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

As an exporter of natural ingredients for health products, there are certain things to pay close attention to when doing business in Europe. To be successful in European export markets, it is important to act professionally when dealing with European buyers and to meet their minimum buyer requirements. Buyers often expect you to go beyond the minimum, so ensure that sustainability is well-integrated into your business and that you can talk about it effectively. If you master these elements, you will have a better chance of becoming and remaining a successful exporter to Europe.

1. Set up a traceability system to substantiate your claims

To be able to do business in Europe, it is becoming mandatory for exporters to be able to provide evidence of the origins of their products and how they are produced. The requirements for transparent supply chains are being formalised as European legislation on traceability and deforestation-free production becomes stricter. Your customer will ask you about your product's sourcing location and its impact on the environment and on the employees producing it. Whether you are an exporter working directly with producers or purchasing natural ingredients through an intermediary, you must be able to provide your European customers with the full picture of traceability. This means all the steps of your supply chain, the actors involved, and the environmental and social compliance aspects.

The activity of mapping all actors in a supply chain and their actions is known as traceability. There are many methods that you can utilise to implement a traceability system. If you've never done this before, implementing a simple and clear system is advised.

Here is a simple process you can follow:

1. Identify the important stages or locations (critical traceability points) in the supply chain where you can track and trace your products: these stages/points are usually found at the farm level, when products are harvested, processed, packed, stored and transported. By identifying these key points you can better monitor and manage the movement and quality of your products throughout the entire chain.
2. Assign unique identifiers to each batch of produce: this can be a QR code, a barcode or a serial number. The identifier will be used to track and trace the product through the supply chain.
3. Establish a record-keeping system: this includes data like batch number, date and time of each stage in the supply chain, location, quality control results, and any other information.
4. Label packages with unique identifiers, product details and origin: this should also include information such as product name, origin, date of packaging and any certification marks.
5. Choose a method for data capture: this can be done manually through logbooks or digitally using dedicated software or mobile applications.
6. Train employees and implement a traceability system: make sure everyone involved fully understands their roles in maintaining accurate records.
7. Regularly verify data accuracy and conduct audits: conduct periodic audits to ensure compliance with standards and identify any gaps or issues. You can consider doing your own audits, or hire an independent consultant to help you with this. This decision depends on various factors, including the size of your business, your available resources, and specific buyer requirements and expectations.
8. Collaborate with suppliers to ensure traceability practices: ask your suppliers to provide information on the origin and quality of the agricultural produce they supply.
9. Prepare traceability documentation: this can be reports or certifications that you can provide customers upon request.
10. Continuously improve the system based on feedback and industry standards: stay updated on emerging technologies and practices that can enhance your capabilities.

2. Prepare fully before attending international trade fairs

As an exporter, trade fairs are among the best opportunities for you to identify buyers for your natural ingredients. These events usually only last for 2-4 days, and it is best to go there with a plan. If you want to ensure that the trade fair is a success, it is critical for you to prepare fully before attending.

To start, you should research and gather relevant information on European consumers' preferences, market trends, regulations and competitors. The knowledge you gather will help you tailor your marketing material and sales pitch.

Trade fairs attract many types of people and companies involved along the supply chain, including final product manufacturers, distributors, importers and independent traders. Trade fairs like BioFach, Europe's largest organic trade fair, have an online platform where you can filter for buyers of certain ingredients and interact with them before you attend. Other trade fairs like Vitafoods also have an exhibitors list that you can use to prepare in advance.

Make a long list of any companies that you find interesting and record at what stand they will be during the trade fair. This targeted approach will maximise the time you can spend interacting with buyers.

For data collection, you can use mobile applications to scan badges or take pictures of attendee information. Ensure that your marketing material, as well as your business cards, are up to date so that people can contact you. You can also ask people whether they use LinkedIn. There is a function where you can scan a barcode within LinkedIn and be automatically directed to their profile.

Remember that attending trade fairs can provide you with additional insights into the market and specific preferences of potential buyers 

Figure 1 below provides a simple outline for crafting your market entry strategy. Before the trade fair you should identify your product, how you want to position yourself and who you want to target, which aspects of your business are strongest for promotion (e.g. sustainable farming, social commitment, high-quality product), what is your place in the market (segmentation), what are you doing in terms of protecting people and the planet, and what are your pricing structures.

Remember that it is important to do this before attending a trade fair. It helps you set specific objectives that you want to achieve in terms of sales, number of new contacts, subjects you'd like to learn about, etc. This will help you focus your efforts.

