Tips to go digital in the natural food additives sector

We live in a digital age where digitalisation is being increasingly used in international trade, and that trend is not likely to stop any time soon. This study provides 7 tips on how exporters of natural food additives in developing countries can use digitalisation to their advantage when entering the European market. Exporters must carefully choose the most suitable options based on a realistic view of their own company and capabilities. Bad choices can have serious consequences.

1. Get familiar with common types of digitalisation in supply chains

Digitalisation has become a part of everyday life throughout the world. Consumers are using digital devices such as smartphones and tablets, and the Internet of Things (IoT) is becoming more and more important.

For exporters of natural food additives, digitalisation is becoming increasingly important in their journey to enter the European market. The right choice of digital tools, digital activities and platforms can help exporters enter the European market and successfully trade on it. This is the key advantage of making the correct choices when using digital tools.

Learn about the various types of digitalisation used in supply chains for natural ingredients. Consider what digital tools could benefit your company. Examples include:

Farmer level

At the farmer level, digitalisation can be used to improve efficiencies concerning fertilisation, irrigation and the use of land. Digitalisation can also be used to ensure compliance with regulations on pesticide usage and pesticide reduction, for example. Greater efficiencies at the farmer level may result in cost reductions and greater productivity. This could potentially lead to greater profitability. For example, the Digital Green company offers a wide range of digitalisation tools for farmers. These include FarmStack, which is software that enables secure sharing of data among farmers.

Processor level

New equipment and technologies at the processor level enable the precise maintenance, measuring and monitoring of key quality parameters for natural food additives. Moisture content and production output are two examples. New equipment and technologies at the processor level also enable the precise maintenance, measuring and monitoring of storage conditions.

As a small or medium-sized enterprise, you can choose to use digitalisation tools only for a specific aspect of your operation. For example, you can use monitoring and tracking devices to monitor temperature, moisture content and CO2 during transport. Most and Switrace are examples of companies that offer such solutions. Many natural food additives need to be stored and transported at certain temperatures for them to maintain their quality.

Big data

Lots of data is collected at the sector association level to set standards, identify the most and least prospective regions and country markets, and identify current and future trends, among other things. Examples of associations doing this in the European food and drinks industry include FoodDrinkEurope. Governmental and non-government organisations (NGOs) such as Eurostat, the International Trade Centre (ITC) and the Food and Agriculture Organization also collect data on natural food additives.

Digital and online trade finance

We are moving towards a cash-free and paperless world where electronic documents and digital platforms and services are used to finance international trade. This is something that is expected to continue. Small-scale digital trading and payment platforms are available for suppliers and exporters in developing countries. Two examples are Stripe and Global Payments.

Logistics

Blockchain technology is being used in supply chains to monitor the flow of products/natural food additives from producers to consumers. Supply chain traceability and transparency are the main advantages of using blockchain technology. It can also be used to remove go-betweens, thus reducing costs.

Blockchain technology enables all parties in in the supply chain to check the status of their products, monitor the movement in real-time and see the status of documents. Alongside tracking goods, blockchain technology can safely and securely encrypt important documentation such as business contracts.

Export sales

Communication with buyers via emails and online platforms from first contact to after sales is already well-established. But the global COVID-19 pandemic has increased and expanded the use of digital tools and online platforms. For example many trade shows now run as hybrid versions where you are able to meet online.

Temporary travel bans and reluctance to hold industry trade fairs and events due to safety concerns and risks related to the COVID-19 pandemic has caused these events to take place on digital platforms. For example, BioFach the biggest trade show globally for organic products was held completely digitally in February 2021.

And even when physical trade fairs are allowed again, we see that trade fairs, exhibitions and conferences are taking place in a hybrid format, a combination of online and physical. For example, ANUGA which is one of the world’s trade fairs for food and beverages where you can network with conventional and natural food companies and buyers was being held in a hybrid format in 2021. This is expected to continue in the foreseeable future

Smart shopping and the informed consumer

We are living in a digital age. The internet, mobile technology and mobile devices have increased consumer access to information and have allowed consumers to be better informed when buying products. Consumers are demanding greater transparency from businesses about the products they sell, including food and drink products, production methods, labels and standards. Several mobile apps and tools now exist to help consumers make more sustainable choices. The EWG Healthy Living App and Giki Badges are two examples example.

Figure 1: Giki Badges App

Source: Giki Badges

Being honest and realistic

Money and resources can be limited for exporters of natural food additives in developing countries. Additionally, costs can be high and profit margins can be thin. You should therefore be honest and realistic when choosing the types of digitalisation you invest in.

Introducing digitalisation into your supply chain can also bring hidden costs. These include costs related to cyber security, technical and enterprise architecture, IT skills training and maintenance costs. You should factor this in when deciding what digitalisation tools you will introduce.

