The Ukrainian food producers who consider placing their products on the shelves of Canadian supermarkets have a long and thorny way ahead. It is like running a marathon. You gear up, have trainings, and make a step-by-step try: a 10-kilometre distance, then a semi-marathon, and only after that you are prepared to run the whole distance. Provided that you have enough energy, willingness and understand the purpose.
Let us analyze the key stages of the cross-Atlantic marathon and barriers on the way to the Canadian retail chains. To begin with, we will concentrate on the questions “what should you sell?” and “whom to?”
Analyzing the demand for your products and consumer preferences in Canada
Your potential Canadian buyers are numerous (over 35 million) and diverse. Canada is a multicultural country; over 20% of its residents were born outside Canada. Consequently, the customs and preferences of Canadian consumers and partners are dissimilar. I would recommend that you start doing your homework by searching for information using the following resources:
- Canadian Importer Database, which provides lists of companies importing goods into Canada, with breakdown by product, by city, and by country of origin.
- Canadian Company Capabilities Directory offers more complete company information. In addition, this tool enables searching by industry. The database includes predominantly Canadian producers, and sometimes distributors.
- Trade Data Online is another convenient tool to get information on importing goods to Canada, in general and by country.
You may get some information from these resources for free.
Studying the demand and the products offered by your competitors is more efficient when you do so on site, that is in Canada, by engaging other people, for example from the Ukrainian diaspora. It is critical that a company may invest into such study. Let us consider some potential market analysis scenarios.
Do-it-yourself market analysis. You, as a producer, go to Canada and – having drafted a plan of visits to certain supermarkets, grocery stores, and points of sale – study the products of a particular group, the prices and the available range. It is an efficient method enabling to understand the proper place and manner of presenting your goods. In addition (a real-world example), if you demonstrate a strong interest and a maximum insistence, you may get contacts of a person active in purchasing for a grocery store or a supermarket suitable for your goods.
Analysis by an agency or an agent. On the one hand, it is a plain vanilla: you contract an agency to conduct the study and, within a specified period, get the report. On the other hand, the agency is not a producer; it will demonstrate its enthusiasm solely within the limits specified in the contract. You cannot exclude that the agent you choose has his own views on the potential of your goods. Among the agents, you may find the representatives of the Ukrainian diaspora living in Canada for years. Often they see the specific nature of the Ukrainian producers, market requirements and demand from the eyes of Canadians. However, I would not recommend you accept a common conception that it is easier to make a deal with a fellow countryman; sometimes it proves unjustified. Your countrymen residing in Canada mind their business interests rather than nationality.
Market analysis by an organization. The main difference between organizations and agencies is that, in addition to studying the demand and providing you with information, organizations may offer you additional services related to the “ongoing promotion” of your company in Canada: participation in exhibitions, educatory touring, etc. Usually, the membership fee they charge is rather moderate; however, you do not get immediate results or “the first aid”. Promoting takes time and requires ‘adoption’ by the Canadian market.
Players of the Canadian food market: who they are and how they work
Supermarkets are the main players; 64% of food products are displayed on their shelves. A supermarket is a full-function and self-service retail market that sells food, with the annual sales of 2 million Canadian Dollars or more.
The 2015 retail sales by Canadian supermarkets and grocery stores are estimated at about 79 million Canadian Dollars.
The top five Canadian supermarkets by annual sales are: Loblaw Cos. Ltd., Sobeys Inc., Metro Inc., Costco Canada Inc. и Walmart Canada Corp.
When choosing and buying food at supermarkets, a Canadian buyer is guided by the following criteria, in descending order of priority: price, taste/freshness, quality, nutritional value/health benefit, safety.
By offering several brands of grocery stores – depending on the pricing policy – some supermarket chains encourage buyers to make more buys. Thirty-three per cent of Canadian buyers opt for specialized stores according to the principle of lower prices.
Winning in the ethnic buyers sector remains a top priority for chain supermarkets in Canada. For Ukrainian producers it means that representatives of ethnic groups (like Ukrainian or Arab diaspora) may trigger interest to certain food product groups. A proactive analysis will help the producer to identify the most wanted products.
In Canada, a typical distributor interacts with the chains of supermarkets and small grocery stores. Customarily, the distributor operates its warehouses in multiple provinces of Canada, which enable prompt product deliveries to multiple stores all over Canada. Commonly, a distributor is active in the markets of both Canada and the US; this may be useful to expand oversea sales geographically.
A distributor may operate a separate chain of small ethnic stores of the same brand. In addition, it may offer products under a private label.
For Ukrainian exporters it is important to know that distributors often show interest to food products matching the tastes of ethnic client groups. They opt for goods with the packaging and formula that remind the consumers about their preferences.
However, you should not narrow your offering excessively.
The partner is not interested in niche goods (e.g., gluten-free snacks) and orients at the goods that are popular among Canadian consumers: from confectionary to species.
An advantage of engaging a distributor is a potentially prompt transaction, which is critical for your entry into the Canadian market. If the goods meet the partner’s price, packaging and labelling requirements, the distributor may deliver them to the supermarket chains within 2 months.
What do the Canadian distributors normally expect from a potential supplier? Firstly, a proposal specifying, among others, the best sellers. Secondly, a list of products, including the product description, packaging options according to the consumers’ requirements and/or preferences, letters of references from serious partners. In addition, the supplier should provide a price list, a potential delivery schedule, and specify whether the products are certified.
Author: Olga Vergeles, Project Manager, Canada-Ukraine Trade and Investment Support Project (CUTIS)