Marketing strategy for

Indonesian spices
This module provides Indonesian exporters of (sustainablyproduced) spices with insights into the ways and means to
position, promote and sell their products on the EU market. It
addresses decision-making strategies on segments, distribution
& product pricing and tips & tools on promotion, communication
and opportunities to meet EU buyers.
Decision-making: segments, distribution and pricing
Market segments
In the spices sector, the exporters choice for one segment over the other
depends highly on the nature of the product and additional sustainability, quality
(and safety) standards which are demanded by the buyer. As described in EU
market insights for Indonesian spices, the European spices sector consists of
roughly 3 segments, which are applicable to the following products:
Premium
o
certified spices (niche sustainable markets); e.g. organic, fair trade,
Forest Garden Products (FGP)
o
high quality; e.g. high grades
o
exotic varieties

Middle range
o
possibility for sustainability certification (mainstream market); e.g.
Rainforest Alliance
o
standard quality; e.g. common/standard grades

Low price
o
lower quality; e.g. lower grades
o
basic legal and industry requirements, e.g. ESA Quality Minima

Although the line between these segments can become somewhat blurred for
certain products, they are often distributed through distinct trade channels.
Choosing one channel over the other will depend on the following elements:
the requirements of your buyers: commitment to sustainability and/or high
quality, sufficient volumes, traceability, demands from their end user clients
(e.g. for retailers, British Retail Consortium (BRC) certification can be
demanded)
your export capabilities and product profile: certifications (or capacity to
certify), quality management systems, delivery capacity, product properties
The match between the requirements of your buyers and your export capabilities
will determine your possibilities to distribute directly or indirectly to end users of
spices. The different trade channels for spices in the EU, including a description of
relevant players and possible channels, are available in CBIs Market Intelligence
on Spices and Herbs: Channels and Segments. A more specific analysis of the
trade channels for exporters in Indonesia are given in EU market insights for
Indonesian spices.

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Tailored Market Intelligence: Marketing strategy for Indonesian spices

As described in the above-mentioned documents, reaching the EU market with a

final product (i.e. directly to a retailer, in retail packaging) is highly uncommon
for small and medium-sized spice exporters. For this reason, spices are discussed
in the sections below as food ingredients (i.e. semi-finished products).
Distribution strategy
Having studied the different trade channels available for spices, your next step
will be to develop a distribution strategy for your products. In general, the
strategies below can be adopted:
Exclusive distribution involves limiting distribution to a single buyer. This
strategy can be used for a spice which usually has a high price and is less
common (i.e. premium segment). It requires a deeper level of cooperation
with your buyer; not only will this buyer have to invest in selling the product
further, but they will often commit not to sell similar/competing products. This
is more closely related to premium spices of rarer species and/or higher
grades, as well as custom-made spices. This type of distribution is also
applicable to circumstances where supplier and buyer develop a sustainability
project together or in the case of high-end certifications such as Forest Garden
Products (FGP).
Selective distribution entails choosing a small number of intermediaries to
distribute your spices. This strategy is commonly used when the number of
potential buyers is limited, and they are not willing to establish exclusivity
agreements. This strategy is most related to the premium segment; e.g.
organic and fair trade-certified spices, which still represent niche markets.
Intensive distribution is generally used to distribute more commonly-traded
spices, where there are many potential buyers available, whether these are
importers or grinders/processors. This strategy is most relevant for spices in
the low price and middle range segments (standard qualities). Note that you
might need to invest in appropriate quality management systems (e.g. related
to food safety) in order to reach a broader array of potential buyers. Once
mainstream sustainability standards for spices (e.g. Rainforest Alliance) gain
popularity, complying with such standards might also contribute to your
competitive advantage over other suppliers.
Pricing
In creating a pricing strategy for spices, you first need to determine the
(financial) objectives you want to achieve as a business. These objectives can be:
maximisation of profits, revenues, quantities, signalling quality leadership, cost
recovery, survival or maintaining the status quo. A newly established spice
company might be interested in, for instance, cost recovery, in order to
compensate for initial investments. For a more established company with a stable
client portfolio, maintaining the status quo would be more appropriate.
Once your general financial objectives have been established, you can link them
to one of the strategies distinguished below:

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Tailored Market Intelligence: Marketing strategy for Indonesian spices

