Food Proc Guide

Winter 2008

INTRODUCTION This guide is intended to help you develop your food processing business. Whether you’re new to the food industry and starting a new business, or are considering expanding your existing operation, you’ll find the tools you need here. The guide takes a look at some of the important areas that are specific to the food processing business. We’ve included guidelines for food safety, quality assurance and government regulations, as well as general information about how to market and promote commercial-scale products. If you’re a new entrepreneur and you’ve never started and run your own business in Ontario, we highly recommend two other invaluable resources along with this guide: •

Your Guide to Small Business: This six-part guide, from the Ontario Ministry of Small Business and Entrepreneurship, highlights what you need to know to begin a new business. It takes you through the process, covering everything from initial preparation to developing a business plan, financing your business, incorporating, assessing your progress and expanding your business. Your Guide to Small Business is available free online at http://www.sbe.gov.on.ca/ontcan/sbe/en/st_yrguide_en.jsp, or you can download it as a PDF file.

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The Canada-Ontario Business Service Centre website, www.cbsc.org/ontario. This website, jointly managed by Industry Canada and the Ministry of Government Services, contains a wealth of information for anyone starting a business. Here you’ll find guidance on getting started, financing, research, marketing, taxation, management and planning, hiring employees and much more. An on-line small-business workshop takes you step by step through a program that will help you develop your business idea, start a new venture or improve an existing business.

Throughout this guide you’ll also find many other valuable contacts and resources, including on-line links, that will help you through some of the hurdles of starting and expanding your food processing business.

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CONTENTS Introduction ………………………………………………………………………. 2 1. Doing Your Research ………………………………………………………….. 6 • Researching the Industry…………………………………………………… 7 2. Your Responsibilities and Obligations……………………………………...… 10 • Liability and Insurance……………………………………………………… 11 • General Obligations and Responsibilities…………………………………… 12 • Regulatory Responsibilities and Obligations………………………………… 15 • Federal Statutes and Regulations…………………………………………… 18 • Provincial Statutes and Regulations………………………………………… 20 • Municipal Regulations……………………………………………………… 24 • U.S. Regulations……………………………………………………………. 24 3. Developing and Manufacturing Your Product…………………………..…… 26 • Choosing a Manufacturing Strategy………………………………………… 27 • Setting Up Your Own Manufacturing Facility……………………………… 27 • Using a Product Development Facility……………………………………… 29 • Co-Packing Your Product…………………..……………………………… 30 • Product Development……………………………………………………… 33 • Inventory…………………………………………………………………… 35

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4. Food Ingredients…………………………………………………………..…… 37 • Sweeteners………………………………………………………………….. 38 • Fats and Oils……………………………………………………………..… 43 • Food Starches…………………………………………………………….… 48 • Flavours……………………………………………………………..……… 50 • Herbs, Spices and Seasonings……………………………………….……… 53 • Food Additives………………………………………………………...…… 57 5. Food Processing and Preservation……………………………………………. 61 • Processing Methods………………………………………………………… 62 6. Quality Assurance……………………………………………………………… 69 • Creating Quality…………………………………………………………..… 69 • Quality Programs…………………………………………………………… 72 • Product Certifications…………………………………………………….… 73 • Product Specifications………………………………………………….…… 74 • Sanitation in Food Processing…………………………….………………… 75 • Developing a Sanitation Program…………………………………………… 77 7. Packaging and Labelling……………………………………………….……… 79 • The Ideal Food Package……………………………………………..……… 80 • Regulatory Considerations………………………………………..………… 81 • Sourcing Food Packaging…………………………………………………… 82 • Packaging Materials……………………………………………………….… 83 • Environmental Concerns…………………………………………………… 86 • Package Design…………………………………………………………...… 87 • Labelling………………………………………………………………….… 88 • Nutrition Labelling…………………………………………………..…… 91 • Other Points About Labelling……………………………………………… 92 8. Strategic Marketing…………………………………………………………..… 93 • Marketing Strategies………………………………………………………… 94 • Marketing Programs………………………………………………………… 95 • Promotion………………………………………………………………..… 97 • Advertising……………………………………………………………….… 99 • Publicity…………………………………………………………………..… 103 • Sales Promotion………………………………………………………..…… 103 9. Pricing Your Product………………………………………………………...… 112 • Pricing Strategies……………………………………………………………. 113 • Pricing Programs………………………………………………………….… 114 • Monitoring Costs…………………………………………………………… 115 • Setting Prices……………………………………………………………..… 117 • Exceptions to the Pricing Rules…………………..………………………… 119 • Trade Terms……………………………………………………………...… 120 • Deals and Allowances………………………………………………………. 121 Ministry of Agriculture, Food and Rural Affairs – Business Development Branch

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10. Distributing Your Product…………………………………………………… 125 • Types of Distribution Channels…………..………………………………… 126 • Building a Customer Base…...……………………………………………… 127 • Deciding on a Distribution Channel………………………………………… 128 • How to Get Your Product Listed…………………………………………… 129 • How to Be a Successful Supplier…………….……………………………… 134 • Choosing a Broker………………………………………………………..… 136 Resources………………………………………………………………………138-161

ACKNOWLEDGMENTS The Guelph Food Technology Centre for their technical support Ministry of Agriculture, Food and Rural Affairs—Economic Development Division Staff Disclaimer Content This information is provided as a public service. Although we endeavor to ensure that the information is as current and accurate as possible, errors do occasionally occur. Therefore, we cannot guarantee the accuracy of the information. Readers should where possible verify the information before acting on it. External Links There may be Web sites linked to and from this site that are operated or created by or for organizations outside of the Government of Ontario. Those organizations are solely responsible for the operation and information (including the right to display such information) found on their respective Web sites. These linked Web sites may or may not be available in French. The linking to or from this site does not imply on the part of the Government of Ontario any endorsement or guarantee of any of the organizations or information (including the right to display such information) found on their respective Web sites. The Government of Ontario does not assume and is not responsible for any liability whatsoever for the linking of any of these linked Web sites, the operation or content (including the right to display such information) of any of the linked Web sites, nor for any of the information, interpretation, comments or opinions expressed in any of the linked Web sites. Any comments or inquiries regarding the linked Web sites are to be directed to the particular organization for whom the particular Web site is being operated.

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Acknowledgments

1. DOING YOUR RESEARCH Research makes good business sense. It can uncover hurdles you need to overcome, identify unexpected costs and help you avoid spending time and money on a project with little or no chance of success. Research can help you “fail small and fail early”—or not fail at all. Research is essential for developing a sound business plan. What’s more, the knowledge you gather will be a useful marketing tool. In your research, you need to look at the industry, the environment, your competition and your customers. The Canada-Ontario Business Service Centre website at www.cbsc.org/ontario contains information about initial research. However, when it comes to researching the food processing industry, you’ll want specific information that’s unique to this business.

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RESEARCHING THE INDUSTRY Your goal here is to gain an understanding of how the overall industry works. You’ll discover trends, important players, competitors and customers that you can then investigate in more depth. Information on an industry comes from two main sources: • •

published data; and interviews.

The easiest way to begin is by collecting all the published information that’s available. This will enable you to build a base of knowledge before you attempt to contact anyone directly. Your starting point should be with the industry associations. They can often provide: • • • • •

a list of participants; leads on published information; general impressions about how the industry functions; key factors for company success; and important industry trends.

A word of caution: industry associations are more likely to help members than non-members, and they may share what you discuss with them among members who are potential competitors. If you already have a business, you might want to consider joining the associations (there are many benefits beyond gathering information). An introduction from a member may also be useful in gaining the association’s cooperation. An excellent source for agri-food industry associations is: Food in Canada www.bizlink.com/food.htm (food industry associations, events and trade shows) Jan/Feb Guide Book Issue Tel: 1-800-567-0444

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Narrowing Your Search Once you have collected background information from the industry associations, you’re ready to refine the topics for your search. All of the organizations that specialize in information can help you complete a narrower search. This might include: • • • • • • •

industry profiles and studies; annual reports of publicly held participants; articles and newspaper clippings about the industry or participants; company directories; company documents; trade magazines; and Statistics Canada information. The government-publication section of your library is a good place to start. Here, you can see if any reports have already been done on the industry. You can also look at specific market information such as food consumption habits, consumer price indexes or income groups. This type of information will help you determine potential target markets or product demand.

Libraries Some libraries specialize in government publications. You’ll find a list in the Resources section of this guide. Databases A vast amount of information about new research, consumer surveys, business trends and developing technologies from all over the world is available on a wide variety of databases. You can access some of these yourself at a library or on the Internet. Others are available through data services, most of which charge on a fee-for-service basis. In order to get the most relevant information, make a list of key words that describe the industry, the participants and the topic in question. Key words can include (but aren’t limited to): • • • • • •

company names; industries; products; topics; individuals; locations.

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As you go through the information you have gathered, take notes and be sure to reference them. This will reduce your need to reread the material, and help you avoid the frustration later of trying to find where a piece of information came from. You should also look through each source for references to other published sources and names of people to interview. The Resources section of this guide includes on-line data sources. Trade Journals Trade journals and magazines can be a useful source of information. Some of these publications are general, while others are specific to the food industry or a sub-sector such as dairy. You can get journals by subscription. Many libraries also carry them. For a list of trade journals see the Resources section of this guide. Also check industry association newsletters; they provide information that you may find of value. Field Research Once you have a basic understanding of published information, it’s time to go out and start talking to people. Field research can give you more specific information than you’ll get from published sources. As you do your field research, make a list of the trends that you see, both positive and negative. You should also try to establish who competes in the food processing industry and for which customers. This will help you identify your company’s own standing in the industry, as well as who to watch out for.

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2. YOUR RESPONSIBILITIES AND OBLIGATIONS Once you have completed all the basic steps involved in starting your own business, you’re ready to look at specific considerations relating to the food processing industry. As a food processor, you have specific obligations and responsibilities that are governed by federal and provincial acts, statutes and regulations. You need to be aware of these, to ensure that you are operating a safe and legally compliant business. Equally as important, you must be certain that you are properly insured. When you’re starting a business, you can’t afford to be under-insured. Even small disasters have the potential to destroy a new business. And personal assets such as your house or car could be seized if you don’t have proper insurance in place.

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LIABILITY AND INSURANCE Many types of insurance are available. Your best bet is to consult with an experienced insurance agent or broker, who can advise you about the coverage you need. When you’re looking for an agent, speak with other food processors, friends and associates for suggestions about who to use. There is a section on risk management for small businesses at the Insurance Bureau of Canada website at: www.ibc.ca. You can also find names in the Yellow Pages. It’s always useful to get more than one quote. You may need to purchase individual policies for each type of protection. However, your insurance agent might be able to find a package that’s geared to your particular business. Product Liability Insurance As well as general insurance, as a food processor you should be covered for product liability and completed operations liability. This will give you protection against claims by customers who have incurred damages or become ill through eating your food product. Much of the regulation aimed at protecting consumers is designed to reduce the risk that they will eat a spoiled or tainted product. But food-borne illness is a continuing concern. A single lawsuit in this area can bankrupt even the biggest company. Personal assets such as a house or car can also be seized. Store owners may require you to provide assurances that your product is properly insured, because they can also bear some liability for selling the product.

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GENERAL OBLIGATIONS AND RESPONSIBILITIES Food safety is the responsibility of everyone along the chain, from farm producers to those supplying inputs to them to consumers. Health Canada The Food Program is administered by Health Canada’s Health Protection Branch. Its main task is to assess and control the nutritional value, quality and safety of food under the authority of the Food and Drugs Act. The branch’s activities include nutritional assessments of food, nutritional labelling and the regulation of novel foods derived from biotechnology. The branch also carries out surveillance and risk-assessment activities to prevent and control diseases of national and international concern, including food-borne diseases. Food Safety You have specific obligations to: • • • • •

your employees; the suppliers of raw products, ingredients and other materials and services; the distributors and retailers of your products; the consumers of your products; and the community in which you operate.

Consumers expect food to be safe. And they expect to be protected from unfair or fraudulent business practices. It’s your responsibility to ensure the safety of your products and the proper representation of its quality and quantity. The government’s role is to ensure that these obligations are met. At the manufacturing plant level, food safety begins at the receiving dock and continues beyond the shipping dock. It includes such considerations as: • • • • • • • •

the location and design of the plant; the safety, proper handling and storage of raw materials, ingredients, packaging materials and manufactured goods; proper handling, storage and disposal of waste products; proper installation, maintenance and use of equipment; proper training of your employees; programs or systems for such concerns as pest control, product formulation and recalls; proper packaging and labelling of products; and adequate information for your customers regarding handling, storage and preparation of foods.

You will find more details about the above in Part 3: “Developing and Manufacturing Your Products,” and Part 6: “Quality Assurance.”

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Allergen Control A variety of foods contain ingredients or substances that can cause adverse or allergic reactions in sensitive people. You need to ensure that prepackaged food is labelled in compliance with the federal Food and Drug Regulations. Most prepackaged food must have a complete and accurate listing of ingredients. If allergens aren’t labelled correctly, or if there is inadvertent contamination of a food with these products, the results can be serious. For information on food allergies and your responsibilities as a processor, go to the Canadian Food Inspection Agency (CFIA) website at www.inspection.gc.ca. You’ll find more information about labelling in Part 7: “Packaging and Labelling.” The CFIA website also contains information about labelling. HACCP Increasingly, buyers are requiring suppliers of raw products, ingredients and manufactured food products to use a documented process control system that maximizes safety. One such system is the Hazard Analysis Critical Control Point (HACCP) system. This is a method of analyzing the food processing to identify potential hazards to food safety. Once they have been identified, critical limits are set at each point during the processing. The Ontario Ministry of Agriculture, Food and Rural Affair’s HACCP Advantage Program was developed as part of the HACCP approach, and is designed to be feasible and practical for any food processing facility, regardless of its size, the commodity produced or the volume processed. The HACCP Advantage Program consists of 57 prerequisite program standards and eight HACCP plan forms. The prerequisite programs are designed to control environmental—and personnel— related hazards, while the HACCP plan accounts for product—and process-related hazards. When you implement all the prerequisite program standards and complete and implement the required HACCP plan forms, you can create a functioning HACCP system. Much of the program may already be present in your business, with the only requirement being proper documentation. The HACCP Advantage Program manual presents the prerequisite program standards and the HACCP plan forms in a user-friendly format. For more information about the HACCP Advantage Program or to get a copy of the manual, call 1-866-641-3663 or e-mail [email protected].

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Product Returns and Recalls You can minimize product returns by ensuring that the quality is maintained once the product leaves the plant. Many companies: • • • • •

use packaging designed to protect and prevent contamination of the product; ensure that everyone handling the product is aware of all storage and transportation procedures; develop clear inventory control procedures; use a printed or embossed code marking on the package to identify the date produced and even the exact production machine or production run; and use systems designed to indicate whether temperature abuse has occurred during distribution.

Product Returns Occasionally, customers will want to return a product because they feel something is wrong with it. As a gesture of goodwill and a way of maintaining and strengthening customer relations, you might want to accept the returned product and issue a credit note or a refund. Investigating and keeping records of complaints is useful. Investigations may reveal problems in production or distribution systems that you need to correct. Records may indicate that a continuing complaint by a customer isn’t related to a defective product or deficiencies in your distribution system, but to home or institutional preparation problems or other customer-related problems. For example, if the local football association is always returning hot dogs when games are rained out, it may be due to their own poor planning, not bad hot dogs. If this is what the complaint records show, then you may want to look at other ways of dealing with the football association. Product Recall or Removal If one of your products is found to be unsafe or is implicated in a food-borne illness outbreak, regulatory agencies will request that you withdraw or recall the product from the marketplace. If you refuse, or there is an imminent threat to public safety, the Canadian Food Inspection Agency or municipal health units may exercise their powers to recall or remove the product from sale. You need to be continually vigilant to avoid product recalls. To minimize the impact of a food recall, have a process control system that provides readily accessible and accurate documentation as well as an efficient and effective emergency recall plan.

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Food and Consumer Products of Canada publishes a number of guidelines and publications, including a Product Recall Manual. Contact: Food and Consumer Products of Canada www.fcpc.ca 885 Don Mills Road, Suite 301 Toronto, Ontario M3C 1V9 Tel: 416-510-8024 Fax: 416-510-8043 E-mail: [email protected]

REGULATORY RESPONSIBILITIES AND OBLIGATIONS The information that follows is only a partial guide to the regulations that apply to the food processing industry. It’s your responsibility to contact the applicable regulatory agencies for detailed information. Some of the responsibilities and obligations you have to your suppliers, employees, customers and communities are specified in agricultural, business, contract, food, environmental, labour, trade or criminal law. In Ontario, federal, provincial and municipal governments have enacted laws governing the food industry and food processors. You need to be aware of the applicable laws, as well as any changes that occur in these laws over time. Get as much information as possible to determine the requirements of the applicable legislation, regulations and bylaws, particularly before: • • • • • •

building a new plant; buying an existing plant; starting operations; expanding or modifying your operation; introducing new products; or expanding into new markets.

One main function of regulatory agencies is to conduct inspections to ensure compliance. The frequency with which these routine inspections are carried out is generally determined by the degree of risk posed by a product. For example, meat is a relatively high-risk product. The slaughter of animals for meat for human consumption has to be done in the presence of an inspector. The inspector will examine all animals before they are slaughtered and all carcasses afterwards.

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If your facility produces lower-risk products, inspectors might visit less frequently. If your product is intended for export markets, the inspection frequency will be determined by requirements imposed by your trading partners. If, during the course of a routine inspection, a product or the premises are found not to be in compliance, you will have to take corrective action. Product and other requirements may vary from country to country, province to province and state to state. Requirements for food processing premises, as well as restrictions on them, may also vary from municipality to municipality. Harmonized Inspection Standards In Canada, the federal, provincial, territorial and municipal governments recognize the need to harmonize food safety standards nationally. The Canadian Food Inspection System Implementation Group is developing a new system of food safety inspection standards, which will be applied nationally. These may reduce the regulatory burden on processors and make international and interprovincial trade easier. You can check the progress of this initiative at the Canadian Food Inspection System website, www.cfis.agr.ca. Legislative Renewal The federal government and many jurisdictions also recognize the need to modernize and consolidate existing food safety legislation. Both Health Canada and the Canadian Food Inspection Agency have launched legislative renewal initiatives. Ministries with food safety responsibilities in Ontario have joined with municipal representatives to identify improvements needed in Ontario’s food safety system. Supply Management at the National Level National supply management plans were introduced under the Canadian Dairy Commission Act and the Farm Products Marketing Agencies Act. The Canadian Dairy Commission oversees the administration of the National Milk Marketing Plan and reports to the Minister of Agriculture and Agri-Food in Canada. The plan covers all processed dairy products, with the exclusion of fluid milks (which are administered by the provinces). The commission oversees national supply management quotas for industrial milk. It also provides quotas for the development of products that are new to the Canadian market.

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If you are planning to use dairy ingredients in your finished product, you need to contact the Commission. It administers a system of “special classes” that sets raw milk prices used to make milk ingredients for finished products. Contact: Canadian Dairy Commission www.cdc.ca Building 55, NCC Driveway Central Experimental Farm 960 Carling Avenue Ottawa, Ontario K1A 0Z2 Tel: 613-792-2000 (main) Fax: 613-792-2009 E-mail: [email protected] The National Farm Products Council is a federal body that oversees certain national supply management agencies. Supplies of chicken, turkey, eggs and broiler hatching eggs are controlled so that Canada’s needs are met effectively. Contact: National Farm Products Council www.nfpc-cnpa.gc.ca Canada Building 344 Slater Street, 10th Floor Ottawa, Ontario K1R 7Y3 Tel: 613-995-6752 Fax: 613-995-2097 E-mail: [email protected] A list of national marketing agencies is available on the Ministry of Agriculture, Food and Rural Affairs website, www.omafra.gov.on.ca/english/farmproducts/index.html Imports You can import products from other countries for processing or further processing as long as you comply with certain conditions imposed by federal or provincial legislation. Some products can only be imported under a federal import permit issued by International Trade Canada. Certain products are subject to tariff rate quotas. These are described on the International Trade Canada website at www.international.gc.ca/eicb/menu-en.asp. If you would like to learn more about import requirements, contact: • • •

a customs broker or freight forwarder; the local Revenue Canada-Customs office; or the local Canadian Food Inspection Agency office.

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FEDERAL STATUTES AND REGULATIONS You need to familiarize yourself with a number of federal statues and regulations, administered by several agencies. Canadian Food Inspection Agency (CFIA) All federally mandated food inspection and quarantine services are consolidated in a single federal food inspection agency—the CFIA. Acts and regulations that the CFIA administers or enforces include the following: • • • • • • • • • •

Agriculture and Agri-Food Administrative Monetary Penalties Act; Canada Agricultural Products Act; Canadian Food Inspection Agency Act; Consumer Packaging and Labelling Act; Orders made under the Financial Administration Act; Fish Inspection Act; Food and Drugs Act; Health of Animals Act; Meat Inspection Act; and Plant Protection Act.

The CFIA maintains an excellent website at www.inspection.gc.ca that provides explanations of the programs and services it offers to industry, access and regulations, and a directory of staff and offices. This website contains a wealth of information available to industry and consumers. It includes newsletters, fact sheets, guidelines, manuals and databases covering a wide range of topics such as allergens, labelling, food safety and codes of practice. Be sure to check out the CFIA’s Guide to Food Labelling and Advertising, which is available on the website and can be downloaded as a PDF file. You can contact the CFIA at: Head Office Canadian Food Inspection Agency 59 Camelot Drive Ottawa, Ontario K1A 0Y9 Tel: 613-225-2342 Fax: 613-228-6601 Ontario Area Office Canadian Food Inspection Agency 174 Stone Road West Guelph, Ontario N1G 4S9 Tel: 519-837-9400 Fax: 519-837-9783

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Measurement Canada Measurement Canada is a special operating agency of Industry Canada that administers and enforces two statutes dealing with measuring devices—the Electricity and Gas Inspection Act and the Weights and Measures Act. Under the Weights and Measures Act, the agency evaluates and approves all measuring devices (scales and meters) used in trade. You must ensure that all approved devices are inspected before you use them, and that you have them inspected regularly. Measurement Canada has an inspection program. However, you are legally responsible for the accuracy of your devices. Measurement Canada also inspects goods and services that you trade on the basis of measure, to ensure that they are accurately measured. Check the Measurement Canada contact list in the Resources section of this guide.

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PROVINCIAL STATUTES AND REGULATIONS As a food processor, you must familiarize yourself with a number of provincial statutes and regulations. The Innovation and Competitiveness Division has useful website links for gaining information about food labelling regulations in Canada and the United States, as well as proposed changes to current government regulations. Note that the selected links below are to external websites, and are intended for information only. A good reference source is the food page of the Ministry of Agriculture, Food and Rural Affairs website at www.omafra.gov.on.ca. You can also get copies of the various acts through government information centres in Toronto and Ottawa, as well as a number of third-party outlets throughout Ontario. Ontario Government Bookstore www.publications.gov.on.ca 880 Bay Street, 5th Floor Toronto, Ontario M7A 1N8 Tel: 416-326-5300 Toll Free: 1-800-668-9938 Fax: 416-326-5317 By mail: Publications Ontario 50 Grosvenor Street Toronto, Ontario M7A 1N8 Access Ontario Ottawa Court House 161 Elgin Street, Level 2 Ottawa, Ontario K2P 2K1 Tel: 613-238-3630 Toll Free: 1-800-268-8758 Fax: 613-566-2234 A list of private distributors is available at www.publications.gov.on.ca/english/shopsite. The acts are administered or enforced by a number of agencies, including the following.

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Ontario Ministry of Agriculture, Food and Rural Affairs The Ministry of Agriculture, Food and Rural Affairs administers or enforces the following statutes: • • • • • •

Dead Animal Disposal Act: regulates renderers and the disposal of dead animals; Edible Oil Products Act: regulates manufacturers and wholesalers of edible oil products that resemble dairy products; Farm Products Grades and Sales Act: establishes requirements for fruit and vegetable, honey and maple products and grade marking requirements for beef; Livestock and Livestock Products Act: establishes requirements for eggs and processed eggs; Milk Act: establishes requirements for dairy processors and dairy products; and Meat Inspection Act: establishes requirements for abattoirs and processing in abattoirs.

Regulations under the Food Safety and Quality Act, 2001 will harmonize Ontario’s standards for food safety with national standards where appropriate. The legislation will serve as a strong complement to the Ministry of Health and Long Term Care’s Health Protection and Promotion Act. For more information, contact: Food Inspection Branch 1 Stone Road West, 5th Floor NW Guelph, Ontario N1G 4Y2 Tel: 519-826-4230 Toll Free: 1-888-466-2372 Fax: 519-826-4375 Note that if you are a processor of dairy products, edible oil products or eggs, you must be licensed under provincial legislation. Abattoir operators who aren’t federally registered also need a license. Contact the Food Inspection Branch for details. The Ontario Farm Products Marketing Commission administers the following acts: • •

Farm Products Marketing Act; and Milk Act.

