Beyond borders

Prepared Foods, July, 1992 by Katherine Hauck

Canada is and has long been our largest trading partner. But all many Americans know about things Canadian is Alex Trebek, k.d. lang, and ice hockey.

Yet it isn't Americans' intellectual gap that concerns Toronto-based Loblaw International Merchants. Tom Stephens, director of the company's Unique Product Program, says that "with thousands of mediocre products on the shelves, the U.S. market is hungry for new foods."

The 209-store Jewel chain apparently agrees. Late last year, Jewel signed an agreement to market Loblaw's President's Choice products on an exclusive basis in the Chicago area, and non-exclusively elsewhere. About 90% of the chain's stores come under the exclusive agreement, which should enable President's Choice to become a "major part of the Jewel corporate brand program," Stephens says.

The rollout at Jewel, which began in March of this year, has become the largest part of the President's Choice label's two-year-old expansion into the United States. Two other retailers also forged regionally exclusive marketing agreements, including Smitty's in Phoenix and Tom Thumb in the Dallas/Ft. Worth area

Stephens attributes the growth and "high success rate" of President's Choice in part to Loblaw's "consumer taste panel of one." Dave Nichol, Loblaw's maverick president, decides which products go on the shelves.

The speed inherent in having just one decision-maker could enable President's Choice to outperform other major brands. Since no time-consuming product development meetings or intricate market testings determine a President's Choice product's fate, Stephens is confident that Loblaw can satisfy Americans' bored tastebuds by staying ahead of the trends.

While President's Choice brand consists of limited SKUs, Stephens says Loblaw's products are of a higher quality than the American brands the retailers are "forced to have on their shelves." He believes Americans are "desperate" for the foods they so often ate in restaurants during the more prosperous eighties.

As for the impact of the FDA and USDA's new food labeling requirement, Stephens reports that Loblaw is "waiting for now." They'll make changes needed on product labels before an official implementation date is scheduled if regulatory officials can define and concur on format.

As for other federal legislation affecting how Loblaw conducts business in the U.S., Stephens' view of the North American Free Trade Agreement is positive: "With borders less visible, it makes it easier for us to develop in the U.S."

Whether its processors are in the U.S., Mexico or Antarctica, Loblaw is no less a Canadian company. Given the xenophobic trade-sensitivy prevalent in the U.S. today, how difficult will it be for President's Choice to become a household word in the U.S. as it is at home?

Stephens admits that some people are critical of the label's origins, though more than 50% of the line is manufactured in the U.S. and products have Seneca, N.Y., on their labels. Geography is the primary determinant of who's likely to accept Loblaw's entry into the branded food market here. Shoppers at Jewel in Chicago "view Canada as a cousin," as do many shoppers in the northeastern states, Stephens observes. It's the "states south of Missouri, states such as Virginia and Georgia, that think of Canada as a |foreign' country." Stephens is quick to assert that only a handful of critics exist; long-term, he sees no problem.