Born globals’ internationalization of traditional products in the agri-food industry: the pastel de nata case

University of Groningen

Master’s Thesis

Born globals’ internationalization of traditional products in the

agri-food industry: the pastel de nata case

MSc BA – Strategic Innovation Management

by

LUÍS GUILHERME OSÓRIO DE CASTRO BARBOSA S3029255

June 22nd, 2020

Word count: 20522 (excluding references and appendices) Supervisor: Dr. Pedro de Faria

TABLE OF CONTENT ABSTRACT 4 1. INTRODUCTION 5 2. LITERATURE REVIEW 7

2.1 Internationalization

7

2.1.2 Internationalization of Small and Medium Enterprises 8

2.1.3 Born Globals 9

2.1.4 Exports and Foreign Investors 10

2.2 Business Models

11

2.2.1 Franchising 12

2.3 Value Capture Mechanisms

12

2.3.1 Patents and Trademarks 13

2.3.2 Secrecy 14

2.3.3 Lead Time Advantages 14

2.3.4 Complementary Assets 15

2.4 Agri-Food Industry

15

2.4.1 The evolution in the international acceptance of foreign food products 16

2.4.2 Traditional Food Products 18

2.5 Research Gap

19

3.1 Methodological Stance

21

3.2 Research Strategy

21

3.3 Case Selection

22

3.4 Data Collection

23

3.5 Data Analysis

24

3.6 Research Quality

24

4.1 Pastel de Belém Vs. Pastel de Nata

26

4.2 Nata Lisboa and Nata Pura

28

4.2.1 Nata Lisboa 28

4.2.2 Nata Pura 28

4.3 Results

29

5. DISCUSSION 40

5.1 Summary of the Internationalization Process

40

5.1.1 Nata Lisboa 40

5.1.2 Nata Pura 41

5.2 Main Characteristics of Pastel de Nata’s Internationalization

42

5.3 Adaptation of the Born Globals’ Model to Traditional Food Products

43

5.3.2 Market Adaptation 45

5.4 Proposed Model

46

6. CONCLUDING REMARKS 48

6.1 Managerial Implications

48

6.2 Limitations and Future Research

49

ACKNOWLEDGEMENTS 50

REFERENCES 51

ABSTRACT

The presence and relevance of traditional food products in the international context has been growing over the years. Among the most significant factors is the progressive internationalization of traditional food products, supported by a continuous globalization, agreements that contribute to a borderless world and an increasing acceptance of global products in diverse markets. However, there is a lack of knowledge and literature related to the evolution of their internationalization process. Therefore, this paper explores how this process occurs in born globals, reviewing the strategies and adaptations that are made along the way by analyzing the internationalization path of pastel de nata, a Portuguese traditional food product. For this purpose, a comprehensive study of two born global Portuguese companies that commercialize it abroad was conducted. The results indicate that when firms internationalize traditional food products successfully, they rely on their brand equity to draw a crucial distinction in the market and should beware of possible market adaptations in foreign markets, to enhance the value of their offering. The findings are presented in a model, which can be used for empirical testing. Overall, this paper has contributed to the born global literature applied to the internationalization of traditional food products. Furthermore, it is useful for managers since it provides them with a comprehensive background of this type of products and highlights important strategies that should be considered through its internationalization process.

Keywords

1. INTRODUCTION

Internationalization has been a widely researched topic in the international business literature, where most studies have defined it as a process of continuous participation and commitment in international markets (Welch & Luostarinen 1988; Schweizer et al. 2010). However, in some situations, it can also take the opposite path, for instance when firms decrease their involvement in foreign markets by selling a foreign production unit, when they dismantle a division that is working abroad, or when they lay-off people working in an international activity (Calof & Beamish, 1995). Therefore, a more inclusive definition has been proposed for internationalization: “the process of adapting firm’s

operations (strategy, structure, resource etc.) to international environments” (Calof & Beamish, 1995,

p.116).

There are different approaches that firms can take, when they incur in an internationalization process. The most traditional one is the Uppsala Model proposed by Johanson & Vahlne in the late 1970s, where they described it as a progressive path where firms increasingly commit to foreign markets (Johanson & Vahlne, 1977, Buckley 2016; Coviello et al. 2017). This gradual commitment occurs after firms have established their operations in the domestic market, and only then they steadily commit to foreign markets (Johanson & Vahlne, 1977; Calof & Beamish, 1995). This model did not cover many occurrences and different paths of the internationalization process, and it has been highly debated and challenged (e.g. Johanson & Mattsson, 1988; Coviello & Munro, 1995, 1997; Welch & Welch 1996; Forsgren, 2002; Petersen et al. 2003; Granovetter, 1985, 1992; Madhok, 1995; Nahapiet & Ghoshal, 1998). Even the authors of the Uppsala Model have recognized that it does “not capture important

phenomena in the modern internationalization business world” (Johanson & Vahlne, 2003, p. 83).

Among the identified shortcomings is the one that the Uppsala Model does not cover the rapid internationalization of firms (Freeman et al. 2009).

become a predominant research area where there are a variety of topics, concepts and definitions (Cavusgil & Knight, 2015). However, there are still subjects where further research is needed, for instance, to understand the drivers and dynamics of the born global internationalization process after its initial period (Liesch et al. 2007), and the growth patterns that emerge after the firm’s first years of activity (Efrat & Shoham, 2012; Sui et al. 2012).

This study intends to contribute to the understanding of the internationalization of traditional food products, a topic that is still substantially unexplored in the existing literature and which is the main subject of this paper. For this purpose, an analysis through the lens of two established born global SMEs will be made, to unravel the evolution in the internationalization of a traditional food product. These products have distinctive characteristics, such as their historical and cultural value, and exclusive intellectual protection mechanisms that confer their authenticity in the market. Their distinct traits make me believe that they might have a distinct evolution during their internationalization path. In this study, I will outline these exclusive characteristics that confer them a competitive advantage and/or a differentiating position in the market. Through an in-depth study of two companies in the agri-food industry that have internationalized pastel de nata, a traditional Portuguese pastry, I will contribute to the understanding of the evolution patterns of born globals after their initial internationalization period, taking under consideration relevant concepts such as business models and value capture mechanisms. Then I will highlight the existing differences and patterns found in both companies and propose plausible recommendations for a successful internationalization of traditional food products. In order to do so, the following research questions will be answered in this paper:

Main Research Question (MRQ): How does the internationalization process of born global

companies who sell traditional products in the agri-food industry evolve?

Sub Question 1 (SQ1): How do they adapt their business model and plan to deal with the

different phases of the internationalization process?