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If you are a processor of apples, asparagus, grapes, potatoes, tender fruit or vegetables, you need to be licensed under the Farm Products Marketing Act. For more information, contact: Ontario Farm Products Marketing Commission www.omafra.gov.on.ca/english/farmproducts/index.html 1 Stone Road West, 5th Floor SW Guelph, Ontario N1G 4Y2 Tel: 519-826-4220 Toll Free: 1-888-466-2372 Fax: 519-826-3400 A useful resource about regulations governing dairy processing in Ontario is the Dairy Farmers of Ontario—Online Services website, at www.milk.org/Corporate/View.aspx?Content=Processors/DairyProcessing Marketing plans have been established under the Milk Act and the Farm Products Marketing Act. These plans are administered by various producer marketing boards. The plans vary by commodity, and each board has been granted different authorities. See the Ministry of Agriculture, Food and Rural Affairs website at www.omafra.gov.on.ca for a list of marketing boards and agencies. Ontario Ministry of Consumer and Business Services The Alcohol and Gaming Commission of Ontario has jurisdiction over the following acts: • •

Liquor Licence Act; and Wine Content Act.

For more information, contact: Alcohol and Gaming Commission of Ontario www.agco.on.ca Atrium on Bay 20 Dundas Street West Toronto, Ontario M5G 2N5 Tel: 416-326-8700 Toll Free: 1-800-522-2876

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Ontario Ministry of the Environment The Ministry of the Environment is responsible for the Environment Protection Act. For more information, contact: Ministry of the Environment www.ene.gov.on.ca 135 St. Clair Avenue West, Main Floor Toronto, Ontario M4V 1P5 Tel: 416-325-4000 Toll Free: 1-800-565-4923 Fax: 416-325-3159 Ontario Ministry of Health and Long Term Care The Public Health Branch is responsible for the Health Protection and Promotion Act. For more information, contact: Ministry of Health and Long Term Care www.health.gov.on.ca Suite M1-57, Macdonald Block 900 Bay Street Toronto, Ontario M7A 1N3 Tel: 416-314-5518 Toll Free: 1-800-268-1154 Fax: 416-314-8721 Local Public Health Units are official municipal health agencies established to deliver community health programs. Among their duties, the Medical Officer of Health and the inspection staff of each unit are responsible for inspecting all food premises, including restaurants and retail outlets, within their units. They also investigate and control food-borne illness outbreaks. You can find Food Premises Regulation 562 under the Health Protection and Promotion Act on the Internet at http://www.e-laws.gov.on.ca/html/regs/english/elaws_regs_900562_e.htm For your location go to: Municipal Public Health Unit Locations (Ontario) Bills before the Legislature The Ministry of the Attorney General website provides the status of bills before the legislature, as well as electronic versions of statutes and regulations. Go to: • •

www.attorneygeneral.jus.gov.on.ca ; or www.ontla.on.ca.

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MUNICIPAL REGULATIONS Local municipalities are responsible for enforcing the Ontario Building Code. Your municipality may have bylaws that control the location of food processing operations, water and energy usage and waste disposal. Check with your local municipal office for more information.

U.S. REGULATIONS You must comply with specific regulations when your products are destined for the United States. United States Food and Drug Administration The United States Food and Drug Administration (FDA) is generally responsible for all food products entering the United States except meat and poultry. If you intend to manufacture products destined for U.S. markets, you must comply with all applicable U.S. laws, particularly the: • • •

Federal Food, Drug and Cosmetic Act; Fair Packaging and Labeling Act; and Nutrition Labeling and Education Act of 1990.

Note that you must register with the FDA if your business includes low-acid canned food and acidified food processing and you ship products to the United States. The FDA maintains a web page at www.fda.gov/oia/impinsp.htm for international importers to the United States, which includes frequently asked questions. The web page also includes a source of international regulatory resources, as well as a listing of FDA District Office Import Program Managers. For more information, contact: The Food and Drug Administration (FDA) www.fda.gov Center for Food Safety and Applied Nutrition Industry Activities Staff (HFS-565) 5100 Paint Branch Parkway College Park, Maryland 20740-3835 Tel: 301-436-2600

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United States Department of Agriculture The Food Safety and Inspection Service (FSIS) is the public health agency in the U.S. Department of Agriculture that’s responsible for ensuring that imported meat, poultry and egg products are safe, wholesome and correctly labelled and packaged. These requirements come under the following acts: • • •

Federal Meat Inspection Act; Poultry Products Inspection Act; and Egg Products Inspection Act.

FSIS has a web page with information for exporters to the United States, at: www.fsis.usda.gov

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3. DEVELOPING AND MANUFACTURING YOUR PRODUCT Your next step in getting your business started is called “product development” or “product commercialization.” This includes taking your initial market research and, perhaps, a simple homemade recipe and developing a physical version (or prototype) of your product, including a commercial recipe and the manufacturing technology needed. You may have already developed a sample of your product at home. However, commercial recipes must still be developed for batch processing.

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CHOOSING A MANUFACTURING STRATEGY There are several ways you can proceed from this point, including: • • •

developing your own commercial recipe and manufacturing facility; obtaining the assistance of a product development specialist who will help you develop a commercial product; or developing your own commercial recipe and finding an existing food processor known as a co-packer, who will make the product according to your recipe.

You’ll find that, as with market research, there is a great deal of support from groups that want to help you develop the best commercial product possible. These groups are experienced in new-product development, or they specialize in one part of the process, such as developing recipes. Most groups will charge a fee for gathering specific information or preparing material customized to your needs. To avoid excessive fees, be clear about your objectives. Also determine whether you have the expertise to develop your own commercial recipe, analyze ingredients and fat levels and set up a manufacturing plant. Product development fees have been known to exceed $20,000.

SETTING UP YOUR OWN MANUFACTURING FACILITY If you decide to operate your own plant, you can either lease or purchase an already existing facility or you can construct a new building. Choosing the Best Location You need to look at many factors when you’re deciding on a location. These include rental or purchase cost, customer and market location, labour force, raw material accessibility, trucking and freight access, leasing arrangements and industrial space availability. You should consider the following initial steps:1 • • • • •

understanding all the needs of the production process; determining if an existing building will satisfy those needs; trying to locate a facility that was originally designed for food processing operations (preferably one that’s already federally or provincially registered); determining if the lessor will pay for renovations required for the business; and calculating whether it is cheaper to adapt an existing building or to build a new one.

__________________________________________________________________________________________ 1Nelson-Stafford,

Barbara, “From Kitchen to Consumer: The Entrepreneur’s Guide to Commercial Food Production,: Academic Press, New York, 1991, pp. 107-108.

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Zoning Be sure to check the zoning laws for the location you have selected. To find out if your business can obtain a permit, call the city planning department (the number will be in the Blue Pages of your phone book). You can also get a good indication of whether the area is zoned in your favour by looking at the surrounding businesses. If the area you have chosen isn’t zoned for business, you can apply for a re-zoning vote before city council. (Re-zoning isn’t likely to happen if there is other land available in an appropriate zone.) Also be aware that just because one inspection department checks your proposed business and, for example, certifies that it meets health and safety requirements, you can’t assume you are a correctly zoned business. Each department is operated separately. Talk to local economic development officers; they can be a great ally in helping you with all municipal concerns. Food Plant Design Naturally, you’ll want your plant to operate as efficiently and cost-effectively as possible. As well, you’ll have to meet certain federal, provincial and municipal requirements. Here are some questions and considerations to keep in mind: • • • • • • • • • •

Your bank will ask for a Phase One environmental assessment if you are buying a site, and it could also be required if you are leasing or changing the use of an existing facility. If you are taking over an existing building, is there documentation to show that it was used for food processing? Is there room for future expansion? Does the facility need repairs? Do the hydro services fit your needs? Will you need space for a cooler? The production line should be as linear as possible; when cross-overs occur they result in inefficiencies, staff waiting time and loss of productivity. If possible, use rolling conveyors, for less walking, lifting and turning. Here’s a general rule of thumb for size—1,000 square feet for $100,000 in sales, 2,000 square feet for $200,000 in sales, etc. Two doors—one for shipping, one for receiving—are best.

Also look at such requirements as floor drains, washable walls, suitable hand-washing facilities, washrooms that don’t open onto the production floor, a change room and a separate area for storing packaging goods, ingredients and finished goods.

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USING A PRODUCT DEVELOPMENT FACILITY Product development facilities include laboratories, research stations and pilot plants. Laboratories provide product development and testing facilities on a small benchmark scale. This is usually the first step if your product is totally new rather than a variation of similar or previously processed products. The process may involve standardizing your home recipe and developing it to a commercial formula. This would include analytical tests, chemical analysis and shelf-life analysis. Product Development Laboratories You’ll find a list of product development laboratories in the Resources section of this guide. For the names of other product development testing labs that operate in Ontario, contact the Ontario Ministry of Agriculture, Food and Rural Affairs—Business Development Branch, at 1-888-4662372. Guelph Food Technology Centre (GFTC)—Pilot Plant The GFTC provides and maintains a state-of-the-art pilot plant with specialized facilities for fruits and vegetables, dairy, meat, cereals, baking, fermented products, confections and pet food. You can access this pilot plant through a project at the GFTC or by arranging to lease or rent space to install and test equipment and new processes. Leading equipment manufacturers have installed equipment in the pilot plant. They can demonstrate the operation of new equipment or carry out confidential development work with you. Ingredient manufacturers use the facility to test the performance of new products in a range of processing environments. You can also use their other advisory services, covering product development, scale-up and nutrition labelling. For more information, contact: Guelph Food Technology Centre www.gftc.ca 88 McGilvray Street Guelph, Ontario N1G 2W1 Tel: 519-821-1246 Fax: 519-836-1281 E-mail: [email protected]

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In addition to the GFTC, several laboratories provide food research services. You’ll find a list in the Resources section of this guide. Note that the list isn’t complete; for the names of other food research labs that operate in Ontario, contact the Ontario Ministry of Agriculture, Food and Rural Affairs—Business Development Branch, at 1-888-466-2372.

CO-PACKING YOUR PRODUCT A co-packer, or contract manufacturer, is a food processor that agrees to produce another company’s product within their own facility. Manufacturers that pack products for others generally do it to use their own equipment to full capacity, which will cover some fixed costs. Choose a co-packer carefully to ensure that it meets your criteria, because it is producing a product that will possess your name. After all, it’s your reputation that will suffer if the end product doesn’t meet client/consumer standards. Advantages and Disadvantages There are some definite advantages in having your product produced by an existing manufacturer. For example: • • • • • • • •

no investment in facilities or equipment; conservation of cash; fewer personnel needs; reduced capital requirements; reduced start-up time required; able to bypass plant maintenance and equipment obsolescence; ongoing technical support by co-packer’s personnel; and assistance with product development (some co-packers).

There are also some drawbacks to using a co-packer. However, they can be mitigated with your contractual agreement. Make sure your contract covers: • • •

control of your product (quality, safety and delivery); formula confidentiality; and cost and product agreement.

Because you can’t be present for every production run, you must have mutual trust and confidence in your co-packer and your agreement.

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Establishing Your Criteria for a Co-Packer Before you contact potential co-packers, it is essential for you to define your specific needs. Some things you should consider include: • • • • • • •

the price you are willing to pay for their services; the quality that must be maintained; the volume you need produced; distribution and delivery methods required; your level of involvement in manufacturing; the timing of your needs; and the availability of warehousing.

You also need to determine whether you require a co-packer that specializes in a particular area (for example, canning equipment). This will depend on your specific equipment needs. Often it is difficult to find a co-packer with the exact equipment you require. In such a case, you must determine up front whether you are willing to purchase or lease the equipment to be installed on the co-packer’s premises. It’s essential to prioritize which needs are the most important to you. It’s unlikely that you will find a perfect match between your objectives and those of your co-packer. Trade-offs must often be made. By prioritizing your most important objectives, you can more easily determine which ones must be met and which can be compromised. Where to Look for Co-Packers Even many experienced entrepreneurs and workers within the food industry often don’t know where to begin looking for a contract manufacturer. There are, in fact, very few publications that list potential co-packers. It’s usually through work-related encounters that manufacturers are revealed. For assistance in finding a co-packer, contact the Ministry of Agriculture, Food and Rural Affairs at 1-888-466-2372. Other alternatives available to assist you include: • • •

food industry associations; Industrial Research Assistance Program advisors; and Private Label Directory, published annually by Private Label Magazine (for U.S. co-packers).

Selecting a Co-Packer Once you have a list of co-packers, start contacting manufacturers to determine: • •

if they are willing to co-pack; and if they are capable of satisfying your needs and objectives.

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Ideally, the size of your business should be matched to that of the co-packer. That is, a small or medium-sized co-packer will probably service a small product line best. After you have screened a number of co-packers and begun looking more closely at using a few facilities, you will want to schedule a tour of each potential plant. From this tour you will be able to get a good idea of their processing line set-up, general up-keep, sanitation, product loss factors, quality monitoring systems, etc. It might also be a good idea to ask to see: • • •

references from other clients; copies of federal and provincial processing licences (if applicable); and copies of previous quality control inspections.

Limit the amount of information that you give a potential co-packer about your product, formulas, processes, etc., until a confidentiality agreement has been signed between both parties. It’s wise to not disclose confidential information to a co-packer, regardless of any agreement that has been signed by both parties, until you are absolutely certain that this is the co-packer that you are going to contract. You certainly don’t want someone running away with your ideas. A test run is usually completed before signing any agreement. Test runs not only determine if the product can be produced within the facility, but they also help to establish the costs assumed by the co-packer. Other key points besides processing capabilities must be taken into consideration when you are selecting a co-packer. These factors are associated with the way the manufacturer does business and how it will affect the co-packer—the client relationship. When dealing with a co-packer, consider their openness, enthusiasm and corporate goals in addition to their facility. Co-Packing Costs In order to negotiate a mutually beneficial agreement with a co-packer, you need to know the costs of producing your product within their facility. The co-packer will provide you with a breakdown of the fixed and variable costs. Generally, if you can offer a co-packer high volumes or long-term business, you will likely be able to negotiate a better agreement. In calculating what you can afford to have your product co-packed, you may need to consider the cost of mark-ups as the product moves from the co-packer to retail. In the food industry, mark-ups are calculated from the retail price working back, rather than from the cost price working up. As a rule of thumb, retailers’ margins average around 30 percent. Distributors’ margins can be as high as 30 percent as well, depending on the services provided.

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PRODUCT DEVELOPMENT Whether you plan to develop the product yourself or use the assistance of a product development specialist, you need to take certain steps in preparation. Food product development involves building on an idea and developing a product to the stage where it is suitable and acceptable for commercial sale. Recipes used for commercial-scale production can be significantly different from the original recipe, because the commercial product must meet the requirements of the regulatory agencies. Many product development facilities can assist you in modifying your product so that it is suitable for commercial production and is accepted by consumers. Before you approach a product development facility, you should establish certain criteria for choosing one that will be appropriate for your product. By this stage, you will have identified the location and size of your target market, so you have an idea of the potential sales. You will have assessed your competitors’ products, gathering such vital information as the ingredients and packaging (including package specifications and cost of packaging) and the positioning of the products in the marketplace. Sensory evaluation tests and physical and chemical analyses can also be performed on your competitors’ products, which will provide further information on their composition. Once you have assessed your competitors’ products, you should have a clearer idea of what the final product should be like. For example: • • • • • • •

general description (fruit pies, cookies, etc.); basic process (fresh, frozen, etc.); flavour and aroma; key ingredients (blueberries, chocolate, etc.); texture; shelf life; and packaging.

You aren’t trying to duplicate a competing product, but you may generate ideas for possible ingredients or packaging and combine them with your own unique ideas. Product formulation involves a series of trials in which test batches are evaluated against a pre-determined set of quality criteria. Before you begin the product development process, set a budget for the amount of money you are willing to spend. This will help the product development facility to determine which services you require. It will also help you to identify the areas that are crucial to developing the product so that it is acceptable for commercial sale.

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Equipment Sourcing Sourcing equipment for the production of your product can also be a difficult process. One way to get the information you need is through the expertise of other food producers; they can provide trade publications, supplier lists and trade show information. As well, people in research and development and product development will provide important information. Go to the Resources section of this guide for equipment sourcing contacts. Trade shows also provide an opportunity to look at available food processing equipment. Trade shows are discussed further in Part 8: Strategic Marketing of this guide. Ingredient and Raw Material Sourcing A good place to start is with the Canadian Company Capabilities website at www.strategis.ic.gc.ca/sc_coinf/ccc/engdoc/homepage.html. This on-line database—part of Industry Canada’s Strategis website—profiles tens of thousands of Canadian companies. The database is used globally to find Canadian supply sources, investment partners, agents and joint venture projects. You can also find other information sources for suppliers of raw materials through trade publications, trade directories, trade shows and other producers. One useful source is: Canadian Food Brokers Association c/o Food & Consumer Products of Canada www.fcpc.ca Tel: 416-510-8024 E-mail: [email protected]

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INVENTORY Inventory is the most visible and tangible aspect of a food processing operation. It includes all the raw materials you have on hand for manufacturing, the goods in progress and your finished products. These items are a large portion of your business investment, and you must manage them well in order to maximize your profits. As a small business, you probably can’t afford the losses that poorly managed inventory can cause.

Inventory Management Successfully managing your inventory involves simultaneously balancing the costs and benefits of the inventory. The costs of inventory are called holding costs. They include the costs of storage facilities, insurance on stocks, loss, breakage, deterioration, obsolescence and the interest on capital you could gain if the money weren’t tied up in inventory. In any business, you should aim to minimize holding costs. However, the benefit of inventory is sales revenue. Sufficient inventory will ensure that your customers can purchase products when they need them. If you hold too little inventory, you may lose a sale. But if you hold too much, you may have excessive holding costs. Proper inventory management includes the following: • • • •

keeping holding costs low while ensuring adequate supply for customers; increasing inventory turnover while maintaining adequate profits; keeping process material stocks as low as possible; and making volume purchases to get discounts while avoiding excess buying.

You can choose from many inventory management systems. One of the simplest is ABC Analysis.

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ABC Analysis ABC Analysis states that “80 percent of the firm’s total inventory cost is caused by only 20 percent of all items.” ABC analysis divides stock items into three classes—A, B and C—that is, those items accounting for 80, 13 and 7 percent of your total inventory costs. Once you can divide your stock into these classes, you can control the stock accordingly. A computer can help you in this method of coding sales items into the three classes. Take the following steps to do your ABC analysis: 1. 2. 3. 4.

Determine the value of each item by multiplying the cost times the number of units sold. Rank items on the basis of their dollar value and list these in ascending order. Calculate the percentage of dollar value of each item. Determine the cumulative percentage for: • the number of items; and • the dollar volume based on the totals for A and B. 5. Classify the items according to A, B and C groupings. Just-in-Time (JIT) Another method of controlling stock is Just-In-Time. This means carrying a minimum inventory and buying only as it’s needed or against orders in hand. This allows you to keep inventory costs at a minimum. This form of inventory management requires working closely with suppliers and customers to ensure that shortages of product or ingredients don’t occur.

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4. FOOD INGREDIENTS As you work on developing your product, one of the keys to success is in knowing the various basic ingredients that are added to foods, as well as how they’re used. Six groups of ingredients are commonly found in food products: • • • • • •

sweeteners; starches; fats and oils; flavours; spices; and food additives.

Once you have read through this section, you should be able to answer the following questions about the food ingredients covered: • •

What forms does it come in? When would I use it?

Note that for information about sources for any food ingredients, you can contact the Ontario Ministry of Agriculture, Food and Rural Affairs at 1-888-466-2372.

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SWEETENERS The taste sensation of sweetness is one of the most highly regarded attributes of food substances. To most people, sweetness comes from sucrose, the white granular sweetener sold in the supermarket. To the food processor, however, sweetness can come from a number of different carbohydrate sources. Commercially Available Sugar Products You can choose from a wide variety of sugar products. Sugar Beet/Cane Products Products in this category include the following: •

Dry granulated sugar: This type of sugar is commonly referred to as table sugar or sucrose. Sucrose is a disaccharide. It is composed of one molecule of glucose and one molecule of fructose. Sucrose is processed in a variety of granulations to fulfil different processing requirements. For example, fine granulated sugar is used for direct consumption, whereas powdered sugar may be used for confections and baking. Dry granulated sugar is packaged in large, multilayer paper bags. A moisture barrier layer must be present to slow the penetration of moisture and the release of water that causes clumping. The clumping of dry sugar is a common problem. To prevent it, bags of sugar should be stored in dry areas. Generally, if the relative humidity of the air is less than 70 percent, little or no clumping will occur. You can also minimize clumping by rolling the bags every few days to prevent a hard mass from forming. As a rule of thumb, as the size of granulation decreases, there is an increase in tendency for clumping because of the larger crystal surface area. In products such as icing and powdered sugars, about three percent cornstarch is added. The starch absorbs the moisture, which prevents the sugar from clumping.

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•

Liquid sugar/sucrose: Liquid sugar is simply the melted form of refined granular sugar. The typical percentage of sucrose in liquid sugar is 66 to 68 percent, and the remaining 34 to 32 percent is water.

•

Invert liquid sugar: Invert sugar is made from sucrose by splitting the sucrose into its component parts, glucose and fructose. (Glucose is also referred to as “dextrose.” Fructose is also referred to as “levulose.”). Invert sugar is a liquid mixture of these component sugars. An equal ratio of glucose to fructose is always obtained during this process. Varying levels of invert sugar are available to food processors, ranging from 10 percent to 90 percent. As invert sugar has a higher sweetness level than sucrose, it is often more economical to use.

•

Molasses: Molasses is the “concentrated juice extracted from sugar-bearing plants, such as the viscous liquid produced in the refining of sugar.” (Pancoast and Junk, 1980) Fancy is the term given to the highest grade of molasses, and blackstrap molasses is the final syrup obtained in the refining process.

•

Brown/yellow or golden sugar: The trade usually refers to brown sugars as soft sugars because they are typically used for their characteristic flavour. Brown sugar is a fine-grain sugar covered with a very thin layer of syrup, usually cane molasses. The grades are based on the degree of brown colour. The clumping of brown sugar is very problematic if it isn’t stored properly. In low relative humidity conditions, loss of moisture causes the layer of syrup to become sticky. However, if it’s stored in high relative humidity, the syrup is permitted to regain moisture. Ideally, brown sugars should be stored at a relative humidity of between 60 percent and 70 percent.

Corn Products Corn sugars are classified as any carbohydrate obtained by the partial or complete breakdown of cornstarch. All corn sugars are processed to have a dextrose equivalent of greater than 20. Maltodextrins are also obtained from the breakdown of cornstarch. However, they possess dextrose equivalents of less than 20. It is important to define the widely used term “dextrose equivalent” (DE). This is the percent of reducing sugars in the syrup, calculated as dextrose (that is, glucose) on a dry weight basis. The simple way to remember this is that DE indicates what percentage of syrup is glucose. •

Corn syrup: Corn syrup is produced from the starch of corn by a series of chemical reactions called hydrolysis. Corn syrup is a very viscous liquid that gains much of its sweetness from its high glucose content.

Corn syrup is the only type of corn sugar sold at the retail level.

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•

Glucose (dextrose): Glucose is the product of the complete breakdown of starch. It is available to food processors in a liquid solution form or a crystalline sugar form. In Canada and the United States, glucose syrup made from corn is referred to as corn syrup. This could create some confusion. Therefore, it’s important that you request the proper ingredient from suppliers.

•

Corn syrup solids (CSS): These are the dried version of corn syrup, and may also be referred to as dried glucose solids. CSS are classified according to particle size, carbohydrate distribution and dextrose equivalent.

•

High fructose corn syrup (HFCS): This type of syrup is similar to invert sugar, but it doesn’t have an equal ratio of glucose to fructose. HFCSs are classified according to their glucose-fructose ratio. The trend in industry is to increase the amount of fructose with a corresponding decrease of glucose. This causes a syrup with a higher sweetness level, so that less syrup is required. However, this is often counterbalanced by the higher cost of processing. In Canada, HFCS is called “glucose-fructose” in the ingredient statement. The proportion of glucose to fructose affects the terminology.

•

Fructose: Fructose has the highest sweetness level of any commercial sugar. Therefore, only a small amount is usually required in food. It is available as a solution or a crystalline powder.

•

Maltodextrin: Maltodextrins in a strict sense shouldn’t be considered sweeteners, because they possess little sweetness. However, they are often used to control sweetness. As mentioned earlier, maltodextrins are obtained from starch that has been processed to have a DE of less than 20. They are sold as a dry white powder that can be reconstituted in water. They are classified by their DE value and their bulk densities. Because they possess a large volume in comparison to their weight, they are often used as fillers.

Honey Food processors generally use two types of honey: white and golden. Golden honey imparts more flavour and, as the name implies, is a golden yellow colour. White honey is less sweet and possesses little colour. Golden honey is less expensive than white honey.

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Artificial Sweeteners Two choices of artificial sweeteners are available: •

Aspartame: This artificial sweetener, with the brand name Nutrasweet®, was approved by Health Canada in 1981. It is a dipeptide, composed of two amino acids, that possesses a sweetness value 160 to 200 times that of sugar. Because aspartame isn’t heat stable, its applications are limited. A recent development, however—encapsulated aspartame—does have applications now in baking. One remaining difficulty with aspartame is that it can’t be consumed by people with phenylketonuria, a genetic condition where the amino acid phenylalanine can’t be broken down by the body.

•

Sucralose: This non-nutritive artificial sweetener, more commonly known as Splenda®, was approved by Health Canada in 1991. Sucralose is a synthetic form of sucrose that contributes no calories and is 600 times as sweet as sugar. Since sucralose is more stable at high temperatures, it can be used in bakery and cooked product applications.

