Over the past few articles, I have looked at global consumer food trends and how they are affecting the various “business units” of Canada Food Inc., and then I went on to do some traditional strategic planning analyses.
First we did a PEST Analysis to look at the macro-environment within which the industry operates and looked at political/regulatory factors, economic factors, social/demographic factors, and technological factors. I then narrowed in on the infrastructure of the food industry with a 5 Forces Analysis and looked at customers/consumers, suppliers, existing competition, the threat of new entrants, and the threat of substitutes.
In the Consumer Food Trends, we identified six large groupings of consumers. These were:
- The Foodies, who are looking for interesting variety in their foods to give them pleasure;
- The Healthies, who are looking for their foods to be healthy above all else;
- The Greenies, who want their foods ethically produced with the environment and social responsibility in mind;
- The Speedies, who want very convenient food requiring minimal preparation time;
- The Cheapies, who are the value-conscious consumers looking to control their spending on food; and
- The Newbies, who are recent immigrants with a clear “culinary culture” based on their country of origin, but who are adapting to some extent to the North American culinary culture.
The PEST Analysis looked at such things as the level of government intervention in the economy, emerging international trade agreements, lower levels of trade protection, and regulations impacting the food industry in the political/regulatory area; the changing levels of growth/disposable income in both the developed and developing economies in the economic area; the impact of the consumer food trends we mentioned and some comments about the “Canada Brand” in the social/demographic area; and factors like our high level of infrastructure in food science and agronomy in the technical/environmental area.
In the 5 Forces Analysis, we again highlighted the consumer trends and also the continuing consolidation in the retail and foodservice sectors in the customer/consumer section; increasing raw material costs resulting from some of the consumer trends, offset to some degree by the value chain management approach, but also increasing demand for non-food uses of agricultural commodities, in the supplier section; the continuing and increasing global competition we face both in our domestic market and export markets in the existing competition section; the emergence of new competition and the resulting trade deficit in food and other industries in the threat of new entrants section; and the varying impact by business unit, essentially from alternatives within the industry, in the threat of substitutes section.
But given that very complex set of analyses, how does Canada Food Inc. score in a SWOT Analysis regarding its strengths and weaknesses, and what are the opportunities and threats/challenges?
The traditional SWOT Analysis looked first at what the company’s strengths and weaknesses were, and then tried to identify what the opportunities and threats were based on the strengths and weaknesses. Personally, I and number of my colleagues in strategic consulting believe it needs to be reversed, in other words, first define the opportunities and threats/challenges in the market place, and then determine what your strengths and weaknesses are within that market place.
So what are the opportunities in the global food market for Canada Food Inc.? There are several:
1. Given the increasing disposable income in developing markets, there is clearly an opportunity for increased exports of value-added food/beverage products to those markets.
2. Particularly in developed markets, there is an opportunity for more focus on products aimed at improved health and nutrition. As the number of elderly people increases due to the aging of us boomers, this is becoming a growth area.
3. There is an opportunity for more focus on specialty products in general, whether local products, environmentally friendly products, upscale/artisanal products and ethnic products, based on the consumer trends identified above.
4. There is an opportunity for increasing innovation generally in products given all the consumer groups’ needs, wants and demands.
What are the threats/challenges we face in the global food market? Well, one challenge is the cost of commodity and other input prices due to the increasing cost of energy and the competition from non-food demand for commodities. The cost of capital investment in new technologies is also an issue here.
From my consulting, I have come to believe that our productivity is too low generally in the entire value chain, and much of that is due to the lack of a common vision and plan and the necessary level of collaboration required along the value chains – both operations and innovation. As the cost of commodities go up and the environmental changes continue, we do not yet have sufficient focus on sustainability along the entire value chain in order to maintain our resource base. And a very large issue is and will continue to be increased competition from developing economies that still, and will for a while, have access to lower-cost inputs of all types.
So given all of that, what are the strengths of Canada Food Inc. that will help us? First and foremost are the vast resources Canada enjoys across a large and diverse range of commodities. If you look at the NAICS classifications for the food sector, you will find Canada at a very high level in virtually all of them, whether it’s animal agriculture, fisheries and aquaculture, grains, oilseeds, pulses or horticulture. We almost have it all. We have a strong food and beverage food processing sector, again, in almost every food and beverage category. To go along with both the commodity production and the processing, we also have a very strong research and development infrastructure in universities, technical centres, and in the sector’s companies themselves. And we have a very strong support infrastructure in other supplier industries, such as packaging and logistics services, both North American and internationally. If we can make it, we can distribute it.
Finally, there is the almost unbelievable international image of Canada in general and its resource base, but also in the food and beverage sector of our economy. There is a strong opportunity to develop the image of the terroir of Canadian food and beverages, whether it is P.E.I. lobster, B.C. salmon, Prairies grains, Quebec cheeses or Niagara wines, to the point of global recognition as one sees in French wines and other terroir-based food and beverage “labels.”
And what could hold us back from global success in being the leader in feeding the world? Well, our weaknesses, to name some key ones, are things like a regulatory environment that is too complex and does not facilitate the success of the sector. We have our provincial regulations and our national regulations. Why not put more focus on globallyrecognized regulations such as has happened with GFSI (Global Food Safety Initiative)? Food and beverages are a global industrial sector. We can’t let countless sets of regulations get in the way.
Although we are beginning to address this, there is a lack of collaboration in the food system in Canada generally, both vertically along the value chain and horizontally across the sub-sectors or “business units” as I refer to them. A very key issue is the lack of a long-term goal (mission, vision, strategies, etc. – a strategic plan) for the sector. And, most importantly, there is a lack of leadership to accomplish such a strategic plan, and a “management committee” and “board of directors” to accomplish needed changes and take advantage of opportunities.
Given this brief set of analyses, it is clear to me that we can be the best in the world. I know it is possible! We CAN do it. After all, we are CANada, and there ain’t no T in there. We are not CANTada.
Gary Fread is president of Fread & Associates Ltd., consultants to the food industry. He has spent 25 years in management positions in the food processing industry, with a background in sales, logistics, purchasing and technical areas. He has worked with Procter & Gamble, Campbell Soup and Morrison Lamothe, and is the past president and CEO of the Guelph Food Technology Centre. He is active in many food industry associations and organizations, serving on the boards of several. Contact him at [email protected]