portfolio project: guayaki marketing plan for sweden | csu-global mkg 400 - august 2015

Running head: PORTFOLIO PROJECT: GUAYAKI MARKETING PLAN FOR SWEDEN 1

Portfolio Project: Guayakí Marketing Plan for Sweden

Julieta Randall

MKG400 – International and Multi-Cultural Marketing

Colorado State University – Global Campus

Aubry, Michael

August 27th, 2015

PORTFOLIO PROJECT: GUAYAKI MARKETING PLAN FOR SWEDEN 2

Portfolio Project: Guayakí Marketing Plan for Sweden

Executive Summary

Tea consumption in Sweden serves a healthier substitute for a caffeine fix and energy

boost. Growing steadily since 2007, the tea market has improved in sophistication and consumer

preferences. Tailor-made tea products are visibly seen in: the sports drink segment, the ready to

drink soft tea segment, the healthy conscious female segment, and the general tea segment.

Guayakí is a brand from California with an assortment of products derived of yerba mate that can

appeal to all these markets in Sweden: single shot energy drinks, flavored or unflavored canned

and bottled drinks, loose leaf, and tea bag format. Following the proper guidelines in accordance

to EU and Swedish regulations, utilizing one of the three major distributing partners, and

producing a positive Swedish style branding and integrated marketing communications, the

product could be a success in the country. This paper will produce a picture of a marketing plan.

Company Background

Guayakí (officially known as "Guayakí Sustainable Rainforest Products, Inc.") is an

organic yerba mate tea and beverage company based out of Sebastopol, California co-owned by

the Argentinian Alex Pryor and the California-native David Karr. The leaf (AKA ilex

paraguariensis) is native to the south Atlantic rain forest and was first introduced to the Spanish

settlers in the 17th century by the Guarani (Ballvé, 2007, p. 12). Traditionally consumed with a

bombilla and gourd, it contains several properties that Argentinians and South Americans have

praised as “the drink of the gods” for hundreds of years due to having: “the strength of coffee,

the health benefits of tea, and the euphoria of chocolate (Guayaki.com, 2015)." Those who are

sensitive to caffeine will find that Guayakí’s mate blend with 24 vitamins, amino acids,

polyphenols, and saponins are easier on the nervous system. Since its first loose leaf product


format presentation format, the company has mass marketed Guayakí under many ready to drink

beverage (RTD) in presentation formats such as glass, cans, and energy shots that vary in

caffeine content. The bottled cans of sparkling mate come "as is" or in many flavors, such as:

unsweetened, pomegranate, citrus, peach, mint, passion, and raspberry; the bags come in

traditional, roasted, chai, green tea, or pure empowerment flavors; the loose leaf is traditional,

San Mateo, Gaucho, barbacua, or roasted formats; and the mate shots come in wild berry, lime

tangerine, lemon organic, and chocolate raspberry flavors. According to Karr in an interview

with Cirillo (2009) at Beverage World, "the bottles have...a stronger brew...whereas the canned

beverage just tastes like an easy drinking tea (2010)."

The co-founders united efforts in 1996 in San Luis Obispo, California where, with the

help of three other partners, turned a vision into reality of what is a vertically integration

company, which means that it sources, imports, distributes, markets, and sells its products

(Smith, 2014, p. 70). In the US, not only it is labeled Certified Organic, Kosher, Non-GMO

project, but it is also the first fair trade certified mate tea company (accomplished in 2009) which

assures fair labor practices (i.e., against child-labor), sustainable collection, reforestation and

restoration, consistent business and fair wages to the region, plus it creates legitimate claims to

the product (Soref, A., 2011, p. 2). It has developed strong foundations and missions in "Brazil

and Paraguay, leaving Argentina as the base of operations, research, and development (Smith,

2014, p. 73)." Winning social and environmental awards, it has grown in mass proportion while

promoting: rain forest projects, biodegradable packaging, carbon footprint reduction, solar power

use, traditional "ceremonial" use, and the creation of the Guayakí foundation (Guayaki.com,

2015).

