The Stamp of Aproval

March 1, 2007
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The Stamp of Aproval

Stringent quality standards and logistical know-how make Canada an ideal partner for sourcing store brand products.
For U.S. retailers, the private label market is full of conundrums: Consumers want quality ingredients, but at a value. They want unique products, but don’t necessarily want to buy into a fad. And they want value-added innovation, but look first to the brands. So what’s a retailer to do?
In pursuit of quality products that are both unique and cost-effective for consumers and retailers, our country’s northern neighbor offers an abundance of options. Much like the proverbial act of borrowing a cup of sugar from the neighbor, the Canadian marketplace has many procedures in place that make doing business with U.S. retailers as simple and efficient as, well, borrowing a cup of sugar.
PL Buyer recently spoke with a diverse selection of Canadian suppliers regarding the issues of supplying private label products internationally to U.S. retailers. The discussion touches on issues surrounding the country’s obsession with quality, its ability to transport products efficiently to the United States and its willingness to work with U.S. retailers in an effort to make sure the needs of both sides are met.
Providing insight on the topic of sourcing private label products from Canada is Paul Neale, general sales manager, consumer products division for Atlantic Packaging Products Ltd., Scarborough, Ontario; Lily Daquila, marketing and special projects, Culinary Destinations Ltd., Toronto; Rob Wagner, vice president of U.S. sales for Mondiv Food Products, Boisbriand, Quebec; Julie Tremblay, marketing director, Fempro Inc., Drummondville, Quebec; Enzo Dadamo, sales director, Grisspasta Products Ltd., Longueuil, Quebec; and Gary MacIntosh, marketing manager, retail North America for Mother Parkers Tea & Coffee, Mississauga, Ontario.
What do Canadian suppliers offer their retail partners that sets them apart from the competition?
Neale: We see [U.S. retailers] and the U.S. marketplace a little differently, and we have a product mix that can bring value to customers in the United States because, typically, Canadian suppliers already have experience in a particular new product format. This experience helps inform the retailer of our capabilities.
Wagner: Canadian suppliers are quick to react to specialized needs. The business culture in Canada is smaller — producing more specialty items. If you bring that specialty-made mentality from Canada down to the United States, you’ll fill a niche of specialty-type suppliers that don’t exist in the United States.
Tremblay: Canadian suppliers are well-known for their high quality standards. This reflects in all areas of business, and we offer our clients the same as we are expecting from our own suppliers: the highest quality possible. Every step of our manufacturing process is based on [these quality expectations].
Daquila: As a whole, Canada displays a diverse global background, especially in the greater metropolises. We are known as a cultural mosaic — many cultures with their unique contributions to the community. What’s more, there’s a sense of authenticity in our products, not simply because of the final results, but even the methods that are used to obtain them. We retain direct influence from the numerous immigrants who choose to make Canada their home. They bring with them a rich fountain of experience and tradition, and we tend to use bold flavors that jumpstart the taste palette as a result. The edge that we have is due to our willingness to take risks and try new approaches.  
Why should retailers consider working with Canadian suppliers?
Tremblay: A better question would be: why not consider working with Canadian suppliers? With the C-TPAT, (Customs-Trade Partnership Against Terrorism) certification set as it is, the shipping lead-time is now the same as U.S. manufacturers.
Neale: We really are cousins with similar values and goals, but we can bring a totally fresh set of eyes to a U.S. retailer. We have industry standards that are looked at in joint committees for both sides of the border, such as reclamation, UPCs and service levels — making for a seamless transition and another option for the American retailer.
Daquila: Globalization is the current movement in businesses across all sectors.  Customers want to be able to access the world from their doorstep, so Canadian suppliers have forged and maintained relationships globally through our strong support base of Canada export/import agencies. By building an ongoing network of other export/import personnel in various locations and through contact with overseas companies, Canadian suppliers are able to work with a wide range of retailers. As a country, Canada is a cultural mosaic, and we glean our expertise from direct ties with other countries so not only can we deliver globally, but our products have an authentic global flare as well.