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Functions of Sugars Sugars have the following functions: •

Sweetness: Not all sugars impart the same level of sweetness. When establishing the sweetness level of your food product, you need to consider the relative sweetness of the sugar. A value of 100 has been arbitrarily assigned to sucrose, which is used as the benchmark. All other sugars are given a value depending on their relative sweetness to sucrose. For example, fructose has been assigned a value of 170, which means fructose is 1.7 times as sweet as sucrose. The Relative Sweetness chart below lists the sweetness values of some of the commercial sugars available. Use such a system only as a guideline. Note that sugars shouldn’t be substituted directly based on values given, without experimentation.

Relative Sweetness Sweetener HFCS 42% fructose HFCS 55% fructose 42DE corn syrup 54 DE corn syrup Molasses Fructose Lactose Glucose (dextrose) Honey Sucrose

Relative Sweetness To Sucrose 100 100-110 40-45 50-55 75 150-170 40 70-80 97 100

Adapted from: Pancoast and Junk (1980)

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•

Humectancy: This is the ability of an ingredient to resist a change in moisture content. With respect to sugars, humectancy is related to the water activity of sugar solutions. Thus, adding some sugars to a food product will reduce water activity.

•

Preservation: The growth of some microorganisms is inhibited by high sugar concentration.

•

Fermentable carbohydrate: Some sugars are used by yeast to produce either carbon dioxide or alcohol. This is beneficial in products such as dough and wine.

•

Browning: Reducing sugars (glucose and fructose) take part in a browning reaction with amino acids in the absence of water. This reaction is known as “maillard browning.” The reaction forms pigments that exhibit a brown colour. Maillard browning is evident in toast, baked goods and certain cooked meat products.

•

Bulking agent: Some sugars that possess a low sweetness level can be used to add volume to a food product without overpowering the flavour of the product. For example, low-calorie table sweeteners made from artificial sweeteners use maltodextrins as a filler.

•

Hygroscopicity: Some dry sugars readily absorb moisture. This is a negative property, because it causes clumping. Some sugars, however, have a very low capacity to absorb moisture. These sugars are used in products where moisture absorption is undesirable.

FATS AND OILS The difference between a fat and an oil is its state at room temperature. That is, a fat is solid at room temperature, whereas an oil is liquid. Today, consumer diet and health concerns have forced food processors to choose very carefully the fats and oils they include in their food products. Fat provides twice as many calories per gram as either carbohydrate or protein, and contributes to health problems if consumed in excess. Unfortunately, certain foods can’t retain characteristic properties without fat. Knowledge of the properties of fats and oils will help you reduce the level of fat, hopefully without sacrificing quality. Functions of Fats and Oils Fats and oils have four functions: • • • •

Palatability: contributes characteristic flavours and aromas, and aids in colour development. Satiety: makes you feel full. Texture: contributes to tenderness and flakiness, mouth-feel. Cooking medium: can be heated above the temperature of boiling water, resulting in an alternative method of food preparation.

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Types of Oil Most oils purchased by food processors and consumers alike have been refined. That is, they have been previously processed to remove odour, colour and other impurities. Adding hydrogen to the double bonds of fatty acids makes them saturated. This changes the properties of oils, because increasing the level of saturation increases an oil’s melting point. As a result, the oil becomes more stable and more solid at room temperature. That is, it is converted to a solid fat. This process is used in manufacturing margarine and shortening. Common Food Oils Some of the common oils available to food processors include: •

Soybean oil: This is a low-cost, highly unsaturated vegetable oil. It is very unstable even after typical refining processes. That’s why it must be hydrogenated slightly for use in salad dressings and mayonnaise. Partially hydrogenated soybean oil is the most abundant oil used in shortenings and margarines. It isn’t used for frying because of its instability.

•

Cottonseed oil: With the advent of the more cheaply produced canola and soybean oils, cottonseed oil has lost its popularity. Because cottonseed oil has many of the same properties as soybean oil, its extra cost isn’t warranted in certain applications. However, unlike soybean oil, cottonseed oil can be used in frying applications. During frying, it is often combined with other oils, because its characteristic nutty notes are used to mask the off-notes of other oils.

•

Canola oil: Today, canola oil is the most commonly used oil by food processors and households alike. It is a result of a Canadian 20-year breeding program of rapeseed. Canola oil is very similar to soybean oil with respect to its uses in salad dressings, shortenings and margarines, and cooking applications. Canola oil contains moderate levels of polyunsaturated fatty acid, linoleic acid and alpha-linolenic acid, and is one of the lowest in saturated fats available commercially.

•

Corn oil: The production of corn oil is limited by the demand for cornstarch products. It is primarily used in the unhydrogenated liquid form and sold to consumers. With the promotion of polyunsaturated oils, it has been included in margarines, although it has no functional advantages over soybean oil.

•

Palm oil: Palm oil is sold at room temperature. This means it can be used as a shortening without hydrogenation. Its use is mainly a factor of cost and availability. Palm oil may be further processed, where one fraction obtained is used as a cooking oil and the other is used for margarines.

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•

Sunflower oil: The characteristic flavour of sunflower oil, together with its good stability, makes it a very popular oil throughout the world. It is used in a wide variety of applications and is sold for a moderate cost.

•

Safflower oil: This oil gained its popularity with the increase in demand for polyunsaturated fats. Safflower oil is typically used in specialty mayonnaise and salad dressings, where a polyunsaturated claim is very important. The high level of unsaturation causes safflower oil to be very unstable in frying conditions, so it is rarely used in households.

•

Peanut oil: Although peanut oil is more costly than other frying oils, it is often used among snack and fast-food processors because of the roasted-peanut notes it gives to food products. That’s why frying is one of peanut oil’s primary food applications.

•

Olive oil: Olive oil originated from Mediterranean countries, although it is also grown now in California. In North America, olive oil is considered a gourmet item because it is highly flavoured and more expensive than other oils. Olive oil is typically used for dressings and frying. “Virgin” olive oil is simply the oil pressed from the olive. It is sold in three grades: “extra,” “fine” and “ordinary,” depending on the free fatty acid content of each. “Pure” olive oil is either a blend of virgin and refined oils or simply refined olive oil. “Blended” olive oil is a blend of virgin olive oil and a second-grade oil, and “industrial” olive oil has been stripped and deodorized to be a bland oil.

•

Coconut oil: This oil is liquid at room temperature. However, just below room temperature it becomes solid. This happens because coconut oil is very high in saturated fats. This property makes it ideal for snack foods and confections. Coconut oil is an excellent frying oil for nuts and snack foods that require a long shelf life because of its stability. Because it doesn’t feel greasy in the mouth, it is also used for coatings and lubricants in confectionery products. Coconut oil’s limitation is that it easily forms a soapy flavour because of rancidity. Due to consumer demands for unsaturated fats, coconut oil is being omitted in many foods by processors.

•

Palm kernel oil: This oil is highly saturated and, as a result, is even more solid than coconut oil at room temperature. Like coconut oil, it is often used in confections. Palm kernel oil is also being phased out of food products due to consumer demand for healthier fats in food.

•

Fish oils: These are mainly used by manufacturers of shortening and margarine in Canada and Europe. Because of their nutritional profile, there has been a renewed interest in fish oils. They are highly polyunsaturated, and they possess omega-3 fatty acids. Omega-3 fatty acids are believed to help reduce heart disease.

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Unfortunately, fish oils must be slightly or partially hydrogenated (increasing the amount of saturates), otherwise they emit strong fishy odours. Storing Oils Store oils in a dark place to avoid oxidative rancidity. If they are kept at room temperature, they may have a shelf life of several weeks before they become rancid. If you store them at refrigerator temperatures, they will have a longer shelf life, but will become solid. Generally, the same is true for hydrogenated oils. It’s also important that lids are fastened securely to prevent air from entering, which also promotes oxidative rancidity. Types of Fat You also have several fats from which to choose. Your Fat Choices Fats available to food processors include: •

Cocoa butter: This is a major commercial vegetable butter. It is unique because it melts sharply at 37°C, which is body temperature. It is cocoa butter that gives the silky mouth-feel to chocolate. Imitation chocolates that use other vegetable oils can’t mimic the way chocolate with cocoa butter melts in the mouth. Because of this unique property, cocoa butter is very expensive.

•

Lard and tallow: Lard and tallow are both meat fats prepared by rendering pork and beef, respectively. Rendering involves heating solid animal fat to a liquid for fat removal. Both are 100 percent fat, consisting mainly of saturated fatty acids. They are solid at room temperature.

•

Shortening: Shortening, other than butter or lard, is defined by the Food and Drug Act and Regulations as a semi-solid food prepared from fats, oils or a combination of fats and oils. Shortening may be processed by hydrogenation and may contain any of a wide range of ingredients, including stearyl monoglyceridyl, certain preservatives and others. Emulsifiers, for instance, may be added to shortenings used for bakery applications to promote small, evenly distributed air pockets and retard staling. You can buy shortening in the solid, fluid or powdered form depending on the application.

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•

Butter: Butter is made from milk fat (that is, cream). It contains about 83 percent fat and 16 percent water. Salt may also be added for flavour and preservation. Although butter is an expensive form of solid fat, it is often used because of its pleasing colour and flavour. Other butter fat products include powdered butter, whipped butter and butter oil.

•

Margarine: Margarine is made from either a single source of vegetable oil or a blend of vegetable oils. It may be hydrogenated to become a spreadable solid fat at room temperature. Margarine differs from shortening in that it contains only 80 percent oil. The remaining 20 percent is water and possibly colour, flavour, vitamins A and D, and emulsifying agents.

Storing Fats Fats that are used quite regularly can be kept at room temperature for ease of use. Generally, however, fat should be stored at refrigerator temperature to retard hydrolytic rancidity. Fats should also be tightly covered to prevent them from picking up neighbouring flavours and odours. Selecting the Proper Fat or Oil For Your Food Application Fats and oils can often be substituted for one another. Therefore, the first decision you must make is whether a solid fat or a liquid oil is best suited for your particular application. Then you must weigh the pros and cons of each type of fat or oil with respect to nutrition, functionality, flavour, shelf-life and cost. Answering the following questions will help sort out which fats or oils are best for your application: 1. Do you specifically need a liquid fat for a salad dressing or for frying applications? _______________________________________________________________ 2. Do you need a solid fat to create flakes in your product? _______________________________________________________________ 3. Is there enough fat or oil in your product to affect the overall flavour of the product? Is it a positive or negative flavour? _______________________________________________________________ 4. Is your ingredient line aimed at being health conscious? _______________________________________________________________ 5. What is the expected shelf life of your product? _______________________________________________________________ 6. At what temperature will your product be stored? _______________________________________________________________ 7. Do you foresee a need for an antioxidant? _______________________________________________________________

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FOOD STARCHES Starch is found in plant cells as microscopic granules. It is extracted from plants and used in food products as a thickening and gelling agent. Starch is a large constituent of some plants, especially cereal grains. This is evident when we cook pasta, rice or oatmeal, as they swell and double or even triple in volume.

Functions of Starch Starch has two functions—thickening and gelling. Thickening Two things must be present in order for starch to swell and thicken a food product: water and heat. By adding heat, water is able to penetrate the starch granule and swelling occurs. The temperature range over which gelling occurs is called the gelatinization range. This range is characteristic for each starch. It is important to heat a starch for a short period at or beyond its gelatinization temperature to remove the flavour of the starch. A few types of modified starches are available that don’t require heat for swelling. These are referred to as cold water soluble starches. When water is absorbed by the starch granule in a starch mixture, less water is available to make the mixture fluid. Generally, starch will swell until no more water is available. It is by this means that starches are capable of thickening food products. Note that acids break down the starch molecule, causing them to have less thickening power. A modified starch is required for acidic food products to enhance thickening. Gelling Some starches have the ability to form gels. A gel is a three-dimensional network that is able to trap water. It is easily recognizable, because gels are mouldable and they take the shape of the container. A gel increases the rigidity of the starch mixture and, therefore, a food product. A starch must first be heated, swollen and allowed to cool before any type of gel can be developed. Only after cooling will a gel form. Note that when a gel stands it becomes weaker as a result of trapped water being released. This can create many problems in food products. For example, consumers will reject a pudding that is sitting in fluid.

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Types of Starches There are two kinds of starches—natural starches and those that are modified. Natural Starches The type of starch you use in a food application determines: • •

whether a gel will or will not be formed; and the strength of the gel, if formed.

Starch from root plants, such as potato and tapioca, are termed waxy starches. They don’t form gels, so they’re used mainly for thickening. On the other hand, starches from cereal grains, such as corn, wheat and rice, do form gels in food products. Modified Starches Modified starches are chemically altered to change and improve the properties of natural starches. The following modified starches are available for food processing: •

Parboiled/pregelatinized starch: This is cold—water soluble, so it rehydrates very quickly in water. Generally, this type of starch is used as a thickening and binding agent in food applications, such as instant pudding and pie fillings.

•

Acid-modified starch (thin-boiling starch): When this starch is cooled, a rubbery gel is formed. This type of starch is used mainly in candy manufacture, and is the principal starch used for gummy bear-type candies.

•

Cross-linked starches: These starches have an increased stability to heat, agitation and shear. However, they are used mainly because of their functionality at low pHs and their excellent freeze-thaw stability. Their applications include baby foods, cream corn and fruit pie fillings.

•

Starch derivatives: These starches are treated in such a way as to cause a decrease in gelatinization temperature and tendency to separate.

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What Type of Starch Do You Need? Before you begin contacting suppliers to determine which starch will best suit your needs, you must answer the following questions. Suppliers will likely ask these in order to provide you with the most suitable starch for your application. 1. Are water and heat available in your food application?________________________ 2. Up to what temperature will your product be heated?________________________ 3. Do you require the starch to be cold-water soluble?__________________________ 4. Do you want thickening only? __________________________________________ 5. Does your product require a gel to be formed?_____________________________ 6. Do you require a freeze/thaw stable starch?________________________________ 7. What is the pH of your product?________________________________________

FLAVOURS The flavour industry was derived from the fragrance and pharmaceutical industry only 150 years ago. Although it is relatively new, analytical techniques have made it possible to identify flavour components in food products down to the parts-per-trillion level. As a result, a huge array of flavours is available to food processors for various applications including confectionery, savoury, baked goods, snack foods and beverages. Working with Flavours When you’re working with flavours, accuracy and mixing method are vitally important if you want to produce a consistent, reproducible, homogeneous product. Because flavours are highly concentrated, many are dispersed in a solvent such as propylene glycol or alcohol. Usually, the flavour portion of a food product doesn’t exceed two percent. It’s also important to note that some flavours contain natural or artificial colours that could be transferred to food products. This may be desirable or undesirable, depending on the application.

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Cost There is a wide range in cost among flavours. Some can be purchased for as low as $3 a kilogram, while others can cost more than $40 a kilogram. Cost usually depends on the following: • • • • •

the form in which the flavour is ordered (liquid, powder); whether it is natural or artificial; the cost of the raw material from which it is derived; the flavour house from which it is ordered; and the amount you use in your formula.

Common Flavour Forms In Canada, natural, naturally fortified and artificial flavours can be added to most food products. There is no restriction on the level of flavour allowable in foods. It is up to you to exercise safe usage levels. Natural flavour is made entirely of materials derived from the named source of the material. For example, “natural apple flavour” must by law contain only apple extracts. Naturally fortified flavour (W.O.N.F.) is made entirely of natural material. Fifty-one percent must be from the named flavour and the rest must be from other natural sources. (W.O.N.F. is an acronym used in the industry that stands for With Other Natural Flavours.) Artificial or imitation flavour is made entirely or partly of substances that are synthetically produced. Flavours in Liquid Form Liquid flavours include the following: •

Essential oil: an aromatic oily liquid derived from the most flavourful part of the plant.

•

Folded oil: an essential oil that has been concentrated. For example, a four-fold oil has had its original volume reduced four times. It is important to note that the flavour character is not the same as the original because the ratio of its components is distorted.

•

Isolate: raw material isolated from its natural source (for example, vanillin from vanilla).

•

Extract: material separated from a liquid or solid by a solvent.

•

Oleoresin: solvent-free extract from spices and plants.

•

Juice: liquid obtained by expressing fruit.

•

Concentrate: fruit juice that has been concentrated by removing water.

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Flavours in Solid Form Flavours are available as powders in two forms: •

Plated: A liquid or solid material is dispersed on a dry carrier such as salt.

•

Spray dried: A liquid is atomized into fine droplets and then dried.

Herbs and Spices Technically, herbs and spices are considered to be flavours because they impart flavour to food. More information about herbs and spices can be found in the next section of this part of the guide. Flavour Enhancers Flavour enhancers are compounds that increase the taste of any flavour—inherent or added—that is present in food products. These compounds themselves don’t have any taste or aroma; they just enhance others. Flavour enhancers are often used in soups, stock cubes and meat products. Monosodium glutamate (MSG) is a flavour enhancer that has seen some controversy in the past few years. It is estimated that less than five percent of the population experiences an allergic reaction when MSG is ingested. However, many processors are eliminating it from their food products in order to protect their customers. Storing Flavours Flavours can be quite costly, so it’s important to maintain their integrity for as long as possible by storing them properly. They should be tightly sealed and stored in full containers. Even a little headspace can cause flavour deterioration through oxidation. When you order flavours, be sure to get storage directions from the flavour house, because each flavour reacts differently to different conditions. Some flavours, when exposed to too cold conditions, precipitate or crystallize. Others, when exposed to too warm conditions, may lose flavour, oxidize or change colour. Generally, as a flavour ages it will lose its flavour intensity and possibly darken in colour.

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Sourcing Food Flavours Answering these questions will aid you in your search for the perfect flavour 1. Make a list of descriptors to describe the flavour you wish to impart to your product. (For example, for vanilla ice cream: creamy, sweet, subtle, aromatic, little vanillin notes). ___________________________________

___________________________________

___________________________________

___________________________________

___________________________________

___________________________________

2. What type of flavour do you require? Natural Artificial

Liquid

Powder

3. Do you wish to have a flavour that contributes colour to your product? Yes No Doesn’t matter 4. What is your estimation of flavour cost in your product?

$__________ per unit

5. At what stage in your process will your flavour be added? At very beginning At very end Before heating

After heating

6. Does your flavour need to be heat stable? No Yes If yes, what is the maximum temperature your product would undergo during manufacturing? ______º Celsius ______º Fahrenheit

HERBS, SPICES AND SEASONINGS A spice is any root, bud, seed or bark derived from a plant grown in a tropical zone that is used to season foods. A herb comes from a seed plant that has no woody tissue and is grown in a temperate zone. Both herbs and spices vary in colour and flavour from crop to crop. The word “spice” is commonly used to refer to any vegetable substance that flavours food. For example, basil is a herb, but it is often grouped under the spice category. In this section, “spices” will refer to both spices and herbs. Spice combinations and levels used in pre-packaged foods typically stem from consumer trends. For example, 15 to 20 years ago there were very few, if any, salsas on the retail shelves. Today, however, consumers can choose from a wide variety of flavour combinations to best suit their particular taste and intensity of preference. As a food processor, you must be careful, especially when marketing to the mass population, that the majority of your market prefers the level of spice you use. Cultural impacts have been very influential in sparking the idea for new food products in recent years, and we can expect an increase in ethnic foods in the future. This gives you many opportunities to experiment with various spice blends. Ministry of Agriculture, Food and Rural Affairs – Business Development Branch

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Functions of Herbs and Spices Herbs and spices have the following functions: •

Flavour: The flavouring portion of spices is found in their volatile essential oils and their non-volatile oleoresins.

•

Appearance: Spices make foods appealing by adding a colour contrast to products.

•

Antioxidant: Some spices retard the oxidation of fats in certain food. An example is rosemary in sausages.

•

Preservative: Certain spices—for example, mustard, cinnamon and cloves—contain antimicrobial compounds that retard or inhibit the growth of moulds, yeasts or bacteria.

•

Medicinal properties: It is believed that some spices impart beneficial health aspects when they are eaten.

Forms of Herbs and Spices Herbs and spices are available in the following forms: •

Dehydrated: Water is removed to increase the stability and shelf life of the plant component. The most common dehydrated spices are onion and garlic powders.

•

Ground: Spices are often milled into different sizes, ranging from cracked and coarse ground to table ground, fine ground and pulverized. Ground spices offer the advantage of being easy to handle and weigh accurately. It is generally true that the finer the grind, the quicker the flavour is detected in a food product. However, it’s also true that the finer the grind, the shorter the shelf life of the spice, because the flavour is lost more quickly. When choosing the grind size, consider the spice visibility and uniformity of the flavour you want. A larger size of grind will add contrast to foods, but the product won’t have an equal intensity of flavour throughout. Ground spices have the following drawbacks— •

loss of flavour during grinding;

•

variable flavour strength;

•

microbial contamination;

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•

easily adulterated;

•

flavour loss during storage;

•

poor distribution of flavour in liquid products; and

•

bulk handling that’s dusty.

Some ingredient suppliers have devised a way to standardize the intensity level of ground spices. When you are sourcing ground spices for your product, be sure to ask the supplier if a standardization system is in place. •

Sterilized: Spice houses began sterilizing spices to overcome problems of contamination of food products with “unclean” whole or ground spices. The process involves exposing the ground spices to ethylene oxide gas to reduce the bacterial load. It’s important to note that bacteria is only reduced, not totally eliminated. One application for sterilized spices is processed meat products.

•

Blends/seasonings: A spice blend, or seasoning, is made up of two or more different spices, for example curry or chili spice.

•

Essential oils: An essential spice oil is the extract obtained from a particular spice. You can purchase essential oils in liquid or dry form. The advantage of using this type of spice is that: •

a standard flavour and intensity are obtained;

•

the oil is free from micro-organisms;

•

the oil is stable under proper storage conditions; and

•

the oil doesn’t add colour to food products.

The main drawback in using this type of spice is that many spice oils lack components that are present in fresh ground spices, resulting in an incomplete flavour. •

Oleoresins: Oleoresins are different from essential spice oils in that they possess all the flavouring ingredients of a particular spice. An oleoresin is an extremely concentrated, viscous extract prepared from freshly ground spices. Oleoresins are free from bacteria, and they may be standardized to a desired degree of flavour strength. Because oleoresins are highly concentrated liquids, they are somewhat difficult to weigh out in small quantities and incorporate into food products, especially dry mixes. To overcome this problem, you can buy them dispersed in a solvent.

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•

Dispersed spices: A dispersed spice is one in which flavour components are extracted from spices and dispersed onto a soluble carrier (for example, salt or whey powder). This makes the spice more soluble in food products and rids it of microbial contamination. Ideally, these spices will possess the same flavour strength as freshly ground spices, so they can be substituted directly. You would need to do further product testing, however, to ensure appropriate substitution and usage levels.

Storing Herbs and Spices Most spices should be stored in cool, dry conditions. However, the conditions may vary depending on the processes the spices have undergone. Whole, ground and liquid spices all require different conditions for proper storage. If spices are improperly stored, they could lose their flavour and aroma, and they could pick up water and turn mouldy. It’s best to contact a spice house for specifics on the appropriate storage conditions for each product. Outside Blending Suppliers Very few manufacturers today blend their own spices. Most food processors buy from suppliers that specialize in blending seasonings. You’ll find that using these suppliers is very economical and can often be cheaper than buying individual spices. When you’re sourcing seasonings from such suppliers, you can opt to: • • •

purchase one of the supplier’s standard spice formulas; purchase a standard formula that is slightly modified to meet particular flavour requirements; or develop a “custom blend” that the supplier will blend for your sole use.

Some suppliers will also pack the spice blend in convenient pre-weighed, “unitized” measures to make it easy to use during processing. Because a single spice can be purchased from various parts of the world, spice houses have the challenge of providing spices to their customers that are consistent in flavour and intensity from month to month and from year to year. This is often a difficult task, so it’s important that you evaluate the quality of the supplier. That is, consider the supplier’s reliability, hygiene record, manufacturing capacity and level of quality control.

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FOOD ADDITIVES A food additive is any food-grade component that is added to food during preparation, processing or packaging in order to improve its quality. Food additives may be natural compounds derived from plants or animals or they may be derived from inorganic compounds found in nature, or even synthesized in laboratories. Food Additive Control The Health Products and Food Branch of Health Canada is responsible for controlling food additives. You can’t sell a food containing a food additive other than those listed in the Food and Drugs Act and Regulations, Part B, Division 16. These regulations also outline the levels allowable in specific foods. The safety of all food additives is reviewed before they are accepted. The additives must also demonstrate their usefulness. Some additives, such as citric acid, have multiple prescribed purposes and can be used in a wide variety of foods. However, other additives, such as TBHQ, are very restricted in their use. In all cases, you should have the food additive reviewed to ensure that it is permitted in the food, is permitted for the prescribed function in that food and is present at a level within any prescribed limits. The Food Additive Controversy Consumers are becoming more skeptical of any foreign food substance in their food products. This is usually because they are unaware of the technological reasons for adding these substances. Many consumers are also unaware that not all compounds with “chemical” sounding names are synthetic food additives. For example, the food gum carrageenan is a naturally derived product from seaweed. Some food additives have received more public attention than others due to their questionable health concerns. Sodium nitrite and MSG are just two examples. Why Use Food Additives Many people feel that the use of food additives stemmed from the need to satisfy consumer demands. To some extent this is true; clumped salt, green oranges, fat pockets on bologna and grainy ice cream are all unacceptable to consumers. But what has likely had a greater impact on food additive usage is the discovery that, in many cases, functionality can be attained by innovative food ingredients at lower costs. There is often a cost advantage in using a food additive over a traditional food ingredient. You have the responsibility to ensure that an additive’s functionality imparts the best possible quality at the lowest possible cost.

