Oh Canada, our northern trading partner

March 1, 2004
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Oh Canada, our northern trading partner

Canada's private label suppliers address advantages OF doing business across borders.
Just north of the U.S. border lies a country 5,000 miles long, housing retailers with some of the most developed private label programs in the world. Canada's retailers have extremely high standards for private label as penetration levels reach as high as the much-admired programs in the United Kingdom. Because of such commitment to private label by retailers, consumers have adopted it as a way of life, looking to private label not as a cheap alternative, but as a high-quality, value alternative.
And with retailers and customers putting such emphasis on private label, manufacturers must keep up. Quality cannot flounder, new product development cannot cease, and manufacturers cannot fall short. Because of such high expectations by Canada's retailers, manufacturers say, they have become top-notch trading partners and are looking to continue working with and creating relationships with retailers in the United States.
PL Buyer recently spoke to a number of Canadian suppliers to find out what North American retailers would gain from working with them. We talked about creating 'win-win' relationships, the fluctuation of the American dollar, the North American Free Trade Agreement (NAFTA), and much more. Keith Chen, president, Culinary Destinations, Toronto; Gustavo Scherman, Treehugger Organics, Toronto; Mike Armstrong, marketing director U.S. retail, Cascade Tissue Group, Candiac, Quebec; Cheryl L. Berry, director, private label sales, E.D. Smith & Sons Limited, Winona, Ontario; Tamara Rahal, vice president sales and marketing, Molinaro's Fine Italian Foods, Mississauga, Ontario; Vito Monopoli, president, Mondiv Food Products Inc., Boisbriant, Quebec; and Dennis Papakostas, president, Expresco Foods Inc., Lachine, Quebec, share their thoughts with us.
What do Canadian suppliers offer North American customers?
Chen: Being close neighbors to the United States in terms of physical proximity and being the United States' largest trading partner, affords Canadian suppliers an intimate knowledge of the needs and requirements of the U.S. marketplace and the ability to respond appropriately. With a strong commitment from Canadian retailers to showcase private label products as high quality and innovative across a broad spectrum of goods, Canadian manufacturers have gained vast experience in service and product development. Manufacturers are also uniquely exposed to what works and what consumers expect from high- quality private label products.
Scherman: For starters, we offer the proven success story of being the two largest trade partners in the world. Two-way trade in goods and services between Canada and the United States is of almost $ 2 billion (U.S.) per day.
It has been estimated that nearly two million jobs in the United States are supported by U.S. exports to Canada. We purchase approximately 25 percent of all U.S. exports — more than all 15 countries of the European Union combined. On the other hand, around 85 percent of Canadian exports are destined to the United States. Canada, with a population less than one-ninth the size of the United States, bought, in 2001, an average of $5,254 worth of U.S. goods per capita. The United States bought $219 billion worth of Canadian merchandise, approximately $768 for every American. This has been achieved by high efficiency and specialization on all areas that participate in the Canadian export businesses, such as raw material, manufacturing and services.
Berry: Canadian suppliers can offer a unique perspective to a category, often due to their ability to provide custom formulations. This capability is the result of smaller production runs, resulting in an innovative, agile approach to corporate brand development. Our history in the mature corporate brand market in Canada enables Canadian suppliers to bring a wealth of experience to North American customers.
Monopoli: They offer unique and premium products, good quality and one of the highest standards for quality controls and safety issues.
Papakostas: Canadian suppliers offer niche products to North American customers with an emphasis on high quality at competitive prices.
What are some unique advantages to working with Canadian suppliers?
Chen: Domestically, Canadian suppliers are used to serving a smaller customer base and because of that have great flexibility to respond very quickly to smaller runs, specialty services and changes in products compared to some of the larger manufacturers who have longer lead times. On the flipside, Canadian suppliers can also be responsive to ramped up production to cover increases in volumes. So retailers can enjoy the best of both worlds with Canadian suppliers.
