The document provides an overview and analysis for a potential entry strategy of GumYum, Inc. into the Brazilian gum market. It outlines Brazil's population size, economic factors, the size and growth of the gum market, and key competitors. The proposed entry strategy includes partnering with distributors, targeting consumers with new flavors, and promoting products at retailers. A financial analysis projects break-even in the second year with a 5% market share. Key strengths and weaknesses are identified.

1. GumYum, Inc.
International Business 200
Ian Harkavy

2. GumYum, Inc.
 Background
 Situation Analysis
 Strategic Advantages; Economic and Cultural Factors
 Market analysis
 Market Size; Market Potential; and Competition
 Potential Entry Strategy
 Implementation plan
 Brazilian Preferences
 Product, Place, Price, Promotion
 Breakeven and S.W.O.T. analysis
 Future outlook
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3. GumYum, Inc.
 Largest country in South
America
 Mostly tropical climate, though
temperate in the South
 Leading producer of agricultural
products
 Recurring droughts in the
Northeast with occasional
floods and frost in the South
 Population: 203, 429, 773
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4. GumYum, Inc.
 Multiple borders
 7,491 miles of coastline
 8,233 square miles of
renewable water resources
 1.134% population growth
 Low cost of production
 Competitive advantage for
sugar production
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5. GumYum, Inc.
 Steadily improving macroeconomic
factors by building up foreign reserves
 GDP (2010): $2.194 trillion
 GDP growth rate (2010): 7.5%
 GDP per capita: $10,900
 Labor force of 103.6 million
 7% unemployment rate
 26% of population below poverty line
 $199.7 billion exports
 $187.7 billion imports
 1.77 Brazilian Reals (BRL)= 1 USD
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6. GumYum, Inc.
 Languages:
Portuguese
 88.6% literacy rate
 87% of total
population is
urbanized
 67% of population
between the ages of
15-64
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7. GumYum, Inc.
 Primary market: males and females between the ages of 13-50
 Food retailing accounts for around 30% of total retail sales,
approaching $50 billion in Brazil alone
 Population of over 200 million
 Poorest 20% of Brazilians account for only 2% of income
 Wealthiest 2.5% earn over 30% of all income
 Brazil is the world’s third largest market for sweets
 Confectionary value sales have risen 46% between 2004-2009
 Gum sales:
 2008- $1,286,000,000
 2009- $1,207,000,000
 2010- $1,460,000,000
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8. GumYum, Inc.
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9. GumYum, Inc.
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10. GumYum, Inc.
 Current economic
stability and lower
inflation
 Surging sales among
poorest 50% of 2008-2013
population
 Benefits from free
trade agreements
 Huge potential for
growth and variation 2008 2009 2010 2011 2012 2013
to appeal to many
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customers

