Industry News | October 21, 2010

From Italy to South Korea, By Way of U.S.

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Paciugo Gelato & Caffè, an Italian-inspired frozen treats concept based in Dallas, announced that it is launching international expansion efforts across the pond—but instead of jumping the Atlantic to its Italian homeland, it’s jumping the Pacific to set up shop in South Korea.

Keith Albright, senior vice president of franchising for Paciugo, says the choice to kick-start the brand’s international expansion in South Korea was made because it’s a market where there’s both available access to capital and demand for American brands.

“It’s a very strong market,” Albright says. “It’s in a lot of ways very accepting of Western brands, and actually really covets Western brands. It’s also a stable economy, and there are lots of large players there who could certainly be an excellent development partner for us. It’s a good place for a U.S. company like us to enter the Asian market.”

Indeed, Albright says Paciugo intends to use South Korea as a launch pad into other Asian nations, like China and Japan.

Albright says Paciugo, which has about 45 units open in the U.S. and another dozen or so agreements signed, will continue to grow steadily domestically. But with financing becoming more available, the time was right to go international.

“We’re at the stage now where I think we’re big enough and we’re certainly vertically integrated enough so that we’ve got the capability of supporting an international network of, ideally, master franchisees,” he says, noting that the company hopes to have one master franchisee for each country it moves into, with the exception of China.

To help take the brand into South Korea, Paciugo is teaming with global consulting firm Bridging Culture Worldwide (BCW).

Don Southerton, CEO of BCW, says his firm is going to make sure Paciugo is steered down the right road and that it can overcome the cultural differences the brand will run into.

“International expansion for most companies is very important, but it’s also very important that you understand the cultural differences,” Southerton says.

“Many Americans have strong ties to Europe … but Korea is a unique market. It takes some insights and a lot of cultural understanding to be successful.”

With BCW helping Paciugo find solid franchise partners that can handle all of the brand operations in South Korea, Southerton says the company will run into less language, networking, and operational barriers.

Strong Korean partners can also come with an added bonus, he says.

“Partnering with the right Korean company is vital because that company could help take you into China, Vietnam, Japan, and the whole [Asian] market there,” Southerton says.

Even though Paciugo is an Italian brand founded in the U.S., Southerton says penetration of the South Korean market—where frozen yogurt is very popular—should not be an issue.

“In many areas they prefer French wine, German cars, Italian fashion—they want something that is authentic and real,” he says. “If they want it to be Italian gelato, it’s vital that it is tied into an Italian family. “

Paciugo Gelato & Caffè was founded a decade ago by Ugo, Cristiana, and Vincenzo Ginatta, an Italian family that moved to Dallas to take gelato State-side.

Albright says there’s no telling how long it will take to build out the South Korean market and move on to another. Long term, he says, the brand might move into the Middle East or South America after Asia.

And even though Italy is filled with mom and pop gelaterias that Albright says would be difficult for Paciugo to differentiate itself from, he isn’t writing the country off just yet.

“I’m confident we’ll get there eventually,” he says.

By Sam Oches