During this process, exporters should ask and answer the following questions:

1. Are there other more important priorities that must be addressed before going digital?
2. Which type of digitalisation is the most suitable given my situation and circumstances?
3. Can the costs of going digital be covered by your revenues? Wil you be able to pay all the necessary extra expenses related to maintenance and training?
4. Can you manage any unexpected costs that arise as a result of going digital? You may be forced to cover extra cost related to upgrading the software or your devices or in case of troubleshooting.

2. Use E-commerce platforms to find buyers

E-commerce is the trade of goods and services through the internet, with the transfer of money and data to complete sales. E-commerce is also known as electronic commerce and internet commerce. According to the United Nations Conference on Trade and Development (UNCTAD) there has been a big increase in global e-commerce, with business to business (B2B) sales dominating the field. This is a trend expected to continue.

As an exporter of natural food additives, you should follow this tip and use e-commerce platforms to find buyers, as it can increase sales and offer new opportunities.

E-commerce platforms allow exporters to advertise their business and the products they offer. Meanwhile, they allow buyers to find exporters meeting their needs through search filters such as price, country/region and certification. For exporters, benefits of using e-commerce platforms include:

• building an online presence;
• capitalising on existing buyer demand and expanding current network;
• lower costs;
• easy set-up;
• ability to test new products;
• expand global customer base;
• access to foreign markets, something particularly important for small to medium sized enterprises in developing countries; and
• increase customer service and loyalty.

Established European buyers and international buyers do not look for suppliers on e-commerce platforms. However, smaller buyers that require lower quantities of natural food additives are more likely to look for suppliers there.

Alibaba is an example of an important international B2B online e-commerce platform. IndiaMART (B2B and B2C) and TradeKey (B2B and B2C) are others. Buyers search for suppliers on Alibaba by searching for products and suppliers of products they want to buy, such as stevia. To help buyers choose a good supplier that is safe, Alibaba provides filters. Important filters for buyers on Alibaba include:

1. Trade Assurance - An accountable way to order, pay and track a purchase. It also allows any problems to be disputed for a refund with buyer money being held in escrow by Alibaba to ensure both parties deliver their side of the deal.
2. Verified - Suppliers with the verified check have had an onsite check by a third party. This means the physical premises exist and the company is an established business.
3. Categories – For example, agriculture / food & beverage
4. Minimum order quantity
5. Price – A minimum to maximum price range.
6. Supplier Country/Region
7. Management Certification – For example, Good Manufacturing Practices (GMP) and International Organization for Standardization.

To trade on Alibaba, exporters must register and create an account. Following this, exporters can list products they sell, including its description, specification, product functions, packaging and delivery, and company profile.

Figure 2.1: Stevia exporter on Alibaba

Source: Alibaba

Figure 2.2: Stevia exporter on Alibaba

Source: Alibaba

1-2-Taste is a B2B platform for raw materials and food ingredients and focuses on small and medium-sized producers. The platform focuses mainly on food ingredients and it offers certified ingredients. 1-2 Taste also provides technical services, including consulting and market insights. In order to become a supplier, you have to create an account. The platform can register suppliers from any part of the world.

Table 1. List of ingredients sold on1-2 Taste

By Functionality	By Application	1-2 tester concepts	My taste ingredients
Food Colouring	Bakery& Confection taste ingredients	1-2 tester Brain booster	My taste ingredients
Natural Flavours	Beverage& Dairy taste ingredients	1-2 tester Oat drinks
Organic Flavours	Ice Cream taste ingredients	1-2 tester Rhubarb Hard Seltzer
Natural Extracts	Meat Processing & Plant based alternatives	1-2 tester Vegan burger mix box
Fruit & vegetable-based	Sea food
Juice Concentrates	Seasoning
Juice Not-from-Concentrate (NFC)	Sports Nutrition Ingredients
Sweet Ingredients &Sweeteners
Nutraceuticals & Health
Texturisers, Proteins & starches
Emulsifiers & Humectants
Fibres
Natural Preservatives
Vanilla Beans& Ingredients
Essential Oils

Source: 12Taste.com

3. Consider using blockchain technology

Blockchain technology is a secure and transparent way to record and store data digitally at lots of points in the supply chain, which is available to all parties. These data can include business contracts containing information on buyer and seller identity, price, order quantity, quality and traceability alongside important documents such as customs documents.

According to the International Trade Center advantages of blockchain technology for small to medium-sized enterprises (SMEs) in developing countries include:

• greater efficiency and effectiveness;
• faster trade;
• lower costs; and
• ability to prove and ensure quality, safety, traceability, environmental and social responsibility including fair prices.

