Strong leadership, unique products and good international partners are the winning ingredients in a successful food business venture, concludes a report by the Canadian Agri-Food Policy Institute.
Based on detailed studies of 13 successful food companies, CAPI says producing strong consumer demand through quality products enhances a business’s prospects.
The report is the latest in a series of studies by the institute and business schools across the country on the potential and challenges facing the food-processing industry, one of the top sectors by both employment and sales.
The food-processing industry is struggling to reverse a growing trade deficit, which reached $6.8 billion last year, the report notes. One-third of the deficit is imported wine. The food industry “has the building blocks to be an even greater economic contributor, but there needs to be greater (government and public) recognition of the sector’s importance.”
Food processing is the largest manufacturing sector and the second in terms of its contribution to the national gross domestic product. There are more than 6,000 food companies, which purchase nearly 40 per cent of national farm production and 65 per cent of the agriculture output in Ontario and Quebec. They employ 240,000 workers, well ahead of other manufacturing sectors, which are in the 160,000 to 170,000 range.
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“Food is one of Canada’s most important economic drivers, yet seems to earn the public’s attention only when communities are under threat of plant closures and job losses,” CAPI chairman Ted Bilyea said, adding creating the right business environment is key to encouraging more investment and growth. “Otherwise, companies will increasingly shift their investments outside of Canada.”
“Despite the fact that the Canadian food-processing sector has been coping with significant change and challenges in recent years, such as the retrenchment of many large U.S. food firms from Canada, we’re seeing examples of impressive business success across the country. It’s time we recognize this industry’s full importance and understand its future potential,” said CAPI president and CEO David McInnes.
Strong leadership is needed to instil a clear purpose that “helps to align employees and other external partners to what is needed to succeed every day,” he added. Premium Brands of British Columbia keeps its 29 food companies operating separately so they produce what they’re best at.”
Quebec-based Bonduelle Americas makes sure its vegetable supply in Central Canada meets its plant capacity. Saskatchewan’s InfraReady produces unique grain products accredited to meet kosher and halal certifications, among many others. Ontario-based Ferrero mass markets unique and fresh chocolate products. In every case, they produce top-quality, unique products that create brand loyalty.
Island Abbey Foods of P.E.I. has parlayed government-assisted research and co-operation with international partners to create a market for solid, 100 per cent pure honey products. PepsiCo Foods Canada has forged strong relationships with Canadian oat growers to supply its plants in Canada and the U.S.
The report points out that “high-quality raw material from Canadian farms is a tremendous advantage for Canadian manufacturing and should be a more significant catalyst for new investment.” Governments need to ensure business conditions continue to be attractive to attract and retain investment.
The sector’s growth will depend on it developing its ability to stand up to American scale through resilience strategies based on being able to differentiate products and leverage those differences in growth markets, the report said. “Such innovative approaches will help drive productivity and better position the firm to attract capital and the right people to manage step change.”