Managing International Trade: Strategies for Exporting Indian Spices to the UK

This board paper discusses the strategies for exporting Indian spices to the UK market, focusing on the challenges, recommendations, and supply chain stages. It covers the economic, legal, and social factors influencing the trade.

M018LON MANAGING INTERNATIONAL TRADE: BOARD PAPER
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Brief Synopsis of the Issue
India is considered as “Spice bowl of the World”. Over 70 Per cent of Spices in the
world is produced in India. The history of Indian Spices is wide as the earliest written
record on spices in India is found in Vedas (Indian spices statistics, 2017). As India
is one of the largest spices producing country in the world entered to trade at
international level by exporting a group of spices such as Saffron, Ginger, turmeric,
bay leaves.
The United Kingdom is one of the major importers of Indian spices that have one of
the most efficient international economies in the trading system. The calculation of
total UK market for seasonings, spices and herbs measured to some 86,000 tonnes
amounting to £166 million (TCI, 2017). The UK market enjoys a consistent growth by
fulfilling the demands for new and exotic tastes and flavours that are natural. It is
essential for the manufacturers to maintain the quality demanded, consistency and
familiar services.
Spice Hut company was founded in Kerala, India for the trading purpose in Indian
spices. It is considered as one of the leading spices manufacturing company in India.
The work structure of the company is to provide a group of fresh spices like Saffron,
Ginger, turmeric, bay leaves. The aim and objective of the organization are to
penetrate in the global market.

Recommendation(s)
Direct sales through brick and mortar stores- this is the most suitable and cost-
effective way to make an entry in UK market as direct contacts with the customers
will allow you to identify the demands and preferences of the potential market.
Distributors- local distributors in the UK market are recommended to be analysed
and identified in order to build local contacts and also gain market knowledge.
Distributors are provided with the knowledge which will result in I access to
established markets in the UK to develop a customer base.
Franchising- giving the franchise to local stores in supermarkets and departmental
stores to reach out to end users is also recommended to Spice Hut (Global Spice
Market, 2016). Franchising will open the doors in the target market in the UK. This
method is safe as the responsibility remains with the franchise.
Online portals- making online portals to directly sell the spices to the customers and
receive online payments through cash or card in the bank account of the UK which is
later transferred to Spice Hut bank account in India.

Background
Globalisation has provided an opportunity to deliver high quality and quantity of
goods at low prices so as to engage two or more countries around the world in this
fast-paced environment. Major competent to become globalized is the international
trade and commerce. International trade refers to the exchanges of goods and
services through import and export process between two or more countries.
India is the 76th member of WTO since the year 1995 and had minimum 100 disputes
settlements. India has currently ratified the new Trade Facilitation Agreement in the
year 2016 (Indian spices statistics, 2017).
Fig 1 EU market for Herbs, spices and seasoning
[Source: http://www.tci-international.co.uk/market_eu.html]
International trade theory:
An earlier model of Ricardian theory focused on the comparative advantage which
might be raised due to the difference in natural resources and technological
advancement. In the modern development, the Ricardian theory of international
trade includes two bases that are many countries, many goods as well as
intermediate input trade. Modern theory includes the many countries, many
commodities that allow the company to make choices of techniques for production
and trade of inputs materials.

Among the different regions such as Karnataka, Uttrakhand, Andhra Pradesh of
India, the history of spices in Kerala dates to over thousand years (Global Spice
Market, 2016). In ancient times, Kerala was renowned around the world for its
monopoly over the spices as it was the sole state to be rich in spices. Lower cost of
production in Kerala leads to lower cost of spices including cheap human labour and
equipment.
India is one of the world largest producer and exporter of spices as it is considered
as the home of spices with its long history. At least 109 varieties of spices are listed
by the International Organization for Standardization, of which India produces and
exports at least 75 varieties of spices to the US, the UK, the UAE, Saudi Arabia,
China, Vietnam, Germany, Singapore Sri Lanka and Malaysia (Indian spices
statistics, 2017).
Varieties of spices include pepper, turmeric, ginger, garlic, cardamom, saffron, bay
leaves, curry and many others. The Indian spices exported to other countries
amounted to $ 2633,30 million with a volume of 9,47,790 tonnes in the year 2016-17
(Indian spices statistics, 2017).
Host country
The UK is one of the highly skilled countries that has economically and politically
stable background around the world. As seen in the chart the growth rate of GDP is
stable despite the Exit of Britain from EU in the year 2016 (ONS, 2017). The decision
on Brexit affected the retail industry and financial industry along with the economy of
UK.

