The ethnic food market is growing rapidly in Canada
As it does, small ethnic food suppliers that are eager to capitalize on this expanding market opportunity face a number of hurdles they must overcome. From packaging and labelling to electronic ordering to effective food grade storage, the challenges facing these upstart or small businesses can be formidable.
Outlining what it regards as the present themes shaping the Canadian grocery landscape in 2016, and according to the Canadian Federation of Independent Grocers, “the ethnic shopper remains an important growth priority for the major grocers in Canada.” That Statistic Canada’s 2011 National Household Survey data revealed the South Asian and Chinese communities were the two fastest-growing visible minority groups in this country explains this emphasis.
Canadian Grocer magazine, meanwhile, stated Canadian ethnic food market growth is growing by about 14% annually, and that 16% of Canadian consumers buy ethnic food weekly. That number jumps to 35% when you zero in only on Ontario consumers. Moreover, about 70% of the growth in Canadian consumer spending will come from so-called visible minorities.
For domestic and international ethnic food suppliers keen to sell their wares in Canada, the opportunity is clear, but the path to the Canadian market, and ultimately, to major grocery store shelves remains problematic.
For these companies, the key to unlocking the door to major grocery store chains and independent grocers lies in partnering with a third-party logistics (3PL) provider with the services and partnerships to facilitate effective supply chain management on their behalf.
Why Scalable, Effective Logistics Matter
Traditional ethnic foods such as Chinese (89%), Italian (84%), and Latin American/Mexican (82%) remain hugely popular among Canadians, noted market research firm Mintel in its “Ethnic Foods and Flavours Canada 2016” report. However, Canadians’ appetites for other cuisines from South Asia, Africa, and elsewhere are on the climb.
For ethnic food suppliers to get in on the action, and keep their costs manageable, they must adhere to major food retailers’ processes, including:
- Labelling. Canada has two official languages. Any product sold in Canada must satisfy both English and French labelling requirements.
- Listing or slotting fees. Typically, large grocery chains impose a fee on food suppliers to have their products placed on their shelves. The more prominent the product placement, the pricier it gets. For small food suppliers, aligning with a food grade storage provider can serve to offset this expense.
- Goods must be palletized. Major grocery store chains expect all shipments to be stacked and transported on pallets to facilitate the quick shipment of cargo.
- Technological sophistication. Major grocers demand interoperable technology and ordering systems. Known as electronic data interchange (EDI), it provides several benefits for both the grocer and food suppliers. Notably for small suppliers, choosing a food grade storage provider that offers a white-label EDI service makes your business appear sophisticated to the big food retailers.
- Vendor management. Controlling the costs associated with having multiple food suppliers (or vendors) is always top-of-mind with major grocers. Choosing a 3PL provider that already has relationships with several chains by providing other food suppliers is far more palatable to grocers than increasing their number of independent vendors.
Growing Your Ethnic Food Supplier Business Smartly
It’s noteworthy that medium-sized ethnic and specialty food supermarkets are on the rise in Canada, growing by an estimated 11 stores per year, or 12% annually. Supplying this market segment through a full-service food grade storage provider simply makes economic sense, too. Taking the do-it-yourself approach to delivering food to multiple supermarkets dispersed across any region is not cost-effective as your business grows.
Major Canadian grocers want a single point of contact
The only way for any small ethnic food supplier to acquiesce to that demand is through partnering with a food grade storage provider that can customize and manage their warehousing, transportation, and supply chain fulfillment.
Additionally, if you’re mulling over which food grade storage distributor to partner with, ask if the distributor represents your competitors. Your food’s ingredients and flavours may be unique, but don’t select a distributor that is already selling your major competitors’ products lest your goods get overlooked.
Contact McKenna Today!
Is your business seeking a cost-effective food grade storage provider to supply large and medium-sized grocers with your ethnic-inspired or specialty food products? Get in touch with us. We have the technology, experience, infrastructure, and expertise to help you grow your customer base and increase revenues.