Pricing Strategies Matrix

Market-oriented
pricing

Competitive pricing

Premium pricing

Product scarcity

Penetration pricing

Price

Premium pricing: where you set your price high to reflect the exclusiveness
of the product. This is only feasible for speciality spices (premium segment),
e.g. exotic, high quality, etc. Certification premiums should also be taken into
account. The organic premium for spices can range between 10 and 25%; FLO
minimum prices and premiums can be found here. Other fair trade certifiers
yield premiums which are decided on a case-by-case basis.
Competitive pricing: where you set your market price by benchmarking
through your competitors prices and differentiating yourself through
marketing. The objective of this strategy is to reach a better
price/performance ratio than your competitors. Such a strategy is most
common for mainstream spices (middle range and low price segments).
Market-oriented pricing: this is particularly interesting in markets which can
experience large price fluctuations, most common among mainstream spices
(middle range and low price segments). By closely monitoring global market
developments, you can anticipate price decreases or increases and release or
hold on to stocks. Note that this pricing method requires a relatively large
amount of liquid capital in order to finance activities when you are holding on
to stocks, as well as good market information and ability to predict. For newly
established, for instance, working with agents can be a way to overcome the
market knowledge gap.
Penetration pricing: this can be an interesting strategy for new market
entrants, applicable to all segments. During times of product scarcity (e.g.
after bad harvests in major production areas), potential buyers are eager to
buy from new suppliers which can offer relatively low prices compared to
current market prices.

International price information for spices can be found on the website of Public
Ledger, which is unfortunately only available for subscribers. The Spices Board
India also publishes indicative international prices for spices on its website and
can be a useful reference. Other useful sources which contain price information
and developments for spices are Commodity Online and Spice Market News.
When establishing your prices, do not forget to consider the different grades for
the spices you offer (and their respective values). Information on the different
grades for spices can be found at the Aggropedia website.

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Tailored Market Intelligence: Marketing strategy for Indonesian spices

Keep in mind that opportunistic pricing may damage your long-term trade
relationship with a buyer. Therefore, you are recommended to be careful in your
price negotiations with regular customers.

Labelling
Labelling of spices exported from Indonesia to the EU should follow these
general guidelines:
Ensure traceability of individual batches.
Use the English language for labelling, unless your buyer has
indicated otherwise.
Labels must include the following:
Product name
Manufacturers lot or batch code
Grade of the spice (if graded), according to Indonesian
standards
Declaration of allergenic substances
Name and address of exporter
Products country of origin
Shelf life: Best before date/ use by date
Net weight/volume in metric units
Recommended storage conditions

Source: Devi Trading Company

Organic and fair trade: Name/code of the inspection

body and certification number. Other specifications
regarding organic and fair trade certification & labelling can
be found under EU Market Access Requirements for
Indonesian spices.

Storage, packaging and transport

Source: Agronegocios La Grama
During storage and transport, spices are subject to a number of risks,
mainly:
Moisture damage / mould
Odour
Contamination (including contamination of organic spices by non-organic
products)
Mechanical damage
Shrinkage
(Insect) infestation

In this respect, packaging plays a crucial role in maintaining the integrity of the
products. The packaging requirements for spices depend on:
1) the type of spice
2) whether it is ground or whole
3) the humidity of storage
In general, spices are best stored in a barrier film such as polypropylene
(essential in areas of high humidity) to provide an attractive package, retain spice
quality and prevent contamination and losses. If polypropylene is not available,
cellulose film is adequate if it is heat-sealable. Polythene is a poor substitute and
should only be used for short term storage as it allows the flavour/aroma of the
spices to escape.

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Tailored Market Intelligence: Marketing strategy for Indonesian spices

The most common forms of packaging for the spices selected are:
o
Cloves: jute fabric bags (50 - 65 kg), bales, boxes and bast mats (75 kg)
(gunny bags).
o
Cinnamon: boxes, cartons and compact cylindrical bales of 50kg wrapped in
jute cloth.
o
Nutmeg: boxes and double-layered jute fabric bags (75 - 90 kg).
o
Turmeric: polythene laminated gunny bags.
Spices such as cinnamon, cloves, nutmeg and turmeric are highly odour-sensitive
and can easily absorb any foreign odour. These spices should always be stowed
separately from each other and away from foodstuffs which readily absorb foreign
odours (e.g. coffee or tea).
In addition, the maximum (recommended) relative humidity and ventilation
during transport of spices should be complied with in order to avoid damage to
the products.
Humidity, temperature and other transport information regarding specific spices
can be found on the websites of CargoHandbook and Transport Information
Service.
Make sure to keep organic spices segregated from non-organic products to avoid
contamination. Spices certified against other standards (i.e. fair trade, Rainforest
Alliance) also need to remain physically segregated from non-certified products at
all stages of the supply chain to ensure their identification and traceability.
Figure 1: Examples of bulk packaging for spices

Polypropylene and jute sacks

Source: LBK packaging, 2013; KETEPA,

2013

Cinnamon bales wrapped in jute cloth

Source: U10 Certified Ceylon Cinnamon

The pallet or container for transportation must be loaded efficiently, which implies
that your stacked chests or sacks match sea freight and EU pallet sizes.

