Get the basics right II
Your sales people need to understand what your customers require
Last week we discussed some of the basic requirements for doing business with retailers. It is an important part of your sales people’s role to interact with existing and potential customers so they know what is required. We recommend you consider the expectations of customers more sophisticated than the ones you work with today. If your business is growing you want to be ready when you have the opportunity. Last week we talked about UPC codes and regulatory compliance.
Your customers will not check or help you much with these basics of selling into retail. They expect you are ready and have it done before you get to them. You really do not want to get the listing and ship product to stores only to find out it is not compliant or you have some other issue. It can be expensive and it can take a long time to get back to the shelf or repair the relationship with your customer
Your customers will have expectations in food safety, logistics, electronic data interchange (EDI), product specs and standards and perhaps labour standards. Every customer is different. Usually, the bigger they are the more expectations they have. From the supplier’s perspective the more hurdles you need to get over. Every retailer is unique so do not assume you have the basics in place for them all just because you understand the requirements of one.
Food safety
Retailers that agree to put your product in their store are paying for more than just a case of 12 jars or boxes. Part of the price they agree to pay, is to ensure the products you are producing are as safe as they can be. Suppliers need to understand the regulatory expectations for food safety and their customer’s expectations. The minimum standard for Canadian Food Inspection Agency (CFIA) might be to follow Safe Food For Canadians regulations, but your customer might also expect you to have some form of Global Food Safety Initiative (GFSI) accreditation. These are two different food safety programs.
Most of the major retailers will have their own food safety minimum requirements for branded products and private label products. Usually, the minimum standard for a branded product is a Hazard Analysis Critical Control Point (HACCP) plan. Often the requirements for private label are more onerous, as these products are owned by the retailer and they want to reduce the risk as much as possible. If you want to sell into a particular retailer, ask them for their specific standards for your products in the appropriate department.
Food safety is important to retailers because they want to protect the consumers who shop in their stores, and they really want to avoid product recalls. Although they charge suppliers back for the costs associated with a recall, it is the store name that is in the media as much as the brand. No one in the value chain wants a recall and the retailer’s perspective is the higher the level of food safety, the better chance of avoiding recalls.
It can be a challenge to obtain retailer’s food safety requirements. They are often different by department and category managers are not always experts in this area. If possible, suppliers should confirm food safety minimum requirements with retailer’s food safety people. They set the standards, and they understand the terminology. Outside resources can be valuable in this area, but make sure they get the confirmation from your customers.
Produce has a different food safety program in Canada that is called Canada Good Agricultural Practices or more commonly Canada GAP. Most major retailers will expect producers to be Canada GAP audited, but it is important to ask the question. Some regional suppliers can be exempt.
Product specifications and Standards
When a supplier presents a product to a retailer, they should have the ability to deliver the product, with the same attributes on every order. Variability will erode your customer’s confidence in your business. When you present the product, make sure you have the capability to repeat this version of it consistently.
In perishable departments, there can be more variability, so retailers will have a defined set of product specifications. This is most common in fresh produce where the items start to deteriorate as soon as they are harvested. Most retailers are willing to accept a certain amount of degradation and other defects. Suppliers need to review the standards and make sure their interpretation is in line with the customer’s.
Retailer’s specifications can be a combination of regulatory definitions such as Canada No. 1 in produce and the retailer’s own requirement for size. An example would be the Canada No. 1 standard for decay is less than 5% but the retailer might require less than 3% decay. The minimum size for a Canada No. 1 onion is 1 7/8” but the retailer requirement could be a 2 1/4" onion. Some retailers will decide they want a slightly larger profile to differentiate their offering. Suppliers need to ensure they understand retailer’s product specifications so they can meet or exceed them.
If there are questions or differences of opinion, they should be addressed immediately and if possible, prior to shipping the product. It is beneficial to get the quality assurance people involved in the discussions, as they are the people who interpret the standards for the retailer.
Consumer packaged goods have less variability. As long as the product meets or exceeds its declared size, has no regulatory issues for labelling and performs past the best before date, retailers should be happy.
Best before dates
There has been a lot of discussion related to best before dates. They were becoming an expected product attribute in the industry for most fresh and packaged goods. This would be a standard question from a retailer, ‘what is the shelf life of the product?’. Suppliers are expected to do a thorough job testing the shelf life of the product. This could include third party audits to validate the claims being made. Obviously, the longer the shelf life the better. The more days before the best before date expires, the more time for the product to move through the system to the store shelf and for the consumer to use the item. In some cases, a longer shelf life can be a competitive advantage.