Figure 1: Parameters for outlining your market entry strategy

3. Ensure that you send high-quality samples to interested buyers

Samples are a big part of doing business in Europe. Often buyers will only continue the conversation with you once they have received and tested the samples you sent them. Therefore, you must always send high-quality samples to potential buyers to demonstrate the superior characteristics of your natural ingredient. When your customer receives a sample that is consistent with their expectations and requirement, they are more likely to want to do business with you. This will create a positive first impression and build trust in your product and company.

Furthermore, high-quality samples show that you are serious and professional. It indicates that you take your business seriously and do things the right way. Sending high-quality samples will reflect positively on you as a business owner. Be aware that samples should be representative of your offer – that is, samples that represent the product that will be shipped. As an exporter, it is important for you to get feedback on the quality of your products. You will be much better positioned to make changes at production if you know that your samples do not match the quality parameters of your customer. By collaborating with your customer on sample testing, you will be better informed on what makes a good product – based on colour, aroma, potency and purity.

When a buyer requests a sample from you, make sure that you prepare and ship the sample according to their exact request. This may include:

1. Product characteristics: e.g. specific species and plant parts, and other product identifiers such as type of certification
2. Quantity and presentation: e.g. 1kg of turmeric powder
3. Packaging: e.g. steel drums or paper bags
4. Expected time of delivery
5. Expiration date

Be aware that many buyers do not only test the first batch of samples they receive. The first batch determines only whether they are willing to cooperate with you for further purchasing. Many buyers will test every single batch they receive to ensure that the quality meets their needs. For this reason, it is critical that you ensure your natural ingredients always meet the pre-defined quality parameters of your buyer.

To gain exposure in the market and identify new potential partners, you can leverage the opportunities of e-commerce and digital trade. Platforms such as 1-2 Taste offer a marketplace for European food manufacturers to source individual natural ingredients. Buyers can order samples, see technical data sheets and specification sheets, and cultivate long-term business relationships with exporters.

Figure 2: Example of samples platform

Source: 1-2-Taste, 2023

4. Set your prices carefully when making a quote

Before you start approaching potential buyers or start selling in the European market, it is important to figure out your prices and pricing strategy. Failing to do so might make you appear unprofessional and could result in you selling your natural ingredients for less than what it actually costs to make and process them.

It is important to keep in mind that quotes for seemingly similar products can vary significantly. Prices are influenced by various factors, such as:

• Whether the ingredients are unprocessed or processed;
• Whether the ingredients have been treated to get rid of insect pests and microbiological contamination;
• Whether the ingredients have been tested at an accredited laboratory with certificates showing they meet certain buyer's quality specifications;
• Whether the ingredients are conventional or follow certain sustainability standards, like organic, FairWild or Fairtrade;
• How much is being bought and how the ingredients are going to be delivered;
• The chosen payment terms, the currency used, and the relationship and trade history between buyer and seller;
• Currency exchange rates, which can also affect the price.

Setting the right price

To set the right price it is important that you find out the actual costs and desired profit margin of your product. Important questions to consider when setting your prices are:

• What does it cost to source, process and deliver your goods to a certain point in the supply chain?
• What is the break-even point for your entire business? This is the number of products you need to sell to at least cover your costs. 
• What is the profit margin you want to achieve (i.e. add above the break-even point)?

Second, it is important to familiarise yourself with the different international commercial terms (Incoterms) for your products. Buyers usually want to know the FOB (Free on Board) price for your goods. Make sure you know how to calculate this price. It is also recommended to prepare prices for other Incoterms such as CIF (Cost, Insurance and Freight) and DDP (Delivered Duty Paid).

A third consideration is that natural ingredients for health products are sold by weight, often in units of 25 kg and container loads. This means you have to set your prices per kilogram or per tonne. Consider giving discounts for larger orders, like 10% off for a 100-kg order. Calculate these discounts based on the unit price for handling, transporting and warehousing the goods.