Sub Question 2 (SQ2): How do value capture mechanisms impact this internationalization

process?

2. LITERATURE REVIEW

Nowadays, in a changing world with a fast-paced economy, companies need to be well prepared to identify and exploit valuable opportunities. Therefore, they consistently look for approaches to increase their revenues and stay competitive. Over the past decades, the communication channels have been improving and the market barriers, in terms of goods, services and capital, have decreased due to the increasing globalization (Acs & Preston, 1997; Kansal 2009). Furthermore, agreements such as the Single European Act, have also contributed for a borderless world, where different economies are increasingly connecting (Etemad, 2004). In line with these circumstances, one of the approaches that companies pursue is internationalization. Internationalization is often regarded as a multi-phased process (Cassiman & Golovko, 2010), which allows firms to grow through geographic expansion (Lu & Beamish, 2001). There are different types of internationalization, and some will be presented in this literature review. Internationalization occurs in multiple industries, which have differences and similarities in its application. Moreover, even companies within the same activity, might have or need different approaches. Firms need to adapt to the new scenarios, through wide research, calculation of their investments and consequent adaption of their business plans, to achieve profit (Teece, 2010). All of this occurs through different stages (Cassiman & Golovko, 2010) and depends on the type of internationalization pursued. For instance, in some cases, firms need to protect their know-how, through intellectual property mechanisms, to prevent competitors from appropriating their value (Schilling, 2017). While others might require external support and collaboration to establish themselves in foreign markets and expand their reach and value (Teece, 1986). With all of this in mind, the following sub-section will provide an overview of the literature, regarding the internationalization process and some of its variants, focusing on SMEs and born globals. Then, literature about mechanisms that support and contribute to the internationalization process as a whole, namely business models and value capture mechanisms are discussed. Lastly, and aligned with the purpose of this study, I will provide an analysis of the agri-food industry, more specifically of the growing acceptance of foreign food products in international markets, and then I will focus on traditional food products.

2.1 Internationalization

2.1.1 Traditional Internationalization

throughout the years, which led to interesting considerations and suggestions that complemented it. For instance, the model was considered to be too general, since firms’ internationalization decisions depend on a certain context, with specific market opportunities and heterogeneous resource patterns (Reid, 1983). Even the authors have reviewed their work in 2003 and 2009 with attention to the changes that have occurred in business practices and theoretical progress (Johanson & Vahlne 2003; Johanson & Vahlne, 2009). Among those, the importance of the role of business networks and its layout outside the firm’s own structure (Johanson & Mattsson, 1988; Coviello & Munro, 1995, 1997; Welch & Welch 1996), the ongoing process and positive effect of knowledge development and learning (Forsgren, 2002; Petersen et al. 2003), and the role of trust and commitment (Granovetter, 1985, 1992; Madhok, 1995; Nahapiet & Ghoshal, 1998) have been researched, and all constitute valid complementary elements of the internationalization process. Therefore, it is safe to state that successful internationalization relies on a firm’s networks, its structure and consequent relationships, on a continuous learning process and knowledge obtained along the path, and on the mutual trust and commitment developed between partners, which are mostly accomplished and built through satisfactory business experiences (Johanson & Vahlne, 2009).

Generally, according to the traditional model, firms will initially internationalize to markets that are closer to them in terms of psychic distance, which is the total factors and differences that complicate the understanding of foreign markets (Johanson & Vahlne, 1977). After entering those, then they will progressively access other markets that are further away (Johanson & Wiedersheim-Paul, 1975; Vahlne & Wiedersheim-Paul, 1973). Furthermore, the higher the psychic distance between countries, the harder it will be for them to establish new connections, which is known as the liability of foreignness (Johanson & Vahlne, 2009). Following the same logic, there is the liability of outsidership, that also hinders the process of internationalization, which reflects itself more at the firm-level, as it is related to the position, or lack of it, in the network of the foreign country (Johanson & Vahlne, 2009; Rugman & Verbeke, 2007).

2.1.2 Internationalization of Small and Medium Enterprises

In this study, I will focus on SMEs. This type of firms is crucial for economic development (Azari et al. 2017) and have a key participation in economic growth, thus research on SMEs’ internationalization requires great attention (Ruzzier et al. 2006). More importantly, the agri-food sector which is the one studied in this paper is mostly constituted by SMEs (Kuhne et al. 2010). There are some similarities between SMEs and larger companies in their internationalization process, but I will review the literature that focused and researched SMEs.

their resources in multiple markets (Lu & Beamish, 2001). They have been increasing their involvement in international operations (Coviello & McAuley, 1999; Lu & Beamish, 2001), and this has unfolded progress on this topic.

2.1.3 Born Globals

From the research previously conducted, there are two main distinct types of SMEs who internationalize: those whose internationalization occur in a later period when they are already established, and those who begin their internationalization process since the beginning of their activity, or in a rather early phase (Lu & Beamish, 2001). The former approach is aligned with the traditional Uppsala Model, where in an attempt to reduce risks and maximize gains, firms internationalize slowly and progressively, when they have already established domestic foundations (Johanson & Vahlne, 1977). For the latter, the Uppsala Model is not adequate, since it does not cover the rapid internationalization of firms (Freeman et al. 2009). These firms who are or aim to be international from the beginning of their conception are known as international new ventures (Lu & Beamish, 2001), or as born globals (Freeman & Cavusgil, 2007). There is not a consensus regarding the exact period before the internationalization of born global firms, but Rennie (1993) considers that those who have internationalized less than two years after their conception, can be considered as such (Madsen & Servais, 1997; Moen & Servais, 2002). Their fast-paced internationalization was a method that was significantly unknown thirty years ago, but nowadays this approach is much more usual (Cavusgil & Knight, 2015; Coviello, 2015).

Their fast-paced internationalization is performed to quickly grasp a competitive advantage in multiple countries, by leveraging their resources (Oviatt & McDougall, 1994), and it is achievable through their high flexibility and adaptability to markets and customers (Rennie, 1993). They take action in dynamic markets, where opportunities emerge and disappear at a fast rate (Freeman et al. 2012), therefore their success depends on how quick and efficient they are in exploiting foreign opportunities (Nordman & Melen, 2008). In their internationalization development process, psychic distance does not have such a substantial impact, in fact founders and partners’ previous international experience, networks, and other customer-related elements have a more significant influence (Rialp et al. 2005). Comparatively, born globals take more advantage of personal and business networks to quickly arrive at distinct international markets (Rialp et al. 2005). Therefore, they are usually more dependent on supplementary resources granted by other international firms and have access through collaboration strategies to better local and international networks, such as key distribution channels, supply chain and partnerships (Rialp et al. 2005).

achieve a higher level of production and growth (Lu & Beamish, 2001), by exploiting their own competences through multiple foreign markets (Zahra et al. 2000). Such strategies will be the focus of the next subsection, where I will provide a more in-depth analysis on them.

