The main objective of this research is to show the reader strategies developed by a Mexican start up company to explore the export of their products into foreign markets. In this case the product is defined as salsa, and the foreign markets to export are Poland, Czech Republic, Korea and Taiwan.
The originality of this research relies on the description of the approach adopted by this company to do their business in the international arena, and the practical approach which led them to become an important player in the foreign markets.
This research is the result of the documentation of all the processes made by the company, from finding an original idea, going through legal establishment of the company, until the project of doing exports to international emerging markets, and the analysis of the expansion into the international high end market. The main objective for the company is to become the leader and reference as a major brand in the luxury segment for salsa.
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4. General Company Description
According to the company’s website1 Salxótico® is a manufacturer of salsa; their products are positioned into the high end market of salsa meaning a high standard for quality and price.
The company is using traditional and ancient recipes 2 and would like to position them in the high end market of salsa, creating and developing on that base new ways to eat spicy food. Their target customers are those who have an inclination for hot flavors, between the ages of 25 and 65, with disposable income above the medium of the population.
Salxótico® main efforts will focus on salsa3 the enterprise would like to take customers from a non spicy experience to the ultimate one which they claim to be the infinite spicy salsa.
According to the enterprise website, their core business is the production, manufacturing, distribution and sales of traditional Mexican salsa.4
The manufacturer plan for the next five years is to position the brand Salxótico® and gain recognition as one of the best brands of salsa in the international market, they also would like to reach at least an increase in sales by $591,161 (five hundred ninety one thousand one hundred sixty one, US dollars), equivalent to 0.01% of the world condiments and sauces market, according to data of the International Trade Center (ITC).
In Salxótico® one of their targets is to get gross margins above 50 %, the long term includes an increase of their sales at a rate of 16 % yearly5, and in order to do so, they have delineated an outline of international expansion, one of their ambitious objectives is to enter into the international sales arena6, getting a market share of 0.1% of the market in
1 www.salxotico.com,
2 That have been in use for more than 5000 years
3 Spanish noun for sauce i.e. a combination of different chilies and spices
4 www.salxotico.com/espanol/quienes-somos
5 The world annual growth for condiments and sauces was 14 % in 2008
6 www.salxotico.com/espanol/quienes-somos
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the US, which means USD$565,124.00 and from there expand step by step into their desired markets.
In the Asia Pacific region they have plans to achieve at least rates of penetration of 5 % of the market, increasing participation on each market by 2-3% every three years, until become part of the top three in sales for each destination.
4.1 Mission Statement
Salxótico® was created to offer the highest quality and value in our salsa. It is a company full of history, their recipes have been in use for thousands of years and they are going to enrich them with the best and freshest ingredients, consumers all over the world are claiming for a real authentic Mexican salsa, more appealed, with fresh ingredients, designed for the high end market, longer shelf life, keeping a Mexican style image of labels and jars, but including more ingredients, using creativity when making a unique salsa, adding different flavors, offer a variety of products from mild to hot and super hot.
According to Randall Frost7, the market in the US is more mature than its Mexican counterpart this is shown by the fact that product availability is higher in America than in Mexico. According to this company trends in the US show that consumers are willing to get more flavors, and they are ready to answer to this claim, the trend is that American brands are doing great in this industry because its capacity to adapt and to evolve into different markets in the domestic market companies such as Chichi’s not only they are being more creative having different salsas they are adding more ingredients, they are also offering different packaging, including organic ingredients or salsa clubs. Salxotico would like to apply American companies’ model into the Salsa worldwide market and get a share of it.
Their primary objective is to position Salxótico® as leaders in the segment of hottest salsas.
For the Taiwanese market Salxótico® wants to position as the leading company in foreign brand salsa, one of their goals in the Taiwanese market is to have a loyal customer base as well as be financially healthy, and growing at a rate of 15 % yearly.
Salxótico® is a brand that views itself in three ways:
• Financial: The company would like to attract investors to raise private funds to do their operations and would offer them an expected yearly return of 25%, the expected amount to be financed is around US$100,000 (one hundred thousand dollars), the length of the project is five years, if there are no private investors interested, then Salxótico will apply for a governmental loan in Mexico to acquire machinery and to do their desired business expansion.
