Joint
ventures

Chilasso Hot Ketchup is the only viable product, having organic and professional qualities and a readily addictive taste. It is also the only hot sauce to belong to the bigger volume ketchup niche, giving it the opportunity to dominate the hot sauce niche in terms of market share. In fact Chilasso Hot Ketchup has the potential to grow to more than double the rest of the hot sauce market.

Because we don’t plan to manufacture the tomato ketchup ingredient in the hot ketchup, but we need to guarantee quality, and because some big customers have blanket arrangements with Heinz to supply table sauces, it is likely that a joint venture with a well-established supplier may be the most effective way to guarantee high volume to large global customers.

But we certainly need to finance the expansion of production before we can underwrite these ventures.

The special service currently afforded to Amsterdam Restaurants of delivery on demand, will be expanded not only to other major Dutch cities, but also to other major European cities starting with including London, Düsseldorf, Brussels and Paris, according to a calculated demand/cost ratio. Such direct sales and delivery are justified by the opportunity not only to provide a uniquely superior service, but also to maximize our profit margin for the subsector of urban restaurants, hotels and other such outlets.
Chain stores, wholesalers and export channels will be distributed via outsourced logistics suppliers for volume efficiency.

Research & Development

Production R&D Already the founder has put 18 years of R&D effort into the products. There will continue to be development of new products in the area of organic sauces, packet mixes and marinades.

Intellectual property has now been notarised to prove ownership from on or before 2nd December 2015 and trademarks have been registered in the Netherlands and Hong Kong, but additional registrations and patent applications are planned in winter 2020 as part of the business expansion.

Financials
The products already have a high profit margin, but historically sales and production were performed by one person, limiting capacity and therefore profit.

The expansion is intended to raise capacity to the point where future expansion can be financed from the growing profits that will result. Currently there are no plans to introduce any credit terms – products are paid for on delivery or in advance in case of an online order through the webshop.

However, costs have to be incurred before sales are made, so a financial model has been constructed that ensures accurate cash-flow forecasting.

Marketing
In restaurants, the products sell themselves. In fast food outlets, the hot ketchup is also sufficiently self-explanatory. So marketing is mainly a question of bringing the product to the attention of retailers. Wholesalers are already willing to take on the products owing also to their self-explanatory nature.

But although there is no viable competitor for Chilasso Hot Ketchup, there are indeed many hot sauces on the market. Therefore promotions in supermarkets will be used to raise public awareness of the Chilasso hot pepper sauces. Later in the year, a 100% organic version of the sauce will be marketed to wholefood outlets. In-store promotion in such stores will be applied if it is deemed cost-effective. The webshop is planned to go live in December 2020 and is currently a basic marketing tool but will grow into strong online store.

Market Dynamics

Included in the marketing plan are restaurant sales roadshows to major European cities, (creating persistent promotion) supermarket in-store promotions, flyer and poster campaigns and online marketing. We want to directly interact with the end consumers.

This is because when people have on average less money for food, they need to compensate using sauce to maintain the level of taste to which they were always accustomed, a level which the hot sauce line shows as increasing rapidly. This demonstrates why table sauces grow faster in a crisis whereas hot sauces are growing more rapidly and irrespective of the economy.
But imagine what happens when we take the volume product, tomato ketchup, a simple organic version of it and combine it with Chilasso to make Chilasso Hot Ketchup. Suddenly you’ve the higher growth of hot sauce with the higher volume sales of tomato ketchup , all n one product! That is the recipe for the sauce that will overtake everything else to become the world’s number one selling sauce in less than five years: Chilasso Hot Ketchup.

Market Position

Chilasso hot pepper sauce is positioned at the top of the market, although pricing is competitive with Tabasco, the erstwhile sector leader. Chilasso hot ketchup has no close rival being both a hot sauce and a ketchup, but will be positioned and priced above Heinz. The packaging for Hot ketchup will also reflect its superiority in the market.

Competitive Strategy

Every function of this business is designed to compete and win against every function of our competitors, or even other large companies, from our product and marketing design, purchasing, production processes through logistics, financial planning and technology. For example, we make market models to a level well-known in algo-trading but not in retail food. We will also use mobile apps, a medium well-known in retail, but not in wholesale ordering. We design packaging to a level well-known in cosmetics, but not in food. So every aspect of the business will outcompete the service/product level of its counterpart in any competing organization in every way except price, which will generally be somewhat higher.

Strengths and weaknesses of the main contenders

The table on the next page shows the strengths and weaknesses of the main contenders. Given that we are anticipating market leadership in the future, it is worth adding some extra information about how we will compete with the two main rivals, Tabasco and Heinz Tomato Ketchup.

Advertising & Promotion

Promotion is the main vehicle for raising public awareness. It is easy to sell the products to restaurants where there is no competition at restaurant quality. So with global logistics in place, we will have sales roadshows that bring the product directly to restaurants in larger towns so that in effect such sales mean persisting promotion to the public, which is much more effective than individual events.

Instore Promotions in larger supermarkets

Because not everyone goes to urban restaurants, and especially in rural areas, we will conduct in-store promotions in the larger supermarkets and provide some budget for regular advertising as well – sales do not vary so much seasonally and because cold and wet weather have an adverse effect on restaurant sales, it is wise to leave the advertising budget unadjusted to compensate for reduced indirect promotion of the products during the middle of winter.

Highly cost-effective online presence

Our online sales and marketing are highly cost-effective. We already have a fixed-price deal in place and paid up for unlimited expansion and modification of the website pages, although we will spend additionally on system-to-website integration as well as internal computer systems. Such systems also have a role to play in marketing because we will have real-time access to orders as well as electronic logging of our marketing activity so that marketing and orders can be matched to assess marketing impact. The key milestones are: Website goes live early December 2020, launching online campaign beginning January 2021.

Production expands in May. We acquire the new office in May. Marketing in Netherlands, UK, Belgium and Germany begins in May and expands continually. Hot ketchup is launched in June. Chilasso 100% organic is launched in October. Ten times sales growth is expected within a year so a further production expansion is planned next year, which will be funded out of earnings alone.

Quality driven Pricing

Chilasso Hot Ketchup will initially be priced about 20% above Heinz Tomato Ketchup. It will probably be priced higher still wherever and when it should become well-enough established. Chilasso hot pepper sauce is initially priced slightly lower than Tabasco, but will move up above it in price as soon as it becomes well-known enough in the market. Already indirect hot sauce competitors from Asia are pricing themselves higher than Tabasco (very indirect because they are aimed at Asian cuisine, whereas we aim at European, Middle Eastern and American cuisines). Competitor prices will be monitored, but Chilasso will NOT lower its prices if the competitors do. This is because Chilasso’s luxury positioning in the market protects it from any price war that competitors may attempt in their desperation as we eat into their market shares.