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10 tips for doing business with European buyers of natural ingredients for health products

Takes 12 minutes to read

The relationships between importers and exporters in the natural ingredients for health products sector are changing. In Europe, there are increased documentation requirements and an increased desire to negotiate on terms of payment for organic and fair-trade products. Use these ten top tips to help you do business with buyers in Europe.


1 . Study international guidelines and European legislation

To be successful in Europe you will need to know all about international guidelines and European legislation. You will also need to know about national regulations and legislation in the countries you are targeting.

European legislation changes quite regularly. To stay informed you can use the following approaches:

  • Check associations for their interpretation of the legislation texts.
  • Ask buyers for any changes in their specification. Note that not all buyers are up-to-date.
  • Ask the enforcer. Food Safety Authorities can give advice on how to deal with new legislation.
  • Contact consultancy firms that assess legislation and advise companies on how to comply. They will be able to help, but at a cost.

Especially the Novel Food legislation is an important regulation in trade with European companies that buy natural ingredients for health product. Check the website of the European Commission for Novel Food to collect information about:

Over the last 10 years the United Nations (UN) has developed international guidelines to increase harmonisation of the procurement and processing of raw materials. These include:

  • ISO Standards (ISO 26000 or ISO 31000)
  • Hazard Analysis and Critical Control Points (HACCP see Codex Alimentarius or ISO 22000)
  • World Health Organization (WHO) guidelines (GACP, plant monographs)
  • European Commission’s Good Practices.

These international guidelines (among others) have been turned into Standard Operating Procedures (SOPs) and Work Instructions (WINs). You can adopt these as part of your business’ key operations.

Adapting and improving your production processes according to SOPs and WINs will improve your chances of success on the European market. Check out the IN2NI website for SOPs and WINs specific to the natural ingredients sector.

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2 . Formulate a clear and specific product offering

Formulating a clear product offering is essential when doing business with European buyers.

Consider developing information that you can adapt to your buyers individual specifications. This will make a good impression. It shows you have done your research, and that you have listened to your buyers’ specific requirements.

Making a good impression and listing to your buyers is a prominent and important part of sales in Europe.

Your product offer should include information on:

  • Quality
  • Quantity
  • Availability
  • Price

Be sure also to include:

  • Product documentation compliant with international standards (incl. botanical names)
  • Certifications and evidence that you operate according to SOPs
  • Information on product availability (year, location)
  • Batch number – according to samples sent
  • Transparent costing and pricing
  • Terms of payment
  • Delivery terms

Tips:

  • Explain which standards your products and processes meet.
  • Explain your position on Risk Management.
  • Demonstrate your commitment to Corporate Social Responsibility (CSR).
  • Explain your costing and pricing and any contributions you make to rural income.
  • Put a time limit on your offer.
  • Use international terminology for trade information, including payment terms.

3 . Consider infrastructure and logistics

When doing business with European buyers you need to offer realistic terms and you must not over-promise.

Be realistic about logistics. Don’t forget to take infrastructure (road, port, telecommunication or internet) or services for transport from freight agencies (for example customs agents) or export consultants into consideration.

You’ll need to learn how to manage the movement of your natural ingredients through the global supply chain.

Buyers in Europe are interested in infrastructure that is ecological as well as economical. You will also need to be prepared to work responsibly and sustainably.

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4 . Be realistic and transparent about prices

Contributing to sustainable development is an important factor in doing business in Europe.

When setting your prices, European buyers will of course expect you to consider the prices you pay for purchasing raw materials and natural ingredients. But they also expect you to take the social and economic impact on rural income in the region you source from into account.

Production costs of natural raw materials and ingredients are at the forefront of discussions about sustainable supply chain development.

Keep in mind, that additional costs for physical, chemical and microbiology analysis, pesticide residues, identity, safety and efficacy or Genetically Modified Organisms (GMO) free may occur if buyers ask for those certificates. Include the cost factors in your costing and pricing.

Therefore, when sourcing your raw materials, it is important for you to consider where they are coming from and how much you are paying for them. This will help establish margins to support your business. However, you must not neglect the aspects of sustainable supply chain development.

Think about your contributions to the community and small and medium-sized enterprises (SMEs) in rural areas. Read more about Corporate Social Responsibility (CSR) on the European Commission’s website.

It is better to be realistic and transparent about prices at the farmer/collector level. In this way you can protect your resources and help rural areas sustain their production. This is part of a socially-responsible and sustainable strategy, and one that will work well for the longevity and reputation of your business.

Tips:

  • Visit the website of the European Commission for more information about Corporate Social Responsibility (CSR) and see the ISO 26000 Standard.
  • Maintain realistic purchase prices at the farmer level and promote Corporate Social Responsibility all the way along your supply chain.
  • Gather data on the costs at source and use these to establish transparent costing and pricing.
  • Include certificates of analysis and other evidence of the quality and sustainability of your products.