Fig 2 UK annual GDP growth rate
[Source- https://tradingeconomics.com/united-kingdom/gdp-growth-annual]
There is a significant growth in the population of the UK as compared to the past ten
years, especially in London, Manchester and Glasgow. The estimated population in
the UK is approximately 65.81 million as on 1st Jan 2017 of which up to 10- 12 per
cent of the citizens are from the Asian region. 3.2 per cent increase in the annual
disposable income of an individual amount to £25,000 results in higher spending of
income (Trading Economics, 2017).
Fig 3 UK household disposable income
[Source: https://tradingeconomics.com/united-kingdom/disposable-personal-income]
Guidelines for spices in the UK
The Seasoning and Spice Association of the UK is the leading voice in the common
interests of members, consumers and food manufacturers that promotes all the
factors regarding the import, processing and distribution of spices, herbs, seasoning
and other related products in the UK (SSA, 2017). It is a member of the Food and
Drink Federation. They have provided certain product specification as preventative
measures that include the product specification as follows:

 Two similar products are differentiated by the key indicator as botanical
species. The botanical name of saffron is Crocus Sativus and of turmeric is
Curcuma Longa, according to the list of Culinary Herbs and Spices by
European Spice Association (FDF, 2017).
 It is essential to list complete description including all the ingredients of the
product along with the declaration of “standardization procedures” and also
take into account of any claim or any known cross-contamination or allergen
risks.
 Key attributes of the spices and herbs that is Safranal content/ colouring
strength of Saffron, Curcumin for Turmeric and much more.
 Different methods and types of adulteration are presented in the publication of
“Guidance on Authenticity of Herbs and Spices” which also includes
recommended controls.
It is very important for the suppliers to ensure the integrity of the products as supplier
assurance is the crucial factor which encompassed through:
 In order to secure and assure the supply chain of herbs and Spices suppliers
should use approvals and certificate, for example, GFSI approved scheme
like BRC Global Standard (FDF, 2017).
 It is essential to ensure the visibility and transparency at each point of supply
chain since the process of the product through from its original sources by
identifying risks and based on the targeted audits of the supply chain.
 Proper practices of manufacturing and agriculture including storage,
processing, segregation etc.

Research on the Assessment Topic
The main aim of the Spice Hut is to provide appetizing experience to the buyer by
delivering the product that fulfils the international expectation and standards. The
company will face competition with Spice Mountain and Saffron that has the largest
share in the London Market. Saffron is available 24 hours daily and supplies the
spices and herbs to its consumer. The expectation of the consumers of London
increase in the spices having the features to be pleasant aroma with essential oils
content of high-quality spices such as Saffron, Turmeric, Ginger and Bay leaves. The
quality of food offered by Spice Hut will compete with the quality offered by Plentiful
Foods Indian Spice Ltd.
Taxation system in the United Kingdom
12.5 per cent of the import duty tax is to be levied on the import of spices with
effective from June 2017 (Commodity information, 2017).
Fig 4 commodity information
[Source:
https://www.trade-tariff.service.gov.uk/trade-tariff/commodities/0910201000?
country=IN#import]
Spice imports from India

In the year 2016, United Kingdom imported spices that are Ginger, Saffron,
Turmeric, bay leaves from India amounts to US$ 20.0 million as studied in the United
/nations COMTRADE database on international trade which is 18 per cent of the
total trade of spices imports in the United Kingdom (Commodity information, 2017).
Fig 5 UK spice imports from India
[Source: https://tradingeconomics.com/united-kingdom/imports/india/ginger-saffron-
tumeric-thyme-bay-leaves]