I. Situation Analysis: Sweden


Sweden is a country that is a little bigger than the state of California (i.e., 173,731 sq.

miles) and happens to be a globalized and stable economy that is in good standing business-wise

with the US once a line of commerce, effective communication, and legal agreement is

established. It is number thirty two in the “ease of starting business” rank and eighteen in the

"doing business with," according to the World Bank (2015). They are highly educated (almost

100% literacy levels), unionized, and productive in many market sectors. Their consumer

behavior has a tendency to comprise innovators and early adopters in terms of new products and

technology. Finally, their high taxing economic system justifies a society of free healthcare and

education, and other social programs that boost the overall welfare of the society.

One thing to remember is that once a foreign business establishes itself there, they are

subject to the same corporate laws as Swedish companies are. In addition, they are subject to EU

law, which is why "companies wishing to use distribution, franchising and agency arrangements

need to ensure that the agreements they put into place are in accordance with EU and member

state national laws; American exporters of consumer goods may find it advantageous to sell

directly to department stores, consumer cooperatives, chains, and other retail outlets (Doing

Business in Sweden, 2013).".

Organic and General Food Market Analysis. To paint a broad picture, "Sweden ranks

first in the EU in consumption of organic foods, leads the way in recycling drinks cans and

bottles, and gets the highest share of its energy from renewable sources (Sustainable Living in

Sweden, 2015)." Their efforts go beyond their national border, like the case of The Swedish

Society for Nature Conservation which is a "non-profit organization that raises awareness, tracks

environmental threats, designs solutions and lobbies politicians and government authorities, both

in Sweden and internationally." The government is highly involved in regulation of foodstuff and


has tough laws against obesity (e.g., highly sugary foods are not well accepted and their salt laws

use compare to campaigns against tobacco) and healthy false product claims.

II. Market Logistics.

Their consumer behavior is globally aware, veering towards ethnic foods, and spending

more almost a quarter of the household budget on it (Exporting to Sweden, 2011. P. 33). This is

good news for caffeine-containing products, especially since tea consumption has been

increasing steadily since 2007. Sweden is the most caffeinated country, according to Caffeine

Informer at 388mg/day (The Most Caffeine Addicted Country, 2015). Fika time—i.e., tea and

coffee break—is culturally accepted and it involves a routine break that is almost ceremonial

(Cole, 2015). On the flip-side, according to Hamblin, "many grocery stores do not sell energy

drinks to people under fifteen,” which could be seen as a threat (2013). Either way, this shouldn’t

be a problem since the segment is quite large and they have a large proportion of elderly and the

median age for first children-bearing is 28 (Exporting to Sweden, 2011).

The country’s energy drink market is to grow in value by 2016 about 27% and the female

consumer segment is favorably targeted by organic and fair trade versions of energy drinks,

according to Euromonitor International (Byrne, 2012). According to Andersson and Frost (2011)

“women and young people in Sweden are the consumers that are most interested in tea and its

health effects (p. 21).” The market retail sales value in 2010 was 4334.7 million SEK.

Due to this culture of health and product consciousness, products oftentimes advertise

healthy promotion and lifestyle, especially in the workplace. Their moderate socialist modus

operandi promotes lean choices and helps curb obesity in their all-inclusive free healthcare; in

advertising, there is a ban on targeting children promoting sugary foods and energy drinks that

are highly caffeinated (Ashton, 2004).


Logistically speaking, Sweden's major cities are the capital (i.e., Stockholm), and

Göteborg and Malmö with high transportation inter-connectivity with seaports, airports,

roadways, railways, and waterways. The three large retail groups (i.e., ICA as the leader, Coop

and Axfood) not only "dominate the distribution of food in Sweden," but also takes care of 50%

of the organic food market (USDA Foreign Agricultural Service, 2012). These major retailers

require large assortments of tea and their major concerns are to carry Fair trade products, but

they are adding the UTZ certified and rainforest alliance as well (Swedish Chambers, 2010, p.

9). Communication with these retailers as partners is usually done by "agents and processors"

and finding buyers and suppliers is usually done at trade shows in Europe.