• Brand Extension: In the future, Salxótico® brand will be used as a platform to launch other related products such as tortilla chips. This will give Salxótico®
leverage over existing brands and increase awareness of the brand on the part of the consumer while reducing advertising.
• Consumer based: They believe that a strong brand increases the consumer’s attitude strength towards the product associated with the brand. And this for Salxótico® will be built by experience with the product. The consumer’s awareness and associations with the brand will lead to perceived quality, indirect attributes and eventually brand loyalty.
Customer satisfaction is the most important for Salxótico®, in order to achieve the highest level of satisfaction we are going to produce our salsa with the freshest and best quality of products that will give a unique combination.
In Taiwan their main target are those people who have experience traveling to the US, specifically California and tried Mexican food, Latin Americans living in Taiwan that like spicy food, Americans living in Taiwan who like spicy food and in general customers that like gourmet food and customers that like salsa,.
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Salsa industry is one that is growing at an exceptional rate; simply in the US it has surpassed ketchup in terms of consumption, Salxótico® anticipates that it can be the dominant player in the next 5 years in Taiwanese salsa market, furthermore Salxótico®, foresees that due to the demographic change in the US map, salsa would get an increase global acceptance, and we are ready to do this global expansion.
4.2 Company Summary
Salxótico® is a startup company, in its first year of operation. Their sales office is located in the WTC Mexico.
Source: www.google/maps
R&D team is creating the ultimate salsa, professional services of design were hired to get the best and carefully design label according to Food and Drug Administration (FDA)
8standards and Mexican standards know as Norma Oficial Mexicana (NOM)9.
Company is going to invest up to USD $80,000 to get the ultimate technology to produce salsa, and is looking forward for opportunities to achieve their goals.
4.3 Company History
8 For additional information on the FD regulation for labeling please check the following link:
http://www.fda.gov/Food/GuidanceComplianceRegulatoryInformation/GuidanceDocuments/FoodLabeling Nutrition/FoodLabelingGuide/ucm064894.htm
9 For additional information on how to get the NOM please check the following address:
http://www.sisi.org.mx/jspsi/documentos/2006/seguimiento/00010/0001000078106_055.pdf
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Salxótico® was created to fulfill a gap between the current markets and the future markets, it was created when the worst recession hit all sectors of economy, according to their founders they created the company on this situation because they were preparing the terrain and investing money when everybody was in panic, and they expect that when economy is recovering they will be already on a good way.
Salxótico® was built to be an export oriented company. It was created to have 80 percent of its sales in the international markets and do not depend exclusively on the domestic sales.
Within years they want to become a renowned producer of Salsa.
Salxótico® was formally established on April the Eight 2009, as a Limited liability Corporation and got its legal rights from Mexican government, with the permit 0911676 immediately after receiving its business license an office was established in the WTC Mexico. The next step was to register the company website.10
Company registered working capital was around $5,000 USD, the minimum required by Mexican laws, currently Salxótico® is working with a small warehouse and the salsa production is outsourced to a third party meanwhile company acquires its own machinery.
In order to accomplish their goals, additional capital is needed as the organization plans to grow, the outline consists of a purchase of an industrial blender with a capacity of 50 liters with a cost of $10,000 USD, one dehydrating machine for seasonal products like avocado, prickly pear cactus and nopal, and for purchase of larger quantities of ingredients. Rent of a factory and its renovation, includes an ambitious plan and they estimate USD$100,000 on initial investment.
4.4 Company Ownership
Salxótico® is a Limited liability company and its shareholders are as follows:
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Exhibit 4.1 Salxótico Shareholers
SHAREHOLDERS SHARES AMOUNT
YUICHI MURAKAMI CORONADO 46 $ 46,000
ELISA CORONADO VALLEJO 1 $ 1,000
CRISTOBAL ALBERTO MURAKAMI CORONADO 1 $ 1,000
JORGE ERNESTO MURAKAMI CORONADO 1 $ 1,000
SADASHI MURAKAMI CORONADO 1 $ 1,000
TOTAL 50 $50,000
Source: own elaboration with data provided by Salxótico
4.5 Start-up Summary
Salxotico is a start-up company. Financing will come from shareholders capital and a three- year Fondo para el Desarrollo Social (FONDESO) in Mexico City. The amount of the loan is US $10,000 approximately.