Scherman: It is hard to say for other sectors of the industry, but in the case of manufacturing fruit juice, we have had over the years a very competitive environment that forced the manufactures to learn to operate with what we believe are lower margins than those of our U.S. counterparts. In recent years, we have seen U.S. interests investing in Canadian manufacturing. For shipments to the United States, our geographical position is ideal for the quick delivery to a large percentage of the U.S. population. Also, as a result of large Canadian imports of a refrigerated goods, the return freight to the United States offers very attractive rates.
Armstrong: We are very customer-focused with excellent service levels. Every order is important to us. We believe in delivering in correct quantities on time and we do Vendor Managed Inventories for some of our customers.
Berry: Canadian suppliers are eager to develop a sustainable business with their retailer partners. The benefit of working with retailers that are strong in corporate brands in Canada, such as Loblaws, is that we have learned to continuously improve our processes and to provide mutually beneficial solutions for the category.
Rahal: We feel that since Canadian manufacturers are typically smaller than some of the larger American companies, we have an advantage as far as the flexibility to customize products and efficiently produce smaller production runs. Retailers need to bring forth a private label product that is better than the leading brand both in quality and price, and to accomplish this requires a great deal of expertise, time and dedication from the manufacturer. We can offer our American customers the customized service they need when developing their private label products.
Monopoli: Because we are smaller than our U.S. counterparts, we can offer more variety and uniqueness to a product line vs. a large manufacturer, which has to have dedicated lines to very few products to achieve their economies of scale.
Papakostas: Insight on new trends. Because of Canada's smaller population compared with the United States, it is an excellent place to press products. It also has a fully integrated, well-educated workplace that can quickly turn around new concepts.
With a weaker American dollar, what does that mean for relationships between North American retailers and Canadian suppliers?
Chen: The advantage of working with Canadian suppliers is the value-added service and experience they can offer to retailers, which you can't put a price on. U.S. retailers have enjoyed the benefits of this expertise and can continue to do so in spite of currency fluctuations. Retailers can continue to rely on their Canadian suppliers to maintain, and even improve, quality, which is critical for long-term success in relationships.
Scherman: It certainly depends on the sector. A good percentage of our cost structure is based on U.S. dollars, anyway. And besides, in historical terms the rates are reasonable at the moment. Also, there are hedging mechanisms for currency, which can provide a good level of security when it comes to mid- to long-term commercial commitments.
Berry: The weaker U.S. dollar is enabling Canadian suppliers to be more competitive beyond our domestic market.
Rahal: Although the decline in the American dollar does put some stress on Canadian suppliers, this change hasn't effected business with our U.S. customers. We have just had to look at ways of becoming more efficient to offset the difference in the dollar, including better buying and additional automation.
Monopoli: It simply means that Canadian suppliers will have to be more efficient in their own operations to stay in the game. They will have to upgrade lines and invest in new technology.
Papakostas: The weaker American dollar is definitely a challenge, but companies should not rely on an exchange rate as a means to be competitive. The weaker dollar offers opportunities to both sides of the border with more access to the Canadian market by U.S. suppliers and the ability for Canadian processors to invest in updating their equipment and processing tools.
Why should retailers consider working with Canadian suppliers?
Chen: Because Canada is so spread out geographically, suppliers are used to servicing retailers with a diverse range of consumers. Consequently operations are set up to be flexible enough to meet these kinds of demands.
As a country, Canada is well known as one of the most culturally diverse in the world. Canadians have embraced the influences of all these cultural groups in all facets of life. Particularly in the area of food, we have seen an explosion in the acceptance of foods that were once considered exotic but have now become mainstream. Fusion and crossover cuisine is a sign of food in evolution. And with this kind of experimentation consumers have become more adventurous and demanding in their food choices and are more willing to go beyond "staples."
Canadian food suppliers have the advantage and experience of responding to these demands and can offer this expertise to U.S. retailers.
With operations geared to all run sizes, Canadian suppliers can respond very well to varying U.S. regional needs and being just across the border, shorter delivery times ensure most major U.S. centers are serviced consistently on an ongoing basis.
