MNP/CTAC Executive Round Table 2014
“Adapting and standing out in an ever-changing market” is the theme that guided event discussions, highlighting the issues that are most relevant to the industry and focusing on the dynamics and business concerns of the participants.
Exporting & Importing
Research & Development
From: Accent alimentaire sur le Québec/May 2014 edition.
For the second year in a row, Food in Canada has partnered with the accounting and advisoryfirm MNP LLP and the Conseil de la transformation agroalimentaire et des produits de consommation (CTAC) for a round table that brought together major industry players to discuss the issues and challenges they face.
Executive round table participants (left to right, seated): Lucie Chouinard, Senior Manager, MNP LLP; George Tiritidis, Vice-President, Operations, Expresco Foods; Sylvie Cloutier, President and Chief Executive Officer, CTAC; Dominique Bohec, Vice-President, Sales and Marketing, La Petite Bretonne (Distribution) Inc.; Élisabeth Bélanger, President and Chief Executive Officer, Maison Orphée; (standing) Charles Crawford, Founder and President, Domaine Pinnacle; Daniel Vielfaure, Chief Executive Officer, Bonduelle Americas; Mike Leahy, President and Chief Executive Officer, Leahy Orchards Inc.; Martin Plante, Chief Executive Officer, Citadelle; Nicolas Pouliot, Marketing & Sales Director, Aliments O’Sole Mio.
Better understanding for better service
Firstly, I would like to welcome all of our participants. At MNP, understanding the reality our clients face in the Food & Beverage manufacturing sector is important in helping us assist them with their growth. With over 80 offices across the country, from Quebec to British Colombia, MNP is Canada’s sixth largest accounting firm. This has allowed us to develop advisory services and specialized accounting solutions for the Food & Beverage manufacturing sector.
Senior Advisor, MNP LLP
Taking on challenges together
As the most significant business association in Quebec’s food distribution and manufacturing industry, CTAC aims to showcase its members’ competitiveness in Quebec, Canadian and external markets. As such, CTAC maintains close ties with its members to better understand and meet their needs. This meeting serves this goal.
President and Chief Executive Officer, CTAC
Sylvie Cloutier – Let’s start by going around the table so everyone can briefly introduce their company.
Mike Leahy – Leahy Orchards started its apple processing business in 1980. Our team includes 240 employees.
Nicolas Pouliot – Les Aliments O’Sole Mio is a family company with 40 years of culinary experience. We produce fresh pasta and sauces for distribution in Quebec, Canada, the United States and Mexico.
Élisabeth Bélanger – Maison Orphée is also a family company. At first, our focus was on imports. Having been in business for 30 years, we now produce first cold pressed oil, mustard and vinegar. We are primarily known for our organic products.
George Tiritidis – Expresco Foods is a processor of value added meat products, particularly skewers, as well as chicken strips and wings. Our company has been operating for 25 years and we export to North America, especially to the U.S.
Charles Crawford – Domaine Pinnacle began operations in 2000. Like Mr. Leahy, we produce apples, which we use to make our main product—ice cider. However, we have recently developed a line of maple and spirit-based liqueurs. Our products are available in Quebec, Canada and 50 other countries.
Martin Plante – Citadelle is a cooperative consisting mostly of 2,000 Quebec family maple syrup producers, in addition to beekeepers and cranberry producers. We have 90 years of history and our products can be found in 45 countries on five continents. Our 300 employees ensure the efficient operation of our six plants and one distribution centre. We also operate five Maple Delights gourmet bistros and shops.
Daniel Vielfaure – Bonduelle is a global processor of canned and frozen vegetables. I oversee our operations for North, South and Central America.
Dominique Bohec – La Petite Bretonne manufactures croissants, madeleines and chocolate buns. We have been in business for nearly 50 years. The business is owned by my parents and exports throughout Canada, the United States, the Caribbean and Mexico.
Sylvie Cloutier – What do you think of the new business opportunities created by Asia’s growing population, the economic recovery in the United States and the recent Canada-Europe trade agreement? Should Quebec producers seize these export opportunities?
M. Plante – It’s undeniable that exports offer their fair share of advantages, but one shouldn’t simply dive into foreign markets without giving it proper thought: patience is, above all else, required. In fact, trade agreements are at the heart of the matter. We need to quickly finalize the Canada-Europe trade agreement so we can make the most of the advantages it offers. For example, in the cranberry and maple industries, it isn’t hard to imagine the significant negative impact an American agreement would have on Canadian processing.