5 . Use modern technology for data collection and processing

If you use modern technology in your business practices it will be easier for you to improve quality, traceability and add value to your natural ingredients. This will make you stand out from the competition.

Some examples are:

  • Tailor-made, pre and post-harvest technology;
  • Hand-held/mobile devices for wild collection and cultivation (this facilitates on the spot documentation and inspection).Linking data collection to process and product documentation or using centralised data processing to provide tailor-made information packages to auditors.

Tips:

  • Allocate sufficient human resources to quality control and quality assurance.
  • Develop your own traceability system with support of the Global Traceability Standard for Healthcare or the ISO 22005:2007. Make sure every ingredient can be traced back to the field of production. 
  • Promote data collection, data processing and documentation as an (future) USP (Unique Selling Point).

6 . Set out terms for trade

Clear terms for trade, shipment and payment are an important part of building trust with European buyers.

You’ll need to be aware of the expectations of your buyers. You should provide clear and honest information on quality and product pricing. And you’ll need to protect your own interests as well when agreeing on payment terms.

In this sector, there is an increased desire to negotiate on payment terms for organic and/or fair-trade products. Sustainable development standards and fair-trade certification schemes (Fairtrade Labelling Organization, FairWild) have developed specific systems of advance payments and premium fund mechanisms.

Advance payments are increasingly viewed as collaboration on risk. The issue of advance payments in the trade of natural ingredients is currently being re-evaluated and the traditionally strong position of the buyer is changing as natural ingredients on the European market become scarce.

Do your research and get to know your buyers’ expectations.

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7 . Support a strong company image

Consumers in Europe want high-quality products. They also want to know more about where those products are coming from. They want to know that they are doing some good while buying a product. This means that buyers are on the lookout for products with a story to tell.

For example explain European buyers what the origin of your product is, and what producers or farmers are involved.

Create a strong image for yourself as a company. This has become an almost unavoidable part of marketing in the natural ingredients for health products sector.

Creating a strong company image with stories about the origins of your products is also an important for improving the image of your country, and putting your country on the European buyers’ radar.

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8 . Be innovative

Try to develop a long-term relationship with European buyers by being innovative. Innovation helps you deliver new and better quality constantly.

Innovation is rooted in continual improvement, monitoring and assessment. To be innovative you will need a reliable and skilled workforce as well as documented procedures.

Strategic partnerships with European manufacturers will help to develop your products/ingredients with a focus on European market needs. Such partnerships lower your risks because there is higher probability on the success of the product on the market.

Combined, these elements give a sense of authenticity and reliability which is very important to European buyers.

Tips:

  • Only send samples of your products on specific buyer request and marked as “type” or “lot” samples.
  • Always be polite and on time when communicating with your clients. Frequent communication builds trust. Remember negative news is also important information. For example send regular newsletters on monthly basis.
  • Find out if your business partners are reliable. You can use the FiBL factsheet for help.
  • Build strategic partnerships with European manufacturers for product development.

9 . Be honest and always substantiate your claims

To be successful in Europe you need to be transparent about what your products are, and where they come from. The only way to convince buyers of your authenticity is by backing up your claims with solid proof.

Historically, products like Peru balsam for example, didn’t actually originate from Peru. They were re-exported after import from Central America. This has damaged the natural ingredients sector by providing misleading information.

To avoid this from happening, European buyers look for traceability. For health products you need to prove your product’s identity, safety and efficacy.

You can use Good Agricultural and Collection Practices (GACP) and Good Manufacturing Practices (GMP) to help you provide the correct levels of traceability. Documentation of origin is important as a way of providing proof, as is certification for organic and/or fair-trade products.

Organise a third-party audit of your processes and value chain to help substantiate your claims.

It is also important to protect the origins of natural ingredients for health products through access and benefit sharing mechanism and denomination of origin. Be aware that the rules change and keep yourself up to date at all times.

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10 . Provide clear and adequate information and documentation

Providing clear and adequate information and documentation about your company’s products and processes is crucial in a business relationship with a European buyer.

For information about how to compile documentation see the International (UN) Standards guidelines and Good Practices (GxPs) for the implementation in the United Nations’ member states. The product (natural ingredient) documentation is specifically spelled out in the European Union legislation for the related sectors as health products.

All medicinal products in the European Union are subject to a strict testing and assessment of their quality, efficacy and safety before being authorised.

Once placed on the market they continue to be monitored to assure that any aspect which could impact the safety profile of a medicine is detected and assessed. This monitoring is coined as pharmacovigilance.

There is a new EU Directive 2014/95/EU (“CSR Directive”) for non-financial reporting. It applies to larger European companies (more than 500 employees) and will also affect their suppliers.

Starting the financial year from 1 January 2017 larger European companies will have to meet new process and product (CSR) documentation requirements. Their suppliers will therefore be asked to make value chain information (by filling buyer questionnaires) and Code of Conducts available.

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