Creating a quote

European buyers typically ask for quotes before doing business with you. Quotes should be short and error-free. The following information should be included in quotes:

• Product description – This should contain basic information on form, quality and certification of your natural ingredient. It is recommended to send documentation like your Certificate of Analysis (CoA) as a separate document. This serves as proof that your product complies with European regulations.
• Shelf life – There are no industry standards defining shelf life, but this is defined as the typical shelf life of an ingredient when it is correctly stored and handled.
• Price – This should be in euros (EUR) or US dollars (USD), but remember that European buyers prefer the first. Clearly indicate which Incoterms are used for the price along with the weight (generally on a per-kg or per-tonne basis). This applies to liquid natural ingredients for health products such as essential oils as well as solid natural ingredients for health products such as turmeric.
• Packaging – Information about the type of packaging (e.g. example steel drum or kraft paper bag) and size (e.g. 25 kg per batch) of your natural ingredient should be included here.
• Payment terms
• Quote expiry date - to avoid or allow for price changes.

Table 1: Example of a quotation for turmeric powder used in the health products sector

Source: ProFound, 2023

5. Act professionally when dealing with European buyers

The competition for buyers is very fierce in Europe. One way you can stand out is by being professional in all your interactions with buyers. At a very basic level, you must be punctual to meetings, ensure you are well-prepared and sustain an image of reliability. The professionalism you display in your meetings will determine a buyer's willingness to work with you. If your buyer sees you are professional and trusts you, this will only have a positive impact on your business. Remember that trust is the most important aspect of successful and long-term business relationships.

There are several ways that you can display your professionalism when dealing with European buyers: 

1. Professional appearance
   Make sure you dress appropriately for business interaction, whether it is online or in person. Present yourself in a manner that aligns with the expectations of your industry and the cultural norms of your target market. For instance, trade fair Vitafoods states in its Exhibition Code of Conduct that it is unacceptable to wear clothing "that is not suitable for a professional work environment, the local culture, or that is provocative, or otherwise potentially or intentionally offensive." 
2. Timeliness
   Punctuality is key and you must be respectful of the buyer's time. If there are unavoidable delays, communicate promptly and provide updates to minimise inconveniences.
3. Preparedness
   Prepare thoroughly before your meetings with buyers, and make sure you prepare thoroughly by researching the buyer's business, needs and preferences. Prepare relevant information such as product details, pricing and documentation.
4. Clarity
   Clear and effective communication are important; you must maintain a polite and respectful tone, and avoid technical terms that may confuse the buyer, unless this concerns industry terminology that you are both familiar with. Be responsive to inquiries and provide accurate and concise information.
5. Active listening
   Practice active listening when engaging with buyers. Pay attention to their needs, concerns and feedback. Ask clarifying questions and demonstrate genuine interest in their perspectives.
6. Honesty
   Being honest and transparent in your interactions with buyers is of critical importance. Provide accurate information about your products, pricing, delivery times, and any limitations or risks involved. Avoid making exaggerated claims. Transparency builds trust and establishes a solid foundation for long-term relationships.
7. Execution
   Follow up and follow through: make sure to act on the promises you make in a timely manner. Keep your buyer informed on developments and make it a priority to respond to their requests promptly. This shows that you are serious about the cooperation and will reflect positively on your company.

6. Meet minimum buyer requirements and go beyond them

To be able to do business in European markets, you must comply with the minimum requirements as set out by the European Union as well as your buyer. Do note that requirements will vary depending on whether you market your ingredient as an herbal medicinal product or a food supplement.

One of the most important requirements of buyers in Europe relates to product quality. For this reason, European buyers increasingly demand that exporters meet quality as well as food safety parameters. Improving the quality of your product and implementing a food safety management system will help your company stand out from competitors in the market.

In addition to the minimum Hazard and Critical Control Point (HACCP) standard, the European food industry increasingly demands that suppliers follow more complete food safety standards. If you are supplying food supplements to large retailers or manufacturers, this is more common.

Here are some of the most common standards that you can utilise and implement for compliance with minimum buyer requirements.

• ISO 22000 – Food Safety Management System certification
• FSSC 22000 – based on ISO22000 and aimed specifically at food manufacturers
• IFS with several standards related to food safety
• BRCGS standards, which provide technical standards for food safety

Supplying to the herbal medicine market necessitates higher quality levels and safety management systems. The International Organization for Standardization (ISO) is an industry-standard that sets out what is needed for a solid quality management system. The expectations of the system relate to leadership, people participation, improvement, process approach, relationship management and customer focus.

Under the Corporate Social Responsibility Directive (CSDR) European companies are increasingly required to be able to provide evidence of transparency and traceability throughout their supply chain, as well as sustainable production methods, packaging and transportation. As an exporter you must also take this into consideration, as the success of your business will be impacted if you do not implement a traceability system that provides evidence of your operational processes.