Dadamo: In some instances, the proximity of Canadian suppliers is much closer than many American manufacturers, especially when it comes to the New England market. Geographically, we’re well-suited to serve the states closest to the Canadian border, and to some extent, beyond.
MacIntosh: I believe Canadian suppliers have a good grasp of portfolio differentiation. Since Canada has higher private label development, most Canadian companies have a good idea of how to develop a private label program to meet all consumer needs. In Canada, most suppliers have experience building different tiers of private label, so we are used to developing different solutions for the value consumer and differentiating that portfolio from mainstream and premium private label consumers.
What unique offerings do Canadian suppliers offer to help North American retailers grow their private label programs?
Neale: We are very much into keeping transportation costs down, or as I like to call it, reducing freight paranoia. We are a country that is 5,000 miles wide about 200 miles high that follows the U.S. border (where the greatest percentage of the population lives). Of course our country is much bigger by area, but we have had to learn to keep transportation costs within reason since our manufacturing base is not as widespread geographically as in the United States.  
MacIntosh: Canadian suppliers are used to developing programs where private label takes a leadership or innovative role within the category. As suppliers, we believe that private label can lead a category, and thus we’ll help develop products that differentiate private label from national brands. We also are less likely to depend on price as the sole reason for a consumer’s private label purchase decision.
Daquila: We realize that the North American private label market is sophisticated, and to develop a strong private label program, it takes both commitment and effort. Therefore, we, along with other Canadian suppliers, have the distinction of being HACCP-recognized, meaning that we are fully licensed by the Canadian Food Inspection Agency to process meat and seafood products in North America and overseas. The certification process is quite lengthy and thorough, but it gives us quality assurance on an international level.  
Canadian suppliers also have the advantage of customization. Private label suppliers must be able to work in cooperation with the retailers to find that custom fit. We follow global trends but we also understand that retailers have a particular market in mind, and we can cater to their needs readily — providing products that are distinguishable in the competitive North American market.
Wagner: Product innovation. There’s a lot of demand from Canadian customers for new products, and in order to survive, we have to constantly be innovating and improving the quality of our products. Essentially, in order to be a successful Canadian supplier, you have to be driven by research and development.  
How do quality standards in Canada stack up against other countries?
Neale: Canada’s quality standards are second to none. We are constantly testing our quality with U.S. retailers and labs located in both Canada and the United States.
Tremblay: More and more, the concept of a private label as a strong brand is developing in the United States. Consumers expect quality and a good deal when they are buying private label products. These products are reflecting the image of the store chain itself, and Canadian suppliers understand how important it is to have a quality private label product.  
Dadamo: We abide by the Canadian government-mandated HACCP guidelines, and follow these restrictions very closely to ensure that the steps throughout the whole process are followed, and that there is stringent quality control.
How does the economy affect relationships between Canadian suppliers and their retail partners?
MacIntosh: While there are times when the value of the Canadian dollar vs. the U.S. dollar can give a Canadian company the benefit, it is usually short-term. In general, the economic business model of a company is a bigger factor than ‘swings’ in the economy.  
Daquila: Our own Canadian economy, and how it compares to other global economies, has a large impact on the ability of Canadian suppliers to remain competitive. If it’s less costly for a retailer to choose a more local company, we have to respect their choice — we understand that retailers want the best value for their money.  In order for them to consider Canadian suppliers, we have to be given equal opportunity. With the rise of the Canadian dollar and through increased relationships that seemingly erase borders, we have access to the world. The stronger our economy gets, the easier it will be for us to remain a viable option for U.S. retailers.  
Neale: Our economies are tied together by the North American marketplace and our intertwined trade agreements. The dollar fluctuation can cause problems from time to time, but the general economies are linked so much so that we often have used the phrase, ‘If America gets a cold, Canada sneezes.’
What role does the Canadian government play when conducting international business?  
Wagner: In some cases, the Canadian government subsidizes business so as to help enable international business and trade. For example, the Canadian government will help a company subsidize the cost of a new piece of equipment considering it will bring business into Canada.
