ANSWERS TO CASE QUESTIONS

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ANSWERS TO CASE QUESTIONS

PART 1

Super Foods: Camu Camu in Peru

• If no immediate change regarding the Novel Food Regulation (EU) is foreseen, what could

be an alternate use of camu camu?

Camu camu, a small tree or shrub that grows in the Amazon regions of Peru, is considered a novel food in the European Union (EU) according to Regulation EC258/97. The regulation covers all exotic foods coming from countries that have a rich biodiversity. This regulation represents a considerable challenge to any company that wants to sell novel foods or beverages in any EU country as the company must prepare a dossier with evidence of the product’s safety, which is an expensive undertaking.

However, the novel food regulation does not cover uses of specific ingredients or products such as camu camu as a dietary supplement. If there is no immediate change in the regulation, camu camu can be sold as a dietary supplement, as an astringent, for functional beverages such as Coca Cola’s Minute Maid, or as a “super-fruit.” Products using camu camu will have to support its properties with sufficient evidence or historical record of usage.

• What brand strategy is Navitas following to “adapt” camu camu to the U.S. market?

Navitas is capitalizing on the potential of camu camu as a “super-fruit.” Navitas added camu camu to its product list in 2010 and named it “Camu Powder.” In July 2011, the company launched a healthy snacks line, combining the power of all superfoods within their product range with camu camu as part of one combination: the Citrus Chia Power Snack, along with chia seeds, maca, and lucuma superfoods, as well as apricot, raisin, cashew, and coconut flakes.

• Would you recommend that Peru use the same brand strategy Navitas is using in the U.S.

and in other international markets?

This question will be good for class discussion with students having different view-points.Many of them may say that Peru should use a different brand strategy than the one Navitas is using in the U.S. and in other international markets. Peru should use a different strategy because the market in Peru is not the same as that of the U.S. and other international markets. So, the strategy that is a success in the U.S. and other international markets may not work successfully in Peru.

(International Marketing 10e Michael Czinkota, Ilkka Ronkainen) (Instructor Manual, For Complete File, Download link at the end of this File) 1 / 4

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• Amazon Herbs follows in the U.S. camu camu. Would you recommend this strategy to

other American importers of camu camu?

Student answers will vary.

• What international marketing strategy would you recommend to Peru in order to promote

camu camu in the North American market?

This question will be good for class discussion as many students will have different opinions about what Peru should do. When entering the U.S., Peru will need to get authorization for the commercialization of camu camu from the Food and Drug Administration. Further, if Peru makes health claims regarding camu camu, it must request permission to sell the product as a drug with all paperwork and information that comes with that request (such as scientific support). However, if Peru sells it as a food, or eventually as a dietary supplement under the Dietary Supplement Health and Education Act of 1994 (DSHEA), then permissions are handled on a different basis. When selling in North America, Peru can continue promoting camu camu as a dietary supplement. It can also consider promoting it as an ingredient for functional beverages such as Coca Cola’s Minute Maid and as a “super-fruit.” It will have to create advertising campaigns that highlight the uses of camu camu and localize the advertisements so that camu camu appeals to the North Americans. Peru should try to use intermediaries who can help camu camu reach the North Americans easily.

African Producers in the Cut Flower and Foliage Trade

• One of the challenges for African flower and foliage producers is the need to ensure that

the products reach the final consumers in good quality. Must they then produce and market their own products that are more tolerant to the stresses of long shipping or continue to produce traditional European flowers which are difficult and expensive to transport?

The main market for cut flowers and foliage from Africa is the European Union, as it is for much of its horticulture product. The obvious reasons are proximity to the market, lower cost of transportation, and longer shelf life of these delicate products. Moreover, it is the buyers that determine and dictate the “design” and trends in the trade.

If African has to sustain its participation in the trade, the African producers need not actually produce traditional European flowers which are difficult and expensive to transport. All they need to do is identify African varieties that are most tolerant to the stresses of long shipping and storage. A trade-off may also be achieved by producing mostly African varieties and one or two varieties of traditional European flowers.