Furthermore, some buyers are specifically focused on purchasing organic- and/or fair trade-certified ingredients as the demand for sustainable products in European markets is steadily growing. Examples of such buyers are AG Nutrition (Netherlands), l'Herbier du Diois (France) and Natac (Spain).

As an exporter, you can capitalise on this trend by implementing certification protocols along your supply chain and getting EU-recognised certificates for organic and fair trade standards. Also, it is important that you can gradually become an even more sustainable business by implementing regenerative agricultural practices, for example. If you are truly committed to environmental and social sustainability, you can meet the UNCTAD BioTrade Initiative BioTrade Principles and Criteria as well as the FairWild standard.

7. Collaborate with business support organisations

If you want to have a better chance of accessing the European market and trading successfully, consider joining an export promotion programme. Or you could collaborate with industry groups that facilitate trade with European buyers. Numerous export agencies offer specialised knowledge and support to exporters seeking entry into new markets. These programmes provide coaching and valuable market insights tailored to specific European industries, including the food and health industries, and are often free of charge. It is highly recommended to join these programmes, as they offer insights into the regulations needed for compliance and provide information on relevant industry trends within the European food industry.

Keep in mind that you might be required to incorporate the acquired knowledge and make adjustments to your business operations. Neglecting the tools and resources offered by various matchmaking programmes could result in missing out on crucial information related to the European market. You could also be excluded from receiving further support. Insufficient knowledge about regulations and requirements of European buyers may hamper your export activities.

The services provided by these export agencies include training, coaching, remote guidance, participation in trade fairs and business-matching. These services are typically delivered by European sector experts who possess extensive knowledge to guide exporters on market entry and trading strategies. For instance, these experts are well-informed about the requirements and expectations of European buyers.

One key advantage of participating in an export promotion programme is the networking opportunities it provides, enabling you to connect with potential European buyers. Additionally, your participation in such networking events enhances your company's credibility and proves your commitment to meeting buyers' needs.

Noteworthy European agencies operating within the natural ingredient for health products sector include:

1. Centre for the Promotion of Imports from Developing Countries (CBI)

The Centre for the Promotion of Imports from Developing Countries (CBI) provides a wide range of services to exporters from developing countries wishing to enter the European market. Services offered by CBI include export coaching programmes, training and coaching, distance learning and guidance, company visits, market information and multiple trade fair participation. CBI is focused on sustainability and works with niche products. CBI is active in specific CBI countries across Asia, East Africa, the Middle East and North Africa, and West Africa and the Sahel.

2. Committee Linking Entrepreneurship-Agriculture-Development (COLEAD)

The Committee Linking Entrepreneurship-Agriculture-Development (COLEAD) is a Belgian-based corporation that offers tailored support, trainings and market access mainly to West African companies. In practice, COLEAD supports the transition to more sustainable agri-food systems by facilitating and promoting good practices that are recognised elements of agroecological systems tailored to the local context.

3. Swiss Import Promotion Agency (SIPPO)

The Swiss Import Promotion Programme (SIPPO) provides support to chosen Business Services Organisations (BSOs) that help exporters boost their exports to new markets. BSO staff receive expert training and coaching in their home country, which they then use to help exporters. It is important to check whether the BSO in your country is being supported by SIPPO. Note that SIPPO has offices in Albania, Bosnia and Herzegovina, Colombia, Indonesia, Morocco, North Macedonia, Peru, Serbia, South Africa, Tunisia and Vietnam.

4. Import Promotion Desk (IPD)

The Import Promotion Desk (IPD) provides exporters from developing countries with training and matchmaking opportunities to meet European, particularly German, importers. Additionally, the IPD prepares market reports that help exporters enter the European market.

5. International Trade Centre (ITC)

The International Trade Centre (ITC) is a developmental agency of the United Nations that promotes sustainable trade. Most of its activities are aimed towards exporters. ITC provides export management, supply chain management, quality management, packaging, and marketing and branding programmes.

The ITC offers publications and a SME Trade Academy providing online courses (some of which are free). If you want to become a successful exporter of natural ingredients for health products, courses such as 'Export Sales and Negotiation' and 'Helping SME's Generate Export Business' may be helpful.

Exporters based in developing countries should prioritise joining a trade promotion programme due to the highly regulated and intensely competitive nature of the European market. By adhering to this advice, exporters specialising in natural food additives can significantly enhance their prospects of effectively accessing and trading in the European market.