2.1.4 Exports and Foreign Investors

When firms decide to internationalize their operations and enter foreign markets, they mainly do it via exporting (Golovko & Valentini, 2011). It is the most common foreign market entry mode, because of its reduced risk, low commitment of resources, and high degree of flexibility (Leonidou & Katsikeas, 1996). Furthermore, through the interaction with international markets, they are able to grasp specific knowledge that is not available domestically, that will in turn be used to enhance the quality and production of their offerings, a phenomenon known as “learning by exporting” (Alvarez & Robertson, 2004; Salomon & Shaver, 2005). This ability to balance exports, innovation, and the knowledge that emerges from this process, has been empirically proved to enhance the firm’s sales growth, and allow the firm to attain an even higher position in domestic and international markets (Golovko & Valentini, 2011). In comparison with FDI, exporting is considered to be a simpler and easier process, due to a more limited resource commitment and less risk involved (Golovko & Valentini, 2011), and because firms do not have to cope with the hassle of establishing a foreign subsidiary (Lu & Beamish, 2006). Plus, it protects the company from the unpredictability of investments. For instance, when political instability or variations in the markets of the host countries take place (Lu & Beamish, 2001), companies can more easily withdraw from such places.

However, there are also investments made in the export process that are sensitive to risk and costly to enforce. When firms export, they have to face sunk costs through the whole process (Bernard & Jensen, 1999), such as packaging, managing production and distribution channels, and market research (Roberts & Tybout, 1999). Additionally, they will also sustain transportation and administrative costs, putting them in a disadvantageous position when compared with local firms (Golovko & Valentini, 2011). In order to tackle these drawbacks, firms should innovate which will make them more efficient in terms of production, and consequently reduce the expenses related to the exports process (Cassiman & Golovko, 2010), for instance through the knowledge that they obtain from exporting (Alvarez & Robertson, 2004; Salomon & Shaver, 2005). Furthermore, due to the reduction of costs and increase of benefits, the implementation of exporting and innovation strategies are positively correlated (Golovko & Valentini, 2011).

As stated above, exporting might be a more suitable option for a firm, since it involves less capital investment, but at the same time it can also negatively influence the firm in terms of distribution opportunism and through the volatile variation of their asset’s value (Lu & Beamish, 2001). In this situation, FDI provides the firm with a more viable option “because it enables firms to minimize

Rugman, 1982, p. 568). Additionally, through FDI the firm is also able to achieve location-based advantages, through its presence in different locations (Kogut, 1985), such as cheaper human labour, access to key resources (Deeds & Hill, 1998) and also new knowledge and capabilities that improve their position in the international market (Shan & Song, 1997). The opportunity to learn organizational practices and mechanisms from diverse foreign markets, and to establish a stronger and more competitive position internationally, are also major advantages of pursuing FDI (Shan & Song, 1997; Porter, 1990; Zahra et al. 2000). Overall, exporting and FDI are the most common strategies in foreign market entry for SMEs (Reynold, 1997). In the following subsections I will review business models’ theory and capturing value mechanisms that support the internationalization process of firms, which can be integrated into the two most used foreign entry modes for SMEs.

Firstly, I will provide an overview of the concepts, aligned with the effect that they have in the creation and protection of value of the company. Starting with business models, I will give an overview of the topic, and explore the franchising approach. Then through an analysis of value capture mechanisms, I will show how companies can better position themselves to capture value in an international context. The mechanisms that I will discuss range from patents, trademarks, secrecy, lead times advantages and complementary assets, which will be elaborated in their respective sub-sections. 2.2 Business Models

A business model encompasses the way in which the firm designs and structures its operations and activities, to create and consequently deliver value to their customers in a profitable manner (Teece, 2010). When a business model allows the firm to differentiate from their competitors in an efficient way, and it is hard to replicate by their competitors, it normally leads to an increase in profitability and to the establishment of a competitive advantage (Teece, 2010).

In order to achieve a higher performance, firms should continuously look for ways of improving their business model (Morris et. al. 2011; Kuratko & Audretsch 2013) and to be prepared to respond and explore opportunities that might emerge (George & Bock, 2011). These changes in the business model might not be novel within the industry, and only new for the company, but those will anyway enhance the opportunity and advantage seeking pattern of the firm (Ireland et al. 2003; Kuratko & Audretsch 2013). It has been proven in the literature that this dynamic behaviour positively influences firms’ success (Cucculelli & Bettinelli, 2015) and that constant business model innovation is a major driver of firms’ performance (Zott et al. 2011).

2.2.1 Franchising

Franchising is a method of licensing, where a parent company, also known as the franchiser, gives permission to an independent entity, known as the franchisee, to do business through an agreement and certain conditions (Czinkota et al. 2004). This can happen at the national and international level, and normally the domestic implementation of this system occurs before the international expansion (Welch, 1989; 1990). For instance, through domestic distribution, firms are able to acquire know-how concerning marketing strategies, and also to collect information about their customers, that can be later applied in other geographical areas (McIntyre & Huszagh, 1995). The operational experience acquired, and the information collected from the domestic markets and franchisees, make the firm more prepared to expand internationally (McIntyre & Huszagh, 1995).

There are differences between national and international franchising. In the context of domestic franchising, in some countries such as the United States and Australia, there are institutions that protect and act on behalf of their constituents (Atwell & Buchan, 2014). At the same time, at the national level,

“there is abundant legal and public documentation about franchise contracts and conflict resolutions”

(Rosado-Serrano et al. 2017, p. 238), which ensure better conditions for it to be practiced. Conversely, in the international context, there are different laws and policies, and there is a higher risk of the loss of intellectual property rights and trademarks, which contribute to the uncertainty of the process (Kedia et al. 1995). There are also differences, in the way in which the franchisors and franchisees collaborate. The international franchisors do not seek to control the process as much, as they give more autonomy to their franchisees and opt for a more collaborative interaction (Paik & Choi, 2007). This collaborative approach indicates that, in international franchising, knowledge and learning are key elements of the business model (Madanoglu et al. 2017).