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3 © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

• What types of upgrading can producers in Africa conveniently adopt to ensure increased

recognition and participation in the floriculture chain?

Cut flowers are highly perishable and very quickly lose their usefulness if they are not handled properly. The chain process is therefore marked by a highly efficient coordination of activities between the producers from Africa and the final consumers in homes and offices in Europe. Producers should work towards increasing the efficiency of the coordination activities between them and the final consumers.

Kenya and Ethiopia, with support from their governments, have organized the trade into string clusters and associations that team up to support each other, and they are able to comply with the codes and standards required by the market. Another characteristic of these successful farms is that they are usually owned and or managed by traditional European growers who have relocated to Africa. Producers in other countries should try to adapt these strategies.

The flower industry is subject to seasonal colors, shapes, and varieties. Consumers are continually seeking products that offer diversity in flower and leaf color, good texture and form, as well as better performance in interior environments. This makes research and development an important aspect of the chain. Producers could try partnering with Europeans who could conduct the research and share the findings with them.

Producers must make efforts to develop techniques which will reduce production costs and the ultimate cost to the consumer. The industry is capital-intensive. There must be efforts to identify and use low-cost production technologies and reorient imported technology to suit Africans’ requirements. There is also an urgent need for African producers to identify varieties that are most tolerant of the stresses of long shipping and storage in order to remain competitive and sustain their position in the chain.

• How much value does the agent or distributor add to a bouquet of flowers or bunch of

roses from Africa before it reaches the final consumers? How can this be accurately calculated to ensure fair prices to the men and women who work on flower farms in Africa?

Cut flowers are highly perishable and very quickly lose their usefulness if their production and handling is not properly done. The chain process is therefore marked by a highly efficient coordination of activities between the producers from Africa and the final consumers in homes and offices in Europe.

A bouquet of flowers or bunch of roses from Africa reaches the consumer in the following

ways:

• Grower/exporter to agent to auctions to retailer to consumers • Grower/exporter to agent to wholesalers to retailer to consumers • Grower/exporter to agent to retailer to consumers

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4 © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.The intermediary agents play an important role in seeing to it that the consumers receive the flowers in good condition. So, the agents do add value.

The value that the agents add to the flowers may be calculated by keeping in mind that once the growers or exporters hand over the flowers to the agents, the risk shifts to the agents. The perishability factor comes into play and the agent has to do his or her best to ensure that the flowers reach the consumers before the flowers perish.

• Knowing that flower production depends on availability of water, how long can the water

bodies in Africa continue to feed flower production and still have enough for human consumption and, importantly, remain unpolluted?

This question will be good for class discussion as students will have different opinions.Students have to keep the following facts in mind while answering this question: • A flower is 90 percent water, needing more water than conventional horticulture products. This water must also be free from contamination and be fit for human consumption.• As of now, many of the African flower farms are located near rivers and water bodies. The farms further invest in irrigation equipment for consistent supply and distribution of water for the plants.

Students could additionally research the use of water in horticulture, the major sources of water in Africa, and the different methods of irrigation used in order to arrive at a conclusion.

Of Catfish and Shrimp: A Dispute between Vietnam and the United States

• Was it fair for the Vietnamese catfish importers to step in and capture market share while

the market has been expanded due to the significant efforts and investments of the domestic industry? How should quality considerations (if quality differences exist) be reconciled?

The idea of free trade assumes that no matter the methods employed to expand markets, there must be no barriers to market entry and trade. If the domestic industry is competitive, it will retain profits in the long run and the investment costs will be paid off. Otherwise, if tariffs are necessary to keep supply limited and to protect the profit margins of the industry, it means that the industry expansion was not feasible in the first place and further protection of it will distort the market and resource allocation.

However, if, as a result of thorough research and investigation, it is found that the income and spillover effects generated by the protected industry overweigh the benefits that consumers get under free trade, tariffs and barriers may be applied. In this case, however, the international role of the country and its foreign policy priorities, and integration in global economy must be taken into consideration.

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