Figure 3: Business-support organisations in Europe

Source: Various, 2023

8. Prepare all the necessary documentation and have it on-hand

You must ensure that all your documentation is organised and available for sharing before you approach a buyer. European buyers increasingly demand a technical dossier that explains all technical, economic, social, environmental and quality data about your product.

Your technical dossier must include the following information:

• The latest versions of all your technical data sheets (TDS), as well as older versions to compare quality differences (e.g. TDS for organic maca powder).
• Certificates of analysis (CoA) (e.g. CoA for Echinacea Purpurea herb extract).
• Certificates of conformity, as sometimes a European buyer might want products to meet certain quality rules. These rules could be set by international groups like FAO or ISO, or they could be guidelines from a European trade organisation such as the European Spice Association - ESA.

It is important that you keep your technical dossier organised, updated and readily adjustable. Doing this will help you run your business more smoothly and will also allow you to respond quickly to requests from potential buyers. The technical dossier should include all required information for export, including:

• Product description: detailed description of your product, including product name, composition, and any specific characteristics worth mentioning
• Manufacturing process: Flow chart and/or full description of the manufacturing process. Describe the entire process, from sourcing to final product. Include information on the extraction method used, equipment employed, and quality control measures during processing.
• Specifications: In your TDS and CoA, outline the specifications and quality parameters of your product, including details on physical characteristics, chemical composition and microbiological criteria.
• Safety assessment: Conduct safety assessment to identify any potential hazards.
• Stability and shelf life: Stability testing helps identify shelf life and storage conditions – how does stability differ under varying storage conditions, e.g. with high exposure to sunlight.
• Access Permit: Refer to any access- and benefit-sharing legislation in your country.
• Documentation of Compliance: Documentation that certifies your business registration, validity, and ability to operate in the EU.
• Further Certification: Explain if you possess any other relevant documentation.

Additional documentation that will be essential includes the certificate of origin and information about the usage of your ingredients in the health sector. European buyers frequently ask suppliers to complete questionnaires to make sure they are following the EU regulations. Responding to these questionnaires truthfully and accurately is crucial.

Preparing the required documentation for European buyers demands a significant investment of time and resources. The stringent EU regulations and growing quality expectations place considerable pressure on buyers to fulfil their customers' requirements. Therefore, it is very important to ensure that your documentation is well-organised and thoroughly prepared.

9. Practice your sales pitch and adapt it to specific buyers

A good sales pitch that is well-structured and confident can make the difference between you doing business with a new buyer or not. Your sales pitch must have a clear value proposition. Explain to your buyer the unique benefit of your natural ingredient, and highlight how your product is able to meet the specific needs of the buyer.

A value proposition has, for example:

• an impeccable traceability system,
• a good resource management and conservation plan, or
• a close engagement with the producing or collecting communities.

To be able to do this successfully, you will need to conduct research and prepare. First, understand the buyer's business and their target market. Try and identify their pain points and how the package of your company plus product can solve their problems. To make your sales pitch more convincing, you can use language and examples that resonate with the industry and show that you understand your buyer's challenges and provide practicable solutions for them.

Understanding your buyer's business is one of the most important elements of delivering a good sales pitch that is unique to the specific buyer you're engaging with. Ensure that you know the position of your contact within the company. For example, you may be speaking with purchasing managers who may be more concerned with the quality and quantity available of the ingredient. On the other hand, sales representatives will be more interested in the claims to be made, such as effectiveness and marketing stories.

When delivering the sales pitch, ensure you have a strong opening that grabs the buyer's attention and make it clear why they should listen to you and continue the conversation. You can do this by highlighting a relevant statistic, success story or industry trend. A well-crafted story of your business or product can make a huge difference to your success outcome. Figure 4 outlines the steps in preparing your personalised sales pitch.

To prove that your product is worth the investment, highlight any certifications or quality standards that your company possesses. If you have existing buyers from European markets, ask them to share product reviews and add these case studies to your marketing material. Although you're trying to sell, you should also focus on how your product can enhance the buyer's product quality, market appeal and customer satisfaction.

At the end of the presentation, clearly state the next desired steps that you would like to take for the buyer and invite them to ask any questions. Your next step could be scheduling a next meeting or sending a sample for quality control. Make it easy for the potential buyer to stay in contact with you by providing contact information and being readily available for follow-up talks and next steps.

Figure: 4 Steps to prepare and execute a sales pitch

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