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Some Common Food Additives Many food additives are available for food processors. Preservatives These are used to lengthen the storage life of food products by slowing the growth of micro-organisms. By doing this, they reduce spoilage and lower the chance of food poisoning. Like all other food additives, the use of preservatives is regulated by the Food and Drug Act and Regulations. This specifies the foods in which certain preservatives may be used, along with their permitted usage levels. Some examples of preservatives and their applications include: • • •

benzoic acid: prepared mustard sulphite: potato flakes sodium nitrite: frankfurters

Antioxidants Antioxidants prevent oxidative rancidity in fats and oils. They act by tying up oxygen so it is unavailable for oxidative reactions. Both natural and artificial antioxidants are available to food processors. Of the following examples, the first two can be found in nature or synthetically derived, while the third can only be synthetically derived. Antioxidant L-ascorbic acid Tocopherols BHT (butylated hydroxytoluene)

Nutrient Source Vitamin C Vitamin E Not applicable

Example of Use Canned applesauce Vegetable oil Dry breakfast cereal packaging

Thickeners and Gelling Agents A thickener increases the viscosity of a food product, whereas a gelling agent imparts a jelly-like consistency to food. Some thickeners can also form a gel under appropriate conditions. Many types of thickeners and gelling agents are available to food processors. However, their behaviour in different applications varies greatly. Some examples of gelling agents and their applications include: • • •

acacia gum: beer, salad dressings, ice cream pectin: jam, milk, salad dressings gelatin: jelly desserts, relishes, skim milk

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Food manufacturers often use hydrocolloids—referred to as gums—to thicken or texturize their food products. Many gums are available, including carrageenan, alginate, locust bean gum, xanthan gum and guar gum. When you’re choosing a gum for a particular application, you need to consider the following: • • • • • •

solubility; viscosity and texture effects with respect to concentration, time and temperature; stability to pH, temperature and shearing; effect on taste; regulatory status; and cost.

Although it’s helpful to know the properties of the gum, only by experimenting with it can you determine the proper gum and level for a certain application. Stabilizers and Emulsifiers An emulsion is a mixture of two immiscible liquids—that is, two liquids that can’t be mixed. For example, a salad oil is an emulsion of oil and vinegar. Other examples include mayonnaise, margarine, ice cream and frankfurters. Emulsifiers help to make an even distribution of one immiscible liquid in the other. Stabilizers help to maintain an emulsion; they are generally gums. Examples of emulsifiers and their uses include: • •

mono and di-glycerides: chocolate lecithin: margarine

Colours Colours are added to foods to make them more attractive to consumers or to restore natural colour that was lost during processing. Because colour is used simply for aesthetic purposes, there is a controversy surrounding their use. Also, some colours have been banned for use in Canada because of detrimental side effects. Natural, inorganic and synthetic food colours are available to food processors. Examples of colours permitted in Canada and some of their uses include: • • •

annato: cheese caramel: ketchup allura red (known as Red #40 in the U.S.): candy, fruit juice beverages

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Flavours Flavours enhance the taste of pre-packaged food products. Natural or artificial flavours are available to food processors. (For more information, see the earlier discussion under “Food Flavours.”) Artificial Sweeteners Artificial sweeteners replace sugar in reduced-calorie or diabetic foods. There are generally two types of sweeteners, one being caloric and the other non-caloric. (For more information, see the earlier discussion under “Sweeteners.”) Leavening Agents Leavening agents are used in baked goods to get more volume and an airy structure. Examples of leavening agents and their uses include: • •

yeast: bread sodium bicarbonate: cake

Flour Improvers and Dough Conditioners These compounds speed up the leavening process and improve the texture of bread. For years potassium bromate was the main dough conditioner used in bread. However, based on public health concerns, it was withdrawn as a permitted food additive in 1995. Bromate has been replaced with sodium stearoy l-2 lactylate in most commercial applications. Anticoagulants Anticoagulants decrease the moisture absorbency of dry powders. As a result, they can prevent clumping and improve flowability. Some examples of anticoagulants and their uses include: • •

silicon dioxide: icing sugar calcium stearate: salt

Anti-foaming Agents These compounds are used industrially to prevent foam formation during processing. Examples and uses include: • •

dimethylpolysiloxane: lemonade mono and di-glycerides: jam

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•

5. FOOD PROCESSING AND PRESERVATION Canadian consumers want safe, nutritious, inexpensive food throughout the entire year. Unfortunately, Canada’s climate limits the production of food for up to six months of the year. Just store the food? Impossible. Once food is harvested, it begins to deteriorate immediately due to the following factors: • • • • •

micro-organisms (yeast, mould, bacteria); intrinsic enzymes; temperature; moisture; and insects and vermin.

Because of the risk of spoilage, much of our food is processed in some way to increase its availability. A food is considered preserved once it is stabilized with respect to safety and quality. It’s important to note that no type of food processing can transform poor quality raw materials into good ones. It can only increase the product’s shelf life. To ensure that your product meets your high standards: • • •

use the highest quality raw ingredients; establish good processing techniques—and follow them; and maintain an appropriate product environment after processing.

Not all processing methods are applied to foods to achieve preservation. Some are also used to change or stabilize food texturally.

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PROCESSING METHODS Methods of processing food can be divided into two main categories—chemical and physical. Chemical Processing Methods The following techniques use the chemical approach in processing food. Intermediate Moisture Foods (IMF) Binding the water that’s present preserves intermediate moisture foods—for example, cookies, cake and bread. This reduces the availability of the water for deteriorative reactions. Water is immobilized by adding permissible humectant additives such as glycerol, glycols, sorbitol, sugars and salts. Generally, IMFs possess water activities that range from 0.6 to 0.85. This enables the food to be stable at room temperature, because the growth of most micro-organisms is inhibited at these levels. Water Activity (aw) Water is the most important factor in controlling the rate of deterioration of a food. However, knowledge of the moisture content of a food isn’t sufficient to predict its stability. It is the availability of water for microbial, enzymatic, or chemical activity that determines the shelf life of foods. This water availability is measured as water activity (aw). Water activity is measured on a scale of 0 to 1, where 0 indicates no water and 1 indicates all water. Food spoilage micro-organisms, in general, are inhibited in food where the water activity is below 0.6. However, if the pH of the food is less than 4.6, micro-organisms are inhibited when the water activity is below 0.85. Addition of Chemicals The addition of some chemicals inhibits microbial growth in foods. These chemicals include not only those classified as preservatives. Salt, sugars, wood smoke and some spices also inhibit the growth of micro-organisms. For more information on chemical preservatives, see Part 4: Food Ingredients in this guide.

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PH Control Almost every food, with the exception of egg whites and soda crackers, has a pH value of less than 7. Foods can be broadly categorized on the basis of their pH as high acid, acid, medium acid or low acid. Examples of each category include: • • • •

high acid (3.7): apples, lemons, raspberries acid (3.7 to 4.6): oranges, olives, tomatoes (some) medium acid (4.6 to 5.3): bread, cheese, carrots low acid (over 5.3): meat, fish, most vegetables

Most micro-organisms grow best in the pH range of 6.5 to 7.5. Yeasts and moulds are capable of growing over a much broader pH range than bacteria. Few pathogens will grow below pH 4.0. This information is important, because it will help you in determining food stability with respect to microbial spoilage. Physical Processing Methods A number of physical methods are available to you for processing foods. Sterilization (Retorting) First, a science note: a pathogen is any microorganism that causes illness. Food pathogens cause food-borne illnesses such as food poisoning or food intoxication. Sterilization destroys all pathogenic and spoilage micro-organisms in foods and inactivates enzymes by heating. All canned foods are sterilized in a retort (a large pressure cooker). This process enables food to have a shelf life of more than two years. Foods that have a pH of more than 4.6, such as meat and most vegetables, must undergo severe heating conditions to destroy all pathogens. These foods are heated under pressure to 121°C for varying times. Severe conditions are applied to ensure that Clostridium botulinum spores are destroyed during processing. These spores produce the deadly botulinum toxin under anaerobic conditions (that is, where there’s no oxygen). The spores are destroyed by heat or are inhibited at pH values of less than 4.6. Therefore, a food with a pH of less than 4.6 that is packaged anaerobically, such as spaghetti sauce, doesn’t need to undergo such a severe heat treatment.

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Pasteurization Pasteurization is the process of heating a food—usually a liquid—to or below its boiling point for a defined period of time. The purpose is to destroy all pathogens, reduce the number of bacteria, inactivate enzymes and extend the shelf life of a food product. Foods with a pH of less than 4.6, such as milk and spaghetti sauce, can be pasteurized. Permanent stability—that is, shelf life of about two years—is obtained with foods that can withstand prolonged heating, such as bottled juices. There is a greater loss of flavour from foods that are exposed to a longer time-temperature relationship. Therefore, temporary stability (that is, limited shelf life) is only obtained with some foods where prolonged heating would destroy its quality. These foods, such as milk, usually require subsequent refrigeration. “High temperature short time” (HTST) and “ultra high temperature” (UHT) processes have been developed to retain a food’s texture and flavour quality parameters. Blanching Blanching is a slight heat treatment, using hot water or steam, that is applied mostly to vegetables before canning or freezing. Blanching is used before freezing to inactivate enzymes present that cause deteriorative reactions to foods during frozen storage. These reactions include colour and texture changes, off-flavours and a decrease in nutritional value. Blanching is used before canning for different reasons, because enzymes will inevitably be destroyed during canning. Blanching induces a vacuum in canned goods, and it’s also used to control the fill into containers (for example, spinach). Microwaving Microwave ovens are rarely used for processing large quantities of food. They are mainly of interest if you cater to the convenience food market, with products such as frozen entrées. Microwave ovens use electromagnetic radiation to excite water molecules in food. The actual waves penetrate only about 10 inches from the source of the radiation. Within the food, the waves only penetrate ¾ to 1 inch on all sides. As a result, the actual ovens must be limited in size. Heat is produced within the food by the friction of water molecules, which spreads to the centre of the food by conduction. Small portions are cooked rapidly in microwave ovens. As the quantity of food increases, however, the efficiency is lost.

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Frying Frying differs from other methods of heat processing in that the cooking medium is hot oil. Because of the big difference between the temperature of the oil and the food, as well as the small size of the food pieces, cooking is completed in a relatively short time—anywhere from 20 seconds to six minutes. Fried foods are known for their characteristic crispy outer surface as well as their high fat content. The fat that is absorbed by the food product varies from 10 percent to 40 percent, depending on the time the food is immersed in the oil. Continuous fryers are often used in the food industry. Refrigeration Refrigerators should be set to below 4°C to control the growth of micro-organisms in foods. This lowered temperature also reduces the respiration rate of fruits and vegetables, which retards reactions that promote spoilage. Refrigeration is generally used to: • • •

reduce spoilage during distribution of perishable foods; increase the holding period between harvesting and processing; and extend the storage life of commercially processed foods.

Not all foods benefit from cold temperatures. For example, bananas turn black and bread goes stale when refrigerated. Freezing While many home freezers are held at -10°C, commercial freezers are under -18°C. At this temperature, the growth of micro-organisms is almost stopped. Deteriorative microbial reactions will still occur, but over a much longer time. In addition, deteriorative enzymatic reactions will still take place during frozen storage. Uncooked fruits and vegetables must be blanched before freezing to prevent these reactions. During freezing, the water in food forms ice crystals. The rate of this phenomenon has a big impact on the quality of frozen foods: •

Slow freezing (e.g. home freezer)

•

Rapid freezing (e.g. blast freezer)

- large ice crystals formed, which puncture cell walls - cellular fluid released - results in shrunken appearance of thawed food - small, numerous ice crystals formed - no change to cell structure

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The shelf life of frozen foods is largely dependent on storage conditions. Under ideal conditions, frozen foods can have a shelf life of one year. However, if foods are continuously exposed to warmer temperatures, such as the opening and closing of freezer doors, then heat shock occurs. Heat shock is when ice melts and re-forms into larger ice crystals. The best example is ice cream, which has a gritty texture if large ice crystals have developed. Irradiation Irradiation is the controversial process of applying low doses of gamma radiation to food products. Forty years of research have shown that the process exhibits no safety hazard. As a result, irradiation is permitted in Canada to: • • •

prevent sprouting in potatoes and onions; control insect infestation of wheat flour; and reduce the microbial load of ground spices.

If irradiation becomes more widespread among various other food products, it is expected to replace fumigation, ensure hygienic quality and reduce the dependence on refrigeration. Weigh Your Options: Batch vs. Continuous Processing Food is processed in either discrete batches or a continuous system. Although there are advantages and disadvantages to each method, choice in the matter is restricted only to those replacing or setting up a new processing line. Generally, batch systems are used to produce small quantities of food, whereas larger volumes are required for continuous systems. Advantages of Batch Processing

Advantages of Continuous Processing

Greater flexibility to change product formulation and rates Lower equipment costs

Lower operation and labour costs

Easier operation and control

Greater product uniformity

Less floor space required

Evaporation Evaporation is the partial removal of water from liquid foods by boiling. When the operation is done under vacuum, boiling is avoided and the food’s flavour qualities are retained. Some of the foods that have undergone evaporation are evaporated milk, tomato paste and juice concentrates.

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This process is carried out for three main reasons: • • •

to reduce the weight and, therefore, reduce storage and transport costs; to preserve foods by decreasing the water activity and increasing the solids content; and to provide consumers with convenient foods.

Dehydration Dehydration—or drying—is the nearly complete removal of water from solid foods. One of the oldest methods of food preservation, it was traditionally carried out by the sun. This application is used for the same reasons that liquid foods undergo evaporation—preservation, convenience and cost savings. Dried soup mixes, dried fruit, powdered milk and spices are just a few examples of dehydrated foods. Spray drying and freeze drying are two drying methods used widely today. Spray drying is when a liquid food is atomized into a fine, dry powder. Examples include natural and artificial flavours and milk powders. Freeze drying involves first freezing the food and then driving off the ice, leaving a high quality, porous dried food such as instant coffee. Emulsions An emulsion is a system containing two liquid phases that don’t mix, where one phase (dispersed phase) is distributed throughout the other phase (continuous phase) in the form of very small droplets. Generally there are two types of emulsions: 1. oil in water (O/W) 2. water in oil (W/O) An example of an O/W emulsion is salad dressing, and an example of a W/O emulsion is butter. Homogenization Homogenization is used to stabilize an emulsion. More specifically, it is the reduction in size and the increase in number of droplets of the dispersed phase by the application of intense shearing forces. Generally, homogenization is applied to change the functional properties or improve the texture of emulsions. For example, most fluid milk sold at the retail level is homogenized to improve its stability, and most caramel fillings are homogenized to increase their smoothness.

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Extrusion Extrusion is the process in which a food is compressed and worked to form a semi-solid mass. This mass is then forced through a restricted opening, or die, to create a desired texture or shape. The purpose of this application is simply to provide a greater variety of textured foods to consumers. Food may also be cooked while extruded. This is referred to as extrusion cooking, or hot extrusion. Some extruded food products are licorice, puffed wheat and cornflakes. Hurdle or Combination Processing Hurdle technology is a concept that was developed to address the consumer demand for more natural, fresh-like foods. It is a way for food processors to employ only mild preservation techniques to their food products. The idea is to use deliberate low-level combinations of existing and novel preservation techniques (“hurdles”) to eliminate the growth of micro-organisms. Lower-intensity individual methods can be used because of the collective effect of the combined methods. Some of the more common hurdles include: • • • • • • • • •

pasteurization; water activity (aw); salt; blanching; freezing; modified atmosphere packaging (MAP); pH; preservatives; refrigeration; and irradiation.

Some micro-organisms present will be able to survive the individual treatments applied. However, no microorganism will be able to overcome all of the combined hurdles. Thus the food is stable and safe. The only way to ensure that the correct combination of hurdle technologies is used is to make sure that a qualified resource conducts quality and safety shelf-life studies. For a list of product development laboratories that can do these studies, see the Resources section of this guide. Examples of hurdle processing can be found in traditional and recently developed foods, such as yogurt and prepackaged fresh salads. The hurdles employed in yogurt manufacture include low temperatures, high acid and competitive microbial flora. Those used to prepare prepackaged fresh salads include low temperatures and modified atmospheres.

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6. QUALITY ASSURANCE Obviously no one can have a perfect product, but the goal of all companies should be to produce quality products. Quality is putting the best possible product together, and doing it consistently.

CREATING QUALITY Every company has constraints that must be dealt with. You may not always be able to afford the best possible ingredients, or you may not be able to obtain enough. Equipment isn’t perfect or exact, and it does break down. With problems like these, you need to set up a program that will help you maximize the quality of your products. Quality in a food product includes: • • • • • •

consistency; food safety; physical appearance; value; nutrition; and shelf life.

Quality Control Quality control—through proper production and quality inspections—prevents unsatisfactory products from being delivered to customers. Quality control is primarily the responsibility of your production staff, and should be built into the manufacturing process. Your employees need to have access to the proper tools and training. This will enable them to maintain product specifications through effective monitoring and decision making.

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Quality Assurance Quality assurance establishes written specifications and standards. This preventative measure is the responsibility of management, which must put in place the necessary programs for producing a quality product each and every time. Quality assurance is also an important aspect of your company’s marketing activities. Future sales are directly and significantly affected by the level of quality and consistency of your product. Consumers won’t want to deal with other companies once you have built a solid reputation for the quality and dependability of your product. A quality product begins with quality ingredients. You need to work closely with your suppliers to ensure that they all meet your tight standards. These should be created for ordering raw materials, packaging materials and other supplies. You can test quality either subjectively or objectively, depending on the factor being measured. Objective Testing There are several ways to test objectively. Some examples include: Physical tests: • weight and/or volume checks; • colour analysis; • particle size analysis; • viscosity measurements; • homogeneity checks; • water activity; and • presence of foreign objects. Chemical tests: • protein, fat and moisture contents; • pH check; • residue analysis; and • vitamin levels. Microbial tests: • total plate count; • moulds and yeast; • coliform count; • thermophile and thermoduric count; and • salmonella presence.

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For objective testing, you may need simple test equipment such as a weight scale or a pH meter. On the other hand, you might have to use expensive and complex equipment such as a high-pressure liquid chromatograph (HPLC) or a sophisticated spectrophotometer (which measures colour). Throughout the food industry, literally thousands of tests are used routinely to monitor product quality. Subjective Testing A number of different sensory tests are used to measure food quality subjectively. Although the use of the human palate and nose for measuring flavour and aroma quality is often not as consistent as chemical testing, in many cases it will give a more appropriate qualitative analysis. Quality Testing Accuracy A test can only be as accurate as its sample, so proper sampling is vital to proper quality testing. Many people not fully familiar with the science of sampling inadvertently bias the results by inappropriately collecting a sample. You must take care to ensure that: • • • •

the sample avoids contamination from other sources; the sample is representative of the entire batch; the sample doesn’t lose the characteristic properties during its collection, handling, transport and storage before testing; and the sampling utensils and container remain free of extraneous materials.

In general, samples should confirm the process of quality assurance. You can accomplish this by gathering the sample throughout the process at regular intervals and in suitable storage containers. When you are testing a composite sample (that is, more than one sample is taken), the collected samples are mixed and weighed on a scale to get the correct size. More than one sample is taken as a back-up in case the first one was mishandled. The sample should be clearly identified with the product, date and time. It should then be tested for the required attributes. (You might want to look at reference material on statistical sampling procedures, available through your local library.) When you’re analyzing food quality, be aware that foods and food ingredients are ever-changing materials. For this reason, the testing must be done as soon after sampling as possible. By the same token, remember that even though a food product may pass all the initial tests, by the time it reaches the customer, the quality may have changed substantially. Shelf tests are one way that companies ensure that a purchased product is a quality product. These are performed to find out what happens to the product over time. This provides a baseline to measure whether product complaints are due to mishandling or poor quality. Ministry of Agriculture, Food and Rural Affairs – Business Development Branch

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Quality Testing Laboratories The Resources section of this guide includes a partial list of laboratories that provide quality testing services. For the names of other quality testing labs that operate in Ontario, contact the Ontario Ministry of Agriculture, Food and Rural Affairs, Business Development Branch, at 1-888-466-2372.

QUALITY PROGRAMS The Hazard Analysis Critical Control Point (HACCP) system is a way of analyzing a food processing system to identify potential hazards to food safety. We have already discussed the Ontario Ministry of Agriculture, Food and Rural Affair’s HACCP Advantage Program in Part 2: Your Responsibilities and Obligations of this guide.

ISO 9000:2000 ISO 9000 is a series of standards designed to prove that organizations meet global benchmarks in the consistency and quality of their goods and services. These standards can be applied to almost any business and style of management.2 A revised core series of the ISO family of international standards was published in December 2000 under the name ISO 9000:2000. The ISO 9000 standards measure suppliers’ systems rather than specific products or services. Suppliers are successful when they can prove that they have carefully documented their processes and follow their systems consistently. As more and more countries adopt these standards as national standards, ISO 9000 is becoming necessary to compete in the global marketplace. Many domestic and global customers are starting to demand that Canadian suppliers adopt the standards. Nationally registered suppliers are licensed to use an ISO 9000 registration mark in marketing and communications efforts to capitalize on their improved quality systems. Registered businesses are also listed in a directory that is widely available to public, corporate and retail buyers. Once you can conform to your systems, you can apply to a third-party registration organization accredited by a national accreditation body such as the Standards Council of Canada. The organization will assess your quality system, identify areas for improvement and then assess the workplace to confirm that the quality management system is being followed.

__________________________________________________________________________________________ 2 Let’s Talk Business. “ISO 9000: Improving quality is the bottom line.” Supply and Services Canada and Industry Canada. SQI 01 (06/93)

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For more information, contact: Business Development Bank of Canada www.bdc.ca Ontario Regional Office 150 King Street West, Suite 100 Toronto, Ontario M5H 1J9 Tel: 416-952-6094 Fax: 416-954-5009 You can also get information through any of the Business Development Bank’s 22 offices in Ontario.

PRODUCT CERTIFICATIONS The two most common kinds of product certification are Halal and kosher. Halal Halal is an Arabic word meaning lawful or permitted. When used in relation to food or drink, Halal means it is permitted and fit for consumption by Muslims. For a product to be Halal, it must, as a whole and in part: • • •

be free of, and not containing any substance or ingredient taken or extracted from a haram (forbidden or unlawful) animal or ingredient; be made, processed, produced, manufactured and/or stored by using utensils, equipment and/or machinery that has been cleansed according to Islamic law; have never come into contact with, touched or been close to a haram substance during preparation, making, production, manufacture, processing and/or storage.

For more information on product certification, contact: Islamic Social Service and Resources Association www.issra.ca 2375 Sinclair Avenue West Toronto, Ontario M6N 1K9 Tel: 416-767-9358 or 416-767-1531 Fax: 416-767-0328 Islamic Society of North America—Canada HQ www.isnacanada.com 2200 South Sheridan Way Mississauga, Ontario L5J 2M4 Tel: 905-403-8406 or 416-626-0001 Fax: 905-403-8409

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Kosher Kosher food is made fulfilling the requirements of Jewish law. The basic concepts of kosher food are no mixing of dairy and meat, no pork or pork products and no shellfish. This also applies to food products containing such ingredients. For example, a food colouring made from a shellfish would be considered unkosher and would taint a food in which it was used. Similarly, using an animal fat together with dairy ingredients renders the product unkosher and taints even the implements used to make it. For information about kosher certification, contact: Kashruth Council of Toronto www.cor.ca 4600 Bathurst Street, Suite 240 Toronto, Ontario M2R 3V2 Tel: 416-635-9550 Fax: 416-635-8760

PRODUCT SPECIFICATIONS Specification sheets are an essential part of a quality product. The sheets are used to ensure that the products leaving the processing plant are of the required quality. They contain detailed specifications about packaging, storing, cooking, ingredients, physical appearance and batch processing. Specification sheets are used for: • • • • •

standard procedures; raw material specifications; finished product standards; daily formulation records; and product inspection reports.

Product that is Off Specification Options for dealing with product that is off specification—that is, it doesn’t meet the required specifications—include: • • • • •

reprocessing the material; selling the material to a processor of animal feed; disposing of the substandard material; donating the material to charitable organizations; or blending the off-grade material with subsequent batches.

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Donating the material or blending it isn’t generally advisable. Donated foods must meet the same health and safety standards as foods sold to the general public. The best way to avoid product that is off specification is to take the appropriate precautions to prevent the problem in the first place. If in doubt, contact: Health Canada www.hc-sc.gc.ca Food Inspection Branch Tel: 416-973-1600

SANITATION IN FOOD PROCESSING A good sanitation program is crucial to the success of your business. Sanitation is affected by everything from the design of your facility to food handling practices, controlled processing procedures and a pest-control management system. John A. Troller, in his book Sanitation in Food Processing (Second Edition, Academic Press, Inc., 1993), describes the purpose of a sanitation program this way: The goal of any sanitation program should be to provide a clean manufacturing operation capable of producing wholesome and safe products. The program should provide guidance and training for employees in good sanitary practices and should be able to identify process stages that are pivotal in producing acceptable products. Last, the program should keep management informed of the sanitary condition of the plant and its workers. Troller includes the following topics under the term “sanitation”: • • • • • • • • • • •

hazard avoidance; quality management; cleaning; personal hygiene; the control of insects, rodents and birds in the food environment; sanitary aspects of food plant design; sanitation of raw materials; equipment and process sanitation; packaging sanitation; sanitation during food transport; and food regulations.