Overall, international franchising is more difficult to pursue due to a more complex setting and franchise network configurations (Rosado-Serrano et al. 2017). Furthermore, international franchisors operate through a network of relationships, on the market and political level, that are hard to manage and control (Rosado-Serrano et al. 2017). For these reasons, normally the approach followed is master franchising, where a third party receives permission to operate on a specific geographic market (Alon, 2006). This type of approach requires local adaptation for instance in the calculation of royalties and franchise fees (Lafontaine & Oxlex, 2004), which can hinder the evaluation process and lead to uncertainty in international franchising (Buchan, 2014).

2.3 Value Capture Mechanisms

quality and consistency across the globe, the companies need to have a protection over their recipes, production processes, and other key components to capture value, and protect themselves from potential contenders (Schilling, 2017). This is aligned with the patents, trademarks, and secrecy theory. Furthermore, the company can achieve higher levels of performance through innovation and strategic decisions that allows them to create value, and to better position themselves in the market (Teece, 1986; Lieberman & Montgomery, 1988). A company can capture value by being the first to introduce a product in the market (Lieberman & Montgomery 1988) or by establishing a strategic alliance that allows them to assess key resources and capabilities (Kogut, 1988; Mowery et al. 1996; Gulati et al. 2000). Aligned with this last part are lead time advantages and complementary assets.

The extent through which a firm can achieve gains from their innovations is called appropriability (Schilling, 2017), and its strength is determined by how easily the firm’s competitors can achieve or exploit such innovations themselves (ibid). According to Schilling in 2017, “the ease

with which competitors can imitate the innovation is, in turn, a function of both the nature of the technology itself and the strength of the mechanisms used to protect the innovation” (p. 188).

In the next subsections there will be a focus on four value capture mechanisms that help firms to capture value from their activities. Those will be patents and trademarks, secrecy, lead time and complementarity assets, since they have received particular emphasis in research (e.g. Cohen et al. 2000). It is important to make a distinction among the concepts, to better understand their influence and how they contribute to the appropriation of value by the companies.

2.3.1 Patents and Trademarks

First, we have patents, which concede the legal privilege, in a determined country, for companies to exclusively produce, sell, use and import an invention for a specific period of time (James et al. 2013). In order for companies to be granted such patents, they must be useful, novel, and not obvious, to the extent that competitors cannot easily achieve such innovations (Schilling, 2017). A patent is only valid in a specific country since there are different laws and requirements around the globe, therefore a company must apply individually for patents among different countries, and the same applies for trademarks and copyrights (Schilling, 2017). Although it can be advantageous to apply and issue patents, they are also costly to obtain, and do not grant a company or inventor with immediate success or profit (Lanjouw & Schankerman, 2001; Somaya, 2003). The costs result from the patenting process, maintenance fees and also those incurred in the reinforcement of the patent, when infringements are identified (James et al. 2013).

the highest IPM revenues, only being surpassed by patents (Doern, 1999). Provided that applying for trademarks is cheaper than other IPM mechanisms, SMEs will normally enforce trademarks rather than patents (Mendonça et al. 2004).

A type of trademarks is geographical indications (GIs). GIs are used to distinctively highlight quality products coming from specific places where they are produced, aiming to protect the interest of consumers and producers (Vinayan, 2017). When enforced properly, they can become a very useful marketing tool (Addor & Grazioli, 2002) and consequently play a role in a specific region’s development (Dokuzlu, 2016). In a regional perspective, they can also contribute to the increase in employment, income, and also to make people stay in those areas (Folkeson, 2005). In order to take advantage of such GIs, they should be registered, and, in the case of agricultural products and foodstuff, they are protected by EC Regulation 1151/2012 (Council of the European Union, 2012), in the European Union (EU).

2.3.2 Secrecy

The use of secrecy also allows the capture of value, through the limitation of information sharing within the company and with the outside via internal regulation (James et al. 2013). This mechanism is most commonly used in countries which have poor and unstable intellectual property legislations (Cohen et al. 2002; Zhao, 2006). The achievement of a successful secrecy strategy consists in allowing the company to expose their product to the market without conceding the exclusive processes and details of its production towards their competitors (Schilling, 2017). These procedures are considered trade secrets, when they confer to the company a profitable stream, and because the owner consistently protects it from public disclosure (Arundel, 2001; Winter, 2000).

2.3.3 Lead Time Advantages

discussed, in the existent literature, some relevant features of knowledge such as its codifiability, teachability and complexity (Kogut & Zander, 1992; Zander & Kogut, 1995). If the competences of the firm are codifiable and teachable, there is a higher chance that competitors will be able to acquire and grasp the benefits from it, which would result in second-mover gains (James et al. 2013). Furthermore, based on a comprehensive debate and analysis a model has been proposed, which states that first mover advantages are more useful and effective, when there is a high level of uncertainty, a higher time lapse between innovations and a high degree of intergenerational learning (Leiblein & Ziedonis, 2007). 2.3.4 Complementary Assets

Finally, complementary assets are those that are used in addition to the innovation itself, in order to enhance its value and efficiency, such as manufacturing, distribution and marketing (Teece, 1986). If for the development and generation of an innovation, the firm has to create specific complementary assets, since those are not available in the market, this will enhance its capacity to capture value (James et al. 2013). Additionally, firms that possess specialized complementarity assets, when faced with situations of technological turbulence or rapid innovation emerge, will have more chances of sustaining their competitive advantage and their performance (Rothaermel & Hill, 2005; Tripsas 1997). However, in a weak appropriability setting, the firm should make an analysis to assess, if they need to contract complementary assets from the outside to develop their innovation, or if it can be done internally (Teece, 1986). In some cases, the lack of resources and internal capabilities poses a challenge for the successful internationalization of SMEs (Zacharakis, 1997), which only accentuates their liability of foreignness (Hymer, 1976). It has been argued that alliances offer a viable solution for SMEs, in the acquisition of key resources, greater market power, reduction of their transaction costs and a shared risk in their activities (Kogut, 1988; Mowery et al. 1996; Gulati et al. 2000). Through this approach, they are able to access their partner’s resources and networks (Gulati, 1998). By accessing their partners' knowledge base, they might also decrease the number of mistakes they commit, and consequently reduce their risks and costs (Lu & Beamish, 2001).