11. GumYum, Inc.
 Hershey
 Nestle Brasil (10% market share)
 Especialidades Mentex, Nestle Classic, Alpino,
Chikito, Galak, Nescau, Seducao
 Kopenhagen
 Cadbury Adams (74.9% market share)
 Trident, Ping Pong Ploc, Clorets, Plets
 Leader in the gum industry
 Arcor Group
 Over 50 brands across product categories in
Brazil
 Sambapito, Big Big, Poosh, Samba, Blow Up
and Tortuguita
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12. GumYum, Inc.
 Point-of-purchase merchandising
 Awareness of health-conscious consumer preferences
 Mass production possible in the gum industry
 Santos Port
 Introduce new flavors into the core flavors market
 “Burst and fade” effect
 Ex: Pineapple, banana
 Majority of growth in the Brazilian market is due to the increase of sales of
sugar-free chewing gum
 One of the fastest growing subsectors in the whole confectionary industry
 Consumers are heavily influenced by the benefits to dental health that sugar-free gum
can provide
 A growing number of products exploit this considerably
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13. GumYum, Inc.
 Contract with independent distributors and
wholesalers to handle logistics and supply
 Electronic-data-interchange system
 Use transportation company with the longest
and strongest presence in each region
 Lower costs and greater speed
 More sophisticated control of distribution
 Maintain the highest green and eco-friendly
standards
 Have salespeople work in tandem with the
distributors worldwide
 Colón port of Panama
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14. GumYum, Inc.
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15. GumYum, Inc.
 Geocentric staffing approach
 Eliminates cultural barriers
 Builds a strong, unified culture
 Uses HR efficiently
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16. GumYum, Inc.
 Make it last long with full
flavor to remain
competitive in the market
 Wrapper games
 Eco-friendly wrapper and
packaging
 Offer different flavors and
sizes
 Fruity and minty varieties
 Whitening and cavity
protection
 Calorie counters
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17. GumYum, Inc.
 Free samples
 Bonus packs
 Rebate promotions
 Advertising:
 Sporting events
 Magazines
 Commercials
 Billboards
 Celebrity endorsements
(Gisele Bundchen, Kaka)
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18. GumYum, Inc.
 Partner with Wal-Marts and
other large retailers/grocery
stores nationwide to sell at
registers
 Gas stations and mini-marts
 Newspaper kiosks
 Padarias (hybrid bakeries)
 Centralize production in major
cities
 Salvador
 Sao Paulo
 Rio de Janeiro
 Brasilia
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19. GumYum, Inc.
 Convert Brazilian reals to US dollars
 1 USD = 1.5630 BRL 1 BRL = 0.6398 USD
 $0.99 pack of gum = 1.55 BRL
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20. GumYum, Inc.
 Packaging to combat the hot climate
 Majority of growth in the Brazilian market is due to the increase of sales
of sugar-free chewing gum
 One of the fastest growing subsectors in the whole confectionary industry
 Consumers are heavily influenced by the benefits to dental health that sugar-
free gum can provide
 A growing number of products exploit this considerably
 Curb your appetite by chewing gum
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21. GumYum, Inc.
 ≈ $6,000,000 in capital for plant
 Cost of labor per year for 500
employees:
 500 x $8,230 (GDP per capita) ≈
$4,115,000
 Cost per pack of gum ≈ $0.03
 Cost to export to the rest of South
America and/or Central America: $860
per pallet (7,500 individual packs or
625 cases containing 12 packs each)
 ≈ $0.11 per pack for shipping, $1.32 per
case
 Sell pack of gum for the equivalence of
$0.99 worldwide
 Mass order quantity discounts
 Intra-national shipping discounts
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22. GumYum, Inc.
YEAR 1 YEAR 2
Estimated market share = 2% Estimated market share = 5%
Sales: 10.27M at $0.99/unit Sales: 25.67M at $0.99/unit
10,167,300 25,413,300
Fixed Cost Fixed Cost
Plant: $6M Depr: $0.6M
Operation: $0.1M Operation: $0.1M
Labor: $4.115M Labor: $4.115M
Variable Cost Variable Cost
Package: $0.03/unit Package: $0.03/unit
Shipping: $0.11/unit Shipping: $0.11/unit
Total Cost Total Cost
(11,652,800) (8,408,800)
Net Income before Tax Net Income before Tax
(1,485,500) 17,004,500
21 We will roughly break even on year 2

23. GumYum, Inc.
Strengths Weaknesses
•Imports and exports are booming as record •Well-established and reputable competition
numbers of exporters are gaining EU licenses already in place
•Brazil’s huge population offers substantial •Income inequality, with consumption patterns
return potential varying significantly according to salary
•Brazil’s large market makes it an attractive •Regional cultural variations limit the extent to
target for international retailers
which producers can rely on a single marketing
strategy for the entire Brazilian market
•The convenience store formats are set to
experience rapid growth
Opportunities Threats
•Trade officials are encouraging exports to •Economic stability cannot be guaranteed over the
countries other than the US , resulting in longer term
significantly higher total export volumes
•High interest rates place constraints on company
•Brazil has more unused commercially viable investment plans
land than any other country in the world,
•High inflation would have severe consequences on
potential for incumbent as well as new producers
this market, because price-stretched consumers
would cut back on non-essential purchases
•Rising production costs
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24. GumYum, Inc.
 The Brazilian gum confectionary market grew by $17.3 million
in 2009, to reach a value of $508.3 million
 Between 2010-2015, value sales are forecast to increase by a
further 41%
 Gradual trend towards the purchase of premium confectionary
products, particularly among Brazil’s growing middle-class population
 By 2015, the market is forecasted to reach a value of $683.5
million, an increase of 25.8%
 Between 2005-2009, per capita food consumption increased
by 49%
 In the next 5 years, it is expected to grow by almost 54%
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26. GumYum, Inc.
 http://www.alibaba.com/countrysearch/BR/gum.html
 http://www.datamonitor.com/store/Product/gum_in_the_bric_brazil_russia_india_chi
na_countries_market_overview_and_forecasts_to_2014?productid=DBCM7234
 http://www.21food.com/product/search_keys-Chewing+Gum_c-Brazil_cat-
101503.html
 http://store.mintel.com/gum-confectionery-in-brazil-2010-market-sizes.html
 http://www.marketresearch.com/product/display.asp?productid=2850847
 https://www.cia.gov/library/publications/the-world-factbook/geos/br.html
 http://www.obamonteverde.com.br/
 http://www.brazil-factoid.com/doing-business-in-brazil.html
 http://www.brazil-factoid.com/sao-paolo-contribution-to-brazils-design-as-an-
emerging-superpower.html
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