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The Code of Practice Your best guideline as a food processor in Canada is the Code of Practice, General Principles of Food Hygiene for Use by the Food Industry in Canada. This code is intended to help you comply with the requirements of Canadian food law. The code “recommends general hygienic practices for use in handling (including growing and processing, packaging, storage, transport, distribution and sale) of food for human consumption in order to ensure a safe, sound and wholesome product.” The code covers the following topics: 1. Hygiene requirements in the production/harvesting area— • environmental hygiene in areas from which raw materials are derived; • harvesting and production; and • storage at the place of production/harvesting. 2. Establishment: design and facilities— • location; • buildings and facilities; • sanitary facilities, including water supply, rest rooms and toilets, lighting and ventilation; and • equipment and utensils. 3. Establishment: hygiene requirements— • maintenance; • cleaning and disinfecting; • hygiene control program; • storage and disposal of waste; • pest control; • storage of hazardous substances; and • personal effects and clothing. 4. Personal hygiene and health requirements— • hygiene training; • injuries; • washing of hands; and • personal cleanliness.

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5. Establishment: hygienic processing requirements— • raw material requirements; • use of water; • processing; • packaging; • lot identification; • processing and production records; and • storage and transport of the end product. 6. Quality control— • individual responsible for quality control; and • laboratory procedures for quality control. 7. End product specification— • sampling procedures; • analytical methodology; and • limits for acceptance. 8. Recall procedure— • A procedure to permit the complete, rapid recall of any lot of the finished food from the market. You can get a copy of the Code of Practice from: Health Canada Health Protection Branch Ontario Regional Office 2301 Midland Avenue Scarborough, Ontario M1P 4R7 Tel: 416-973-1600 Fax: 416-973-1554

DEVELOPING A SANITATION PROGRAM The best people to ask for help in developing a sanitation program are the various government inspectors that would be inspecting your business. Many people treat them as unwanted guests and intruders, but their interest is in the safety of the buying public, and their approach is preventative in nature, not punitive. An inspector can point you to many relevant resources.

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Federal and provincial inspection departments are key contacts. You can also contact: Agriculture and Agri-Food Canada Blueprints, Plants and Equipment Section 174 Stone Road West Guelph, Ontario N1G 4S9 Tel: 519-837-9400 Fax: 519-837-9770 Health Canada is responsible for plants that produce food products not covered by Agriculture and Agri-Food Canada. (Contact information is included previously in this section of the guide.) Some private firms can help you to establish or assess a sanitation program. Check with industry associations; some of them will be able to give you referrals. Contact: Ontario Food Protection Association P.O. Box 24010 Guelph, Ontario N1E 6V8 Tel: 519-463-6320 Fax: 519-463-6321 E-mail: [email protected] Sub-sector associations may also have their own sanitation programs or information. Contact: Ontario Food Processors Association 7666 Mill Road, R.R. # 4 Guelph, Ontario N1H 6J1 Tel: 519-767-5594 Fax: 519-763-4164 E-mail: [email protected] Ontario Dairy Council www.ontariodairies.ca 6533 Mississauga Road, Unit D Mississauga, Ontario L5N 1A6 Tel: 905-542-3620 Fax: 905-542-3624 E-mail: [email protected] Baking Association of Canada www.baking.ca 7895 Tranmere Drive, Suite 202 Mississauga, Ontario L5S 1V9 Tel: 905-405-0288 Fax: 905-405-0993 E-mail: [email protected] Companies that sell approved cleaning chemicals can also help you establish a sanitation program. For other contacts, see the Resources section of this guide under Food Safety Information Sources.

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7. PACKAGING AND LABELLING The way you package and label your product is important. First, packaging protects it from physical, chemical and microbiological invasion. The package also provides a medium for presenting advertising messages and other important information to the consumer. And finally, the package is one of the greatest influences on a consumer’s decision to try your product.

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THE IDEAL FOOD PACKAGE The perfect food package has all of the following criteria: • • • • • • • • • • • • • • • •

meets current legal requirements; compatible with food; protects against contamination from the environment; controls the product’s environment; resists mechanical damage; sanitary; tamper-proof; attractive; convenient; inexpensive; lightweight; environmentally sound; functions as a preparation and/or serving vessel; sells itself; identifies the product; and supplies the required information.

It’s important to note, however, that not one food package available today meets all of these criteria. It’s up to you to decide which are most important for your particular application and which can be compromised.

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REGULATORY CONSIDERATIONS Regulatory issues around packaging are very complex, and you must consider them in detail with respect to each food product’s unique needs and the properties of its potential package. The following is a brief summary of some of the regulatory issues you will want to investigate more closely as you examine your packaging options. Packaging Materials Packaging materials for food are regulated in Division 23 of the Food and Drug Regulations. The regulations are broad in scope and limited in specifics. You can contact Health Canada with specific questions about the acceptability of food packaging materials or for a voluntary review. Packaging suppliers may also have additional information about the acceptability of packaging materials. Standardized Sizes Certain products sold in Canada are federally or provincially regulated with regard to the container size. One example is provincial dairy regulations, such as those in Quebec. Other common examples include products regulated under the federal Processed Products Regulations (PPR), such as many canned fruits and vegetables. The federal Meat Inspection Regulations specify standardized sizes for a few products such as luncheon meat (retail consumer product only). Sizes for refined sugar syrups, peanut butter and wine are regulated under the federal Consumer Packaging and Labelling Regulations for retail products. Before you commit to packaging, you would be wise to determine if the products meet standardized size requirements. If they do, they can only be sold in the units—weight or volume—as prescribed in applicable regulations. Your choice of packaging materials may have an effect on whether the product meets standards of identity or standard container sizes. For example, tomato paste should meet standard container sizes under the PPR. If a tomato paste is packaged in a squeeze tube, it won’t comply with the canned standard, and so it can’t be called “tomato paste.” The product will have to be identified as an unstandardized product such as “concentrated tomato extract.”

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Other Considerations In certain cases, your choice of packaging could have provincial considerations. For instance, beverages in cans are prohibited in Prince Edward Island. Provincial governments regulate environmental issues related to beverage containers. Not all beverages are regulated, only those that each province classifies. A common example is carbonated beverages. The requirements vary from province to province, with some requiring returnable, redemption (deposit and return) or recyclable containers. The Food and Drugs Act and Regulations contain more information. Check your library for a copy, or on the Internet at www.hc-sc.gc.ca/food-aliment/e_index.html. You can also buy a copy from: Renouf Publishing Co. Ltd. www.renoufbooks.com 5369 Canotek Road Ottawa, Ontario K1J9J3 Tel: 613-745-2665 Toll Free: 1-888-551-7470 Fax: 613-745-7660 E-mail: [email protected]

SOURCING FOOD PACKAGING Before you begin contacting food packaging suppliers, you should have a good idea of the type of packaging you need, as well as the dimensions and volumes required. Like food ingredient suppliers, packaging suppliers deal only with those customers that can fulfill a certain volume order. Because of this, you may find it easier to source your materials through food packaging distributors. You could encounter a problem, however: these distributors usually carry only standard types of packaging. For generic packages, look in the Yellow Pages for distributors near you. For more information, contact: Packaging Association of Canada www.pac.ca 2255 Sheppard Avenue East, Suite E330 Toronto, Ontario M2J 4Y1 Tel: 416-490-7860 Fax: 416-490-7844 E-mail: [email protected] RePack Canada www.repackcanada.com Mississauga, Ontario Tel: 1-877-804-4841 E-mail: [email protected]

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PACKAGING MATERIALS You can choose from a number of packaging materials. Each has its advantages and disadvantages. Metals Metals provide excellent protection to foods, because no moisture or gas transmission can take place. Metals are: • • • •

inexpensive; non-toxic; strong; and coated or plated so that they won’t react with the food.

Cans are the primary type of food packaging produced from metals. They allow you to cook the food inside the sealed can. The main metals used to make cans are steel and aluminum. Steel can’t be placed in direct contact with food or it will rust. As a result, steel must be coated with tin, chromium or various polymers for acidic foods. Aluminum, on the other hand, won’t corrode when it’s exposed to food. However, it is sensitive to chloride ions and acid in foods. Can Sizes Metal cans come in a large variety of sizes, ranging in both height and diameter. Sizing is based on the American system, so it is read in inches. Two sets of numbers are given, the first set being the diameter and the second being the height. Within the set, the first number is stated in inches and the second is stated as 16ths of an inch. Can Types You can purchase either three-piece or two-piece cans. Because two-piece cans have only one seam, they are superior with respect to integrity and appearance. Unfortunately, they are more expensive, and only small sizes are available. Sources of metal containers are listed in the Resources section of this guide.

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Glass One of the main benefits of using glass over other types of food packaging is that it is non-reactive with virtually all foods. As well, it contains the product totally, because it is impervious to moisture and gases. Like metal, glass allows you to cook the food inside the container. It is also good from a marketing perspective—because it is transparent, the consumer can see the contents. Not only is glass recyclable, but it is also often re-used by some food processors. The drawback of glass as a food packaging material is that it is extremely fragile and very heavy, which adds to distribution costs. The standard glass for food packaging is soda-lime glass. It can be formed into unique shapes and sizes. It can also be coloured for an attractive appearance or to screen out light that could cause unwanted changes in the product. Sources of glass containers are listed in the Resources section of this guide. Paper Food packages made from paper can be formed into simple or elaborate designs, because it is flexible and easy to work with. Other benefits to using paper include: • • •

light weight; generally inexpensive; and excellent surface for printing.

Because paper isn’t waterproof, its structural integrity is limited. That is, when paper gets wet, it becomes weaker. As a result, paper is restricted to certain applications when used alone. To overcome this problem, paper is often coated with polymers or lined with foils. Types of paper packaging include: • • •

bags and pouches; folding cartons; and corrugated boxes.

Sources of paper containers are listed in the Resources section of this guide.

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Plastic Plastics are ideal for food packaging because they are: • • • • •

resistant to breakage; relatively inexpensive; corrosion resistant; lightweight; and waterproof.

Plastics can be produced easily in complex shapes, and they also possess a wide range of colours, or remain transparent. Although plastics have come a long way since their introduction into the food industry, there still remain some drawbacks to using them for food packaging. For example: • • • •

they can bend, crush or crack easily; some possess little heat resistance; they pick up dust easily; and some of the more complex laminates can be very expensive.

Plastics also don’t have the excellent barrier properties of glass and metals, so they allow gases to pass in and out of the package. Plastics differ in how effective they are as barriers to the various important gases—oxygen, carbon dioxide and water vapour. Selecting the right plastic packaging requires knowledge of how sensitive the product is to loss or absorption of these gases. Types of Plastic Plastics are often classified into two categories—thermoplastics and thermoset plastics. •

Thermoplastics: These can be re-formed into a desired shape after being melted. This type of plastic is used to produce plastic bags, pouches, bottles, trays and cups.

•

Thermoset plastics: A thermoset plastic is very strong once formed, and will decompose before melting (that is, it won’t re-form). This type of plastic is commonly used for bottle caps and can coatings.

Sources of plastic containers are listed in the Resources section of this guide.

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Laminates Laminates combine the advantages of several materials into one. For example, one film may consist of paper, metal (foil) and plastic. In this case, paper is used for its low cost and strength, metal is added to prevent gas and/or light penetration, and a low-cost plastic is incorporated so the film can be heat-sealed. Laminates can often be more costly than other packaging alternatives, such as metal cans or plastics. Examples of laminates are Tetra Brik® drink boxes, potato chip bags, retort pouches and “ovenable” paperboard (paperboard that can be heated up to 400°F). Sources of laminated films are listed in the Resources section of this guide.

ENVIRONMENTAL CONCERNS The Ministry of the Environment’s Waste Diversion Ontario (WDO) has the mandate to develop, implement and operate waste diversion programs. The Waste Diversion Act, 2002 (Bill 90), is now in effect. Before you select your product packaging, get more information on environmental acts and regulations in Ontario. Visit the ministry website at www.ene.gov.on.ca/en/land/index.php. In general, food packaging has a bad reputation with consumers. They see it taking up space in landfill sites and hear how it is using up valuable resources. It’s not that they believe packaging isn’t necessary, but rather they view it as excessive and over abundant. As a result, you must choose the packaging for your products carefully. When you’re sourcing, take into consideration packages that are smaller, thinner and use less material. By doing this initially, you can save yourself some time and money searching for a new package farther down the road.

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PACKAGE DESIGN Your packaging must look professional in order to compete, particularly in the food business. It is the packaging that will determine a first purchase, while the quality of your product will bring repeat business. The first and most important step you must take in designing your package is to establish the product requirements for: • • • • • •

the appropriate amounts in which you will sell the product (these may be based on adequate portion sizes, competitors’ offerings or customer preferences); volume and weights of the different sales amounts; physical packaging attributes that help the customer use the product; protective needs, including shipping and handling factors; the appropriate shape of the packaging, not only for esthetic appeal but also for efficient shipping and stocking; and legal requirements.

Once you have determined the required specifications, the design of the packaging can be created to work within these boundaries. Packaging design is part of your overall marketing strategy. You can either do the design yourself or hire a professional graphic designer. Professional help from printers will be necessary in order to create a package that has impact in the market. However, it is important that you are able to give the designer specific directions, because he or she won’t be as knowledgeable about the target market as you are. The more information you can give to the designer about your target market, package structure and desired image the easier it will be for him or her to create what you are looking for. You can get information about packaging design from trade magazines, trade shows, competing products and books on labelling. You can also contact: Packaging Association of Canada www.pac.ca 2255 Sheppard Avenue East, Suite E330 North York, Ontario M2J 4Y1 Tel: 416-490-7860 Fax: 416-490-7844 E-mail: [email protected]

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Factors to Consider Regarding Design Here are some of the considerations you should take into account when you are developing your product design: • • • • • • • •

Determine the target market. Establish the image or “personality” of the product based on the tastes and preferences of your target market: bold, elegant, practical, sophisticated, fun, etc. Determine the most important features of your product to the audience (if too much information is presented, the design will be cluttered). Determine where you will be selling the product and the associated distributor’s regulatory requirements for the package, including labelling. Determine the placement of the product in relation to other products, particularly competitors (your package must stand out against its background). Colours convey meaning, and the meaning will be different in each cultural setting. Colours don’t usually appear to be as bright or bold when the product is on the shelf. Be careful that colour “rules” used in other situations aren’t being applied to the package design. Symbols and shapes can often convey information more concisely than text.

LABELLING High quality labelling, like packaging, requires research, planning and consultation from a variety of sources. As well, package and label design must be integrated. It’s important that they both send the same message to the consumer. Your ultimate goal is to produce a label that is educational and user-friendly. It should also adequately market your product within legal specifications. And, of course, your label needs to be an integrated part of your strategic marketing approach. (This is covered in more detail in Part 8: Strategic Marketing. Before you create a label, you should know: • • • • • • •

all the regions where your product will eventually be sold, and through which distribution channels; information your customers would find helpful; the colours and promotional appeals that are suitable for your audience (your designer can give you input on this); how the label will be applied; what labelling material is suitable for the product environment (that is, does it need to be freezer-proof? Shipping-proof? Smudge-proof?); what the labelling budget is per unit; and regulatory requirements for the product.

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Once you have enough information to answer the above questions, you can approach a label designer. Note that it is the manufacturer or distributor’s responsibility to ensure that the label meets legal standards. In Canada and the United States, a unique set of specifications is required for each product, based on a combination of factors, including: • • • •

geographic region; product class; distribution channel; and intended consumer.

For information about mandatory and optional labelling elements for products being sold in Canada, contact: Canadian Food Inspection Agency www.cfia-acia.agr.ca Food Label Service Toll Free: 1-800-667-2657 Toronto 1124 Finch Avenue West, Unit 2 Toronto, Ontario M3J 2E2 Tel: 416-665-5055

Guelph 174 Stone Road West Guelph, Ontario N1G 4S9 Tel: 519-837-9400

The Department of External Affairs and International Trade provides information and advice on U.S. labelling requirements. It will review draft or prototype labels and provide comments and suggestions before you approach U.S. Customs. You can also get copies of A Food Labelling Guide, published by the U.S. Food and Drug Administration, from the Foreign Affairs Canada. Contact: Foreign Affairs Canada www.dfait-maeci.gc.ca 125 Sussex Drive Ottawa, Ontario K1A 0G2 Tel: 613-944-4000 Toll Free: 1-800-267-8376 Fax: 613-996-9709 International Trade Canada will help with labelling requirements for the U.S. market and abroad. Contact: International Trade Canada www.exportsource.gc.ca 125 Sussex Drive Ottawa, Ontario K1A 0G2 Tel: 613-944-4000 Toll Free: 1-800-267-8376 Fax: 613-996-9709 Ministry of Agriculture, Food and Rural Affairs – Business Development Branch

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Ingredient Listing In both Canada and the United States, all ingredients must be listed by their common name, in descending order of proportion. Ingredients for certain formulations of standard products aren’t required, but these exceptions are different for each country. In Canada, ingredient specifications fall under the Food and Drugs Act and the Consumer Packaging and Labelling Act. In the United States, the Food and Drug Administration regulates requirements. The size of the text and its position on the label are also regulated. Universal Product Codes Many retails and distributors now require 12-digit, scanner-readable universal product codes (UPCs). The codes contain product pricing and inventory information that is scanned and processed by the cash register, allowing the retailer to keep up-to-date product stock and sales information. GS1 Canada can issue product code numbers within 48 hours. You can also get guidelines on UPC usage and positioning from the council. Codes issued in Canada are suitable abroad. However, if a manufacturer’s number is to be assigned in the United States, you must join the Uniform Code Council. This organization will also provide a list of reputable printers that can create film masters. For more information, contact: GS1 Canada www.gs1.org 1500 Don Mills Road, Suite 800 Don Mills, Ontario M3B 1L1 Tel: 416-510-8039 Fax: 416-510-1916 Uniform Code Council Inc. www.uc-council.org 300-7887 Washington Village Drive Dayton, Ohio 45459 Tel: 937-435-3870 Fax: 937-435-7317

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NUTRITION LABELLING In 2002, Health Canada regulations made nutrition labelling mandatory on most prepackaged food for most manufacturers as of December 12, 2005. For small manufacturers (those who had gross revenues from food sales in Canada of less than $1,000,000 in the 12-month period prior to December 12, 2002, the transition period is five years. These companies will have to comply with the new regulations by December 12, 2007. The “Nutrition Facts” table is intended to provide information needed by consumers to make informed food purchasing choices and to compare products. Under the new regulations, foods will be labelled with more complete, consistent and accessible nutrition information than was the case previously. Previously, nutrition labelling was voluntary and the information wasn’t always presented in the same way. Under the new regulations, foods will be labelled with more complete, consistent and accessible nutrition information, including: • • • • • • •

the number of calories, and the amount of: fat • sugars saturated and trans fats • protein cholesterol • vitamins A and C sodium • calcium carbohydrate • iron fibre

The Nutrition Facts table will appear on most prepackaged foods, but some exemptions include: • Alcoholic beverages; • Fresh fruit and vegetables; • Raw single ingredient meat and poultry except for ground meat and ground poultry; • Raw single ingredient fish and seafood; • Food containing insignificant amounts of the 13 nutrients required in the Nutrition Facts table; • Food products sold only in the retail establishment where they are prepared or processed; • Individual servings of food intended for immediate consumption. Foods lose their exempt status if: • Their labels or advertisements carry a nutrition or a health claim; • Vitamins or minerals have been added; • Sweeteners such as aspartame have been added. Specific regulations for making nutrient content claims and how they are to be presented on food labels, also exist and should be reviewed to see if they pertain to the way you wish to promote your product. “Free” claims and words such as “very” low or “ultra” low, and “light” fall under these regulations. Diet-related health claims, which relate to a food’s ability to reduce the risk of heart disease, cancer, osteoporosis and high blood pressure, are also being allowed for the first time in Canada.

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Until the nutrition facts table becomes mandatory, products may comply with either the new nutrition labelling regulations or with the previous regulations. Allergen Labelling, Certified Organic, “Best Before” Dates and other forms of labelling. The new regulations for nutrition labelling do not relate to other types of information on the label. For more information on these and other labelling regulations, please refer to the Canadian Food Inspection Agency website at http://www.inspection.gc.ca/english/fssa/labeti/labetie.shtml or visit the interactive nutrition labelling resource at: http://www.hc-sc.gc.ca/fn-an/labeletiquet/nutrition/interactive/inl_main_e.html#5. Your can also e-mail your question to: [email protected]

Lab Testing for Nutrition Content Claims A number of laboratories test for nutrition content. A list of labs is included in the Resources section of this guide. The list isn’t intended to be complete. For information about other labs in Ontario, contact the Ontario Ministry of Agriculture, Food and Rural Affairs, Business Development Branch, at 1-888-466-2372. The Canadian Food Inspection Agency recommends using an in-house or accredited laboratory that uses methods that have been validated for the food you want to have analysed. A list of accredited labs can be accessed through the Standards Council of Canada (SCC) website at: www.scc.ca

OTHER POINTS ABOUT LABELLING You should be aware of the following: • • • • •

“Eco-labelling” (or Environmentally Friendly Labelling) falls under separate guidelines in both Canada and the United States. Before you finalize the printing of labels, all the work should be proofread several times. Also, if you are unhappy with the design work, ask the designer or printer for changes. Printers normally create print plates for label printing. Ask the printer if you can keep the plates when the job is completed. This will permit you to change printing companies without incurring the additional cost of creating a second plate. There is usually a minimum order amount when purchasing labels or packages. Determining this amount before you order will help you to avoid over-purchasing to meet the minimum. The cost advantages of bulk printing may be overcome by the cost of disposing of unused labels if you require a change. Keep this in mind when you order labels.

You can get an “informal comment” on label prototypes from governmental bodies in both Canada and the United States. However, these organizations won’t issue a legal confirmation that a product label has met all regulatory criteria.

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8. STRATEGIC MARKETING Marketing is a general term used to describe all the steps that lead to final sales. It is the process of planning and executing pricing, promotion and distribution to satisfy your individual and organizational needs, as well as those of your customers. From this definition, it is easy to see that marketing is more than just selling a product or service. It is an essential part of business. Without marketing, even the best products and services fail. Companies constantly go under because they don’t know what is happening in the marketplace and, as a result, they aren’t fully meeting their customers’ needs. They mistakenly believe that with the proper amount of advertising, customers will buy whatever they are offered. Marketing consists of the decisions you make strategically—behind the scenes—that affect how your customer perceives your product. Your marketing decisions need to include the four Ps: • • • •

product; place/distribution; promotion; and pricing.

Pricing is discussed in detail in Part 9: Pricing Your Product, and distribution is examined in Part 10: Distributing Your Product.

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Your strategic marketing plan is an important part of your business plan; if you have developed a detailed business plan you are well on your way to marketing strategically. You will have established: • • • •

a mission statement; your overall company objectives, such as profitability, volume or stability; competitive strategies, such as overall cost leadership, differentiation or niche marketing; and your marketing objectives— • to achieve a viable level of sales or market share; • to increase market share; • to maintain market share; • to maximize cash flow; or • to sustain profitability.

The next step is to establish specific marketing strategies.

MARKETING STRATEGIES Your marketing strategy outlines exactly how you will achieve your marketing objectives. For example, if your objective is to increase market share, your strategy will state how this will occur. A marketing strategy is a way to give marketing orientation to your business by deciding to position your product or service in terms of buyer needs and wants. Inexperienced business people often make decisions based on what they like or want, leaving the customer out of the picture. A marketing orientation brings the customer into the centre of the picture. You can achieve the marketing objective for profits, cash flow and market share by: •

•

•

increasing the number of users by— • increasing their willingness to buy; or • increasing their ability to buy; increasing the rate of purchase by— • broadening the occasions they use the product; • increasing their level of consumption; or • increasing their rate of replacement; retaining current customers by— • maintaining their satisfaction; • meeting what the competition offers; or • developing or increasing relationship marketing;

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•

acquiring new customers by— • adding line extensions (variations of existing products designed for existing markets); • using leaders (lower prices on certain products to increase the sale of more expensive complements); • bundling (selling products together, usually at a lower price than if bought separately); • gaining head-to-head market dominance; • using head-to-head price/cost leadership; • differentiating the product; • serving a narrowly defined target market; or • adding “flankers” (new brands designed to serve new segments).

MARKETING PROGRAMS Marketing programs are strategic plans that include detailed approaches to the four Ps (product, place, promotion and pricing). Your approach to making decisions for each of the four Ps should closely follow your mission statement, company objectives, competitive strategies, marketing objectives and marketing strategies. The Strategic Marketing Flow Chart The chart that follows will give you an overview of the strategic marketing process. (A version of this chart is known as the “Stage-Gate Process for New Product Development.”) If you would like to become more familiar with the theory behind marketing approaches, a number of organizations can teach it to you. Marketing courses are available at many Canadian post-secondary educational institutions.

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Diagnosis

Long Term Evaluation (3 Years)

Define the Business Gathering Information - Environmental Analysis - Customer Analysis - Competitor Analysis - Internal Analysis No Go

Decisions

Decision Point Short Term Evaluation and Annual Assessment

Go Mission

Implementation

Objectives - Profit - Volume - Stability - Non-Financial

Competitive Strategies

Marketing Strategies

- Differentiation - Cost Leadership - Focus

- Increase the number of users - Increase the rate of purchase - Retain current customers - Acquire new customers

Marketing Programs - Product - Distribution - Promotion - Pricing

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PROMOTION Promotion includes all the activities that are designed to inform, persuade and influence people when they are making the decision to buy. Promotion consists of: • • •

advertising: non-personal communication transmitted through the mass media; publicity: free promotion through news stories in newsletters, newspapers, magazines and television; and sales promotion: all forms of communication that aren’t found in advertising and personal selling, including direct mail, coupons, volume discounts, sampling, rebates, demonstrations, exhibits, sweepstakes, trade allowances and point-of-purchase displays.