2.4 Agri-food Industry

Now we already have an overall perspective of the internationalization process. We have looked upon some of its variants, the traditional and the born globals model, export and FDI approaches, and also at mechanisms that allow it to prosper. In this subsection we will look at the agri-food industry, then make a bridge to the evolution of the international acceptance of foreign food products and to the internationalization of traditional food products, which is the focus of this study.

match the requirements of their customers, to grow steadily allowing them to achieve long-term goals and to remain competitive in the global market (Zouaghi 2016; Kuhne 2018). Most innovations occur as a result of “customer and retailer demands, marketing strategies, consumer perception of quality

and safety and environmental pressure” (Zouaghi & Sánchez, 2016, p. 9). This sector consists mostly

of a great number of micro and SMEs (Kuhne et al. 2010) and represents one of the most important industries in the EU, in terms of its employment and economic output (Zouaghi & Sánchez, 2016). It is in fact the leading manufacturing industry in Europe, “representing 15.6% of the overall sales, and

over one-third of world trade in agricultural products and food” (Serrano & Pinilla, 2014 p. 2). This is

a direct result of globalization, since companies now have better conditions to sell their products abroad (Gomez-Conde & Lopez-Valeiras, 2017). Furthermore, the enlargement of the EU, innovative progresses in the transportation of perishable products, and the decrease of entrance barriers, have also boosted international sales (Schiefer & Hartmann, 2008). Overall, firms in this industry are increasingly relying on internationalization, in order to survive and to be successful (Serrano et al. 2018). However, the agri-food sector that is of high importance in the international context has not received much attention when compared to other sectors (de Perea et al. 2019). The next subsection aims to analyze the evolution of the international acceptance of foreign products, in the agri-food industry.

2.4.1 The evolution in the international acceptance of foreign food products

In order to understand the establishment and prevalence of foreign food products in international markets, there is a collection of factors to be analyzed. In this subsection I will review some of those factors, which influence their dissemination and acceptance in foreign markets and the firm’s consequent success. Those include globalization, products characteristics, local specialization, country of origin, consumer preferences and global trends. Then, I will make a bridge to discuss where traditional products stand in an internationalization context, debating their specific characteristics and processes, while having in mind what was discussed above.

Secondly, the product’s characteristics also have an influence in their international success and acceptance, and they should be aligned with customer demands. There has been increasing evidence of the advantages of product differentiation on a firm’s capacity to internationalize (Fernández-Olmos & Díez-Vial, 2014). For instance, the quality of the products has been shown to be positively related to the opportunity of becoming an exporter (Crozet et al. 2011). In this context, it is interesting and relevant to look at the way in which local specialization unrolls and the impact it has in international sales. This specialization is mostly driven by the producer’s capacity of manufacturing products with exclusive characteristics (Musso & Francioni, 2015). These characteristics are the ownership of resources that are not obtained in other areas, innovation, the capacity to develop differentiated products as a result of experience and know-how and a distinctive image linked to a certain geographical area or an established brand (Musso & Francioni, 2015). More specifically, in the agri-food industry, the key boosters of local specialization are a result of the national environment, that allow the production of goods with certain features, local production based on a specific experience and know-how and an image related to the country of origin (COO) (Papadopoulos & Heslop, 2003; Balabanis & Diamantopoulos, 2004).

The COO concept refers to the country where the product has been manufactured, which may or not be the same as the brand’s country of origin (Jaffe & Nebenzahl, 2006). It has been argued that the COO functions as a strong indicator in the consumer evaluation and perception of a designated product (Verlegh & Steenkamp, 1999). Furthermore, it provides the consumer with cues of product quality, has an impact in their risk and value evaluation, and directly influences their purchasing intentions (Jaffe & Nebenzahl 2006; Pharr 2005; Phau & Chao 2008; Wilcox 2005). Therefore, if everything else remains constant, a country with a superior perceived image, more specially in terms of their products, will have a competitive advantage that can lead to economic benefits (Jaffe & Nebenzahl 2006). It has been empirically shown that consumers not only appreciate more the products from countries with a more positive COO image but are also keen to spend more money on them (Koschate-Fischer et al., 2012). Consequently, the establishment of a premium price strategy will be easier and more efficient, and the company should also emphasize this COO factor in their communication strategy, for instance through their marketing and packaging (Koschate-Fischer et al., 2012). On the other hand, if the brand does not hold a favourable COO position, they should pursue other communication strategies, such as highlighting other product attributes (Verlegh et al. 2005).

income growth, which results in bigger consumption levels, and a shift towards products with higher quality (ibid). It is important to stay connected with global consumer trends, and with the demands that emerge from such preferences, to stay aligned with the market. According to the EU report, consumer preferences also had an impact in the consumption behaviour, which are the result of their societal habits, health concerns and a raise in the consumer’s awareness for the environment and climates changes.

2.4.2 Traditional Food Products

After all the debate and context given in the previous subsections, it is now adequate to introduce the main subject of this study: the internationalization of traditional products in the agri-food industry. There are notorious examples of traditional food products worldwide such as pretzels from Germany, pierogi from Poland or for instance champagne, an exclusive designation to the wine that comes from the Champagne region in France. Over the years, there has been an increasing concern and curiosity in relation to traditional food products in many EU countries (Bilska et al. 2017). These products can be registered, in order to preserve their authenticity and to restrict unrighteous appropriation from other parts, and there are legal provisions and regulations to enforce their protection (Barska & Wojciechowska-Solis, 2018). Some of these products are assigned with distinguishable labels, in order to highlight their exclusivity, high-quality, and to ensure that they have been conceived through traditional methods of production, supported by a valuable and unique culinary tradition (Barska & Wojciechowska-Solis, 2018). Among these exclusive mechanisms of protection for traditional products are the Traditional Specialty Guaranteed (TSG), the Protected Geographical Indication (PGI) and the Protected Designation of Origin (PDO) (Gheorghe et al. 2013). These products can benefit from these exclusive designations, production methods and protection over their historical heritage. Furthermore, their tradition and popularity can incentivize their customers to acquire them, in order to experience a designated culture, or in the case of those who have already tried it, to relieve a past experience.

mechanisms to differentiate them in the market, there are reasons to believe that they do not follow the same guidelines of other food products along their internationalization path. This is the central idea of my study, and the research gap for which I will contribute, with evidence from born globals regarding the internationalization of this type of product.

2.5 Research Gap

In this section, I analyzed and demonstrated that the internationalization process has been highly discussed in the literature. However, it has been stated that future research on internationalization should investigate the characteristics of industries more specifically, as those can influence the internationalization process (Schueffel et al. 2014). Through a further research in the agri-food industry this paper will contribute to its internationalization literature and particularly to clarify the distinctive paths that traditional products take among it.