Neale: The Canadian government helps by spearheading marketing thrusts at tradeshows such as the PLMA. They help the smaller companies learn how to deal across the border and deal with international trade. They also publish a list of every Canadian manufacturer that is interested in the export business, and offers these published lists at every Canadian embassy around the world.
How does the broad geographic reach of Canada affect the logistics of doing business with a Canadian supplier?
MacIntosh: For the most part, geography tends not to be a major issue. Like most major Canadian cities, most Canadian manufacturing sites are located close to the U.S. border. In addition, companies like Mother Parkers often have multiple production sites, which include U.S. locations for better North American coverage.
Daquila: From a logistics standpoint, Canadian suppliers are very capable of moving goods readily to various locations. Because our population is spread out in sectors throughout the country, we can coordinate deliveries across any of the border checkpoints.
In order for our products to be delivered nationally, we have to understand the logistics of coordinating a variety of transport options. To ship our product from east to west or vice versa, we sometimes need to transport our products south to the United States, then across and back up into Canada. We also are in constant contact with both governments on either side of the border, and we keep up to speed with regulations across the globe.
If we can reach the remote metropolises of our own country, we can definitely coordinate shipment of our products to most North American locations and with the help of our government agencies, we can expand that availability worldwide.  
Neale: Essentially, we have tremendous experience in dealing with logistics and have great flexibility to deal with anything that comes at us as cost effectively as possible.
North America’s Europe
Rich in culture and deep in heritage, Europe, as a continent, has a mystique to it that’s enjoyed by many around the globe. Products imported from varying parts of Europe, such as German beer, Swiss chocolate and Italian leather are considered to be the best in the world. And although we’re separated from the European continent by a body of water and an ocean of different languages, North Americans can (and do) enjoy the benefits of their own Europe, so to speak. Quebec, serving as Canada’s largest province, exhibits the history, rich culture and artistic passion for fine goods as compared to any country in Europe.  
Joan Kimball, international marketing and business development, food and agriculture for the Quebec Delegation of Canada, points out that not only is Quebec a wonderful place to visit, the province also is an ideal hub for international trade, particularly when it comes to sourcing private label products to the United States.
Although each of Canada’s provinces is special in its own way, Quebec easily can be considered the gem of North America. According to Kimball, the city has a culinary obsession for which it is unabashedly proud.  
“Because of its heritage, the foods in Quebec are very authentic, very European,” Kimball says. “An indulgent amount of specialty foods are produced and enjoyed in Quebec. The province really does have its own identity and flavor, which is directly linked to its heritage.”
As the second most populated province in Canada, citizens of Quebec have strong ties to their French heritage, the most obvious example being that the official language in the province still is French. “But at the same time, the province is very North American in its business practices,” Kimball adds.
For U.S. retailers looking to source unique products with a European influence, companies located in Quebec are an ideal option. Understandably, the province’s size, location and language issues may seem a little intimidating for some U.S. retailers looking to source items for their private label programs, but suppliers in the province are more than capable of appeasing any concerns U.S. retailers may have about doing business across the northern border.
The most important bit of advice Kimball offers to U.S. retailers considering sourcing products from Quebec for the first time is “Go for it!”  
“Obviously there are border issues for all products coming into and out of the United States, we’re not dealing in the same business environment we were 10 years ago. But if a retailer has a good custom’s broker, then that broker will work the retailer through those issues,” Kimball says. “Or if you’re new to the whole process, retailers can work through the Canadian delegation closest to them. The delegation, which is operated by the Canadian government, matches the needs on each side of the business partnership to make sure the process runs smoothly and efficiently and that everyone gets what they need.”
According to Kimball, the Canadian government has delegations to Quebec located around the United States and the world, with individuals dedicated solely to the food industry, as well as to non-foods.
In an effort to find a suitable supplier to source private label products across the U.S./Canadian border via Quebec, the issue of the language barrier may cause concern for some retailers. How much of the business transaction will be lost in translation?
“It’s the politics of doing business — the supplier in Quebec is going to have someone to sell the product that speaks the language where those products are being sold,” Kimball adds. “The language of business is business. When you want to do business, you communicate.”

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