In fresh products, there is a limited life for the product and in some cases mold or other issues will arise that make the product unfit for consumption. There is also more variability. The condition of the product when it was packaged can impact shelf life as does the quality of the cold chain it has been through. Some retailers prefer suppliers to include a packaged-on date as opposed to a best before date. Each retailer and in some cases each department will have their own unique expectations. Look at products in their stores, ask other suppliers and ask them what they expect.
In some packaged goods, best before dates were related to the product losing some flavour, as opposed to being unfit to eat. Ultimately the supplier owns the product and must make the decision how long the product maintains integrity or is unfit to eat. Your shelf life will be compared to similar items. If it is shorter, retailers will expect the eating experience to be better.
Product ingredients, formulation, process and packaging can all impact your best before date. Research similar items and expect to be compared to the products in your category. This can impact the price your customers are willing to pay.
In some markets like the United Kingdom (UK), different terminology is used. They have ‘best before’ and ‘use by’. ‘Best before’ indicated when the product was starting to lose quality whereas ‘use by’ indicated it was no longer safe to consume. Industry in the UK is moving away from ‘best before’ and encouraging stores and consumers to make the decision. The driving force for this change was reducing food waste. Many people believed food that was fine to eat was not being consumed, because of ‘best before’. We could see changes in our market related to this issue.
When you present your products to a potential customer you should explain your practices for best before or use by or packaged on. Have the discussion and ensure your practices are in line with their expectations.
Lot coding
Traceability in the industry is very important. The Safe Food for Canadians Regulations were developed to include traceability. Suppliers need to have the ability to trace inputs one step back and shipments one step forward. Your customers will expect this when you want to do business with them.
Your product should have a lot code on every package that allows you to relate the production to a certain period of time for production and certain inputs. You should also be able to determine where the products from each lot have been shipped.
Whether you have equipment on your processing line or you have to do this manually, it needs to be a component of your finished products to be for sale in major retailers.
Third party audits
The major retailers started expecting suppliers to comply with third party audits in food safety. This practice has now evolved into other parts of supplier’s businesses. Some retailers will expect you to complete audits related to working conditions, employees and sourcing of inputs for your products. The rationale is they need to reduce the possibility suppliers are doing something that is unethical or outside the boundaries of what they determine as fair business practices.
Some suppliers get frustrated with these demands and it is true it all impacts cost of goods. It is the retailer’s store and as long as one supplier is willing and able to comply, they will expect every supplier to confirm their audit results. In many cases it is part of the listing agreement you will need to complete.
Your sales people should be asking these questions
Your sales people should be aware of the expectations your customers have for food safety and product standards. We can’t stress enough that different retailers have different expectations. It is much better for your sales people to do their research, ask the question and confirm what the customer expects. Next week we will talk about some more basics of selling into retail like electronic data interchange (EDI) and promotion plans.
I do have travel coming up to Toronto, Vancouver, Guelph and Winnipeg so if you want to connect or have an event in any of these locations give me a call or send me an email.
Peter
SKUFood Recipes for Success Podcast
In this episode of SKUFood Recipes for Success, Peter is joined by Amy Proulx of Niagara College Food and Beverage Innovation Centre. They explore what it really takes to move from concept to commercialization in today’s competitive food and beverage landscape. From formulation to scale-up, the journey from idea to shelf requires more than a great concept, it demands technical expertise, regulatory understanding, and a clear path to market.
We dive into the critical role of food science in building products that are not only innovative, but also safe, consistent, and commercially viable. From ingredient functionality and shelf-life stability to navigating regulatory requirements and label compliance, this conversation unpacks the often unseen work that underpins successful CPG products.
This episode offers a behind-the-scenes look at how founders and brands can better leverage technical resources to de-risk innovation and accelerate growth. Whether you’re refining a formulation or preparing for scale, the insights shared highlight how disciplined development and strong science can turn great ideas into products that succeed in market.
If you would like to be a guest send us a note. We are always working on the upcoming episodes.
Year over year tonnage growth is a win
If you are selling into Canadian retail, it is not easy. Overall, sales are forecasted to decline in the industry. Population growth has slowed down to close to zero and people are buying less to control their grocery bill.
Track your sales carefully and get your business ready for this challenging period. If you can bring sales opportunities to your customers, that do not involve reducing profit, you will be popular.
Product innovations and growing categories will get the extra merchandising displays. Watch for retailers to delist slow moving items and try to reduce inventory. This will be more prevalent in conventional stores.
With the focus on Canadian food and beverage we wanted to share a program we have developed with Alain Bosse, the Kilted Chef. We partner to share insights about Canadian food and beverage at conferences and events. We talk about where products come from, share insights about some hidden gems and of course Chef Alain has great tips for using the products at home. This is designed to be entertaining and engaging. Not just for food industry audiences, it works for everyone.