Attending to the exclusive protection mechanisms and characteristics of traditional products depicted in the last subsection, there are reasons to believe that the path of the most common internationalization strategies has some differences regarding this type of products. More specifically, taking into account the Uppsala model, some firms can start its production abroad as their internationalization process evolves (Johanson & Vahlne, 1977; Calof & Beamish, 1995). However, because the production of traditional food products is extremely dependent on their country of origin’s raw materials quality and availability, it is highly unlikely that this type of firm will do that. The focus of this study is on born globals, and regarding their internationalization method much of the existing empirical literature has only studied and analyzed new industries and high technology-based sectors (Rialp et. al 2005). While the antecedents and outcomes of born globals’ internationalization have been considerably researched (Rialp et al. 2005), less research has been directed to the drivers and dynamics of this process, after the starting period (Liesch et al. 2007). More precisely, there is a research gap regarding the understanding of the internationalization process, and of the consequent growth patterns after the firm’s first years of existence (Efrat & Shoham, 2012; Sui et al. 2012). That will be the focus of my study, to explore in which way does the born global internationalization process of traditional food products evolve over the years after its initial period, and also depict the consequent adaptations performed that enable its success.

With the following gaps underlined, this paper intends to answer one main research question, and two sub-questions:

MRQ: How does the internationalization process of born global companies who sell traditional

products in the agri-food industry evolve?

SQ1: How do they adapt their business model and plan to deal with the different phases of the

internationalization process?

3. METHODOLOGY

As seen previously in the literature review, there is still much room to explore the internationalization process in the agri-food industry. In particular and relevant for this study, there is not much information regarding the born globals’ internationalization of traditional products, within that industry. This next section advances on the research method used to address those gaps, and to answer the research questions.

3.1 Methodological Stance

Even though there is not a comprehensive research behind the specific born globals’ internationalization of traditional products in the agri-food industry, there are numerous theories and concepts related to internationalization in general. The existent literature on this topic allows to explore and advance the foundations, regarding the born global internationalization process of the companies studied. Following this process, a closer look at the specificities of the industry and type of product, will then be investigated and provided. This will complement the existing literature and assist in the analysis of the respective internationalization process of such companies.

Normally, research strategies can be grouped into qualitative and quantitative (Denscombe, 2007). In the qualitative approach, investigators focus “on the beliefs, motivations and actions of people,

organizations or institutions” (Lakshman et al. 2000, 371). There are diverse methods of pursuing a

qualitative investigation such as structured or open-ended interviews, external observation, or even the interpretation of written material (ibid). When compared to a quantitative approach, the qualitative one does not endorse a straightforward and plain view of the subject in order to count the number of occurrences of a certain event, instead it assumes a holistic approach that upholds the complexities of human behaviour (ibid). In this study, I intend to contribute to the born global internationalization literature, through the study of a specific product and industry. To fulfil this purpose, I aim to explore this topic deeply with the help of professionals in the industry, thus a qualitative research strategy fits this purpose. This is a suitable approach as “qualitative research takes an interpretive, naturalistic

approach to its subject matter; qualitative researchers study things in their natural settings, attempting to make sense of, or interpret, phenomena in terms of the meanings that people bring to them” (Jones,

1995, p.2). To fit this purpose, interviews were conducted. 3.2 Research Strategy

in which I would focus my study, and started the alignment between the information I have collected and the research questions I aimed to answer. Attending to the methodological stance, an exploratory research approach seems like the most appropriate option. Therefore, I have conducted a multiple case-study (Eisenheardt, 1989; Yin, 1981). As my goal is to attain specific knowledge within an industry, a case study is a suitable approach, since it provides a comprehensive and detailed overview of a single case (Bryman & Bell, 2015; Creswell, 2013).

3.3 Case Selection

For this study, three Portuguese companies, namely Nata Lisboa, Nata Pura and Pastéis de

Belém were selected and studied. These companies have been chosen for different reasons, after an

in-depth study of the industry, mostly through news articles, but also through some existent literature about them. Their relevance for the study were based on: (1) their position in the industry; (2) their strategic decisions regarding internationalization; (3) their strategic decisions regarding innovation. Since the goal is to compare their different paths, pursued individually, the companies must have a common ground. Accordingly, these companies’ main activity is associated with the same traditional product or variants of it, in the agri-food industry. While Pastéis de Belém, who are the pioneers in the commercialization of such product have never internationalized their operations, both Nata Lisboa and

Nata Pura have pursued international expansion, with different strategies, and are the focus of this

study. An overview of these companies can be found below.

Pastéis de Belém was the first company to commercialize the product in 1837, following an old secret recipe from an historical monastery. The recipe has never been changed since its conception and has been transmitted between generations to the master confectioners in their “secret room” (Pastéis de Belém, 2015). It is one of the main attractions for tourists in Portugal, and they only have one store located in Belém. Despite their tremendous national success, they have never internationalized their operations. Their decision on exclusively maintaining the national focus, where they are clearly market leaders, has motivated me to study their reasoning behind this approach.

Nata Lisboa was established in 2012, with the purpose of expanding pastel de nata

internationally. From their conception, they have assumed the goal to share a traditional recipe, and the inherent cultural and gastronomical values of the city of Lisbon, with the world (Nata Lisboa, n.d.a). While pastel de nata is their core product, they also intend to replicate the environment of old Lisbon through the offering of other traditional products, in their stores. This is attained through the use of a franchising model, where all the stores in the world stay aligned with the company’s values, delivering the service in an efficient and consistent manner.

Nata Pura was established in 2013, also with the purpose of expanding pastel de nata

recognized that pastel de nata was already present in many locations around the world, due to Portuguese communities and for historical reasons (Nata Pura, n.d.b). Under these circumstances, the product quality varied depending on the locations. Therefore, they intend via an exporting and marketing strategy, to expand the product worldwide, while maintaining its consistency and quality regardless of the location.

As can be seen above, Nata Lisboa and Nata Pura have distinct internationalization strategies, which have proved to be successful so far. This has allowed me to compare the different decisions taken, and how this disparity influenced the way that their internationalization process has progressed. Even though there are some clear differences in their approach, there are also similarities in their core, which helped me to establish a better comparison between both. By studying the three companies together, I expected to be able to understand and compare, the separate internationalization decisions taken, or the lack of them, and contribute with some clarification for the internationalization process regarding traditional food products.