As for labeling, import license permits are surveyed by local partners and issued by the

National Food Administration (which can be contacted at http://www.livsmedelsverket.se/en/);

by law requires labeling to be in Swedish, list ingredients (in descending order of weight), net

metric weight or volume, name of company or origin, and best before date (The Canadian Trade

Commissioner Service, 2015). Specifically, the Krav label is well-known among Swedish and

the EU EcoLabel/EU organic logo is mandatory; the first one can be acquired via a KRAV-

licensee who registers and receives the certificate (How to obtain the KRAV-label for your

products, 2015). The value added tax in Sweden is 12 % for foodstuffs and they don’t usually

create discount programs as incentives for market penetration. In fact, they just recently

introduced the first discount store called Hemkop, a not-for-profit store (Marshall, 2015).

The best known competitors in ice tea sector are Lipton and Nestea; a major competitor

in the organic energy drink sector is White Tiger by First Class Beverages of Sweden, promoting

less sugar in one of its formats and Guru Drink (Byrne, 2012; Guruenergy.com). As for tea leaf


suppliers, there are the usual suspects like Twinnings and domestically their national brands of

Gevalia and Aftek Te & Kryddor, but none specializes in yerba mate.

III. Marketing Plan

Marketing Mission. Guayaki’s mission is to properly market and sell its line of certified

organic and fair trade products to a Swedish market of energy drink, RTD, tea consumers

focusing on a clear description of its natural ingredients, sustainable practices, health impact, and

recyclable materials that promote environmental consciousness and social change.

Marketing Objectives

To open distribution channels in the major cities of Sweden via ICA, COOP, or Axfood

To position itself in the Swedish organic, foodstuff market

To cater to these segments: sports drink, RTD soft tea, health conscious female, and the

all age loose leaf and bag segment (excluding lower than 15 year old limit and children)

Marketing Goals

To be on the top ten tea and ready to drink product ranking in the country

To shift perception on energy drinks and position Guayakí as the healthy alternative

To produce consciousness of the company's efforts in the south American Amazon

To appeal to the lifestyle green consumer who is active, working, and/or plays sports

SWOT Analysis

Strengths. Guayakí is an experienced and versatile company in the U.S. with strong

consumer sentiment due to: their credible claims, assorted flavors, supplemental

energy/vitamin content, low sugar, measured caffeine intake and specs, added-value

ingredients (e.g., ginger and ginseng). Their domestic distribution strategy is


overabundant and comprises gas stations, supermarkets, and small organic produce stores

and it hopes to mirror this effect in the foreign market (Sax, 2015).

Weaknesses. Their wide selection of products may confuse the country introduced, so

select products should be chosen, producing a study on flavored tea sentiment. Mate is

still considered second to Earl Gray, Green Tea, or Black Morning Tea as a first choice.

Opportunities. Sweden is one of the most caffeinated countries, with a characteristic of

being innovators in consumer behavior, welcoming new products/services (even those

exotic of origin). Swedish and American lifestyles towards health are very similar and

may translate well, plus Guayakí has a distinctive name that will create a good

impression and the high FDA regulation standards can transfer to Swedish and EU ones if

done and filed properly.

Threats. There may be no national awareness on what the yerba mate actually is in

Sweden. Political regulations involving caffeinated products to minors (less than 15),

sugar content, or taxing regulations may or not affect company profits in the company.

Yerba Mate requires a specific taste preference that may not be well accepted. Brand

awareness is low in Sweden for teas, but if they position themselves as the only yerba

mate tea, this may be an opportunity.

IV. Marketing Strategy

Guayakí needs to adapt its line of products to the Swedish market by introducing an

assortment its signature brand: the loose leaf in bag format and the carbonated RTD flavored

cans (with low calorie, sugar, and caffeine) that appeals to both sports drinkers and female

drinkers. It has a strong brand image that needs no modification other than the required organic

and fair trade labels for EU and Swedish standards that can be negotiated via the product agent,


adapting the label details, and translating everything into Swedish. It’s important to add how

“food consumption consists of more than 70% of canned, frozen and highly processed foods,” so

this high figure dictates how ready to drink cans and bottles are the trend (Market Report: Focus

on the Swedish Market, 2013, p. 6).

A Swedish advertising agency should be consulted in order to properly promote the

product to the right segments and create product awareness. It is important to take into

consideration how it’s illegal to advertise to children below 12 years of age and that caffeine

drinks aren’t sold to teens below sixteen. Regulations imposed may require to televise ads after a

certain time.