Branding
Branding your company is something different than carrying your own brand.
Branding, in this case, consists in establishing a companys identity and in
projecting this identity outward. As a first step for an Indonesian spice company
to establish its identity, a recommended exercise is to list this companys
essential characteristics. The characteristics to be emphasized will depend on the
nature of the business, its mission, product offer and target market.
For companies working in the mainstream market, exporting spices of a standard
quality, without a specific focus on sustainability, emphasis is usually drawn to:
The companys (modern) facilities and equipment
Its (strategic) location

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Tailored Market Intelligence: Marketing strategy for Indonesian spices

Its competitive prices

Its Quality Management Systems (QMS) and reliability stemming from them
Its Corporate Social Responsibility (CSR) policy.
The above-mentioned characteristics are also relevant to spice companies trading
in products of a high quality, exotic varieties and/or containing social and/or
ecological certifications. Nonetheless, these companies should put further
emphasis on the following:
The companys social and/or ecological mission
Its compliance to certifications covering social and/or ecological standards,
whether these related to niche or mainstream markets
Its beneficial impact on producing communities and/or in the conservation of
local biodiversity
Its innovative character, e.g. introducing new products and exotic spices
In conclusion, this companys highlighted characteristics should be a
combination of Process + Product + Impact.
These characteristics will be the basis to develop the companys theme. This
theme will be reflected onto the following branding aspects:
Name
Tagline, catchphrase or motto
Logo/ trademark
Graphics, shapes and colours
Customer relationship management
Once these aspects are well-developed and incorporated into the structure of the
company, a promotional strategy should be drawn.

Marketing and promotion

Promotion is an important step for Indonesian exporters to access the competitive
spices market in the EU. The goal of promotion is to gain exposure for your
product, bring you in contact with potential buyers and convince them of your
capabilities and quality. For companies dealing with sustainable spices, promotion
is a crucial opportunity to convey your ecological and social mission.
Give careful attention to the message you want to bring across, because making
false or irrelevant claims is counter-effective. The exact content of your promotion
depends on the type of promotional material you use. However, it should always
be linked to the theme you developed for your company.
There are different ways to promote your product, and those include:
Advertising (in magazines, for instance) is not very common in the spices
sector. Only large companies place advertisements, mostly when launching
ingredient innovations. For smaller companies, magazines can play a more
informative role, to discover trends & sustainability developments, market
players, legislative developments, etc.
Personal selling is an important component of any promotional strategy in the
spices sector, being even more relevant for speciality products. It is highly
interactive and excellent for communicating detailed product information and
features. It revolves around directly contacting potential clients at trade fairs
or through e-mail, sampling, etc, and following up on the contact made with
company visits, actual offers and negotiations.
Useful formats are (digitalised) folders, flyers, presentations, product
datasheets, representative websites [read more about websites below], etc.
Personal selling increases the chances to create strong relationships with
buyers. Some aspects you have to include in your promotional material are:
o Accurate description of products which can be supplied, according to EU

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Tailored Market Intelligence: Marketing strategy for Indonesian spices

o
o

JAN

or UN standards.
Photos of the product which clearly shows the product as well as the
packaging
Delivery capacity per year per product including a figure which clearly
shows your window of supply. See the generic example below:
FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

Spice x

Sales promotion can help market penetration (see penetration pricing under
the section Decision-making: segments and pricing), but buyers can get used
to promotional prices and other incentives, making it difficult for the exporter
to switch back in the long run.
Exhibitions, described under the section Important events to meet with
(potential) buyers below.

Website
Websites are an essential element of product marketing. High-quality websites
are associated with being a modern, professional organisation. In the context of
this study, a high-quality website should also convey the companys commitment
to sustainability. A good example of such a website is the one from the Indian
company PDS Spices. A few snapshots are given below:

Be aware that poorly-managed websites can actually do more harm than good.
Websites offer opportunities to display and advertise your products, as well as
improving your visibility and the reliability in the eyes of (potential) buyers.