3.4 Data Collection

As mentioned above, a multiple case study is the main method. Through this approach, researchers are able to investigate existent patterns, which are common to cases and theory (Eisenhardt 1989). Additionally, data has been gathered through different methods, with the intent of confirming a match and pattern between them. This data collection has occurred between two different phases. The first one focused on the collection of secondary data through relevant literature, news articles and available documents/reports. This has allowed me to get an overall picture of the industry, and to investigate and select the most suitable companies for this study. Then, relying on the information obtained through the secondary data, an interview protocol was created, and the gathering of primary data followed. In this process interviews were conducted since they are useful where comprehensive information is required from the respondents (Gill et al., 2008). Furthermore, they can help to achieve findings and conclusions regarding unclear phenomena (Collis & Hussey, 2014). This is the case in the internationalization of traditional food products. The interview protocol was structured in a way that allows divergence sometimes between topics, to explore other areas that might become relevant (Gill et al. 2008) using follow-up questions. The protocol can be found in Appendix A.

supported their claims, and also follow-up questions were asked, according to what the respondents explained and depicted. This process has been applied in all interviews, also to search for similarities and patterns in their answers. At the end of the interviews, there was a section where I have asked for advice on related companies or associations that I could interview, additional documents for my research, and also if there was something that was important and that they wanted to add. All of the interviews have been conducted in Portuguese, since it is the native language of the respondents, and the focus of this study is in the internationalization of a traditional Portuguese product.

3.5 Data Analysis

All interviews were transcribed. A thorough reading of everything was made, to assess the quality, a better understanding of the data (Rowley, 2012) and its validity. This was helpful to understand the main points of each interview, the relationship of different perspectives with the theory, leading to the creation of relevant interview codes (ibid). As soon as inductive codes were established, there was a process of convergence among the interviews, where all the equivalent insights between different topics were grouped (ibid). Those remarks that did not align with the focus of the research questions, were not used and deleted in a screening phase. The rest of the insights were organized, through the same procedure in which the interview protocol had been designed: context, internationalization, business model, value capture mechanisms, human resources. This allowed a more efficient comparison and provided the basis for appropriate conclusions to emerge (ibid) about the proposed research questions. Afterwards, quotes from the interviews were used to develop an understanding of the different approaches and to establish a connection with the research questions. 3.6 Research Quality

In the development of a case study, it has been suggested that it should meet the criterion of methodological reliability, replicability and validity (Yin, 1984). Usually, and also in this case, there was not much information available to confirm the validity of the information provided. Although, in order to tackle this situation, different sources have been contacted, as well as complementary documents, such as news articles and reports, were explored, to confirm the validity of the information and reinforce its relevance. This strategy of gathering different sources is known as triangulation, and, when there is a support and bridge between claims from different sources, we are able to achieve confirmatory triangulation (Gillham, 2000). Furthermore, during the interviewing phase, the same questions have been asked to multiple respondents, in order to avoid informant bias. In order to strengthen the replicability and reliability of this study, the interview protocol is available in the appendix.

4. FINDINGS

This section will be divided in three parts. First, I will provide an overall description of pastel

de nata, the traditional product in which this study is focused on. In this description I will look at its

origins, the pastel de Belém, and at the strategy of the exclusive company that produces it. Then supported by the latter, I will briefly discuss how subsequent companies identified an unexplored opportunity and how they have approached the international market. Finally, in this first part, I will express the reasons why pastel de nata is relevant, and it serves as a great example to study this type of industry and to answer the research questions. In the second part, I will make a brief description of the companies chosen for this study, and the reasons behind their selection. Finally, and after the context given by the previous parts, I will elaborate on the results derived from the research and interviews made on the selected companies and use quotes from them to illustrate the main findings, regarding their internationalization process. I will structure this process according to my research questions, where I will first describe the similarities in the company’s strategies and then their differences.

4.1 Pastel de Belém vs. Pastel de Nata

To understand the origins of pastel de nata first we have to look at pastel de Belém’s history, another Portuguese traditional product in which it has been inspired. The origins of pastel de Belém date back to the beginning of the 19th century, in Belém close to the Jerónimos Monastery, and it is said that the secret recipe originated from there (Pastel de Belém, 2015). Close to the monastery, there was a sugarcane refinery, affiliated with a small place of diverse trade. The liberal revolution in 1820 forced every monastery in Portugal to close, and someone from the monastery started to commercialize a sweet pastry, in that small place nearby (ibid). This became the first spot that sold pastéis de Belém. Even though it was not the perfect location, the attractiveness of the Jerónimos Monastery and of the Belém Tower, ensured a solid flow of visitors, which quickly grasped the habit of eating such pastry. Following its success, in 1837 began the manufacturing of pastéis de belém, in a facility annexed to the refinery, and according to the monastery’s recipe (ibid). This recipe has remained unchanged since its conception by their creators, and carefully transmitted through generations. The company adopted the same name as their key product, Pastéis de Belém.

“If all of a sudden there are pastéis de Belém everywhere, to what extent does the brand and product lose a portion of the special component that they have? I don’t know, it is something difficult to measure, but that in our opinion has an outstanding value.” (Pastel de Belém’s CEO)

Despite the fact that Pastéis de Belém have solid protection mechanisms and techniques to preserve their recipe, copies of the product started to emerge, which resulted in the emergence of the

pastel de nata. A national spread of the product occurred, and nowadays pastel de nata is the most

popular pastry in Portugal, present in almost every street corner. In its consumption, Portuguese usually combine it with an espresso, and it is eaten for breakfast, as a snack or for dessert. Its global acceptance has been increasingly confirmed in the last decades, following an increase on Portuguese tourism, which has allowed more customers to try and enjoy it. Realizing the success and popularity of pastel de nata in the Portuguese market and among foreigners, some companies have delineated a strategy in order to sell it all over the world, exploring a market with a vast potential, something that Pastéis de Belém never did.

It is precisely the notoriety and great success of pastel de nata in the national market that led to the creation of an industry around it. This makes it a suitable example to investigate the internationalization process in the traditional products industry. Portugal is a well-known country for its gastronomy, but no other pastry has the supremacy and acceptance among all types of consumers, from locals to foreigners, as the pastel de nata. This is also a result of its organoleptic properties, and of its nutritional value.

“It was through the analysis of market trends (that we have evaluated pastel de nata’s potential), it was gourmet, natural, with the best ingredients that are available, and it was very convenient for consumers in terms of its consumption.” (Portugal Venture’s Investment Manager)

“Pastel de nata is a product which has half of the calories of the most known staples in the market, and one third of the fat. In this sense it had a competitive advantage and it was adapted to the current trends, namely health concerns. It also confers to the customer a different organoleptic experience, with a puff pastry which is simultaneously sweet and salty, and a smooth texture accompanied by a crispier one, all in the same product.” (Nata Pura’s Marketing Director)

product is particularly desirable for all customers. Pastel de nata is a good pastry to sell, it captures people by itself.” (Nata Pura’s COO)

Although its internationalization process is recent, there are already some companies who have successfully done it. In the next subsection I will describe two of the major players that have followed this approach.