When you are designing a promotion plan, clearly spell out: • • • •

which objectives to use. It’s possible to have more than one objective, but you would be wise to target your audience, or you will run the risk of losing focus; what to say; who to say it to; and the criteria that you will use to measure success.

Suggestions for Inexpensive Promotion As a new food processor, you can promote your product inexpensively and effectively by advertising through: • • • • • • • • • • • • • • • •

food-related trade journals; product demonstrations; contests; flyers; the Yellow Pages; business cards; statement stuffers; window banners; personal selling; newsletters; greeting cards; sports team sponsorship; home parties; seminars; ethnic services; and direct mail.

Of course, one of the best free methods of promotion is good word of mouth.

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Your Promotion Objectives Your promotion objectives need to be clearly stated and measurable. They must be compatible with the objectives of your company as well as the competitive and marketing strategies. Your objectives will vary for different products and situations. For example, you have to promote differently to brokers than to wholesalers. When you’re promoting to a broker, you need to emphasis what you want the broker to present to the wholesaler. When you approach a wholesaler, you simply want the wholesaler to purchase the product. You have five general promotional objectives to choose from:3 • • • • •

provide information; increase demand; differentiate the product; accentuate the value of the product; or stabilize sales.

Your Promotional Strategy Once you have reviewed all the possible promotional tools, the next step is to devise a promotional strategy. It should address the following issues: • • • • • •

What is the goal of the promotion? What types of promotion should be used? What effect should the promotion have on the customer? Which promotion is working? Which promotion isn’t working? What are the costs of the promotion compared to the benefits?

__________________________________________________________________________________________ 3Beckman, M. Dale; Kurtz, David L.; and Boone, Louis E. Foundations of Marketing. Fifth Canadian Edition. Dryden Canada: Toronto, Ontario. 1992. p. 480.

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ADVERTISING Advertising makes use of the mass media to get your message out.

FORMS OF ADVERTISING You can choose from a number of different media. Each one has its advantages and its disadvantages. You may find that you’ll want to use more than one medium to promote your product. Newspapers Advantages: • flexibility; • community prestige; • intense coverage; • reader control of exposure; • coordination with national advertising; and • merchandising service. Disadvantages: • short life span; • too broad an audience/not targeted readership; • hasty reading; and • poor reproduction. Magazines Advantages: • selectivity; • quality reproduction; • long life; • prestige associated with some; and • extra services. Disadvantages: • lack of flexibility.

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Television Advantages: • impact; • mass coverage; • repetition; • flexibility; and • prestige. Disadvantages: • temporary nature of message; • high cost; • high mortality rate for commercials; • evidence of public distrust; and • lack of selectivity. Radio Advantages: • immediacy; • low cost; • practical audience selection; and • mobility. Disadvantages: • fragmentation; and • temporary nature of message. Outdoor Advertising Advantages: • quick communication of simple ideas; • repetition; and • ability to promote products available for sale nearby. Disadvantages: • brevity of the message; and • public concern over esthetics.

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Media Rates Promotional and media costs are the most difficult to allocate because their effectiveness is hard to measure in a concrete manner. Before looking at the dollar costs of different media, you should decide: • • • •

which media are most likely to reach your target audience; which media suit the image of your product; whether any product-specific features make one medium more appropriate than another (for example, is a visual demonstration necessary); and what is your promotional budget?

Common errors to avoid are: • trying to focus your efforts on too broad a market; • allowing the quality of a promotional piece to lapse in order to afford more distribution, or lack of planning and coordination of promotional efforts; • no measurement of effectiveness; and • relying on one medium. Advertising Associations and Publications Two excellent resources in planning your advertising campaign are: Canadian Advertising Rates & Data (monthly publication—single issues available) www.cardmedia.com Rogers Media Publishing One Mount Pleasant Road, 7th Floor Toronto, Ontario M4Y 2Y5 Tel: 416-764-2000 Fax: 416-764-1705 or 416-764-1709 or 416-764-1721 The National List of Advertisers (annual publication) www.cardmedia.com You can get free information or fee-for-service material on advertising topics from: Advertising Standards Canada www.adstandards.com 175 Bloor Street East, South Tower, Suite 1801 Toronto, Ontario M4W 3R8 Tel: 416-961-6311 Fax: 416-961-7904

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Periodicals for the advertising industry, including Marketing & Strategy magazine (weekly) and Ad Age (twice weekly), are available through your public library. Setting Your Advertising Expenditures4 How do you determine how much you’re going to spend on advertising? The following information will help you: • • • • •

• •

Market share: A company that has a higher market share generally has to spend more on advertising to maintain its share. Sales from new products: If a high percentage of your sales comes from new products, you have to spend more on advertising compared to companies with established products. Market growth: If you are competing in a fast-growing market, you should spend comparatively more on advertising. Plant capacity: If you have a lot of unused plant capacity, you should spend more on advertising to stimulate sales. Product price: Both very high-priced (or premium) products and very low-priced (or discount) products require higher ad expenditures. This is because, in both cases, price is an important factor in the buying decision. The consumer has to be convinced, through advertising, that the product is a good value. Product quality: A higher-quality product requires greater advertising effort because of the need to convince the consumer that the product is unique. Breadth of product line: If you have a broad line of products, you have to spend more on advertising compared to companies with specialized product lines.

Media Directories For contacts as well as market reach, pricing and related information about media outlets, consult: Bowdens Media Directory www.bowdens.com Bowdens Media Monitoring Ltd. 2206 Eglinton Avenue East, Suite 190 Scarborough, Ontario M1L 4T5 Tel: 416-750-2220 Toll Free: 1-800-269-8145 Fax: 416-750-2233 E-mail: [email protected]

__________________________________________________________________________________________ 4

See Workbook for Estimating Your Advertising Budget (Boston: Cahners Publishing Co., 1984)

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Market Wire www.marketwire.com 48 Yonge Street, 8th Floor Toronto, Ontario M5E 1G6 Tel: 416-362-0885 Fax: 416-362-6669

PUBLICITY Publicity gives you free advertising through stories in newsletters, newspapers, magazines and television. You can get publicity by sending a media release to the various media offices, cultivating friendships within the media or with those who are known as trend-setters. Positive word-of-mouth can also generate interest in your story. Or you can attempt to generate your own publicity by developing a publicity campaign, which could include a media release. A media release is a one or two page letter identifying a newsworthy event and outlining the who, what, when, where and why of the story. You can send out a media release to announce the start-up of your new business, introduce a new product or announce any other success story related to your company. The media will publish or announce the story as a news item, and there will be no expense for you. Publicity is one of the most effective and least costly means of advertising.

SALES PROMOTION A lot of options are available to you when it comes to sales promotion. You’ll probably find that you’ll want to use several of them to promote your product and your business. Three of the most commonly used in the food industry are trade shows, in-store demonstrations and coupons. You can also use direct mail. Trade Shows When you budget for a trade show and include this venue in your overall marketing plan, you’ll be giving yourself a highly focused way to: • • •

establish a presence in the marketplace; gain an overview of the current industry; and get a list of serious buyers more quickly than you could with a traditional sales approach.

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Although trade shows are relatively expensive, they are widely used in the food industry. If you plan your participation properly and present your business well, trade shows offer the potential for a high return in sales and contacts. You may need several months to a year to get a well-located booth and prepare the appropriate materials and displays. Choosing the Right Trade Show Your first step is to develop a list of several shows you feel would be suitable. Various directories are available that contain a complete index of trade shows, listed chronologically, geographically and by subject. As well, each listing has a phone number for the show’s contact. Trade Show Week contains listings of trade shows in the United States, Canada and Mexico in its domestic edition and other countries in its international edition. Contact: Trade Show Week www.tradeshowweek.com 5700 Wilshire Boulevard, Suite 120 Los Angeles, California 90036-5804 Tel: 323-965-5384 Fax: 323-965-2407 Ministry of Agriculture, Food and Rural Affairs www.omafra.gov.on.ca Katie Meagher, Communications Officer Business Development Branch E-mail: [email protected] Why This Show? Part of your show-planning process is setting the objectives for the show. First, be aware of which type of show it is—for the final consumer (consumer show) or for your food chain partners (trade show). Examine your goals. Do you want to take orders on the spot, build your brand awareness, introduce a new product and gather leads?

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Vertical versus Horizontal Markets Another thing to consider is whether your product or service should be presented at horizontal or vertical shows, or both. Horizontal shows are those with vendors who are selling a broader variety of products or services, and the attendees usually come from a single market segment. They are looking for either very specific products or services or a broader variety. Vertical shows are more narrowly focused to just one type of product and market. The advantage of vertical shows is that the attendees are all from a very specific market, and your objectives can be more focused. The disadvantage is that your product or service must fall exactly within the focus for the show or you won’t get the results you want. Shows for food only would be vertical. However, shows for services to the grocery industry or for gift basket marketers would most likely be horizontal because the attendees would be from all types of markets. Narrowing the List Unless you have unlimited budgets and resources, you’ll need to find out which shows from your potential list are best. The key lies in finding the shows that pull in the most decision makers for your industry. To find out who attends, ask the show management for a demographic profile of attendees. Typically, show literature will list only their numbers and general titles. Check the titles and purchasing responsibility if that information is available. Another route is to contact past attendees. Have a list of questions ready that will tell you if they are indeed the decision makers and what value they placed on their time spent in the exhibit hall. You can also ask non-competing exhibitors from the previous year what their impressions of the show were and whether they will be attending again. Or, if possible, go to the show as an attendee yourself so you’ll know if you want to participate next year. You can get an exhibits-only pass for many shows, so you’re not paying the entire fee. You should also ask the show managers how they are promoting the show and what their strategy is for getting people to the exhibit hall. If it’s a new show, promotion has to be very good to get the traffic you need to make it worthwhile. Conference schedules are often set up so that luncheons and socials are held in the exhibit hall to ensure that attendees spend time with vendors. While it’s nice to get them into the exhibits (and to your booth), food-related functions aren’t always the best arenas for talking with prospects. It’s difficult to handle a plate of food, a drink and your company’s literature at the same time. Make sure the schedule allows for plenty of time around those events so attendees can eat and visit your booth.

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Preparing for the Show Get all the information you need to begin your preparations. The contact person for the show will provide you with basic information. Make sure you have: • • •

a floor plan (preferably with other exhibitors indicated), so you can choose a high-traffic area. Don’t hesitate to pay extra for a good location—the whole point is exposure; booth specifications, including dimensions, lighting, tables, chairs, skirting and any display or sample restrictions; and information about all the services being offered—accommodations, equipment rental, assistance with setup, tear-down or packing storage.

Training Your Booth Staffers One of the most important steps to take in order to have a truly successful exhibiting experience is the training of your booth staff. They account for 90 percent of the positive feelings that show attendees have about the show and your company. Trade show attendees usually go to shows to get detailed information about products and services, so they expect your booth staff to be very knowledgeable. You want to send your most “people—oriented” representatives, as well as those who know the most about your company. Be sure that they understand exactly what your objectives are for the show. Your staff should also be armed with information about your competition and the competitive advantage your product or service has. Finally, make sure they can emphasize the benefits of your product or service instead of simply regurgitating the product “features” list from your brochure. A number of excellent resources can help with training trade-show staff. You can narrow down the ones in your region by conducting an Internet search on “trade-show training.” Other Preparations When you’re setting your budget, allow for personnel, accommodations, booth, handouts, promotional activities, product transportation and travel. If the trade show is outside of Canada, allow for insurance costs and plan to spend an entire day before and after the show in the host country. Contact existing and potential customers before the show. Invite them to drop by your booth and inform them about special promotions available only at the show or new products that you’re launching.

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Show programs and advertising inserts in the general media or industry publications give you the opportunity to advertise in specific vehicles aimed at promoting the show and sharing costs. It’s advisable to choose professional design and marketing consultants to help you prepare the materials for your booth. These will include: • • •

a high-impact display to attract the audience; professionally prepared information handouts (remember, attendees are there to gather knowledge); and samples of your product.

Company Literature and Giveaways The number of brochures, giveaway items and other handouts you need to bring depends on how many people you expect to see. Keep in mind that about 90 percent of all literature never makes it back to the attendees’ offices. Perhaps it’s best to train your staff to always offer to send the literature by mail to the attendee’s office. Attendees often don’t want to lug your marketing materials all over the exhibit hall and will jump at the chance to have you send the information to them the following week. Follow-Up Prepare a system for recording leads. Several options include: • • • •

lead sheets for sales staff; a business-card exchange system; a sign-up sheet for more information; and a guest book.

Be sure to follow up your leads after the show. This should be done immediately, and it’s best to let customers know in advance when and how they can expect to be re-contacted. In-Store Demonstrations Demonstrations—sometimes referred to as “product samplings”—are an effective and inexpensive means of promoting a new or existing product. There are three types of in-store demonstrations—live, mobile and static.

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Live Demonstrations At a live demonstration, a member of your staff does simple food preparation. This is best for a new product that requires information or answers to questions, or for a product that needs special preparation. One advantage of a live demonstration is that you can encourage the customer to buy the product. A disadvantage is that a great deal of time is required for the demonstration, so costs can be high. Mobile Demonstrations These are a form of live demonstration, where a demonstrator walks through the store offering samples. The demonstrator usually has a base operation near the product sales display. Not all stores allow this type of demonstration. Static Display This is an area displaying the product and offering unattended samples. One advantage is that this type of display is very cost effective. A disadvantage is that there’s no control over purchasing decisions or how much sample is used. This type of demonstration needs to have the consumer familiar with your product. Steps in Planning Demonstrations 1. Determine what type of demonstration you are going to use. 2. Decide which stores you are going to target. Choose one that stocks your product. 3. Find out the store policy on how to set up in-store demonstrations. Every store has different policies. 4. During the demonstration, hand out simple information about the product as well as any coupons. 5. Be unique and try new ideas; you must stand out from the competition. 6. Know the competition, but don’t downgrade them during the demonstration. 7. Talk to the store managers. The better the relationship you have with them and the better they know your product, the more cooperative they will be. Talk to them about two weeks before the demonstration, so that they will have product on hand and on the shelves. 8. Be prepared to work the whole weekend, not just peak hours. The normal run of a demonstration is Thursday, Friday and Saturday. 9. The store may want incentives from you, such as cost cuts on product. If possible, get the store to special your product during the demonstration. However, be prepared to pay for this opportunity.

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You can hire a demonstration company, if you wish. Consider time, energy, ease of demonstration and your budget when you make this decision. One firm that specializes in in-store demonstrations is: In-Store Focus Inc. www.instorefocus.com 2250 Argentia Road Mississauga, Ontario L5N 6A5 Tel: 905-817-0119 Remember that demonstrations normally don’t give you access to a very wide market, so they probably should be only one segment of your marketing and promotional package. Coupons Coupons can be an effective way to increase your sales and profits. However, you should be aware of certain costs: • • •

costs of physical distribution, mailing coupons, placing advertisements and paying the retailer a handling charge for redeeming the coupons; reduced contribution margins because coupons are price reductions; and the use of coupons not only by new customers but by existing customers, who would have paid the regular price.

Most printers in Ontario can print coupons. You need to estimate various rates to determine the effectiveness of a coupon promotion. The estimations could be based on past performance or on experiments that run coupons in one city or one part of a city. Rates include: • • • • •

redemption rates; displacement rates; acquisition rates; stock-up rates; and conversion rates.

You can have coupons distributed in a variety of ways. Three organizations—redemption agents, clearing houses and billing agents—can help with handling coupons.

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You can get detailed information about coupons in An Industry Guide to Couponing Practices. This is available from: Food and Consumer Products of Canada www.fcpc.ca 885 Don Mills Road, Suite 301 Toronto, Ontario M3C 1V9 Tel: 416-510-8024 Fax: 416-510-8043 Food and Consumer Products of Canada also negotiates coupon rates with retailers on behalf of food companies. If you would like to start a coupon program, contact: Resolve Corporation www.resolvecorporation.com 455 Horner Avenue Toronto, Ontario M8W 4W9 Tel: 416-252-7741 Fax: 416-252-0037 This company is Canada’s largest provider of coupon clearing services to retailers. It offers sorting, invoicing and accounts receivable services relating to coupon redemption. You can also contact: A.C. Nielsen www.acnielsen.com 160 McNabb Street Markham, Ontario L3R 4B8 Tel: 905-475-3344 Fax: 905-475-8357 A.C. Nielsen provides market research, information analysis and insights to consumer products and services industries.

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Direct Mail One way of reaching a targeted market is through direct mail. Its advantages are: • • • • •

selectivity and speed; intense coverage; flexibility of format; complete information; and personalization.

However, direct mail also has some disadvantages: • • •

high cost per person; dependency on quality of the mailing list; and consumer resistance.

Your next step in strategic marketing is pricing.

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9. PRICING YOUR PRODUCT Pricing is much easier when you have only one product. All of the activities you undertake in your business—fixed (like a mortgage) or variable (like the price)—must be covered by the price of your one product. However, if you are producing several goods, your fixed costs must be applied proportionately to the various products according to their use. It would be nice to have both an extensive marketing program and the lowest price. But in most cases, this just isn’t feasible, and trade-offs need to be made. The money for your marketing programs must come from the consumer, so some programs may not be possible if you have low prices. Traditionally, companies have used costs as the basis for setting prices, with no regard to the value a customer places on the product or how competitors are pricing. A market-driven company will “price on value, knowing costs.”5 This is known as target pricing. What you do is study the competition and your customers to identify a point where your product must be priced to be competitive. Once the target price is identified, you decide on a desired profit. You then work backward to calculate the costs at which your product must be produced to meet the profit and target price. These calculations must take into account the target profit margin, price reductions for retailers, costs of promotion and future distribution costs. To properly calculate you company’s costs, you must include current and planned activities for distribution, promotion and product development.

__________________________________________________________________________________________ 5“Pricing—Think

Value Not Cost,” The Best Readings from Business Marketing—Views from the Trenches. PWS-Kent Publishing Company: Boston, MS. P. 255.

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PRICING STRATEGIES Pricing strategies specify the role of price in implementing your marketing strategy. Your pricing strategies state what you want to achieve by setting a particular price. You can have several strategies; they aren’t necessarily mutually exclusive. You should determine pricing strategies for each marketing strategy you have set. And they should be consistent with the distribution and promotion strategies you have planned.

Marketing Strategy

Pricing Strategies •

Reduce economic risk.

•

Offer low price to encourage trial.

•

Offer better value.

2. Increase the overall size of the market by increasing the rate of purchase.

•

Increase frequency of consumption.

•

Broaden the number of usage situations to include lower priority uses.

3. Increase market share through retention of customers.

•

Meet price competition.

4. Increase market share through acquisition of customers.

•

Undercut the competition.

•

Offer premium price.

5. Introduce a line of substitutes.

•

Encourage trade-up.

•

Clearly differentiate quality differences in a line of substitutes.

•

Expand the range of products bought by existing customers.

•

Attract new customers through superior value.

1. Increase overall size of the market by increasing the number of users.

6. Introduce a line of complementary products.

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PRICING PROGRAMS You can arrive at your pricing strategies through various pricing programs, such as: Penetration pricing: • a low price to stimulate demand Use this when: • lower prices will result in overall increased growth in the market or increased demand for your product; • you sell higher-margin complementary products that are being pulled along with the sale of lower-priced products; • your company enjoys economies of scale; or • your competitors have high cost-structures. Parity pricing: • setting the price near or at competitive levels and using other market variables to implement strategies Use this when: • your total market volume won’t grow with lower prices; or • your competitors can easily match any price decrease. Premium pricing: • setting a price above competitive levels Use this when: • your company can differentiate a product in terms of higher quality or special features; or • you have little excess capacity and it’s difficult for competitors to enter the industry.

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MONITORING COSTS If you are offering a number of products, you can’t get the information you need from a conventional profit-and-loss statement. Instead, you need to track your costs both for the company and for each product. Without product-specific information, you won’t be able to tell which products are doing well and which need additional marketing support. In order to gather all the relevant information, you have to track two types of costs: • •

variable costs: (direct costs of manufacturing): costs that are specific to the manufacturing of the particular good or service (that is, labour, raw materials and supplies); and fixed costs: ongoing costs that occur whether your business is shut down for a time or in full production (for example, depreciation, insurance, taxes, selling and administration costs, and utilities).

Fixed costs can be broken down into two kinds of costs. Traceable fixed costs can be related to a product line on a non-arbitrary basis. Non-traceable fixed costs are incurred on behalf of your business as a whole and can’t be assigned to a specific product line. Contribution Analysis Contribution analysis studies how the final selling price will contribute to fixed costs. Ideally, a product would cover all the fixed costs and contribute a net profit, but this doesn’t always happen. Many products in a company’s business only cover their variable costs and part of the fixed costs. You must decide if these products are worth continuing—is the product necessary to the product line? Fixed costs exist whether you produce the product or not. Ask yourself: “Is it better to produce a product that pays for itself and part of the overhead or to do nothing (that is, not produce it) and cover none of the overhead?” If your business has excess capacity, you would be better off keeping the products that are covering only part of the costs. However, if capacity is full, selling a product with low or negative total contribution may not be advisable. If your resources and sales are going to the low-contribution product instead of the higher ones, you aren’t maximizing your profitability.

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The following is an example of a table used to monitor the contribution of various product lines.

Variable costs of goods sold Gross profit margin Other variable costs Variable contribution margin Traceable fixed costs: Sales salaries Manufacturing salaries Packaging salaries Advertising of specific product lines Rent and utilities Total traceable fixed cost Total contribution (see calculation)* Non-traceable fixed costs: Company advertising General and administrative overhead Total Net operating profit

Company Total

Product One

Product Two

Product Three

Product Four

205

50

70

40

45

$915 30 $885

$250 0 $250

$380 20 $360

$180 10 $170

$105 0 $105

280 180 105

70 50 30

95 70 25

65 40 20

50 20 30

115 70 $750 $135

30 20 $200 $50

50 30 $270 $90

20 15 $160 $10

15 5 $120 ($15)

$40

$40

$40

$40

$40

60 $100

60 $100

60 $100

60 $100

60 $100

$35

($50)

($10)

($90)

($115)

Salaries can be split according to hours spent on a product or some other reasonable basis. Rent and utilities can be split on the basis of volume allocations. Company advertising and general and administrative overhead can’t be allocated to specific products, so are non-traceable fixed costs. Determining which products should receive additional support becomes clearer after we calculate the percentage variable contribution margin (PVCM).6 selling price – variable costs PVCM = --------------------------------------selling price

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Guiltinan,Joseph and Paul, Gordon. Marketing Management, Strategies and Programs, Fourth Edition. McGraw-Hill; Toronto, Ontario. P.226

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The PVCM shows which products contribute the greatest amount to overhead and profit for each additional dollar spent to increase sales. From the above example:

PVCM

Company Total 0.79

Product One

Product Two

Product Three

Product Four

0.83

0.80

0.77

0.70

Although Product Two has the highest total contribution, additional dollars should be spent on Product One because this is where the greatest gains will be enjoyed.

SETTING PRICES The two important tools for setting prices are: • •

break-even analysis; and cost-volume relationships.

Break-Even Analysis You can use this tool for initially setting a product’s price or for calculating the effects of a price change. It will help you to understand that for certain prices, you need different levels of production to break even—that is, cover all your variable and fixed costs. The break-even point is where your total revenue equals your total cost. Below break-even, you will incur losses. Above this point, you will realize profits. You should ignore “sunk” costs, such as research and development for a product. Depreciation on equipment should be used as a cost rather than deducting its full costs. Total Fixed Costs (B) Break-Even Point = --------------------------------------Unit Contribution (A)

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The following table shows an example of a break-even analysis for five different pricings of one product. Unit Selling Price Unit Variable Cost

$21.95 $7.95

$23.95 $7.95

$25.95 $7.95

$27.95 $7.95

$29.95 $7.95

Unit Contribution (A)

$14.00

$16.00

$18.00

$20.00

$22.00

$27,500

$27,000

$25,000

$20,000

$18,000

Revenue

$603,625

$646,650

$648,750

$559,000

$539,100

Fixed Costs (B)

$400,000

$400,000

$400,000

$400,000

$400,000

Variable Costs

$218,625

$214,650

$198,750

$159,000

$143,100

Profit (loss)

($15,000)

$32,000

$50,000

$0

($4,000)

28,571

25,000

22,222

20,000

18,182

Estimated Sales

Break-even (units) (C)

Cost-Volume-Profit Relationships Economies of scale measure the impact of changes in volume on fixed costs. You could find that your ability to increase the volume of output will allow you to decrease the per-unit cost. Product 1 Unit Variable Cost Total Variable Cost Total Traceable Fixed Costs Total Direct Cost Divided by Volume Average Unit Cost

2000 units $40 80,000 240,000 320,000 4000 $80/unit

4000 units $40 160,000 240,000 400,000 8000 $50/unit

Increases in volume have the greatest impact on products with high PVCM because most of the costs are fixed for these products. The experience curve effect is where variable costs decline as volume increases. This can bring about better results when you increase the volume. Experience curves can be due to:6 • • •

more-efficient production processes; higher discounts because of greater volume of purchases; or workers becoming more efficient.

