Choosing the Right Export Market: Why Market Size Alone Is Not Enough

A large population, a growing economy or a high level of imports can make an overseas market look attractive. Those figures are useful, but they do not show whether a particular product can compete, reach the right customers or generate an acceptable return.

One of the most common mistakes in export development is to select a country and move too quickly towards finding a distributor. Before approaching potential partners, a business needs to test the commercial proposition: who will buy the product, what they will pay, how the product will reach them and whether the exporter can support the opportunity.

The right export market is where demand, positioning, pricing, route to market and the exporter's capabilities align. It may not be the largest or wealthiest country on the shortlist.

Headline Figures Tell Only Part of the Story

Population and GDP per capita are useful starting points because they indicate potential scale and purchasing power. National averages, however, can conceal substantial differences in income, geography and buying behaviour.

A country may have a large population but only a small addressable market for a premium imported product. Another may have fewer consumers but a concentrated, affluent customer base that is easier to reach through established retail, food-service or specialist channels.

The assessment should therefore go beyond asking how large the market is. Exporters also need to establish:

• Who the realistic customer is and where that customer is located
• How often the customer is likely to buy and through which channels
• Which alternatives are already available
• What price the market will accept
• Whether the reachable opportunity is large enough to justify the investment

Without this analysis, impressive economic statistics can create a misleading picture of the opportunity.

From Ambition to Implementation

In a series of public sector-supported projects, JEMCO was commissioned to research export opportunities for a UK craft beer producer across China and Hong Kong, the Gulf Cooperation Council markets and the United States.

Each region offered possible openings, but the work also showed why headline attractiveness is only the beginning of market selection. Large and affluent markets can require complex distribution arrangements, high freight and market-entry costs, regulatory work, sustained brand investment and a credible response to strong local and international competition.

The research identified prospective companies and commercial channels. JEMCO's commission did not extend to approaching those businesses or managing the follow-up, so it was not possible to establish how many of the opportunities would have converted into viable relationships.

That distinction matters. A list of importers or distributors does not create an export business. The exporter must have the time, finance, production capacity and internal commitment to pursue contacts, provide samples, visit the market, negotiate terms and support partners over an extended period.

Assumptions made before research can create a similar problem. An exporter may decide in advance that partners should accept a broad portfolio, commit for several years or purchase particular volumes. Those terms may suit the exporter, but research and buyer discussions must show whether they are realistic in the target market.

For a smaller producer, pursuing several ambitious regions at the same time can spread limited resources too thinly. A more practical approach is usually to prioritise one or two markets, test the proposition and build experience before expanding further. Good research should help a business decide both where it can compete and whether it can turn an identified opportunity into sustainable sales.

Understand the Competitive Environment

Strong import demand may indicate an active category, but it can also mean intense competition. The market may already contain established international brands, powerful local producers and lower-cost regional suppliers with long-standing distributor relationships and substantial marketing support.

An exporter needs to compare:

• The main local and international competitors
• Their prices, positioning, pack formats and product claims
• The channels in which they are strongest
• The margins expected by importers, distributors and retailers
• Any credible gap that the product can fill

The aim is not necessarily to find a market without competition. An absence of competitors may indicate weak demand. The stronger opportunity is a market where the product has a clear and commercially valuable point of difference.

Calculate the True Market Price

A product that is competitively priced in the UK may become much more expensive by the time it reaches an overseas customer. The calculation needs to include freight and insurance, duties and taxes, registration or certification, customs clearance, warehousing, local distribution, commercial margins, listing fees, promotional support and currency risk. Geopolitical disruption may add further cost or delay.

Working backwards from an acceptable retail or customer price is often more useful than adding export costs to the UK selling price. It shows whether enough margin remains for every business in the supply chain and whether the exporter can earn an acceptable return.

If the landed product will be priced well above recognised competitors, there must be a convincing reason for customers to pay the difference. Otherwise, the opportunity is unlikely to be sustainable.

Assess the Route to Market

The most suitable route to market depends on the product, customer and country. Some products require a national importer or distributor. Others may fit specialist retail, food service, hospitality, e-commerce, direct business-to-business sales or a combination of channels.

The assessment should examine:

• How the product category is normally purchased
• Whether distribution is concentrated or fragmented
• Which retailers, wholesalers or food-service operators influence the market
• Whether online sales are established and commercially practical
• Any chilled, frozen or specialist handling requirements
• The area a distributor can cover and whether separate partners are needed

Appointing a distributor is not the same as developing a market. A distributor may provide access, logistics and local relationships, but the exporter will usually remain responsible for positioning, product knowledge, promotion and demand generation. The quality of the route to market matters more than securing an initial order from the first willing partner.

Confirm Product and Regulatory Suitability

A product may need to change before it is ready for a new market. Labelling, ingredients, product claims, packaging, technical standards and certification requirements vary by country. Food and drink exporters may also need to address product registration, shelf life, temperature control, health certification and local-language information.

Pack size deserves particular attention. A format developed for the UK may not suit local household sizes, purchasing habits, price points or retail shelf space. Shelf life must cover production, transport, customs clearance, warehousing and distribution while leaving the importer and retailer enough time to sell the product.

These requirements may not prevent entry, but their cost and effect on the commercial proposition should be understood before resources are committed.

Consider Growth as Well as Current Demand

The market with the highest sales today is not always the strongest long-term opportunity. Growing and aspirational markets can be attractive where modern retail is expanding or demand is developing for premium, specialist, healthier or more sustainable products.

Growth forecasts still need to be tested against the exporter's category, price position and target customer. A rapidly expanding market may remain unsuitable for a particular product, while a mature market may offer a more predictable route because its channels, customer expectations and regulatory requirements are clearer.

Test the Exporter's Capacity

Market attractiveness is only one side of the decision. The exporter must be able to supply consistently, provide suitable pricing and payment terms, meet technical requirements, respond promptly and support its commercial partners. Samples, market visits, marketing materials and promotional activity also require time and money.

International sales rarely result from one meeting, exhibition or distributor appointment. They require sustained follow-up. An attractive market can become the wrong market if the exporter cannot give it the attention needed to develop.

Make Market Selection a Commercial Decision

There are no risk-free export markets. Each presents a different balance of opportunity, cost, competition and complexity. Market assessment cannot eliminate uncertainty, but it can show where the evidence is strongest, the risks are manageable and profitable sales are realistically achievable.

Before moving to partner identification, a business should be able to answer three questions:

1. Is there a clearly defined and reachable customer for the product?

2. Can the product reach that customer at a viable and competitive price?

3. Can the exporter provide the commitment and support needed to develop the market?

Only when the evidence supports positive answers should the business invest in selecting distributors, customers or other commercial partners.

How JEMCO Can Help

JEMCO helps businesses assess and prioritise international opportunities before they commit significant time and resources. Our work can include market assessment, competitor and pricing analysis, route-to-market planning, identification of suitable customers and partners, and practical support as opportunities develop.

If your business is considering a new export market, or reviewing whether an existing opportunity is commercially viable, we would be pleased to discuss how JEMCO can help.

Related insight: Food & Drink Exports: Why Finding a Distributor Is Only the Beginning

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