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DEC

Tailored Market Intelligence: Marketing strategy for Indonesian spices

Trust and credibility are major challenges for DC exporters. Therefore, your
company, cooperative or association should have a website which contains the
following aspects:

Website proposing well-defined products:

o
Botanical and trade names
o
Product description (EU or UN standards)
o
Size
o
Colour
o
Taste profile
o
Chemical properties
o
Microbiological & Mycotoxin properties
o
Certification
o
Uses
o
Availability
o
Packaging

Strengths of your company:

o
Certificates: mention the year of certification and explain how it
contributes to sound products and services. Certificates can be
related to quality management (BRC, ISO 22000, etc) or
ecological/social aspects (e.g. organic, fair trade, FGP for niche
markets and Rainforest Alliance for the mainstream spices market).
In terms of social responsibility, certificates such as BSCI and
OHSAS should also be displayed clearly. More information on these
certificates can be found in Compliance with EU buyer requirements
for Indonesian spices.
o
A specific story: explain the mission and history of your company. In
case you have organic and/or fair trade certifications, use them to
promote the sustainable and ethical aspects of your company. If you
are a company working in the mainstream sector, Rainforest Alliance
certification and linkages to sustainable initiatives within the spices
sector (e.g. Sustainable Spices Initiative - SSI) are very interesting
to promote. Check the websites of Indonesian company Cassia Coop and Dutch company Nedspice for examples of how sustainability
is showcased.
o
Videos can improve the story-telling aspect of marketing and convey
the positive ecological and social impacts of a company through
images. See the website of Sri Lankan company Saaraketha for an
example of a video gallery:

Quality and delivery reliability: explain your companys processes to

implement and monitor quality.
History and track record, including a client reference list to help create
trustworthiness. Buyers tend to pay particular attention to the year of the
companys foundation, as they have more trust in companies which have
already been in existence for a long time.
o

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Tailored Market Intelligence: Marketing strategy for Indonesian spices

Additionally, a company profile, brochures, presentations and product catalogues

can be put on your website. By publishing such promotions materials online, the
company can save on printing and distribution costs. At the same time, it enables
exporters to update the information at any point in time without substantial costs.

Social media
Internet also provides increasing possibilities to spread marketing communication.
Online video sharing, such as YouTube, makes it possible for you to refer
potential buyers to a video about your company. As described earlier, these
videos can be linked to your website.
Social media can help Indonesian exporters to get acquainted with EU buyers, as
they are regularly active on (professional) social networks such as LinkedIn.
However, opportunities for promotion through social media remain limited to
updates of your profile. Two-way communication still takes place through e-mail,
phone and face-to-face contact.
Facebook remains largely limited to private use, although some companies have
created pages to advertise their products. It should be noted that most of these
companies market final products, whereby direct contact with the consumer is
essential. See the examples of British company Steenbergs and the Dutch
company Verstegen. Marketing products, finding buyers at the wholesale level
and/or communicating with them on Facebook is uncommon.
There are also cases in which Facebook is used for country-branding within a
specific sector. When looking at the food ingredients sector at large, Facebook
pages have been created for Guatemalan coffee, Bolivian quinoa, etc. In the
case of spices, a success story for country-branding on Facebook is the one of
Spices Board India. Such initiatives help promote the sector as a whole, but
require harmonized action and a sound institutional base.

Trade press
In the food sector, trade press plays an informative role, functioning as a means
for gaining insight into the market and competition, rather than being an
advertising tool. However, it can also have a promotional function in terms of
finding potentially interesting buyers. There are no specific European magazines
or news portals focusing exclusively on spices, but the following could interesting
for Indonesian exporters in this sector:
o
Ingredients Network - online magazine containing main food industry trends.
This magazine is linked to Food Ingredients Europe trade fair.
o
Food Navigator - news portal dealing with food trends which are sub-divided
into specific sectors. It is a useful tool to keep up-to-date on topics such as
sustainability, scientific study results and product development. It is possible
to receive news updates by signing up to Food Navigators Newsletter.
o
Wellness Foods Europe - the first European magazine devoted exclusively to
health ingredients, nutraceutical foods and beverages. It is an interesting
magazine to learn more and keep an eye on this specific segment.
o
Organic & Wellness News - not only does this online magazine brings
information on the organic market, which is still a niche for spices, but it also
addresses news items which encompass broader themes such as
sustainability (e.g. fair trade), health and product innovations.
Prospect databases are another source to find sector players and achieve trading
agreements:
o
Foods for Trade - leading B2B marketplace for the food industry. It offers a
company profile service and member accounts for business partners and