For blockchain technology to work, your company and parties involved in the supply chain must:

• be in the position to invest in buying and maintaining the necessary technology such as hardware and software;
• have staff who can or are able to learn to use it; and
• be willing and ready to share data.

The use of blockchain in the food industry is developing, with its use expected to increase in the future. Blockchain technology’s ability to prove and ensure supply chain safety, traceability and sustainability – particularly environmental and social responsibility – are key reasons behind this. This is especially important as younger consumers are becoming increasingly concerned about environmental and social responsibility.

Throughout Europe there is growing consumer demand for products produced in a way that is environmentally and socially conscious. This is particularly true for food products, as they have shown the highest growth of sustainable product sales in recent years. This trend is expected to continue.

According to a cited Kantar report Generation-Z consumers (born after 1995) in the UK are 1.4 times more likely to pay a premium for eco-friendly products with another report finding 45 percent of Generation-Z plan to prioritise sustainability over price. This trend suggests demand for environmentally and socially responsible natural ingredients is likely to increase in the future.

As an exporter in a developing country, you should follow this tip and consider using blockchain technology, as it offers several advantages. However, it is important to consider if there if there is business case for you to do so.

4. Use cost-free big data to identify and take advantage of opportunities

Numerous market research companies regularly collect large data sets and analyse existing data sets concerning natural food additives. They then publish data and produce reports containing their analysis of large data sets at a cost. Such an analysis can include the most and least prospective regions and country markets in terms of volume and value alongside its development over a period.

However, for small to medium-sized exporters in developing countries, access to large data sets and analysis reports is expensive. As an alternative, exporters can use and download large data sets published on cost-free digital international trade tools. Use this data to find new opportunities for your business and increase your chances of entering the European market. Examples of cost-free digital international trade tools providing access to big data on natural food additives include:

The International Trade Centre (ITC) Trade Map

The ITC Trade Map tool provides indicators on export performance, international demand, alternative markets and competitive markets alongside directory of importing and exporting companies. It covers 220 countries and territories and 5,300 products of the Harmonized System. Data is available in quarterly and yearly trade flows in table, graph and map form. Trade Map transforms large data sets into a user-friendly and interactive format.

Food and Agriculture Organization of the United Nations FAOSTAT

FAOSTAT provides access to food and agriculture data for over 245 countries and territories from 1961 to the most recent available year. It allows users to search by indicator or commodity and compare data alongside providing information on its definitions and standards.

Eurostat

Eurostat is the statistical office of the European Union (EU). Eurostat provides international trade data on its database according to Harmonized Commodity Description and Coding System (HS code). Data dimensions to choose from include European country markets, partner countries, product flow such as import and export, period and indicators such as value in Euros and quantity in 100KG. Data is available in spreadsheet, chart, treemap, map and table form.

European Commission Access2Markets

The European Commission’s Access2Markets portal statistics tool provides EU trade statistics (including the UK) according to HS code, individual EU member state, the entire EU, trade partner countries, import value, export value, import quantity and export quantity.  

Figure 3: HS Code 13012000 under which gum arabic is traded trade data from the Access2Markets portal statistics tool

Source: Access2Market

Cost-free digital international trade tools often only publish data large data sets. However, they do not always publish reports containing an analysis of large data sets. Performing an analysis of large data sets can be difficult for exporters in developing countries as they may not have the skills, time and resources to do so.

However, the Centre for the Promotion of Imports from developing countries (CBI) provides market analysis studies containing analysis of large data sets of promising natural food additives. These studies identify the most and least prospective European country markets in terms of volume and value, as well as its development over a certain period. Thus, exporters should consider reading the CBI’s market analysis studies for promising export products for natural food additives in Europe.

5. Attend digital events and use digital resources

In recent years, events where potential buyers can be found have started taking place digitally. At the same time, resources providing market information are also being made available digitally. Exporters of natural food additives should follow this tip as it can increase their chances of entering the European market. This is a key advantage of following this tip. Not following this tip is only to your disadvantage.

Digital events

COVID-19 presents serious safety risks to human health. As a result, in 2020 and 2021, physical trade fairs, exhibitions and industry conferences where buyers could be found have been postponed or cancelled. Reasons for this include lockdown measures and restrictions placed on large events by governments and authorities to prevent the spread of COVID-19. As an alternative, many of these events have been held digitally.

For example, BioFach, the biggest trade show globally for organic products, was held completely digitally in February 2021. Uncertainty caused by COVID-19, and particularly the risk of future waves, means digital events are likely to continue to take place digitally.

Figure 4: BioFach virtual edition 2021

Industry trade fairs, exhibitions and conferences are also taking place in a hybrid format, a combination of online and physical. For example, ANUGA, one of the world’s trade fairs for food and beverages where you can network with conventional and natural food companies and buyers, is being held in a hybrid format in 2021.

