Border Control

March 1, 2006
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Border Control

Canadian market suppliers look to open borders and create more partnerships with U.S. retailers.
Based in a country so well-respected for its retail industry and its private label programs, Canadian market suppliers have always had to achieve high standards in product quality and customer service. And while some of them are located in the heart of great metropolises and others are in the beautiful wilderness of the vast country, they all have a few imperative traits in common — they conduct business with the highest expectations met and they want to cross borders and create more partnerships with U.S. retailers.
PL Buyer recently spoke with some Canadian suppliers to talk about what sets them apart from competitive American suppliers, what retailers can gain from working north of the border and how issues such as the economy and the fluctuating dollar impacts supplier-retailer relationships. Erin Dalton, director of sales and marketing, VLR Food Corp., Concord, Ontario; Fred Speck, U.S. and Canadian retail sales manager, Whyte’s Foods, Mississauga, Ontario; Keith Chen, president, Culinary Destinations, Toronto; Andy Tocchet, vice president and general manager, Atlantic Packaging Products Ltd., Consumer Products Group, Scarborough, Ontario; Bill Antoniw, director of retail and private label, Heritage Frozen Foods, Edmonton, Alberta; Rob Wagner, vice president of U.S. sales, Mondiv Food Products, Boisbriand, Quebec; Richard Schroeder, president of Nutri-Nation Functional Foods, Port Coquitlam, British Columbia.; Philip Dehne, vice president of Nutco Inc., Markham, Ontario; Thomas Montzenigos, sales manager, Expresco Foods Inc., Lachine, Quebec; and Don Bartlett, president, Funster Natural Foods Inc., London, Ontario, offered some insight.  
What do Canadian suppliers offer North American customers that sets them apart from competitive American suppliers?
Speck: Canadian suppliers are very comfortable dealing with a multitude of different ethnic groups and businesses. Canada is a nation rich in multiculturalism, and Canadian suppliers have become accustomed to dealing with very unique and specific needs. We have an understanding of the many issues involved in formulating such partnerships.
Tocchet: Experience in supplying a much smaller market across a large geographical area has enabled Canadian suppliers to become very effective in delivering service levels that today’s North American retailers demand and expect. A smaller market has provided an opportunity to leverage our unique advantages, and an expansive delivery area has forced us to develop cost-effective supply chain solutions. 
Antoniw: Like American suppliers, Canadian suppliers can supply large volume contracts, but also welcome smaller volume runs, competitive pricing on those volumes, and unique niche products not available elsewhere.
Wagner: A lot of the manufacturing plants in Canada are smaller than in the United States, basically because the population is 1/10 the size. Up in Canada, there are only a handful of customers and because of that, Canadian manufacturers can be really flexible. In the smaller plants, smaller production runs are ideal for private label programs.
Dehne: As a Canadian manufacturer, we are able to source raw materials globally with few duties or restrictions.
Montzenigos: Essentially there are no major differences between Canadian suppliers and American suppliers. Based on our proximity and expertise, we are like any other North American supplier; however, because we are in a smaller country we may deal with customers on a more personal and creative nature lending ourselves to greater flexibility and innovation.
What are some unique advantages to working with Canadian suppliers?
Dalton: There are Canadian retailers that all of North America looks to as a benchmark for innovative and cutting-edge products. Those retailers have achieved incredible success, in part because of the Canadian suppliers partnering with them.
Speck: We are neighbors separated only by our friendly border. We have the same cultural understanding, and both countries understand the importance of bilingual labeling issues.
Chen: Canadian suppliers have forged and maintained relationships, not only with our U.S. neighbors to the South, but globally as well. We have a strong support base through the Canadian export/import agencies that allow us to have the flexibility to supply our products in a wide variety of markets.
Tocchet: The Canadian private label business model is somewhat similar to the European model, in that there is a higher percentage of private label goods and services being offered than what is found in most American retailers. There are examples of some private label programs being offered in Canada, that are not only successful in the North American context, but also are  world-class examples of a retailer executing an effective private label strategy. Working with these retailers has enabled Canadian suppliers to be more aligned with the needs and demands that these programs require. 
Antoniw: Canadian suppliers have a long history of working with the private label industry, as it emerged as a force in Canada before the United States. We have a wealth of experience to draw on when it comes to meeting customer needs— competitiveness is a necessity in Canada with our large geographic area and small population base. Our efficiencies in production and distribution translate into price competitiveness and savings for U.S. retailers.  
Schroeder: Canadian suppliers are close to the American market. Most of our population is parked right near the 49th parallel. Canada can offer a source of products that are culturally in tune with the rest of the North American market while providing a uniqueness of raw ingredients and specialty manufacturing processes. It can open up a bigger universe of potential products to help any marketer improve their business.
Bartlett: The unique advantages are proximity, same language and business culture and a currency discount still worth 12 percent.