Scherman: If the industry in question has a track record of exports to the United States, most likely the retailers will be dealing with an efficient, competitive and mature supplier that already operates in a very specialized way.
Armstrong: Cascades offers a full range of tissue products in all categories — facial, bath tissue, roll towel and napkins. We have ultra, premium, value and economy lines. Cascades is also geographically diverse with facilities from East to West in both Canada and the United States.
Berry: Canadian suppliers can provide value-added products that will positively impact the profitability and brand equity of a retailer's corporate brand program. Canadian suppliers have an extensive history in corporate brand development due to the mature market in Canada. Our eagerness, sincerity and focus on consistent quality have built our strong reputation in the market.
Rahal: I think that working with American retailers is a win-win situation. The opportunities and sheer volume of business that lies within the United States is significant, and many American retailers are in need of quality products. We are here to service these accounts the best way we know how with individualized customer service, innovative quality products and exceptional service.
Papakostas: They should consider working with Canadian suppliers because of our integrated communications, distribution and logistics access to North America. Canada has a pro-active stance on business and has a knowledgeable workforce.
What kind of an impact does the NAFTA agreement have on your business?
Chen: There are huge benefits in terms of duties and tariffs, which have afforded greater opportunities and more open approachability by U.S. customers. Canadian suppliers have to continue to be vigilant in terms of innovation, competitiveness and differentiation in terms of service, product development, and sensitivity to customers' special preferences.
Scherman: NAFTA was hard for Canadians in the beginning, as a lot of U.S.-owned manufacturing units operating here closed their doors. Economic forces run their course, and where efficiency could be reached, this initial trend reverted and new jobs were created again, this time more prepared for the NAFTA challenges. The numbers now speak for themselves, and we are now enjoying a fair and fertile business arena.
Rahal: With the current NAFTA program, which includes free trade on many items, the duty charges we used to incur have been dramatically reduced. This has had a very positive effect on our business opportunities in the U.S. allowing us to once again be more competitive in price.
Papakostas: The NAFTA agreement has increased product flow to both sides of the border. Canada is the United States' largest client and access to each other's economy works to grow jobs and opportunities. PLB
Your appetizer solution – Culinary Destinations
Capture the momentum in one of the fastest-growing food categories by letting Culinary Destinations help you build your appetizer line. Quality, taste and integrity of ingredients are given the highest priority in product development. Products offered include a wide range of ethnic flavors from Mexican empanaditas and Italian bustinis, to Asian spring rolls and Mediterranean tortellini, to Greek lamb rolls and Continental smoked salmon gems. New products include a natural line of hors d'oeuvres.
Culinary Destinations provides product development, private label manufacturing and co-packing services suitable for both the retail and foodservice industry. The company has HACCP designation and is a federally registered facility, licensed to process meat and seafood products for distribution in North America and internationally. For more information, contact Keith Chen at 416-201-0707 or email kchen@culinarydestinations.com.
Doing Juice with Treehugger Organics
Treehugger Organics has been in the juice business for 20 years, supplying raw materials to the North American industry with concentrates from all over the world. Our relationship with a particular group from Brazil evolved into our partnership with the largest producer in the world of organic orange juice.
Our job is to bring organic orange juice to the public at a price that is not too far from the traditional, non-organic, national brand product. We can offer absolute consistency in quality and service, as well as the track record of successful programs already in place with various important chains both in the United States and in Canada. Just taste our product to learn for yourself, and give us a chance to prove our point. Check out our Web site at treehuggerorganics.com.
Cascades Tissue Group covers paper products
The Cascades Tissue Group, the fastest-growing section of CASCADES, is also the fastest-growing paper company in North America.
Private label offerings are available in all four categories, including facial, napkins, bath tissue and roll towels. The use of a proprietary blend of fibers allows us to produce the full range of grades, including ultra, premium, value and economy.