4.6 Board of Directors
The role of each shareholder is defined as follows:
Governing body of Salxótico®
Exhibit 4.2 Salxótico Board of Directors
Owner Directors Alternate Directors
Yuichi Murakami Coronado Sadashi Murakami Coronado Elisa Coronado Vallejo Cristóbal Alberto Murakami Coronado
10 www.salxotico.com.
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Jorge Ernesto Murakami Coronado ---
Source: own elaboration with data provided by Salxótico
4.7 Company Locations and Facilities
Salxótico® has two locations, a warehouse area, and an office. The second one located in the WTC Mexico, it is used to have meetings with potential customers, to receive income phone calls, in the future Salxotico plans to add a new location and will include a plantation field, warehouse and production facilities, to integrate vertically their business and become more competitive.
4.8 Branch Office
Salxótico® is conscious of the meaning of being an international company, in order to reply to the demands of its partners in Asia, Salxotico is going to open a branch office in Asia, the selected for this initial branch office needs to be decided by the board of directors, the candidates cities are Kyoto, Japan and Taipei in Taiwan.
The project manager should be in charge of visiting potential customers, do presentations about the company, about their products, service to customers, in charge of local promotions to boost the demand of Salxótico products, and trying to detect business opportunities for the group.
He would also act as purchasing manager for salsa jars in China; look for reliable suppliers of the same product. Check shipping of goods.
4.9 Milestones
According to Salxotico Management team their milestones can be measured by the accomplishment of their objectives on time and budget.
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Source: own elaboration with data provided by Salxótico Exhibit 4.3 Salxótico Milestones
Item/Date of
5. Company Products
Salxótico® sells Mexican salsa to the most demanding consumers, in general terms they focus on the high end market providing gourmet salsa made of the highest quality and the freshest availability in the market.
Salxotico product offering is built into market segmentation, giving them uniqueness in appeal, and flavor, with the best quality.
Their promise is that every time you open a jar of our salsa you will feel like you were in Mexico.
5.1 Product Description
As a start up enterprise they are just going to focus only on one line of products, which is salsa, according to the company website they have a variety of 5 different flavors, including what they claim to be the spiciest salsa in the world.
Available level of spiciness is: hot, medium and mild. Their plan is to expand their product portfolio in the future and includes the launch of tortilla chips brand, made of blue and white corn, a fully own restaurant and different flavors for salsa.
Based on their statements this company claims that their salsa has a unique appeal, especially due to it’s carefully and well designed label and for the quality of its ingredients, they combine only fresh ingredients and a long life in shelf 11 furthermore their R&D team supported by years of experience in the Mexican salsa industry got the ultimate salsa in the market which they claim to be the spiciest in the world.
Salxótico® currently offers salsa as their main item, product offering encompass: mild, hot and very hot salsas. The following chart explains the different levels of spiciness available in their line and its ingredients:
11 (approximately 60-90 days), normal fresh salsa life is around 3 weeks
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Exhibit 5.1 Product Description
# Name Description Level of spiciness
1 Pico de Gallo A non spicy salsa made of tomato, cilantro, onion and a minimum quantity of pepper. Suitable for kids and beginners. Another version includes more chilies to have it spicy.
Mild, medium and hot.
2 Guacamole Could be both non-spicy and spicy. Ancient Mexican recipe consists of mashed avocados, onion, lemon drops, cilantro and green chili.
Mild, Medium and Hot.
3 Salsa Verde Combination of green tomato, garlic, onion, green chilies, spices and cilantro.
Mild, Medium and Hot.
4 Salsa Roja Combination of tomatoes, chile de arbol, chile morita, chile pasilla, garlic and spices.
Medium, hot and very hot.
5 Salsa de Xoconostle Combination of prickly pear, tomato, onion, water, chile de árbol, chile morita,
Very, very hot.