__________________________________________________________________________________________ 6

Guiltinan, Joseph and Paul, Gordon, Marketing Management, Strategies and Programs, Fourth Edition. McGraw-Hill: Toronto, Ontario. P. 145.

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EXCEPTIONS TO THE PRICING RULES You should be aware of the types of deals and allowances that are generally used to support the marketing of your specific products and categories in the targeted food retail outlets: competitive research is key. Private label products are becoming increasingly popular in grocery stores. This gives you an alternative opportunity to access the food retail market. If retail buyers want your product for store branding, they will expect you to quote a “net net” price—which doesn’t include deals and allowances—with a cash discount. The retailer will typically absorb the promotional costs and listing allowances and will determine the retail pricing. Club warehouses and stores offer foods under “everyday low pricing” schemes—a constant low product price is offered to the consumer as opposed to “high low” pricing supported by trade deals and allowances and special consumer promotions. These outlets will also expect you to quote a net price for your product.

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TRADE TERMS The following are some of the options that may form part of your pricing strategy. Listing Fees These are normally single payments made to retailers or distributors to encourage them to carry your products. The listing fee accounts for one-time set-up costs for administration, warehousing, computer listing, quality control and consumer advertising. Listing fees are negotiable and depend primarily on the product category and potential success of the product. The more certain the retailer or distributor is that your product will be successful, the less the necessity to recapture initial set-up costs. However, if your product isn’t a success, the retailer or distributor will want to recover all initial costs, including the costs of removing the failed product from store shelves and warehouses. In addition to listing fees, you must support your product with such extras as promotional ads and store demonstrations to help get listed. The retailer will often ask for free goods when you’re introducing a new product. Most retailers don’t charge listing fees for certain commodity groups, such as produce, meats, bakery and bulk items. For grocery items, fees can be as low as $200 to $300 per product or higher, depending on the product category and the retailer’s policies. Cash Discount This is a discount offered for payment of an invoice within a specified number of days from shipment or receipt of goods. The industry standard is one percent to two percent off the invoice if paid in 10 days, or the net invoice payable in 30 days. Discounts—Leaks and Swells This is a general allowance that’s given to offset the cost of product shrinkage or damage within cases. Damaged Goods Damaged product is usually returned within a certain time for compensation or sent to a reclamation centre (central warehouse). The supplier is billed via a debit note on a monthly basis.

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Guaranteed Sale If a product is risky or its potential success is questionable, the buyer will usually expect you to guarantee the sale of the product. You must agree to repurchase any unsold portion of the initial order. However, if the product is perishable—for example, produce or meat—the buyer will normally absorb the risk and take responsibility for the entire lot. Price Protection Market conditions might fluctuate so that the product price declines and becomes lower than the price you originally quoted. If this happens, you are expected to compensate the difference for any stock the retailer is holding. However, if market prices increase, the buyer will expect you to give sufficient notice so that he or she can purchase some product in advance of the price increase. Many retailers won’t accept price increases in November and December, because this is their busiest time. Product Liability Insurance Major distributors and retailers probably won’t carry food products from manufacturers that aren’t insured against lawsuits if consumers were to become ill or injured after consuming their goods.

DEALS AND ALLOWANCES You can use promotional deals and allowances to encourage retailers to list and sell more of your products. These tools also help maintain a sufficient turnover of your product so that it doesn’t get delisted due to poor sales. Deals and allowances alone won’t move additional product, but they will motivate buyers to list or promote your product over another and pass savings on to consumers through lower retail prices. Deals and allowances are usually negotiable, depending on the product categories and potential success of a new product. Often suppliers will offer the same deals and allowances to all retailers and distributors on a net basis. Published deals are common, where every retailer and distributor is offered the same allowance for the same period. Note: Although most distributors and retailers pass on deals and allowances to be reflected in the final price to the shopper, this isn’t always the case. You may be able to recommend the ultimate retail price, but you can’t control it. You can negotiate with the distributor or retailer to gain some influence in the final price, but ultimately it is the retailer’s decision. That’s why they call it the “manufacturer’s suggested retail price.”

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Co-operative Advertising You pay a percentage of the invoice price to the retailer or distributor to cover some of the costs for advertising the product in newspaper ads, flyers, etc. Generally two percent to five percent of the invoice value is used for co-op advertising. However, this percentage can vary from as little as one percent to as much as 15 percent, depending on the product category. Manufacturers normally “purchase” a package promotion at various times throughout the year to meet their advertising needs. These promotional packages and ad costs are set once a year and listed by retailers for suppliers. Most retailers book ads up to six months in advance. The promotional package prices are often negotiable, but only once the product is in the store. It’s important to keep in mind that these co-op advertising funds alone won’t pay for retail ads. Additional funds will be needed to cover ad costs. Suppliers of produce, fresh meats and bulk foods usually don’t pay for co-op advertising. However, they are expected to offer deals or off-invoice allowances to retailers to lower product prices during consumer promotions. Promotional or Off-Invoice Allowance This is normally a dollars-off-per-case allowance, which lowers the regular cost of the product to the retailer and offers savings to the shopper. Suppliers usually offer this allowance three to four times a year. In general, the trade expects a 10-percent allowance for a minimum of four weeks. When you offer the allowance, give the retailer a minimum of eight weeks lead time. Many retailers purchase 80 percent to 90 percent of their products on deals over the course of a year. In most cases, the allowance is used in conjunction with other merchandising vehicles— such as co-op advertising—to achieve in-store merchandising objectives. A retailer won’t buy and advertise an item if it doesn’t have an off-invoice allowance. Ad Cost/Bill-Back This is an allowance that supplements costs for such retail advertising as co-operative advertising, flyers, newspaper ads, point-of-sale material and media (radio or TV) within a store group.

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Display Allowance This allowance encourages in-store display activity and is paid to the retailer for all cases ordered and displayed during a specified time. Payment is usually by a separate cheque following proof of performance by the retailer. Inventory Deal Allowances of Free Goods It’s good business for you to offer incentives that will encourage retailers to carry your products for the first time. Incentives may include one case free for each store or a case allowance for a certain period—for example, 60 days—after an initial order. Free Goods “One free with 10” means order 11 cases, pay for 10. “One free with three” means order four cases, pay for three, etc. To calculate your actual cost, multiply the number of cases you’re paying for by the price per case. Then divide that figure by the number of cases ordered. For example: One free with 10 at $10.75 per case: 10 x $10.75 = $100.75 $100.75 divided by 11 = $9.77 per case actual cost Here’s an easy reference to see what free goods are worth expressed as a percentage. (The percentages below are rounded off to the nearest 10th): • • • • • • •

1 free with 2 = 33.3% 1 free with 3 = 25% 1 free with 5 = 16.7% 1 free with 10 = 9.1% 1 free with 12 = 7.7% 1 free with 20 = 4.7% 1 free with 25 = 3.8%

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Volume Rebates Volume rebates, usually one percent to five percent, are based on a percentage of the invoice price paid to the distributor. The volume rebate increases on an incremental increase in sales. The objective is to encourage the distributor to move additional cases over a given period. At the end of this period—for example, one year—an adjustment is made on the final payment to reflect the actual cases purchased. This is a retail performance incentive. Volume rebates, once offered to a retailer, are often difficult to withdraw. Before offering them, you should determine if your competitors are doing so, because rebates aren’t offered for all product categories. Over and Above On occasion, suppliers may offer allowances—for example, lump sum payments or per-case rebates—“over and above” the originally negotiated arrangements with retailers. This is done to strengthen promotions, clear out inventory at retailer warehouses or possibly when launching a new product. Note that retailers welcome “over and aboves,” but may expect such deals on a consistent basis. You should negotiate “over and aboves” annually, and the activity provided by the retailer in return for the allowance should be determined in advance of payment. You might also want to request confirmation that a particular deal or discount was passed on to the consumer. Ask if the retailer is willing to provide proof of performance, such as a copy of newspaper advertising or pictures of large or end displays. This material will be useful when you’re selling to other retailers or promoting your products to independent stores. Truckload Allowance/Minimum Delivery Size You may wish to offer a purchaser a discount for taking an entire truckload of product. For example, you could offer $1,000 off a 45,000—pound truckload, worked through to a per-case saving that will vary depending on the weight of the case.

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10. DISTRIBUTING YOUR PRODUCT In order to get your product to the consumer, you have to go through certain distribution channels—the paths that your goods, and title to the goods, follow. Distribution channels serve various functions, including: • • • • •

reducing the number of marketplace contacts and resulting in a more efficient system; matching the requirements of individual consumers to the outputs of various producers; standardizing to improve the efficiency of the system; holding inventory to increase market response and lower transportation costs; physical distribution of products to ensure that they are available for customers to purchase on demand.

It’s important to build good relationships with your distribution channels; remember that they are acting as “babysitters” for parts of your business that you aren’t interested in focusing on. For example, a retail chain partner acts as your retailing arm to consumers. The following terms are used in relation to distribution channels: •

Direct selling occurs when you sell products directly to consumers. Methods include catalogues, home parties, door-to-door selling, telephone sales and retail craft shows.

•

Indirect selling occurs when you sell to an intermediary, as opposed to an end user. Methods of indirect sales include selling your product to a retail store as well as using a wholesaler/distributor or broker/agent. Indirect sales can include club chains, hotels and institutions as well as any kind of retail shop.

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•

Wholesaler and distributor are two different terms used to describe the same distribution channel. A wholesaler/distributor buys products from producers and normally sells the goods to retail stores. When you use a wholesaler/distributor, you must still convince each individual store to stock the product. That’s why it’s best to use this distribution channel when you have detailed information about retailers or previous sales experience. A wholesaler or distributor usually represents complementary products and takes title of the goods. In most cases, you will be responsible for advertising and for getting listed with retail chains. However, a distributor may share some responsibility for promotions, especially for smaller retailers.

•

Broker and agent are two different terms used to describe the same distribution channel. Unlike the wholesaler/distributor, a broker/agent doesn’t take title of products. Instead, he or she provides a sales force to sell your goods for you. You may want to use this distribution channel if your product falls into a mainstream category such as frozen food, dry grocery, deli or beverage.

When you’re making decisions about direct selling, indirect selling, broker/agent or wholesaler/distributor, look at competitor practices and consumer needs. You don’t always have a choice about distribution channels; industry norms often determine which channels you have to use. For example, large retailers (grocery chains, department stores and club chains) may prefer to purchase exclusively through wholesalers/distributors and agents/brokers.

TYPES OF DISTRIBUTION CHANNELS7 Seven distribution channels are available for food companies. Direct Channel ProducerÆ End User: • This is preferable when technical specifications or rigorous performance requirements apply. • The volume of the product delivered to a customer must be of an economic delivery size so that freight isn’t a penalty, or of such value that transportation costs don’t matter. The One-Step Channel (Consumer Markets) ProducerÆ RetailerÆ End User: • In consumer markets, the intermediary is usually a retailer. • You negotiate directly with the buyer for the retail chain. __________________________________________________________________________________________ Beckman, M. Dale; Kurtz, David; and Boone, Louis. Foundations of Marketing. Dryden Canada: Toronto, Ontario. 1992. pp. 338-391.

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The One-Step Channel (Hotels, Restaurants and Institutions—HRI Trade) ProducerÆ WholesalerÆ End User: • The wholesaler takes title to the goods that are being handled. • The wholesaler’s sales force is responsible for selling to the end user. • The wholesaler can reach hundreds of HRI accounts more economically than the producer can. The Agent Channel (HRI Trade) ProducerÆ Agent/BrokerÆ Industrial User: • The agent becomes your sales force, making the sale but never taking title to the product. Traditional Small Retail Channel (Consumer Markets) ProducerÆ WholesalerÆ RetailerÆ End User: • This channel is used by small processors who are producing limited lines of products and trying to sell to small retailers. Agent/Wholesaler Channel (HRI Trade) ProducerÆ Agent/BrokerÆ WholesalerÆ End User: • Use this channel if you are attempting to market a product into a new market area. • An agent/broker familiar in the new market is used. All-Aboard Channel ProducerÆ Agent/BrokerÆ WholesalerÆ RetailerÆ End User: • This channel is used when products are produced by a large number of small companies that then use a broker to bring buyer and seller together. • The broker is an independent sales force used to contact large, scattered wholesalers. • This channel is also used if your product can deteriorate and you must find a buyer quickly.

BUILDING A CUSTOMER BASE You can go to a number of sources to develop a list of potential customers for your product. These contacts are given in the Resources section of this guide.

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DECIDING ON A DISTRIBUTION CHANNEL You need to look at a number of factors when you’re deciding on a distribution channel.8 Market Factors Short channels of distribution tend to be used if: • • • •

potential customers are geographically concentrated in a specific region; there is a small number of buyers; orders are relatively few in number but large in size; or specialized knowledge, technical know-how and regular service are required by the customer.

Product Factors Short channels of distribution tend to be used if: • •

the product is perishable; or the product has a high per-unit value.

In general, the lower the per-unit value of the product, the longer the channel. The Producer Short channels of distribution are more likely if: • •

you have adequate resources so that you can hire your own sales force rather than relying on that of the wholesaler; or you have a broad product line, making it feasible to cover the selling costs over a large volume.

Competitive Factors Short channels of distribution are more likely if you feel that independent intermediaries aren’t adequately promoting your product.

__________________________________________________________________________________________ Beckman, M. Dale; Kurtz, David; and Boone, Louis. Foundations of Marketing. Dryden Canada: Toronto, Ontario. 1992. pp. 400-401.

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Information for the Distributor The distributor will want certain pieces of information from you, including the following: • • • • • • • • • • •

a description of the product; the product’s size; whether the product is fresh, frozen, etc.; what the product’s shelf life is; whether the product is seasonal; packaging (Is the package prone to breakage? Who takes credit for breakage?); what market the product is in currently, or what market you would like it to be in; the distributor’s costs (what he or she can sell it for); the store’s costs (suggested retail selling price); current and future sales promotion activities (sampling, merchandising, coupons or allowances); and the distributor’s territory and responsibilities to you.

If you’re dealing with multiple distributors, providing this information (and more) in a standard electronic format is an appealing approach. You may wish to investigate the option of an electronic catalogue based on your products’ barcodes or other identifying marking. An electronic catalogue could include “public information”—such as size and description— that is accessible to all of your customers. It could also have several private sections, where partner promotion activities and other more confidential information can be stored.

HOW TO GET YOUR PRODUCT LISTED When a retailer puts your product on the store’s shelves, this is often referred to as being “listed.” The term comes from larger grocery wholesalers that sell to a network of stores. The store buyers make their purchases from a central product list of available items. In most cases, store operators within a chain purchase at least 60 percent of the products they carry from their wholesaler’s pre-approved lists. Smaller, independent stores operating outside of a chain may have more discretion to buy from a variety of suppliers. Food products proliferate on the market, so getting a listing in a large retail chain isn’t a simple process. Generally, to make room for new products, another product will need to be bumped off the shelf (be “delisted”) or assigned less shelf space. You need to convince the buyer that your product is unique. You will also have to provide specific product/market information that shows how the product will succeed in the marketplace and bring more returns to the retailer than a competing product. Although traditional grocery store shelves are dominated by national brands and private label products, there are opportunities for smaller businesses to enter the retail market with unique, quality food products that meet consumer demands.

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Choosing the Right Stores By this stage, you will probably have decided the type of stores you are interested in selling to; this is part of developing your marketing package. To ensure that your product sells well, it must be where consumers who are likely to buy your product shop, available at the quality/price/value they want, and meet their needs. Look at your business goals and resources. If all you want is for your business to provide a part-time income while you sell locally to two or three stores, you will likely want to consider small, independent stores run by local businesses. If you have a unique gourmet or specialty product, you may want to approach gourmet stores and cooking schools in your town, the province, the country or export markets. If you have something that you think would appeal to a value— conscious consumer, you may want to consider the mainstream grocery retail stores that are targeted at the budget shopper, such as No Frills™ or Food Basics™. Larger chain stores generally have their own in-house distribution system for stores across the chain. However, specialty or health food stores tend to be supplied by a combination of local suppliers and wholesalers/distributors that aren’t affiliated with their stores. Much of the information that follows is aimed at giving you help in selling to wholesalers/distributors. Who Decides What to Buy? You should investigate very carefully the buying policies of the food retail companies you want to approach. The rule of thumb for new products is that buying decisions are made at the retail company’s headquarters, not at the store level. Some managers may have input in identifying potential new products for their particular store. However, the majority don’t have the authority to secure listings. You may risk non-payment if you close a deal at the store level, even if it’s an independent store of a corporate chain. Within each organization, identify the buyer responsible for purchasing your product. Buyers are classified by product category or by specific products. Get information about the organization’s purchasing policies from the buyer before you present your product. Some food retail companies make decisions about buying new items by committee. This process allows buyers, category managers, merchandisers and executives to pool their expertise so that they can achieve the right balance of merchandise categories within overall company strategies. Committees usually meet biweekly or monthly to review new product applications.

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In some organizations within certain product categories, buyers are authorized to approve or reject items on the spot if they feel strongly about the product. If the buyer is uncertain about the item, he or she will bring it before the committee. You need to provide sufficient relevant information about your product so that informed buying decisions can be made. In addition to basic product/vendor information, buyers and committees expect details about consumer preferences, shelf space, distribution allowances, test market results, advertising and consumer promotional support. Purchase Planning Cycles Retailers/distributors may have specific cycles for certain product categories that fit in with seasonal promotions. If you want to sell products for the Christmas season—such as bakery, confectionery and poultry products—you should approach retailers/distributors at least six months in advance. If you have perishable items such as produce or fresh meats, buyers may order three to six weeks in advance of promotions. What’s more, some retailers/distributors may forward-contract production of horticultural products up to one year in advance of actual product sales. Purchase planning cycles can differ greatly between product categories and retailers. You need to familiarize yourself with buyers’ seasonal order deadlines and contracting policies and target your sales efforts accordingly. Presenting Your Product Your critical first step to securing a listing with a retailer/wholesale distributor is presenting your product. Your presentation skills, level of detail of the information you present and adherence to correct protocol according to the company’s policy will influence the buyer’s decision to list. Once you have identified the buyer, telephone him or her to make an appointment to present your product. Allow at least two weeks to get a meeting scheduled. Before this meeting, you may have to complete a “New Product Presentation” form from the organization. This form is often used for grocery items. It may be mandatory if you are presenting new grocery items to retailers. However, if you’re selling perishable items such as produce, meat and bakery goods, you may be able to complete a shorter version of the form or even just negotiate a contract on the spot. The protocol differs among retailer/wholesale distributors and product categories. Check it out before your appointment. If you do need to complete the form, you will be asked to provide basic information such as address, telephone, fax and sales representative/broker. You’ll also be asked for general product information including item description, pack/case dimensions and weights, Universal Product Codes (UPC), pallet patterns, pricing information, trade terms, deals, allowances, promotional support, order sizes (that is, minimum quantities) and delivery information.

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At the Presentation It’s important that you provide as much information as possible when you are presenting your product. This may be the only opportunity you’ll have to try to convince the buyer (and the buying committee, which you won’t meet) to list your product. You should also provide several product samples, company and product brochures and details about the following:

• • • • • • • • • • • • •

the unique benefits your product provides; its planned positioning in the marketplace; suggested positioning in-store; cross-merchandising options; planograms (schematics for shelf-space positioning); a one-year marketing plan that includes proposed purchases of ad support; the distribution system; delivery arrangements; options/costs; special terms and allowances; additional marketing support such as advertising, in-store product demonstrations, point-of-sale material, consumer product information and special events; a list of competitors who are currently carrying your product; and relevant market research on the product, category, size and growth of the market, and test-market results.

Buyer Preferences Ontario retailers generally state that they would prefer to purchase Ontario products over imported products when everything else—such as quality, price, supply and allowances—is comparable. When approaching a retailer, you should emphasize that you are a local supplier, because you may be more likely to be listed, even on a test basis. (However, once an Ontario supplier’s product is on the shelf, it is expected to perform as well as any other successful product—slow sales will result in delisting.)

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Planograms A planogram is an electronically generated representation of a section of shelving in a retail environment. Retailers use the information to develop planograms, which help them to plan for optimal use of shelf space. The planogram is given to the stores to show the merchandisers how to set up the shelves. A planogram can be an impressive part of your sales presentation, providing a mockup of what a shelf would look like if your product were on it. For more information, contact: GS1 Canada www.gs1.org 1500 Don Mills Road, Suite 800 Toronto, Ontario M3B 3L1 Tel: 416-510-8039 Toll Free: 1-800-567-7084 Fax: 416-510-1916 E-mail: [email protected] After the Presentation Once you have presented your product to the buyer, you may be given approval or rejection at that meeting. However, it’s more likely that you’ll have to wait two to four weeks, depending on the product category and whether a committee is involved in the buying decision (perishables tend to have a faster response time). In some cases, the buyer will agree to test-market the product in a few stores for a set time (for example, two to six months) before committing to listing the product. However, this is more the exception than the rule. If your product was rejected after the initial presentation, that isn’t necessarily the end. You can approach the retailer again if you have made appropriate product modifications or enhanced trade terms to meet the needs of the retailer. Be aware, though, that many retail organizations only allow previously rejected products to be reviewed for listing again after three to six months have passed.

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HOW TO BE A SUCCESSFUL SUPPLIER Retailers have used adjectives such as “professional,” efficient,” “well-informed,” “ambitious” and “creative” when asked to describe a successful supplier. However, effective actions leading to results speak louder than words. Communication A successful supplier must consider the buyer’s needs and communicate all relevant information concisely and on time. Important information includes: • • • • • • •

price changes; promotional deals and allowance; product shortages and date of availability; new products; discontinued items; changes in packaging, labelling or size; and promotional activities.

You should always have product samples, price lists and deal information readily available for the buyer. Frequency of Contact When retailers were surveyed, they indicated that successful suppliers contact buyers on a regular basis—for example, every two weeks—to ensure that supplier and product are meeting retailers’ needs and expectations. Getting a product listed doesn’t mean that it will stay listed. You will have to follow up with adequate merchandising and promotional efforts to ensure that the turnover rate of your product meets or exceeds expectations. Turnover Rate You and the retailer should agree on the expected turnover rate of your product at the store level. Then you need to constantly monitor this rate and adjust deals, allowances and promotional efforts to ensure that retailer expectations are satisfied. Keep in mind that the number of times a case of your product sells (the “case turns”) and the size of cartons are extremely important. When buyers check velocity reports, they usually look at the number of turns, not the case size. It may be to your advantage to package 12 units per case instead of 20, because increased turns are perceived to equate to increased sales volumes.

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Merchandising Merchandising focuses directly on using the trade and the purchase environment as vehicles for enhancing consumer sales. It affects the trade’s acceptance of and support for the product in-store. Merchandising is an ongoing activity. Aspects of merchandising include: • in-store location; • shelf space; • shelf position and layout; • shelf communication materials; • distribution; • brand; • size; and • inventory. Merchandising tools include: • display bins; • signage; • racks; and • point-of-sale materials such as signs. Suppliers often hire merchandising companies to monitor in-store product displays, product stocks and so on, to ensure that their products are being presented as expected. Warehousing and Distribution You should identify any shipping problems, stock shortages, over-shipments and damages. Then you need to take immediate action to correct them. It’s also important to monitor the service of freight companies to be sure that they are meeting your needs and those of your buyers. Category Management The industry often uses terms to refer to its buying practices and the process of effectively moving product from the raw stage to the consumer.

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Category management is a distributor/supplier process of managing categories as strategic business units. This is a process of maximizing profits on the basis of product movement by category, not by brand item. It’s done through efficient use of item assortment, pricing, promotion, shelf presentation and other techniques to move goods out of warehouses to consumers. You should identify which buyer has responsibility for the category that your product falls into. Talk to retailers about your profitability and provide factual support. For example, you can indicate the incremental sales gains from merchandising programs and discuss distribution of support. Be prepared to follow up promotional programs with reviews of the results, and share the information with retailers so that they can modify efforts to increase mutual benefits. E-Business and Electronic Data Exchange These days, it’s becoming increasingly important for producers to understand electronic commerce and the ability to use the Internet to receive orders. You should be prepared to invest in the equipment that will make this possible. Becoming an affiliate member of a grocer trade organization should give you a pipeline to public information about electronic commerce initiatives. Find out what type of computer system the retailer operates and how you can interface with it. Retailers who are wholesalers may have integrated warehouse and store computing; they may be prepared to allow dial-in access for suppliers. This would enable you to exchange information about purchase requirements, purchase orders, etc.

CHOOSING A BROKER Make sure that you need a broker’s assistance before you hire one. For example, if you’re selling to President’s Choice, you may need a broker, but if you’re dealing with Sam’s you may not. When you use a broker, it’s like hiring a sales force, and can be immensely important to the success of your company. Here are some of the benefits of a broker compared to a salesperson: • • • •

•

Food brokers represent the products of many companies and can achieve better market coverage for lower cost. You will get a sales force at minimal cost. Brokers offer you the link to electronic commerce functions. Most brokers offer a menu of services that covers every area of the business cycle except the actual manufacturing. Services can include head office contact, retail and end user coverage, invoicing, warehousing, developing marketing plans, tracking of promotional spending, retail audit and much more. A broker can give you wide geographic coverage for less cost.