C. Crawford – I’d like to add to Martin’s comments that in our case, as a small company having focused on exports from the very beginning, finding strategic partners abroad has provided us with a whole new take on the export experience. For example, about 10 years ago we reached an agreement with the company Camus à Cognac that allowed us to access the Russian and Hong Kong markets, among others. The Canada and Quebec trade offices are also effective, low-cost resources to help a company get started with the exporting process.
S. Cloutier – And is the South Korean market a good opportunity?
C. Crawford – Yes, an excellent one, especially in the long term. Besides, since our resources aren’t unlimited, I believe it’s important to identify our key markets and concentrate our efforts there.
D. Vielfaure – I also believe that the elimination of counterproductive tariffs, which is made possible by such agreements, is a positive development. It’s especially beneficial when you can sell to one of your affiliated companies located in a specific region, thereby saving on customs charges because that affiliate could then handle local sourcing.
S. Cloutier – And with the U.S., the fact that our dollar is weaker…
D. Vielfaure – This is always a welcome advantage, but it doesn’t significantly affect our business because much of our production is on the other side of the border. The declining Canadian dollar helps to some degree, but for Bonduelle, it doesn’t have the impact it once did.
N. Pouliot – For us, since 50% of our exports are to the United States and Mexico, currency becomes a key factor. We also focus on agreements with partners. Agreements like NAFTA can also make things easier, but our long-term presence in these markets, our involvement in food fairs for example, provides a sense of continuity that inspires confidence and opens the door to new partnerships.
G. Tiritidis – I would add that some segments of the industry must also factor in quota systems. Additionally, one must not forget that in the context of free trade, foreign partners are also trying to export their products here. We would therefore be well advised to take another look at Supply Management to ensure a balance between target export markets and access to our local market.
D. Bohec – I agree with this point. Above all else, we need to be highly competitive on our own turf if we want to counter the threat of imports that comes with free trade.
É. Bélanger – When we first started exporting, we also turned to the U.S. market. The value of the dollar is a good incentive, but even more important is their economic recovery, which opens the door to niche markets like our own. Also, with people becoming more health conscious, there is a general trend toward healthy food. We follow the same formula in the U.S.: we go to fairs and try to find the distributors that best suit our market in terms of size and purpose.
D. Bohec – For La Petite Bretonne, the main export market is also the United States. In fact, European companies want to come to Canada to access the United States and we’re right next door… However, I wouldn’t advise that anyone start a business to begin exporting right off the bat. It’s a major expense that only pays off in the long term. As in Charles’ example with Camus, we secured distribution agreements – and co-packing agreements in our case – with people located in other regions.
S. Cloutier – Do you adapt your strategies to trends such as buying local, health or specialty products (brought about by an ageing population and ethnic communities, among other factors)?
M. Plante – It is well known that maple syrup, honey and cranberries are excellent for your health. So we focus on these aspects and adapt our products to today’s trends. For example, we created a ginger maple butter that targets the Asian culture and we have just developed a Thai-inspired honey. We also adapt our traditional products for culinary experiences in our gourmet bistros, like in March when we opened maple taffy stations featuring different flavours such as Irish Cream.
N. Pouliot – I understand Martin and the idea of innovating with flavours, but when your name is O’Sole Mio, it’s hard to go Thai. But we do focus a lot on health. We recently imported dried gluten-free pasta with omega and other healthy ingredients to meet the needs of consumers. Nevertheless, 95% of our products come from Canada.
É. Bélanger – This has also been our experience during the last 30 years as there is something authentic about quality. This is why we are focusing on organic. For us, that is much more relevant than the ethnic approach.
D. Bohec – We’re happy to welcome ethnic groups for the simple reason that croissants are often already built into their dietary habits. For the elderly, we have started reducing sizes, because that’s what they are asking for. I would also like to point out that we are currently assessing whether we will include the “Aliments du Québec” logo on all our packaging, given the positive reputation that many Quebec products enjoy.
S. Cloutier – How do you handle regulatory changes, whether here or abroad? Are imports subject to the same rules?
D. Vielfaure – In my case, the second part of the question is of greater interest because our export products meet the various required standards. However, we’ve noticed that products following different standards enter Canada with little regulatory scrutiny for all kinds of reasons, and I find that harder to swallow.
