The competitive nature of food processing in Canada results in a constant set of challenges. When the Canadian Agri-Food Policy Institute (CAPI) set out to find out why we had failures and a $6.8-billion food-processing trade deficit through 13 case studies, they also discovered the ingredients for success.
Food manufacturing in Canada is the leading sector in terms of employment and GDP, greater than auto manufacturing. And as much as Canadian companies are attracted to our corporate system of taxation, they still often expand in the United States. The companies that stay in Canada and continue to grow with a global presence share a specific set of attributes.
Leadership trumps all when it comes to survival in a tough economic and highly competitive environment and a mission statement does not cut the cloth. The case studies found that great companies had a clear purpose that was very focused. The CEO and other leaders took responsibility for breathing life into the purpose of the company. In one case study, Premium Brands, which owns 29 different food companies, keeps their competitive edge by fostering entrepreneurial spirit across the board. They avoid the big ship strategy of commoditization. They list the leadership traits of the CEO as being entrepreneurial, accountable, and knowledgeable on what they want the company to be and not to be and as having strong financial and industry expertise. That person is to be confident in their abilities, detest bureaucracy and expect the same accountability from all employees. George Paleologou is this man and his 3,600 employees are clear that the vision of the company allows them flexibility and creativity. The Premium Brands recipe for success is a very clear purpose and a match between the vision and the target.
Multiple points of differentiation grounded successful food manufacturers based in Canada to stay competitive and hard to copy. In Ontario, Ferrero makes fresh chocolates in a method that is tricky to reproduce. In Quebec Bonduelle Americas plans and forecasts vegetable supply so its processing plants can operate at high levels of efficiency. Bonduelle achieves this by working with growers to improve agronomic practices that compliment its mandate to “feed people vegetables as part of a healthier diet in order to create a healthier world.” Just like a meat packing plant, vegetable-packing plants need to operate at full capacity. The catch is in ensuring supply, something meat packers currently struggle with, and in keeping focused on their point of differentiation which is “vegetables first, technology second.” They don’t feel edged out by the McCain’s of the world because they don’t have the same mandate.
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A competitive advantage can be a technology or marketing strategy but most successful companies had deep relationships with all parties, particularly growers. You may not know that PepsiCo processes Quaker Oats for your breakfast and it may not be important to you. But the fact that all the oats for Quaker is sourced from Eastern and Western Canada for both the Canadian and U.S. processing plants is important. PepsiCo sees great relationships as part of its success strategy.
Enabling policy is the quilt that wraps the culture to keep it safe and warm and to attract new entrants into food manufacturing. In Canada, we have the commodity on the farm and that makes our country somewhat attractive for processing companies but it has not proven to be enough. The stability and support of government policy that is enabling with all three levels of government working together is needed to support the stay-ability of manufacturing companies so they expand in Canada rather than outside of it. This working environment recognizes that we grow and process on a global platform but must do so in a way that builds communities.
Morrison Lamothe Inc. (MLI) is an old Canadian frozen food-processing company founded in 1933. It has had its struggles but maintains a strong family atmosphere among its employees. Management also knows from experience that sometimes a relationship and a willingness to reinvent oneself results in unprecedented success. MLI reflects on the value of relationships and taking calculated risks. “One problem became an opportunity in late 2004 as the Canada-U.S. border closed to some beef products and MLI was approached by Nestle and asked how quickly could they manufacture Nestle Canada’s beef-based frozen entrees. The team managed to get 13 new SKUs manufactured in seven weeks, no small feat. MLI delivered, Nestle became their biggest branded customer in both countries, and a deeper relationship was established.” The result of this relationship was that later Nestle offered MLI the second-largest coffee-roasting plant in Canada and thus the very lucrative Coffee Club, a “white labelling” company was created. Today, whenever you use a coffee pod regardless of the brand, it has been processed in Canada through MLI.
There are so many lessons for our businesses to be learned from food manufacturers who are international in scope. They too strive for success in a highly volatile, stressful and constantly changing environment. And despite the technical hurdles, such as a swing in the weather or the dollar, they have shared their building blocks with CAPI.
Great companies operating in Canada were built by committed and accountable leadership that communicates the purpose of the company. These companies differentiated themselves in a way that is hard to replicate and in step with consumer preference. They lobby for enabling policy so investors drive the bus and government supports prosperity at all levels. And most important of all they remind us to build and maintain a company on relationships — the cornerstone of success.
Brenda Schoepp is a motivating speaker and mentor who works with young entrepreneurs across Canada around the world. She can be contacted through her website www.brendaschoepp.com. All rights reserved. Brenda Schoepp 2014