Arguments against the Recommendation(s)
PELTS ANALYSIS
Political (medium)
Since the political environment of the UK is stable but there are many approvals to
be taken from the UK government being spiced vulnerable to adultery or
contamination or allergen risks. Sanctions are to be taken from the government of
the UK to ensure safety and transparency of trading of Indian Spices without any
barrier. Consumer demand is impacted by the Brexit referendum though it will not
impact on the demand or sale volume in the UK. It is essential for the Spice Hut to
fulfil the guidelines of the Seasoning and Spice Association (Moynihan, 2017). Strict
regulations and norms need to be followed on the spices that are to be imported
from India.
Economic (medium)
The economy of the country will impact the distribution and supply chain of the
company in spice market. Fluctuation in the exchange rate of Pound will impact on
the profits and cost of the spices of Spice Hut. A large amount of risk is on the
income and revenue of the company as the sales will be done in British Currency
which will be converted into Rupees (Moynihan, 2017). Though the rate of Pound is
stronger as compared to that of Rupees, it will have small to minimal impact on the
profit of Spice Hut.
Legal (high)
There is a limitation in trading contracts owing to the quality of the spices. Health and
safety regulation and restrictions on the use of some chemical and pesticides will
impact the imports of the spices in the UK. The guidelines enforced by the
Seasoning and Spices Association displays the quality of the spices to be
maintained to be approved for imports in the UK (Moynihan, 2017). The food and
Drink Federation has published the Allergen risk assessment models for dried herbs
and spices. If the distributors and supply chain intermediaries import spices from the
company and in case any import detects the contamination or allergen risk, the

import will be restricted. The quality of safety and integrity is to be maintained to
import goods the UK.
Social factors (low)
A large number of people living in the UK is from Asia. People belonging to Asian
region are fond of having Indian spice in their food. Even, changes in lifestyle and
current trends influenced the citizen of the UK to use these Indian spices in their
recipes and dishes (Moynihan, 2017). Another social factor is the health
consciousness of the people which might have either positive or negative impact on
the imports of the company Spice Hut.
Technological (medium)
Technology is of most important in the food and spice industry as testing facilities,
lab and research on the imported spice will be enabled through technology
(Moynihan, 2017). It is essential for the Spice Hut to implement the facilities of
testing to check for the quality starting from the farm level to reach to the destination
of the spices at the stores to end user by controlling and maintain the safety and
guidelines. Development in infrastructure is of utmost importance.
Ethical stance (high)
There is a threat for contamination or availability of allergen risk with the spice
exports in food and drinks industry in which many companies from different were
restricted to export the spices in the UK owing to breach of laws and guidelines
(Moynihan, 2017). Maintenance of the quality of spices without any contamination or
allergen risks is one of the ethical complications which can negatively impact on the
export of spices of Spice Hut from India to the UK.

Arguments in support of the Recommendation(s)
UK spice market is one of the major opportunistic markets for Spice Hut Company to
fulfil its organizational objectives of expanding to a global level by exporting spice to
the UK spice market. It is observed that the customers in the UK show their trust and
faith in the brands that fulfil their needs and are focused on maintaining the quality of
the spices (Global Spice Market, 2016). Spice Hut is renowned for delivering the
high-quality spices to its customers.
The spices in the UK are more expensive as compared to the high-quality spices of
Spice Hut. For example, the price of 10 grams of spice jar would cost to £ 25 in
Plentiful Foods Indian Spice Ltd which is one of the key competitors of Spice Hut,
while the same size of spice jar would only cost £ 20 that gives the opportunity for
the company to increase the selling price to the customer of the UK so as to
generate higher profit for the company.
Comparison:
Features
Plentiful Food Indian Spice Ltd
 Pleasant aroma and essential
oils
 Spice jar weight: 10 grams
 Price: £ 25
Features
Brand: Spice Hut (India)
 Pleasant aroma and essential
oils
 Spice jar weight: 9.89 grams
 Price: £ 20
Forecasting cannot be made on the non-tariff barriers on the imports of Indian
Spices in the UK. The imports of the spices can be supported through outlining the

benefits of the special economic zone in the UK. The benefits include support from
Government, tax relief on customs duty for export, increase in the capital allowance.

Implementation of Recommendations
As the Spice Hut has the ability to allocate its expertise and core skills from the
home company of Spice Hut. International strategy is appropriate strategies suitable
for the import of spices from India to the UK (ET Bureau, 2017). In this strategy,
Spice Hut will plan to have a centralized coordinated supply value chain in order to
strengthen and safeguard the core competencies of the brand.
The presence of Spice Hut is limited around the world and does not have any plan to
build a manufacturing unit in abroad which will result in higher risk of political and
legal issues along with the aim to minimise the cost. It is very important for Spice Hut
to develop the design of the spices jars and high-quality spices so as to be able to
meet the expectation of the customers. It will be again difficult to coordinate with the
foreign distributors and franchisees which will result in an increase in cost as well as
direct selling through bricks and mortar stores will increase in costs.