Sales promotions programs wouldn’t be needed at this time, just placing the product at

competitive prices vs. White Tiger and other competitors, for example. Bundling prices can be

introduced for those who like to buy ready to drink at a bulk. According to Mariano (2011),

Guayakí seems to opt for aggressive social media campaigns and their public relations

allocations go directly to that. This can be introduced in Sweden as well.

V. Mode of Entry

Business Agreements: Market Access. Before entry to Sweden, the product needs to

pass through the EU supervision which can be done at trade shows or via direct contact with an

agent and processor. Imports are subject to tariffs that go up to 25%, yet if the business is found

to have “sustainable development and good governance,” tax incentive arrangements can be

made (Market Report: Focus on the Swedish Market, 2013). The European Commission’s

website is useful to answer many questions on the subject at:

http://exporthelp.europa.eu/thdapp/index.htm.


Customs. The duty to be paid is calculated on the item´s customs value which is based

on the price paid, the cost of transport, and the cost of transport insurance (Importing goods to

Sweden from countries outside the EU, 2015). Customs are paid at the time of import. On top of

customs duties, the Swedish government imposes VAT Swedish Tax Agency charge and those

who are not registered, pay it at the time of import.

Channels of Distribution. As previously mentioned, according to the Swedish Chambers

of Commerce (2013) retail groups in Sweden with integrated retail and wholesaling activities

and convenience store wholesalers are: ICA Gruppen, Coop Group, Axfood (Axel Johnson),

Bergendahls Food, Axfood Närlivs (Axel Johnson), Menigo (Brakes Group), and Privab (Market

Report: Focus on the Swedish Market, p.16-17). Axfood has 700 food stores, Bergendahls has

180, and there are more than 2500 convenience store wholesalers.

Packaging and Pricing. Their packaging is created with biodegradable materials and

they are bundled in cases of 12 cans (priced at $29.99 in US dollars which can translate to the

Crown to $255 Swedish Krona). The 25 tea bag is priced at $6.95 US dollars which is $59

Krona. Individual sale for the cans is $3.45 which is $29.00 Krona. These prices are actually

cheap for the Swedish market, so a 12% markup plus an 8% to cover costs shouldn’t be that bad

on their perception of money.

Budgets. Making a budget for an exporting enterprise is important considering every

question posed by negotiations, retail markups, export agents costs, warehousing, cost of

shipment, insurance, taxes, gross margins and profit margins, handling expenses, loading and

unloading charges, and insurance costs. The Swedish krona is a relatively stable in comparison to

the dollar (at an exchange value of 1 to 0.12 of a US dollar). Traditionally, Guayakí has opted for

direct-marketing efforts with direct wholesalers domestically and e-commerce direct sales


online, so a venture to the EU/Sweden market would sound costly in the beginning. Duty import

calculations can be found at: http://www.dutycalculator.com/new-import-duty-and-tax-

calculation/

Action Program. The program for market penetration will be to establish solid

relationships with Axfood of Sweden after producing the paperwork signaling the legitimacy of

the business and exporting intent through them. Axfood will act as a franchiser in direct

marketing representing the brand abroad and making sure that Guayaki is delivered to the major

locations. For advertising and promotional reasons, Guayaki could require Pyramid’s services,

which is a B2B agency and their focus should be in small level of traditional medium advertising

(TV, magazines, radio, etc.) and mostly digital media: social media and online marketing efforts.

Sports events and associations, organic food fairs, and supporting organic, fair trade events that

support sustainability, should be targeted as well.

Conclusion

Adapting to Sweden would change the product’s target market (due to age restrictions)

to: adult females, all-age brew tea drinkers, and male/female sports fanatics (all of them 18 and

above). It comes with advertising constraints to children, would need updated food labels that

relate to their own (e.g., filing for the Krav label), and would have to go through EU and

Swedish supervision. The markup prices should consider the value added tax in Sweden is 12 %

for foodstuffs. Luckily, their steady national coin—the Kroner—is a trustworthy currency in

comparison to the US dollar.


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portfolio project: guayaki marketing plan for sweden | csu-global mkg 400 - august 2015

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