Case Study: Global Market Entry Assessment (1/4)

Project aims, objective & scope Client requested Frost & Sullivan services to support its
decision on whether to invest in a plant to produce Chemical X via a new feedstock process
Client

Project objectives

Client was a family-owned company established in 1842

and based in Germany

Client developed a process based on a low cost feedstock,

which has higher efficiency and produces Chemical X with
less by products than current production processes

Along with a focus on various metals, it has a Chemicals

division with three plants across Germany, that supplies
specific specialty chemicals based on sulphur chemistry
for a variety of applications across global markets

As part of the decision whether or not to invest in a

production plant for Chemical X, the client asked Frost &
Sullivan to conduct a global market assessment to determine
the opportunity for the Client in the Chemical X market

Key Questions to be answered:

What is the current global X market situation and expected situation in the future, including the development of volume demand?
For which purpose and which products are X 70% and X anhydrous used and how are the application markets expected to develop?
Who are the consumers of X, how high is their demand and where are they located?
What expansion plans do current market participants have, and are there any future market participants expected, especially in China?
What is the market share of suppliers, by volume?
What are the market entry barriers for a new market entrant and how strong are they?
What does the supply/demand equilibrium look like and how is it expected to develop?
What are the prices of X 70% and X anhydrous and how are they expected to develop?

Project Scope
Geographic: Europe, US, Asia (China, India, Japan, Taiwan)
Product: Chemical X in two separate forms (anhydrous & 70%)
Application: Three main applications (one with 8 sub-applications) and scouting for new applications
1

Case Study: Global Market Entry Assessment (2/4)

Proposed approach & timeline Frost & Sullivan proposed a phased approach to ensure
Client had an overview of the market in time to make a decision on investment & also to
enable customer analysis to focus on the specific market segments of most interest to Client

Overview of
Global Chemical
X Market

On-site
Workshop

Research focus:
Existing Chemical X
manufacturers &
distributors
Secondary & primary
Identification of growth
research (36 interviews)
hot spots
Analysis
Go/no go investment
decision
Short market report:
Market sizing &
Development of project
potential by
roadmap i.e. selection of
region/application
phase two segments to
Growth drivers
focus on
Supply / demand
equilibrium & future
trends
Competitive landscape
(supply side)

8 weeks from project kick off

Phase 2 Demand Side

Go / No Go decision on whether to do
further analysis and evaluation of the
market segments to target

Phase 1 Supply Side

Deep Dive:
Understanding
the Customer

Presentation of
Findings

Research focus:
Current & potential
Chemical X end users
Secondary & primary
research (50 interviews)
Analysis
Final report:

Evaluation of global
opportunities
Onsite presentation of
project findings

Customer information
to understand
purchasing
requirements and
decision making unit
Competitive landscape
(demand side)

Estimate for 3 segments: 8-10 weeks

Source: Frost & Sullivan

Case Study: Global Market Entry Assessment (3/4)

Project Output Phase one findings confirmed that there were no red flags preventing
market entry, therefore we moved to a second phase of the project to deepen demand-side
understanding of the market in order to build a route-to-market plan

Source: Frost & Sullivan

Case Study: Global Market Entry Assessment (4/4)

Project Conclusion Frost & Sullivan was able to create a 15 year potential sales scenario,
based on recommended route-to-market and pricing
25 customers all regions (EU 6, US 6, China 13) & all routes to market (distributors:
(distributors: 10, Application 1: 7, Application 3: 8)
Distributors
Application 1

30

Application 3

Assumed
Pricing

Europe
(/kg)

US
(/kg)

China
(/kg)

70% XXX

1.70

3.20

1.20

aXXX

2.20

5.10

2.00

Cumulative Sales

Sales Revenues (million EUR)

25

20

Conservative pricing estimates were used

to develop this scenario. It may be possible to
demand slightly higher prices than those
indicated.

10 million initial investment recouped during year 8 (assuming 50%

margin). This increases to year 19 if 10% margin is assumed.

15

10

Initial sales come via distributors. XXX

distributors like XXX and XX are key to
supply Application 3 R&D but other
distributors require higher volumes

Application 1 will take a bit of time to

penetrate (due to the testing required) but
offers good volumes, particularly if EU and
US XXX are targeted.

683 t
59 t

316 t

0
1

3049 t

2619 t
92 t

2733 t
146 t

2848 t

2544 t
72 t

196 t

326 t

1882 t

2140 t
3t

1135 t

1171 t

1212 t

1310 t

661 t

747 t

1006 t

1258 t

920 t

1728 t

2351 t
26 t

Application 3 is very slow to start with but

is the best outlet for high quality products.
The volume taken by each customer is
small so multiple contacts are needed.

1424 t

866 t
74 t

1063 t
190 t

792 t

873 t

989 t

1067 t

1135 t

1217 t

1319 t

1337 t

1356 t

1375 t

1394 t

1413 t

10

11

12

13

14

15

435 t

Note: The numbers shown in red are the total annual volume sold across all routes to market.
Those on the bars are the volumes for each route to market. The height of the bars
represents revenue. All volumes are quoted as anhydrous (99%) Chemical X equivalents.

Year
Source: Frost & Sullivan