M. Leahy – I agree with Daniel. Agri-food and safety standards in Quebec and Canada aren’t problematic; in fact, they act as a guarantee for consumers. However, it is entirely unfair that competition from the United States and abroad isn’t subject to the same rules, especially since local producers and processors must pay to be compliant.
G. Tiritidis – I think that if we are serious about wanting to export worldwide, businesses must take the initiative in terms of regulation. Everyone should meet the Global Food Safety Initiative (GFSI) standards. That would allow us to eliminate import and export inequalities.
N. Pouliot – Indeed, three years ago, one of our major clients required that we obtain our GFSI certification. Since we didn’t want to lose their business, we got our certification six months later. Additionally, many invitations to tender now include this requirement.
Lucie Chouinard, MNP – I’d like to come back to Sylvie’s question on health and specialty foods. We’ve been talking about it for 20 years, but have people really changed their eating habits?
D. Bohec – I always say that it’s necessary to innovate, without getting too far ahead. If consumers aren’t ready for your product, it won’t sell. We are currently focused on producing unbleached flour, developing preservative-free products and refining our labels, which is very fashionable. We’re ahead of the curve, but not too far ahead.
É. Bélanger – It’s true that we sometimes develop products that exceed our customers’ expectations, and this costs us money. However, it’s embedded in our company’s DNA. We have always viewed health as extremely important but never neglecting pleasure, without which consumers wouldn’t purchase our products.
C. Crawford – In our experience too, pleasure must not be neglected, nor the feeling that the product consumed is authentic. For example, we developed a maple liqueur called “Coureur des Bois”, made only with premium quality syrup. Consumer response has been spectacular.
M. Plante – I would like to add that to differentiate yourself, innovation is a must. We are able to test our new products in our shops prior to documenting their market penetration when proposing them to large chains.
L. Chouinard – And what about the dynamics of local product sourcing and the effectiveness of export policies?
M. Leahy – For us, doing business five or six hours away is doing business in a local market, such as New York, Philadelphia, Boston and Toronto. Currently, about 50% of our sales are directed at American markets.
G. Tiritidis – Finding creative solutions is essential to remaining competitive. For example, we have taken on the challenge of offering fresh products all the way to California. Since we do partial load shipments (LTL) every week, we have entered a partnership to share transportation and lower costs.
D. Bohec – We did something similar with our croissants exports. Given their light weight, we found a partner to fill the lower portion of the containers with meat, which can’t fill the space alone on account of weight.
L. Chouinard – How has the very topical notion of sustainable development affected your approach?
G. Tiritidis – It certainly has had an impact in terms of our dealings with distributors, but I don’t think it has had a concrete impact on the consumer. In any case, not nearly as much as reduced packaging, which is an area of focus for us.
É. Bélanger – For our company too, packaging is a real challenge because of the related costs and the different options designed to improve recycling. I think this challenge is worth taking up wholeheartedly because it is the legacy we will pass on to future generations.
C. Crawford – Packaging certainly makes a difference in a product’s success, just like the image it sometimes conjures. For example, the “Coureur des Bois” product that we introduced in Quebec was very successful, a fact we attribute partly to its name and its folkloric image. However, elsewhere in Canada this image didn’t resonate at all. So we changed its name to “Cabot Trail” in those markets, and the difference was striking.
D. Vielfaure – That’s true, and I would add that corporate image is probably the big winner from a company’s good environmental practices, like responsible packaging. While such practices come at a cost, they also often make it possible to save big in terms of energy efficiency, water consumption, productivity and more.
“Some segments of the industry must also factor in quota systems.”
“Above all else, we need to be highly competitive on our own turf if we want to counter the threat of imports.”
“With people becoming more health conscious, there is a general trend toward healthy food.”
“Finding strategic partners abroad has provided us with a whole new take on the export experience.”
“The declining Canadian dollar helps to some degree, but for Bonduelle, it doesn’t have the same impact it once did.”
“Agri-food and safety standards in Quebec and Canada […] act as a guarantee for consumers.”
“We need to quickly finalize the Canada-Europe trade agreement so we can make the most of the advantages it offers.”
“Our long-term presence in these markets […] provides a sense of consistency that inspires confidence.”