SUPPLY CHAIN STAGES OF SPICE HUT
Supply chain model of the export strategy includes the above-mentioned stages in
which raw material is collected from the farmers and growers which is then
processed and transferred from one intermediary to another (ET Bureau, 2017).
Once the Indian spices are approved by the standards of FSSAI in India and SSA or
FDF in the UK then this product is sent to the distribution centre to be sent to
domestic as well as stores in the global market.
GROWER
(FARMER)
COLLECTOR
(SPICE HUT)
PRIMARY
PROCESS
OR
LOCAL
TRADERS
SECONDA
RY
PORCESS
OR
EXPORTE
R
IMPORTE
R
TRADER
PROCESS
OR/
PACKER
FRANCHIS
EE/
STORES/DI
STRIBUTO
RS
CONSUMERS

MODES OF TRANSPORTATION
The efficient route to transport the spices shipment from India to London is via a
flight from New Delhi or by road. IT systems are implemented to transfer information
including the documents of import or export as well as placing an order for the
product between London and India (ET Bureau, 2017). Marketing strategies are to
be implemented to increase awareness and popularity among the citizens of the UK
through online and offline systems.
Signature and Date: Your full name and date of board paper (DD/MM/YYYY)

List of References
1. Commodity information, 2017. Commodity information for 0910201000
[Online available at
https://www.trade-tariff.service.gov.uk/trade-tariff/commodities/0910201000?
country=IN#import] [last accessed on17-Jan-2018]
2. ET Bureau, 2017. Indian spices export peaks to a new high [Online available
at //economictimes.indiatimes.com/articleshow/59143904.cms?
utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst ]
[Last accessed on 18-Jan-2018]
3. Food and Drink Federation (FDF), 2017 [online available at
https://www.fdf.org.uk/corporate_pubs/guidance-herbsandspices.pdf] [last
accessed on 18-Jan-2018]
4. Moynihan B., 2017. How to Import Saffron [online available at
http://www.ehow.co.uk/how_8298603_import-saffron.html] [last accessed on
18-Jan-2018]
5. Office for National Statistics (ONS) 2017, The UK population is growing
[online available at
https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigrati
on/populationestimates/articles/overviewoftheukpopulation/mar2017/
previous/v1#consequences-of-these-population-changes] [last accessed on
17-Jan-2018]
6. Seasoning and Spices Association (SSA), 2017 [online available at
http://www.seasoningandspice.org.uk/ssa/home.aspx] [last accessed on 18-
Jan-2018]
7. Global Spice Market, 2016. Spice Market - Global Industry Analysis, Size,
Share, Growth, Trends, and Forecast 2016 - 2024 [online available at
https://www.transparencymarketresearch.com/spice-market.html] [last
accessed on 17-Jan-2018]
8. TCI international Ltd (TCI) 2017, The UK market for seasonings, herbs &
spices [online available at http://www.tci-international.co.uk/market_uk.html]
[last accessed on 18-Jan-2018]
9. Trading Economics, 2017. United Kingdom GDP Annual Growth Rate [online
available at https://tradingeconomics.com/united-kingdom/gdp-growth-annual]
[last accessed on 18-Jan-2018]
10. Trading Economics, 2017. United Kingdom Households Disposable Income
[online available at https://tradingeconomics.com/united-kingdom/disposable-
personal-income] [last accessed on 18-Jan-2018]
11. Trading Economics, 2017. United Kingdom Imports from India of Ginger,
saffron, turmeric, thyme, bay leaves [online available at
https://tradingeconomics.com/united-kingdom/imports/india/ginger-saffron-
tumeric-thyme-bay-leaves#data] [last accessed on 17-Jan-2018]
12. Indian spices statistics, 2017 Export of Spices From India – Indian Spices
Export Data of Q2 2017 [online available at

http://www.exportgenius.in/blog/export-of-spices-from-india-indian-spices-
export-data-of-q2-2017-98.php] [last accessed on 18-Jan-2018]

Appendix
Spice Hut was founded in the year 2015 in Kerala, India. It is one of the renowned
companies in a small business enterprise that deals in the Indian spices. The
company is involved in the processing of the spices such as ginger, bay leaves,
turmeric, saffron. The company has made its presence in over 11 countries and is
now planning to export its goods to London in the UK. The strategies of the company
are to export is excellent goods while maintaining quality standards of the UK. The
main aim of the company is to serve its customer by providing high-quality Indian
Spices that fulfils the standardisation of Seasoning and Spices Association. The
objective of Spice Hut is to expand its business at the global level by turning the
orientation of the company to international level.