business in this region. Latin America, lead by Brazil, is putting forth a lot of effort to increase trading with Russia, the 9th economy in the world.

Doing research or seeking the advice or assistance of experts in the region is essential to foreign businesses entering or active in this market. It is no longer news that in order to succeed in Russia, you have to be friends with your counterparts, which mean tremendous amounts of travel, dinners, vodka, banter, conversation, etc. In Russia, relationships come before results, context is vitally important, professional mistakes are easily forgiven, but personal lapses are not.

This makes doing business in Russia a very expensive undertaking both in terms of time and money, especially if the Russian project is just one of your many responsibilities. One way to cope is to work with an "interface person" or consultant who will help you to build and manage your relationships with Russian partners or customers.

Although there is no substitute for face-to-face meetings, an interface person will reduce your personal involvement, while maximizing effectiveness of your communication with Russians. You will spend less time in crisis mode, as you will have significantly fewer misunderstandings and frustrations. Intrix work with its own expert team in Russia.  If you are interested in this market please contact Jerry Owen.