6 Salsa de Habanero Combination of onion, water, lemon drops, dice habanero chile, pepper and spices.
The hottest
Source: own elaboration with data provided by Salxótico
5.1.1 Salsa Pico de Gallo
For its characteristics could be suitable for those who are beginners in salsa or with no experience with it, it is not spicy, it can be a perfect match for nachos, or can even replace ketchup, is made of chopped tomatoes, onion, a bit of pepper to make it tasty, cilantro, water and spices. The label is designed to focus on kids, the craziest label of all.
All their mild salsa will use this kind of packing.
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Figure 1: Salsa Pico de Gallo, source: www.salxotico.com/english/products
Salxotico is also offering different levels for each salsa, not only are they going to be mild, they can control how spicy a salsa can be by adding dice or chopped chilies, so in this case salsa pico de gallo although originally is non spicy, customer can also find it in its spicy version and very spicy version.
5.1.2 Guacamole
Guacamole, one of the most famous salsa all over the world, it is made of mashed fresh avocados, chopped onion, lemon juice drops, salt and cilantro this level of spiciness could be either mild, medium or hot, making it a perfect match for burritos, tacos, and of course nachos the label for medium salsa is the following:
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Figure 2: Guacamole, source: www.salxotico.com/english/products
5.1.3 Salsa Verde
Literally green salsa, is the next level of spiciness, is a bit hot, made of combination of chilies, onion, cilantro, green tomato, water and spices, all of the ingredients are cooked to make them have a longer love on shelf, suitable meals, pollo verde, enchiladas suizas.
Figure 3: Salsa Verde, source: www.salxotico.com/english/products
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5.1.4 Salsa Roja
Salsa Roja (Red salsa), is made of tomatoes, chile de pasilla, chile chipotle, tomatoes, onion, garlic, spices, and salt, basically suitable for those experienced in the culinary art, it can help to make Mexican dishes such as: Tinga, pollo en salsa roja, carne con chile.
Figure 4: Salsa Roja, source: www.salxotico.com/english/products
5.1.5 Salsa de Xoconostle
Salsa de Xoconostle (Prickly pear) is one of a hot flavor but innovative in the market because it is using an ancient component of the traditional Mexican food that has not been in use for one or another reason, its ingredients are as follows: Prickly pear, water, morita chili, chile de arbol, salt, garlic and spices, suitable to eat carnitas and barbacoa, or simply try it with tortilla chips, you would love it.
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Figure 5: Salsa de Xoconostle source: www.salxotico.com/english/products
5.1.6 Salsa de Habanero
Salsa de Habanero (Habanero Salsa): Habanero (the hottest chili in the universe), garlic, onion, salt and spices, this is only for experts and those willing to try the hottest, no other salsa can give you this flavor, suitable for tacos of cochinita pibil, burritos and tacos.
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Figure 6: Salsa de Xoconostle source: www.salxotico.com/english/products
5.2 Future Products
Salxótico® is always looking for new business opportunities so in the future the company would extend their portfolio with exotic salsa, they will explore tropical fruits as a main ingredient of our salsa, fruits such as mango, raspberry, kiwi, pineapple, are on target to develop a new line of products, another line of natural products should include the following in order of importance to launch into the market Tortilla chips made of white and blue corn and a Mexican restaurant in Taiwan.
5.2.1 Own salsa Jar
Customers always expect the best for their money, in Salxotico they are conscious of this issue and because of that reason and in order to charge a premium price for their product they are going to have their own salsa jar, carefully designed by Mexican artisans to make their appeal even more beautiful and attractive to the customers eyes.
5.2.2 Blue corn Tortilla Chips
One of the best ways to eat salsa is with the ancient Mexican tortilla chips, since Salxotico always wants to offer the best value and the best products to its loyal customers, a new line of blue corn tortilla is being cooked to satisfy all salsa aficionados. Salxotico
One of the best ways to eat salsa is with the ancient Mexican tortilla chips, since Salxotico always wants to offer the best value and the best products to its loyal customers, a new line of blue corn tortilla is being cooked to satisfy all salsa aficionados. Salxotico