Cascades Tissue is involved in many supply chain initiatives. We have full utilization of EDI transaction sets, real-time inventory control systems in our DC's, utilization of UCC Net Data Synchronization, Vendor Managed Inventory for select customers, excellent customer service and flexible manufacturing scheduling systems. Cascades Tissue Group has the capacity, infrastructure, geographical and technological capabilities to meet our customers' every need. See them on the Web at cascades.com.
E.D. Smith enhances entrees
E.D. Smith is a leading Canadian, value-added processor and marketer of premium quality private label and branded meal enhancers sold at retail and food service accounts throughout North America. We excel in custom formulating preserves, fruit spreads, tomato-based sauces, specialty sauces and ketchup.
The company was founded in 1882 by Ernest D'Israeli Smith, and has continued to grow and prosper throughout the years based on the strength and commitment of its people. The manufacturing facility is located in Winona, Ontario, in the heart of Ontario, Canada's fruit belt on the Niagara Peninsula. Our outstanding customer service and superior, consistent product quality have built and sustained our strong reputation in the market.
For further information on how E.D. Smith can provide solutions to your category challenges, please contact us at 1-800-263-9246.
Molinaro's Fine Italian Foods goes global
Our company has risen to become one of the largest operations of its kind in North America. We now operate from a fully automated manufacturing plant in Mississauga, Ontario, exporting products globally. We specialize in producing branded and private label Italian food items. Our core items include fully topped pizzas, par-baked pizza crusts, authentic Italian style calzones, shelf-stable pizza kits, IQF filled pasta (ravioli, tortellini, gnocchi) and specialty flatbreads such as gourmet foccacia and thin wood-oven style crusts for both retail and foodservice accounts. We pride ourselves in the quality of the products we produce and our ability to customize products specific to our customers' needs. All of our products are manufactured in our facility using only the freshest ingredients — and although we are fully automated, we still have the flexibility to produce traditional artisan style products.
As we continue to grow, you can depend on us to not only introduce new products to the market, but to also maintain the quality you have come to know and trust. With that trust in mind and the ever-growing needs of the health-conscious consumer, we are proud to introduce our new line of organic and low-carb specialty products.
The secret of our continuing success is simple. We offer unsurpassed quality topped with the extras that increase volumes such as competitive pricing and line extensions. Our competitive edge is our ability to offer exceptionally high quality products produced in the most cost-effective way with a consistency that cannot be challenged.
Mondiv Foods
Mondiv Foods is a leading glass retort manufacturer for private label products. In addition to jar gravies, Mondiv processes upscale pasta sauces, bruschettas, tapenades, artichoke antipasto and rosee. Our Montreal, Canada, plant is a state-of-the-art, USDA-certified operation, which allows us to pack jar gravy and other glass packed private label products using real meat chunks.
Mondiv welcomes the opportunity to diversify its product lines to fit specific customer requirements. As a result, recent additions to the Mondiv product offerings include alfredo pasta sauce, upscale marinara and marsala sauces and a full line of organic pasta sauces. We also manufacture frozen pasta items. We offer great flexibility in product formulations to meet the changing needs of retailers and consumers.
For more information about Mondiv Food Products, please contact Rob Wagner at the U.S. Sales Office at 704-569-0267 or via e-mail at rwmondiv@bellsouth.net.
The Original Meat on A Stick – Expresco Foods
Expresco specializes in the preparation of meal solutions on a stick, made from high-quality meat that is seasoned and lightly marinated. The result? It's delicious, nutritious and superior quality products to meet the needs of consumers seeking variety. Low in fat and high in protein, these products satisfy consumer demand for healthy alternatives.
The company's experience in the foodservice industry has provided it with the flexibility and openness necessary to set up various partnerships with key players in the foodservice and retail markets. Expresco's knowledge of manufacturing and packaging technology has allowed it to create private label brands that have established themselves with consumers.
All products are vacuum-packed and flash frozen, allowing for maximum shelf life. Expresco's unique process preserves peak quality, flavor and freshness.

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