Figure 5: Anuga online trade fair platform

Source: Anuga

Digital resources

Market information about natural food additives and information about the latest news, trends and developments in the food and drink industry and European country markets is increasingly being made available digitally. Digitally available industry magazines, newsletter and articles published on websites are a valuable source of this information. Examples include Food Navigator, New Food Magazine, Food Europe and Food&Drink Business Europe. Additionally, exporters can subscribe to the CBI newsletter.

Webinars and their recordings, which allow speakers to deliver and share presentations alongside answering questions, are being made available digitally. These webinars contain information about the latest news, trends and developments. For example, CBI holds webinars for natural food additives such as Insights session: Exporting gum arabic and guar gum.

Figure 6: CBI webinars for natural food additives

Source: CBI

6. Use online company databases to find buyers

Using online company databases should be one of the first steps exporters in developing countries take when looking for new buyers. These databases make it easier and faster to find buyers, which is likely to increase chances of exporters successfully entering the European market.

There are also online marketplace platforms that enable you to offer your products and trade with customers. However, these platforms do not offer list of potential buyers. 

Popular databases relevant for exporters of natural ingredients for natural food additives include:

• EUROPAGES – directory of European companies, which can be searched by sector (for example natural food additives) and by keyword. You can filter your results further and select companies that are traders and not manufacturers (by selecting ‘agent’, ‘wholesaler’ or ‘distributor’, for example).
• ‘Wer liefert was’ is the leading B2B online marketplace in Germany, which is the most promising European market for natural food additives. This database allows you to search for companies and filter results as per your specifications. The companies are mostly German-speaking, so it is a good idea to search in German as well as English, as this will generate a wider range of results.
• Kompass – large database of companies. Subscribers can apply several filters to find potential buyers. It is also possible to perform a basic search free of charge by entering the product name and to refine your search by selecting ‘importers’.

Be aware of fraudulent companies selling fake databases. There are several ways of identifying emails sent by fraudulent companies. These companies will often have no online presence and their emails will contain impersonal greetings and poor grammar and spelling. The presentation may also be sloppy.

It is important to note that no database is complete, with even paid databases not including every potential buyer in your top European country markets. Nevertheless, to make finding buyers easier and faster, suppliers should follow this tip as it likely to increase their chances of successfully entering the European market.

Figure 7: Logos online company database platforms

Source: Various

7. Get help going digital

For exporters of natural food additives, going digital can be challenging. However, the main advantage of following this tip and getting help going digital is that challenges can be reduced and overcome. Meanwhile, of not following this tip would mean you continue to face challenges which could have a serious impact on your business and cause you to miss out on opportunities. Thus, follow this tip.

An easy way to get help going digital is to do online searches for companies and organisations offering services to go digital. To start, you can do basic online searches with simple search terms such as ‘help going digital’ followed by the name of the country are in. You can also narrow your results by selecting and entering information in filters on search engines. Common filters include language, region and year. Following this, you should contact companies that are relevant for you.

Another way of getting help going digital is to visit websites of digitalisation support projects, companies, platforms and associations offering digital solutions suitable for you alongside further information. Examples include:

• GIZ Digitalisation projects – GIZ is German international development agency providing support for sustainable development in developing countries. GIZ’s digitalisation projects provide digital support in several developing countries.
• GSMA Mobile for Development programmes – Provides resources and services to get digital. Services include device information, eSIM, fraud and security, network, interconnect, and roaming services.
• Ujuzi Kilimio – A company providing a real-time soil testing service using sensors and mobile technology, access to large data-sets and digital software to allow users to make informed decisions.
• Agri-Wallet – A company offering a digital financial platform for value chains in developing countries. It creates financial transparency and provides real-time insights.
• Futurepump – A company providing sustainable solar-powered water irrigation technology designed for small farmers in developing countries.
• Sypecomp – A company providing digitally remote sensing, farm mapping, financing, intelligence, smart sourcing/traceability and localised weather forecasting to suppliers in Ghana.
• M-Shamba – A social enterprise providing a digital platform, using interactive voice response services to explain and transfer agricultural technologies to smallholder farmers. It also provides digital literacy programs.
• Africa Goes Digital – An African association of company’s offering digital solutions in Africa. Consider contacting its members that are suitable for you.

Additionally, see Annex 5.A1. of the OECD Latin American Economic Outlook 2020: Digital Transformation for Building Back Better report to see a list of digitalisation projects in Latin American countries. Consider contacting those that are relevant for you.

This study has been carried out on behalf of CBI by Ecovia Intelligence.

Please review our market information disclaimer.