Why should retailers consider working with Canadian suppliers?
Speck: Easy access to the supplier is of great importance for most companies. Although modern technology has made it such that this is not as much of an issue as in yesteryear, many Canadian food suppliers have satellite offices and brokers in major cities across the country. This enables us to provide our customers with easy access, outstanding service and customer care from coast to coast.
Chen: In today’s retail market, we are seeing a shift toward global flavors. Canada is a veritable hotbed of different cultures. From experience, we have seen that experimentation leads to innovation which gives retailers the differential advantage over their competition. It’s about making one’s own distinct mark. Products from Canada are unique and trendsetting because we are willing to take large steps toward new lines.
Tocchet: The Canadian retail market has developed a successful private label strategy. It has been essential that Canadian suppliers truly understand and are aligned with our retail partners’ goals and objectives. As such, the characteristics of successful Canadian suppliers has been to execute effectively in three critical elements of any private label program — being first to market, innovation and flexibility. 
Antoniw: Canadian suppliers are accommodating when it comes to exploring new ideas and new products. Projects many American suppliers may consider too small-scale, are often welcome volume additions to Canadian suppliers. In addition were just nice people to work with!
Wagner: We’re more flexible when it comes to identifying new product opportunities. We’re wiling to jump on them quicker than American companies because we are set to have small production runs.
Bartlett: Leading-edge retailers know that the United States isn’t the sole source of all innovative products. U.S. retailers easily can tap into different levels of innovation by looking into the backyard of its next door neighbor — to the north.
How can Canadian suppliers help North American retailers grow their private label programs?
Dalton: By sharing ideas. It’s our responsibility to bring new concepts and flavors to our customers and they in turn, communicate their goals to us. It’s a partnership and many of our customers rely on our expertise in this area because we focus heavily on R&D and product development.
Tocchet: Having to deal in a very competitive arena against the larger multinationals has made it essential that we deliver value by providing a wide assortment of key products, that we are strong innovators in packaging and merchandising, that we manage an effective QA process that ensures compliance and consistency to quality, and that we execute world-class service levels.A strategic partnership with a Canadian supplier, that delivers results for these key metrics, will ensure that any North American retailer can effectively grow a private label program.
Antoniw: By augmenting the large base of American suppliers, Canadian suppliers diversify the choices U.S. retailers have when sourcing for their programs. American retailers can have confidence in the Canadian supply chain and in the consistently high levels of quality Canadian food processors offer.
Wagner: New products, new innovations. New trends. We’re set up to do those things a lot easier than American suppliers. We have a focus on R&D and product development in Canada. Doing business with select and very few retailers that put high demands on suppliers enables us to be a better supplier in Canada, and we can transfer that to the United States.
Dehne: Canada has a worldwide reputation for quality. Our customers, especially those overseas, tell us that “product of Canada” on the label is a positive selling feature.
Montzenigos: Canadian suppliers specialize in specializing.
Bartlett: Canadian suppliers can assist by striving to provide timely, innovative and premium-quality products that drive private label category growth and profitability.
How does the economy affect relationships between retailers and suppliers in the United States and Canada?
Speck: The economy is very closely tied between Canada and the United States. Most Canadians doing business in the U.S. understand that you are our big brother and as in most households – the big brother rules. The real and biggest partnership between our two countries comes from the sharing of sales.  For example, when Canadian suppliers buy raw materials from the USA to be further processed and sold back as finished products. This is a true example of how close the two countries can work together.
Chen: Both retailers and suppliers value the power of choice. They want to be able to have the product or service they want conveniently. With the present economy, we are moving more and more toward an equal-opportunity market.  With the rise in the Canadian dollar, both the United States and Canada have access to a wide range of options. Increased relationships across the border boost the economy. It is an essential cycle. At the heart of it all, everyone wants the best value for their money.
Tocchet: The largest impact on any Canadian supplier is the strength of the Canadian dollar. Recently, its growth has made it more difficult to economically service the U.S. market. However, this change has necessitated Canadian suppliers to become extremely effective in cost management. It is absolutely essential that Canadian suppliers adopt a “lean thinking” culture and eliminate all areas of waste within their organization in order to remain competitive.
Antoniw: A strong economy is good for us all, reducing the fixation on price, and allowing retailers and suppliers to innovate with unique new products that appeal to consumers more focused on value, than price alone. 
Bartlett: The greatest economic impact has been the rising Canadian dollar against the U.S. dollar, making all imports into the States appear more expensive. The effect is that Canadian suppliers have to maximize efficiencies at every possible turn. PLB

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