4.2 Nata Lisboa and Nata Pura

In my investigation, I was able to contact two of the most successful and important actors in the internationalization of pastel de nata, which are Nata Lisboa and Nata Pura. In both companies,

pastel de nata is the key product. I have chosen these companies because of their successful

internationalization processes of a traditional product, which I believed that would allow me to answer the research questions proposed. As expected, with my research of the companies but especially through the interviews that I have conducted with them, I was able to collect enough information, to understand and analyze the internationalization process of a traditional product, and how it has been implemented through different phases. In this subsection I will make a brief introduction of the companies, and then in the following one I will discuss the results from the interviews.

4.2.1 Nata Lisboa

Nata Lisboa was founded in 2012, and they have pursued a franchising approach for its

potential for a quick and successful dissemination. Their strategy and focus were to spread their brand concept in international markets, but they have also done it successfully in Portugal. At the peak of the 2012 financial crisis, according to the company’s CEO, every project that could had a positive impact in terms of the projection of national brands, business internationalization and to the economy dynamic, was well-received. Nata Lisboa was one of them and that is why they have started the project.

4.2.2 Nata Pura

Nata Pura was founded in 2013, initially as a part-time project composed by 5 people. After

the conception of the business plan, which took two years to be completed, and some market research, the initial team realized the promising potential of the project and totally focused on it. They were financed by a venture capital firm, Portugal Ventures, who has assigned an investment manager to assist in the company’s development, integrating her as a non-executive director within the company. They strategically chose to export (frozen) pastel de nata all over the world, as distributors. They regarded

pastel de nata as an innovation in the global pastry industry, and they focused on a marketing strategy

“Our injection of funds allowed Nata Pura to delineate a strategy so that the product could rapidly and consistently escalate to international markets.” (Portugal Ventures’ Investment Manager)

4.3 Results

In this subsection I will simultaneously depict the internationalization processes of Nata Lisboa

and Nata Pura, where I will use quotes from the interviews conducted to support them. First, I will

describe the processes and mechanisms in which I have detected similarities, in the approach of both companies. Then I will focus on the differences. In this part, I will only describe the results that I have obtained. Then in the next section, which is the discussion, I will analyze and discuss, in more detail, the results that are relevant for this study and that allow me to answer the research questions proposed.

4.3.1 Results Overview Similarities

After analyzing both interviews from Nata Lisboa and Nata Pura, I have come across some similarities in their internationalization process. Now, I will divide those through different topics. Brand Designation

In their brand designation, Nata Lisboa and Nata Pura have adopted a part of the traditional product’s name. Even though pastel de nata is the full designation, it is also commonly known just as

nata. In the case of Nata Pura’s name, they wanted to transmit the idea that they do not use processed

ingredients in its conception, since pura in Portuguese means “pure”.

“The brand was named Nata Pura because of our idea to create a product without processed ingredients, that’s the relation with purity.” (Nata Pura’s Marketing Director)

Internationalization Context

In order to cope with the second-round of the 2008 financial crisis, which had its particular impact in 2011 and 2012, both companies opted to structure a project with an internationalization strategy. The foreign markets were much more appealing, the situation in Portugal was not ideal for businesses, thus entrepreneurs started to look for adequate opportunities abroad. There was wide support to this type of initiatives, which through the projection of national brands and products could stimulate the Portuguese economy.

“Coming from the second-round of the financial crisis, the international market was much more attractive, and we were all very tired of working and fighting (in the national market).” (Nata Pura’s Marketing Director)

Overall Market Focus

In their genesis, both companies have outlined that their main focus was the international market. They both had the perception that pastel de nata was a commodity in Portugal, that a customer can easily find it everywhere all over the country. Furthermore, in the national market there is a battle for the price, since for instance supermarkets also sell pastel de nata. Therefore, they both concluded that there was much more value in foreign markets, that their investments would be much more cost-effective in them, and that those should be their focus.

“The concept was developed in a global perspective, even our slogan “The world needs nata” is in English, a lot of our documentation and concept is developed to an internationalization perspective.” (Nata Lisboa’s CEO)

“In Portugal the product is a commodity, where there is a battle for the price. Outside (of Portugal) the investment is much more rewarding, therefore it was a business decision to do it there.” (Nata Pura’s COO)

Opportunity and Expansion

Even though both companies might have different strategies regarding their market destinations as a whole, they both are sensitive to opportunities that can emerge. For instance, Nata Lisboa is still dependent on investors for funding, therefore it is still a little hard for them to definitively determine that they are going to a certain country. In the case of Nata Pura, it is very usual for them to establish connections with (potential) clients in fairs, where they promote their product. Their clients need to fulfil some logistic requirements, and have a supply chain assembled, which also influences their market expansion. Therefore, in some cases, the opportunity dictates the expansion path.

“We are still very dependent on the investment of potential franchisees. A lot of times it is the opportunity that dictates the expansion plan.” (Nata Lisboa’s CEO)

Strategic Partnerships

One aspect of their quest for strategic partners where they are similar, is that they look for partners that have a strong local market knowledge. This allows them to have a much more efficient expansion and consolidation process within them.

“(…) our franchisees already have a very strong local knowledge (…)” (Nata Lisboa’s CEO) “We looked for someone that knew the markets better than we did.” (Nata Pura’s Marketing Director)

Quality of the product

There is a considerable concern with maintaining pastel de nata’s quality, in every market where they are present. They want to achieve the same quality in their offering throughout the world. Both companies export it frozen, therefore it is only through the cooking phase that there can be some differences. Nata Pura for instance has created a segmentation of the product to preserve the quality of offering. Their premium version where they use their own brand is Nata Pura Black and they have created Nata Pura White, a smaller and cheaper version with less flavours, when clients want to use a private label.

“We can control it (the cooking phase) by explaining the procedures, through manuals, monitoring techniques, that allow the standardization of the quality in every market.” (Nata Lisboa’s CEO)

“We don’t want in any way to affect the quality of our product, our product is premium, if we make a private label, we don’t use our premium offering.” (Portugal Venture’s Investment Manager)

Raw Materials and Producers

In terms of their raw materials’ suppliers, they both have contractual agreements with partners, which allows them to have a stable and consistent flow of raw materials. Nata Lisboa has arrangements with national producers since the foundation of the company, while Nata Pura has worked on the relationships with certain national producers, until it was completely aligned with the needs and requirements of the company.

“We have certain producers defined, and the whole network is provided by them with whom we have agreements, since the company’s foundation.” (Nata Lisboa’s CEO)