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Tailored Market Intelligence: Marketing strategy for Indonesian spices

promotes companies through trade leads. Subscribers can also create

customized ad packages.
Greentrade - online marketplace with the worlds largest database of the
organic farming industry. Greentrade organises pavilions at international
trade shows, with preferential rates for its subscribers.
Organic-Bio - online database which compiles a list of the main companies
worldwide dealing with organic (and often fair trade) products. It is possible
to specify your search at the product level, filtering by specific spices. Both
producers/exporters and buyers can be found in this database.

Sector associations and support organisations

Sector associations and support organisations can also be an interesting point of
departure to get acquainted with the (European) spices sector and related
initiatives covering topics such as sustainability, market access, quality standards,
etc. The most relevant institutions in this respect are:
o
European Spice Association (ESA) - it represents the interests of its members
in all matters pertaining to the processing, packing, quality assurance and
food safety and/or marketing of herbs, spices and spice products (e.g.
seasonings). The website of ESA has a full list of national members and
companies which could be of interest to Indonesian exporters.
o
Sustainable Spices Initiative (SSI) - the SSI is an essential initiative for
Indonesian exporters to keep up-to-date on sustainability issues within the
spices sector. SSI was founded by four leading players in the Dutch spices
market and nowadays it also involves large-scale companies and
organisations with the aim to transform the mainstream spice industry into a
more sustainable market. SSI centralises the action of several support
organisations which deal with sustainability of the spices sector, such as
Cordaid, the Royal Tropical Institute, ICCO, Both Ends and Rainforest
Alliance.
o

International Trade Centre (ITC)

- ITC supports the sustainable development

of developing and transitional economies through trade and international

business development. ITCs work in the spices sector aims at improving the
quality and quantity of spices exported by developing countries.
United Nations Conference on Trade and Development (UNCTAD) - UNCTAD
is the principal organ of the United Nations General Assembly dealing with
trade, investment, and development issues. Its focus is on creating
opportunities for developing countries and to assist them in their efforts to
integrate into the world economy on an equitable basis. UNCTAD conducts
activities in various sectors, including spices.

Other relevant organisations active in the spices sector can be found at CBIs
Market Intelligence on Spices and Herbs: European Support Organisations.

Important events to meet with (potential) buyers

Trade fairs are still the most suitable events to connect buyers and suppliers.
Visits to trade fairs are therefore a good way of increasing exposure of your
company and products, as well as getting to know your competition. It is
recommended to go first as a visitor (as opposed to an exhibitor) to find out
whether the trade fair is interesting for your company. Even though there are no
trade fairs in Europe focusing exclusively on spices, the most relevant events for
this sector are:
o
SIAL - it is one the worlds largest food exhibitions, encompassing a number
of food ingredients and final products. Some of the most important spice
companies in Europe and elsewhere (suppliers and buyers) can be found in

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Tailored Market Intelligence: Marketing strategy for Indonesian spices

the exhibitor list, making it an important trade fair to either visit or exhibit at.
SIAL is held every year in Paris, France.
Food Ingredients Europe - it is a trade fair which deals with various food
ingredients, including spices. Fi Europe takes place every year in different
European cities.
Anuga - it is the worlds leading food fair for the retail trade and the food
service and catering market. Although it is not the most relevant exhibition
for Indonesian spice exporters to find potential buyers, it is useful in
discovering new trends and learning about the European consumer market. It
is held every year in Cologne, Germany.
Biofach - most important international exhibition for organic food and fair
trade products, held every year in Nrnberg, Germany. It is a crucial trade
fair to either visit or exhibit at for companies which sell certified products.
Natural & Organic Products Europe - this exhibition is most relevant for
organic and health products, and can be interesting for Indonesian exporters
focusing on this niche market.
Vitafoods - a trade fair which is most relevant for spice exporters targeting
the functional food/supplement sector (and not the retail market for spices).
It is held every year in Geneva, Switzerland.
Ethnic Food Europe - Ethnic Foods Europe is Europes most renowned ethnic
food and beverage exhibition. Not highly relevant to find potential buyers for
Indonesian spices, but interesting to learn more about the European market
for ethnic food and how spices fit within this market.

This survey was compiled for CBI by ProFound Advisers In

Development
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