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The food broker’s main strength is local market and account knowledge. Your best approach to finding a broker is to contact the Canadian Food Brokers Association (CFBA). CFBA works, without charge, to educate processors and help them in selecting a broker. The association also offers a service to aid manufacturers in contacting suitable firms, and you can get a list of members from the association. Contact: Canadian Food Brokers Association c/o Food and Consumer Products of Canada www.fcpc.ca Tel: 416-510-8024 E-mail: [email protected] You can get lists for the United States from the Grocery Manufacturers of America. This organization offers several documents on choosing a broker, including: • • • • •

How to Select Your Broker; Handling Competing Items; A Guide for Developing Food Brokers—Principal Agreements; Professional Working Relations Between Manufacturers and Food Brokers; and Guidelines for Manufacturers and Food Brokers Serving the Food Service Industry.

For more information, contact: Grocery Manufacturers of America www.gmabrands.com 2401 Pennsylvania Avenue N.W., 2nd Floor Washington, DC 20037 Tel: 202-337-9400 Fax: 202-337-4508 Food manufacturers’ associations often hold exhibitions, inviting brokers from target markets to attend. Federal and provincial government trade development groups also plan and manage trade shows in target market areas. These are often cost-efficient because a variety of discounts due to group participation are available. There are also national associations of brokerage firms that hold annual exhibitions. At these shows, companies searching for representation exhibit their products in a trade show format.

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RESOURCES PART 1: DOING YOUR RESEARCH Libraries Libraries that specialize in government publications include: Metropolitan Toronto Reference Library www.tpl.toronto.on.ca Business and Social Science Desk 789 Yonge Street Toronto, Ontario M4W 2G8 Tel: 416-393-7131 Statistics Canada Publications www.statcan.ca 25 St. Clair Avenue East, 10th Floor Toronto, Ontario M4T 1M4 Tel: 416-973-6586 Toll Free: 1-800-263-1136 Fax: 416-973-7475 Statistics Canada Publications sells government publications and will provide research services for a minimum fee of $40.

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The Canadian Agriculture Library Agriculture and Agri-Food Canada www.agr.gc.ca/cal Sir John Carling Building 930 Carling Avenue Ottawa, Ontario K1A 0C5 Tel: 613-759-7068 Fax: 613-759-6627 The library offers a business-oriented service where callers can obtain marketing, trade and regulatory information over the phone. The library doesn’t lend materials to the general public. University of Guelph Library www.uoguelph.ca Guelph, Ontario N1G 2W1 Tel: 519-824-4120, ext. 52091 The University of Guelph Library contains extensive information about the food industry in Canada and worldwide. Even if you aren’t associated with the university, you can still use all the materials on-site, receive assistance from library staff and photocopy materials to take with you. On-Line Data Sources FOODNET www.foodnet.fic.ca FOODNET is a database that’s accessible on the Internet. It includes information about food market trends (domestic and international); a supplier listing; sources of food research expertise (including laboratories); food safety regulations and related information; an events calendar (including trade shows); and a listing of food labelling consultants. Or contact: Food Processors of Canada www.foodprocessors.ca 350 Sparks Street, Suite 605 Ottawa, Ontario K1R 7S8 Tel: 613-722-1000 Fax: 613-722-1404 AAFC: Agriculture and Agri-Food Canada Online www.agr.gc.ca

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AAFC provides easy access to information about news, trade, policies, commodity prices, regulations, agri-science and technology, federal agri-food programs and officials and expertise. All you need is a telephone or a fax machine if you want documents faxed to you. A computer and modem provide access to the bulletin board and Internet versions of the service. Voice or Fax-Back: 1-800-410-7104 (in Ottawa: 613-759-7959). Or contact: The Canadian Agriculture Library Agriculture and Agri-Food Canada www.agr.gc.ca/cal Sir John Carling Building 930 Carling Avenue Ottawa, Ontario K1A 0C5 Tel: 613-759-1000 Fax: 613-759-6726 Ontario Ministry of Agriculture, Food and Rural Affairs www.omafra.gov.on.ca 1 Stone Rd. West Guelph, Ontario N1G 4Y2 Tel: 519-826-3100 Toll Free: 1-888-466-2372 OMAFRA provides access to news, information about trade, policies, regulations, trade shows, provincial agri-food programs and food industry events. CISTI: Canada Institute for Scientific and Technical Information www.cisti.nrc.gc.ca National Research Council of Canada Bldg. M-55, 1200 Montreal Road Ottawa, Ontario K1A 0R6 Tel: 613-993-1600 Toll Free: 1-800-668-1222 Fax: 613-952-9112 Fee-for-service. Reference and Referral Services Tel: 613-993-5290 Fax: 613-952-8239 Customized literature searches will give you relevant references on any topic in science, technology or medicine. They can also conduct patent searches and refer you to experts in industry, academia or government research organizations.

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Electronic Products and Services Tel: 613-998-8544 Toll Free: 1-800-668-1222 Fax: 613-952-8244 Provides access to a number of databases, including: Swetscan, an electronic table of contents service for more than 12,000 journals on science, technology, medicine, social sciences and business. Updated weekly. CAN/OLE, an automated information retrieval system that provides a fast, easy way to identify, locate and order documents on almost any topic. Canada-Ontario Business Service Centre www.cbsc.org/ontario 151 Yonge Street, Suite 905 Toronto, Ontario M5C 2W7 Tel: 416-775-3456 Toll Free: 1-800-567-2345 Fax: 416-954-8597 This is a federal/provincial initiative designed to improve business access to a wide range of information on government services, programs and regulations. Free access is available. TRADE JOURNALS General Canadian Business http://www.cbp.ca/ Tel: 1-800-465-0700 Plant—Canada’s Industrial Newspaper www.plant.ca Tel: 416-764-2000 Food Industry Canadian Grocer www.bizlink.com/cangrocer.htm Tel: 1-800-268-9119 Fancy Food Magazine (U.S.) www.fancyfoodmagazine.com Tel: 312-849-2220

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Food Distribution Magazine (U.S.) Tel: 561-447-0810 Food in Canada www.bizlink.com/food.htm Tel: 416-764-1755 The Food Institute Report (U.S.) www.foodinstitute.com Tel: 201-791-5570 Food Processing (U.S.) www.foodprocessing.com Tel: 630-467-1300 Food Technology www.ift.org Tel: 312-782-8424 Foodservice and Hospitality www.foodserviceWorld.com Tel: 416-447-0888 Gourmet News (U.S.) www.gourmetnews.com Tel: 207-846-0600 The Gourmet Retailer (U.S.) www.gourmetretailer.com Tel: 305-446-3388 International Food Marketing & Technology www.harnisch.com Tel: 49-911/20 18-0 Ontario Restaurant News www.can-restaurantnews.com Tel: 905-206-0150 Packaging Digest (U.S.) www.packagingdigest.com Tel: 630-288-8000 Prepared Foods (U.S.) www.preparedfoods.com Tel: 630-616-0200 Progressive Grocer www.progressivegrocer.com Tel: 646-654-7258

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Western Grocer www.mercury.mb.ca Tel: 204-954-2085 Western Restaurant News www.mercury.mb.ca Tel: 204-954-2085 Whole Foods Magazine www.wfcinc.com Tel: 908-769-1160 Sub-Sector Specific Bakers Journal www.bakersjournal.com Tel: 519-582-2513 Baking and Snack (U.S.) www.sosland.com Tel: 816-756-1000 Baking Buyer (U.S.) www.sosland.com Tel: 816-756-1000 Beverage Retailer (U.S.) www.beverageretailer.com Tel: 662-236-5510 Beverage World (U.S.) www.beverageworld.com Tel: 847-763-9050 Canada Poultryman www.canadianpoultrymag.com Tel: 519-582-2513 Dairy Foods (U.S.) www.dairyfoods.com Tel: 630-616-0200 Manufacturing Confectioner (U.S.) www.gomc.com Tel: 201-652-2655 Meat and Poultry (U.S.) www.meatpoultry.com Tel: 816-756-1000

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Milling and Baking News (U.S.) www.bakingbusiness.com Tel: 816-756-1000 Oils and Fats International (U.K.) www.oilsandfatsinternational.com/ Tel: + 44 (0) 1273 407980 Poultry Briefs www.devalkconsulting.com Tel: 613-739-7850

PART 2: YOUR RESPONSIBILITIES AND OBLIGATIONS Measurement Canada www.mc.ic.gc.ca Belleville District Office 328 Sidney Street Belleville, Ontario K8P 3Z3 Tel: 613-969-3306 Fax: 613-969-3665 Hamilton District Office 251 Arvin Avenue Stoney Creek, Ontario L8E 2L9 Tel: 905-662-5900 Fax: 905-662-6754 London District Office Federal Building 78 Meg Drive London, Ontario N6E 3T6 Tel: 519-680-7365 Fax: 519-680-7759 Toronto District Office 232 Yorktech Drive Markham, Ontario L6G 1A6 Tel: 905-943-8700 Fax: 905-943-8717

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PART 3: DEVELOPING AND MANUFACTURING YOUR PRODUCT Product Development Laboratories Compusense www.compusense.com 679 Southgate Drive Guelph, Ontario N1G 4S2 Tel: 519-836-9993 Fax: 519-836-9898 • • • •

sensory evaluation product development investigative quality control services time-intensity research

Contract Testing Inc. www.contracttesting.com 119 West Drive Brampton, Ontario L6T 2J6 Tel: 905-456-0783 Fax: 905-456-1172 • • •

consumer product testing focus groups sensory quality maintenance programs

Guelph Food Technology Centre www.gftc.ca 88 McGilvray St. Guelph, Ontario N1G 2W1 Tel: 519-821-1246 Fax: 519-836-1281 • • • • • • • •

food analysis food safety commodities research fermentation packaging consumer studies nutrition research food engineering

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Silliker Canada Co. www.silliker.com 90 Gough Road, Unit 4 Markham, Ontario L3R 5V5 Tel: 905-479-5255 Fax: 905-479-4645 • • • • • • • •

Accredited by: Canadian Food Inspection Agency (CFIA), Standards Council of Canada (SCC) chemical and microbiological analysis nutritional labelling quality assurance programs shelf-life studies process improvement (GMPs) sensory evaluation packaging (some)

Maxxam Analytics www.maxxam.ca 6740 Campobello Road Mississauga, Ontario L5N 2L8 Tel: 905-817-5700 Fax: 905-817-5777 [email protected]

Certified / Accredited by: Standards Council of Canada (SCC), Environment Canada, Canadian Association of Environment Analytical Laboratories (CAEAL), Canadian Food Inspection Agency (CFIA) • • • • • • •

nutritional labelling microbiological testing chemical analysis shelf-life studies residual testing foreign matter identification environmental testing

Ortech www.ortech.ca 2395 Speakman Drive Mississauga, Ontario L5K 1B3 Tel: 905-822-4111 Fax: 905-823-1446 • • • •

Technical consultation problem solving chemical/physical characterization technology transfer

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Treloar Product Development Inc. www.treloar.on.ca P.O Box 58023 500 Rossland Rd West Oshawa ON L1J 8L6 Tel: 905-433-0598 Fax: 905-433-3861 • •

food product development technical consultation

Research Laboratories Compusense www.compusense.com 679 Southgate Drive Guelph, Ontario N1G 4S2 Tel: 519-836-9993 Fax: 519-836-9898 • • • •

sensory evaluation product development investigative quality control services time-intensity research

Silliker Canada Co. www.silliker.com 90 Gough Road, Unit 4 Markham, Ontario L3R 5V5 Tel: 905-479-5255 Fax: 905-479-4645 • • • • • • • •

Accredited by: Canadian Food Inspection Agency (CFIA), Standards Council of Canada (SCC) chemical and microbiological analysis nutritional labelling quality assurance programs shelflife studies process improvement (GMPs) sensory evaluation packaging (some)

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Department of Plant Agriculture www.plant.uoguelph.ca Ontario Agriculture College University of Guelph 50 Stone Road West Guelph, Ontario N1G 2W1 Tel: 519-824-4120 ext. 53391 Fax: 519-763-8933 •

storing and processing of fruit and vegetables

Lipid Analytical Laboratories www.lipidanalytical.com 150 Research Lane, Suite 100 Guelph, Ontario N1G 4T2 Tel: 519-766-1510 Fax: 519-766-1511 •

analysis and research on lipids (fats)

University of Toronto www.utoronto.ca/nutrisci Department of Nutritional Sciences Faculty of Medicine Fitzgerald Building 150 College Street Toronto, Ontario M5S 3E2 Tel: 416-978-2747 Fax: 416-978-5882

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Equipment Sources Canadian Process Equipment and Control News www.cpecn.com 29-588 Edward Avenue Richmond Hill, Ontario L4C 9Y6 Tel: 905-770-8077 Fax: 905-770-8075 Food in Canada www.bizlink.com/food.htm One Mount Pleasant Road, 7th Floor Toronto, Ontario M4Y 2Y5 Tel: 416-764-2000 Fax: 416-764-1755 The October issue annual Buyers’ Guide contains information on processing equipment and packaging. Canadian Institute of Food Science and Technology www.cifst.ca 3-1750 The Queensway, Suite 1311 Toronto, Ontario M9C 5H5 Tel: 905-271-8338 Fax: 905-271-8344 Food Processing Machinery and Supplies Association www.fpmsa.org 200 Daingerfield Road Alexandria, Virginia 22314 Tel: 703-684-1080 Fax: 703-548-6563 The association offers a “fax-back” service: food companies can fax a description of their equipment needs. Guelph Food Technology Centre www.gftc.ca 88 McGilvray Street Guelph, Ontario N1G 2W1 Tel: 519-821-1246 Fax: 519-836-1281

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Food Processing Magazine www.foodprocessing.com Putman Media 555 West Pierce Road, Suite 301 Itasca, Illinois 60143 Tel: 630-467-1300 Thomas Register www.thomasregister.com 5 Penn Plaza New York, New York 10001 Tel: 212-290-7277 Fax: 212-290-7365

PART 6: QUALITY ASSURANCE Quality Testing Laboratories ACCREDITED LABORATORIES Silliker Canada Co. www.silliker.com 90 Gough Road, Unit 4 Markham, Ontario L3R 5V5 Tel: 905-479-5255 Fax: 905-479-4645 • • • • • • • •

Accredited by: Canadian Food Inspection Agency (CFIA), Standards Council of Canada (SCC) chemical and microbiological analysis nutritional labelling quality assurance programs shelf-life studies process improvement (GMPs) sensory evaluation packaging (some)

Maxxam Analytics www.maxxam.ca 6740 Campobello Road Mississauga, Ontario L5N 2L8 Tel: 905-817-5700 Fax: 905-817-5777

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Certified/Accredited by: Standards Council of Canada (SCC), Environment Canada, Canadian Association of Environment Analytical Laboratories (CAEAL), Canadian Food Inspection Agency (CFIA) • • • • • •

nutritional labelling microbiological testing chemical analysis shelf-life studies residual testing foreign matter identification

OTHER LABORATORIES Laboratory Services A Division of the University of Guelph www.uoguelph.ca/labserv P.O. Box 3650 5 Stone Road West Guelph, Ontario N1H 8J7 Tel: 519-823-1268 Fax: 519-767-6240 • • • •

microbiological testing chemical analysis nutritional composition testing sensory evaluation for dairy products, foods and environmental sample

CanTox www.cantox.com 2233 Argentia Road, Suite 308 Mississauga, Ontario L5N 2X7 Tel: 905-542-2900 Fax: 905-542-1011 Compusense www.compusense.com 679 Southgate Drive Guelph, Ontario N1G 4S2 Tel: 519-836-9993 Fax: 519-836-9898 • sensory evaluation • product development • investigative quality control services • time-intensity research

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Contract Testing Inc. www.contracttesting.com 119 West Drive Brampton, Ontario L6T 2J6 Tel: 905-456-0783 Fax: 905-456-1172 • • •

consumer product testing focus groups sensory quality maintenance programs

Guelph Food Technology Centre www.gftc.ca 88 McGilvray St. Guelph, Ontario N1G 2W1 Tel: 519-821-1246 Fax: 519-836-1281 • • • • • • • •

food analysis food safety commodities research fermentation packaging consumer studies nutrition research food engineering

Labstat Inc. www.labstat.com 262 Manitou Drive, Unit #5 Kitchener, Ontario N2C 1L3 Tel: 519-748-5409 Fax: 519-748-1654 • • •

complete nutritional labelling program comprehensive vitamin and mineral analyses accredited microbiology laboratory

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Ryerson University www.ryerson.ca/foodandnutrition School of Nutrition 350 Victoria Street Toronto, Ontario M5B 2K3 Tel: 416-979-5074 Fax: 416-979-5204 • • • • •

consumer studies/surveys packaging quality assurance sensory evaluation irradiation

University of Toronto www.utoronto.ca/nutrisci Department of Nutritional Sciences Faculty of Medicine Fitzgerald Building 150 College Street Toronto, Ontario M5S 3E2 Tel: 416-978-2747 Fax: 416-978-5882 • • •

nutrition and health food safety regulatory affairs

Food Safety Information Sources Canadian Research Institute for Food Safety (CRIFS) www.uoguelph.ca/crifs Department of Food Science, University of Guelph Guelph, Ontario N1G 2W1 Tel: 519-824-4120, ext. 58010 Fax: 519-763-0952 •

CRIFS is co-sponsored by the University of Guelph, Agriculture and Agri-Food Canada, Health Canada and the Ontario Ministry of Agriculture, Food and Rural Affairs.

Food Safety Consortium—University of Toronto www.utoronto.ca/nutrisci/foodsafe.html Department of Nutritional Sciences, Faculty of Medicine University of Toronto 150 College Street Toronto, Ontario M5S 3E2 Tel: 416-978-0799 Fax: 416-978-5882

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American Institute of Baking (AIB) www.aibonline.org 1213 Bakers Way P.O Box 3999 Manhattan, Kansas 66505-3999 Tel: 785-537-4750 Fax: 785-537-1493 •

This organization offers both publications and courses dealing specifically with sanitation, as well as baking in general.

American Association of Cereal Chemists www.aaccnet.org 3340 Pilot Knob Road St. Paul, Minnesota 55121-2097 Tel: 651-454-7250 Fax: 651-454-0766 •

This association offers publications on raw material storage and sanitation practices as well as many other subjects related to cereal chemistry.

PART 7: PACKAGING AND LABELLING Sources of Metal Containers Alcan (Rio Tinto Alcan) Foil Products www.alcan.com 191 Evans Avenue Toronto, Ontario M8Z 1J5 Tel: 416-503-6700 Fax: 416-503-6720 Ball Packaging Products Canada www.ball.com 1121 Walkers Line Burlington, Ontario L7N 2G4 Tel: 905-335-4780 Fax: 905-319-4083 RePack Canada www.repackcanada.com Mississauga, Ontario Tel: 1-877-804-4841 E-mail: [email protected]

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Sources of Glass Containers Consolidated Bottle Company www.consbottle.com 77 Union Street Toronto, Ontario M6N 3N2 Tel: 416-656-7777 Toll Free: 1-800-561-1354 Fax: 416-656-6394 Richards Packaging Inc. www.richardspackaging.com 3115 Lenworth Drive Mississauga, Ontario L4X 2G5 Tel: 905-624-3391 Fax: 905-624-2288 Sources of Paper Containers Container Corporation of Canada www.containercorp.com 68 Leek Crescent Richmond Hill, Ontario L4B 1H1 Tel: 905-764-3777 Fax: 905-764-3784 J.J. Marshall Inc. www.jjmarshall.com 9780 Waverly Street Montreal, Quebec H3L 2V5 Tel: 514-381-5647 Fax: 514-381-6636 Jones Packaging Inc. www.jonespackaging.com 3000 Page Street London, Ontario N5V 5H3 Tel: 519-451-2100 or 1-800-265-9093 Fax: 519-451-2107

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Cascades Inc. www.somervillepackaging.com 7830 Tranmere Drive Mississauga, Ontario L5S 1L9 Tel: 905-678-8211 Fax: 905-678-7233 Tetra Pak Canada Inc. www.tetrapak.ca 1610 – 16th Avenue Richmond Hill, Ontario L4B 4N6 Tel: 905-780-6030 Fax: 905-780-4900 Sources of Plastic Containers ACO Container Systems Ltd. www.acotainers.com 794 McKay Road Pickering, Ontario L1W 2Y4 Tel: 905-683-8222 Fax: 905-683-2969 Consolidated Bottle Company www.consbottle.com 77 Union Street Toronto, Ontario M6N 3N2 Tel: 416-656-7777 Toll Free: 1-800 561-1354 Fax: 416-656-6394 Container Corporation of Canada www.containercorp.com 68 Leek Crescent Richmond Hill, Ontario L4B 1H1 Tel: 905-764-3777 Fax: 905-764-3784 Curwood Packaging Canada Ltd. www.curwood.com 114 Armstrong Avenue Georgetown, Ontario L7G 4S2 Tel: 905-877-5201 Toll Free: 1-800-387-2205 Fax: 905-877-6711 •

Specialty: trays

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Polytainers www.polytainers.com 197 Norseman Street Toronto, Ontario M8Z 2R5 Tel: 416-239-7311 Fax: 416-239-0596 •

Specialty: white formed containers

Pretium Packaging www.pretiumpkg.com 3300 Route Transcanadienne Pointe-Claire, Quebec H9R 1B1 Tel: 514-428-0002 Fax: 514-428-0011 Par-Pak Ltd. www.parpak.com 26 Victoria Crescent Brampton, Ontario L6T 1E5 Tel: 905-792-3000 Toll Free: 1-888-272-7725 Fax: 905-792-3330 •

Specialty: trays

Sources of Laminated Films Celplast Packaging Systems Limited www.celplast.com 67 Commander Boulevard, Unit 4 Scarborough, Ontario M1S 3M7 Tel: 416-293-4330 Fax: 416-293-9198 Curwood Packaging Canada Ltd. www.curwood.com 114 Armstrong Avenue Georgetown, Ontario L7G 4S2 Tel: 905-877-5201 Toll Free: 1-800-387-2205 Fax: 905-877-6711 Poly-Cel Packaging Products 6141 Atlantic Drive Mississauga, Ontario L5T 1L9 Tel: 905-670-2414 Fax: 905-670-2416

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Winpak www.winpak.com 85 Laird Drive Toronto, Ontario M4G 3T8 Tel: 416-421-1700 Fax: 416-421-7957

Nutrition Labelling Canada Food Production and Inspection Branch Canadian Food Inspection Agency - Food Label Service www.cfia-acia.agr.ca 1-800-667-2657 Toronto 1124 Finch Avenue West, Unit 2 Toronto, Ontario M3J 2E2 Tel: 416-665-5055 Fax: 416-665-5069

Guelph 174 Stone Road West Guelph, Ontario N1G 4S9 Tel: 519-837-9400 Fax: 519-837-9783

United States U.S. Food and Drug Administration www.fda.gov 5600 Fishers Lane Rockville, Maryland 20857-0001 Toll Free: 1-888-463-6332

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Lab Testing—Nutrition Content Laboratory Services A Division of the University of Guelph www.uoguelph.ca/labserv P.O. Box 3650 95 Stone Road West Guelph, Ontario N1H 8J7 Tel: 519-823-1268 Fax: 519-767-6240 • • • •

microbiological testing chemical analysis nutritional composition testing sensory evaluation for dairy products, foods and environmental samples

Silliker Canada Co. www.silliker.com 90 Gough Road, Unit 4 Markham, Ontario L3R 5V5 Tel: 905-479-5255 Fax: 905-479-4645 Accredited by: Canadian Food Inspection Agency (CFIA), Standards Council of Canada (SCC) • • • • • • •

chemical and microbiological analysis nutritional labelling quality assurance programs shelf-life studies process improvement (GMPs) sensory evaluation packaging (some)

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Guelph Food Technology Centre www.gftc.ca 88 McGilvray Street Guelph, Ontario N1G 2W1 Tel: 519-821-1246 Fax: 519-836-1281 • • • • • • • •

food analysis food safety commodities research fermentation packaging consumer studies nutrition research food engineering

Labstat Inc. www.labstat.com 262 Manitou Drive, Unit #5 Kitchener, Ontario N2C 1L3 Tel: 519-748-5409 Fax: 519-748-1654 • • •

complete nutritional labelling program comprehensive vitamin and mineral analyses accredited microbiology laboratory

Maxxam Analytics www.maxxam.ca 6740 Campobello Road Mississauga, Ontario L5N 2L8 Tel: 905-817-5700 Fax: 905-817-5777 •

• • • • • • •

Certified/Accredited by: Standards Council of Canada (SCC), Environment Canada, Canadian Association of Environment Analytical Laboratories (CAEAL), Canadian Food Inspection Agency (CFIA) nutritional labelling microbiological testing chemical analysis shelf-life studies residual testing foreign matter identification environmental testing

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PART 10: DISTRIBUTING YOUR PRODUCT Sources for Finding Potential Customers Trade Associations The following associations maintain extensive information about the grocery industry and membership lists, generally for use by members only. Canadian Council of Grocery Distributors www.ccgd.ca 1 Concorde Gate, Suite 604 Toronto, Ontario M3C 3N6 Tel: 416-922-6228 Fax: 416-922-5909 Canadian Federation of Independent Grocers www.cfig.ca 2235 Sheppard Avenue East, Suite 902 Toronto, Ontario M2J 5B5 Tel: 416-492-2311 Fax: 416-492-2347 Canadian Health Food Association www.chfa.ca 550 Alden Road, Suite 205 Markham, Ontario L3R 6A8 Tel: 905-479-6939 Fax: 905-479-1516 Scott’s Directories Scott’s Directories provide comprehensive information about manufacturing companies across Canada. You can find this directory at your local library, or from: Scott’s Directories www.scottsinfo.com 12 Concorde Place, Suite 800 Toronto, Ontario M3C 4J2 Tel: 416-442-2122 Fax: 416-510-6870

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