While Wal-Mart Stores Inc. continues to make inroads into the Canadian food industry sector – its sales were up 8 per cent in the first quarter of 2016 – one Canadian food manufacturer is piggybacking on the United States behemoth to do the same south of the border.
With 405 stores, Wal-Mart Canada Corp.'s footprint pales in comparison to the 5,299 outlets found in the American market, so for the trio of friends that launched Mississauga-based Awake Corp. in 2012, looking beyond Canada's shores was just good business sense.
However, getting their products – a novel caffeinated chocolate bar and a line of granola bars combining caffeine and B-vitamins – to be distributed by the globe's largest company by revenue was something of a tall order.
They had started at postsecondary campuses across the United States, which ended up working in their favour.
"Over two years we built out a pretty good distribution footprint and a loyal and excited consumer following amongst that college and university shopper," says Adam Deremo (below), founder and managing partner of Awake. "It was really our ability to show retailers how strongly our brand has been accepted by millennial shoppers that got them interested to launch it in their stores."
The process of targeting a specific demographic, or geographic region, can pay dividends for Canadian companies looking for success and sales overseas. Starting slowly, but methodically, and gaining legitimacy along the way are the blue print for success, according to Andrew Black, founder and chief executive officer of BrandProject, a Toronto and New York City-based company that partners with startups, of which Awake was one.
"A retailer like Wal-Mart is not going to take you until you've got proof, so they're going to look to other retailers and ask you how many units you're selling per week per store and in other like-minded retailers," he says.
But while students pulling all-nighters cramming for exams may have been a natural fit for the brand, and continues to grow, that of itself wasn't going to land Awake on Wal-Mart's doorstep. Instead, the company had to rely on a little bit of luck.
"The category manager who brought our granola bars into Wal-Mart actually discovered our brand on Facebook," says Mr. Deremo.
"He was looking for a company to partner with to develop some innovation for what they refer to as their portable snacks segment … and through our broker network we were able to get a meeting set up and sell our line to Wal-Mart."
The other method that Mr. Deremo suggests for putting a product in front of potential customers and clients is through trade shows. Although he attends the National Confectioners Association, and goes to most of its meetings and events, he says going to other trade shows can yield the "opportunity to meet a buyer or director, some sort of procurement or merchandising decision maker."
While the unexpected election of Donald Trump, who expressed hostility to trade deals, to the U.S. presidency has made some exporters concerned about future business, Mr. Deremo says for him, it is business as usual.
The company's granola bar is now selling in more than 3,000 Wal-Mart stores nationwide in the United States, and as of August will also be in about 3,000 7-Eleven Inc. outlets – through the same broker that holds the Wal-Mart account. Its caffeinated chocolate bar retails at Walgreens, the second-largest pharmacy chain in the U.S.
"I think it's a really good example of what Canadian companies need to do which is position themselves into a distribution chain or a supply chain," says Jayson Myers, the former president and CEO of Canadian Manufacturers & Exporters and now principal at Jayson Myers Public Affairs Inc.
Mr. Myers adds that to achieve the kind of nationwide distributors that Awake has gained requires a product that is unique in some way, but once it has been found, the benefits are clear.
"By finding a supply chain or a distribution network that you're able to sell into [you might] not need to go outside of the country to take your product global and [instead] rely on your partner to do that for you."
For Mr. Deremo, the addition of caffeine to its chocolate as a means of separating its products from other lines of chocolate is certainly one of the key things that made a real difference in attracting the attention of the likes of Wal-Mart and 7-Eleven.
"Those companies, they develop innovation but they're really good at incremental innovation, not disruptive, things with entirely new functional application," he says. "So our product really does have a point of difference."
The other factor was the company's emphasis on social media, particularly given the demographic of customer that the company originally pursued.
"Our consumer doesn't really find their media in sort of the old-school TV and radio way; it's overwhelmingly digital, so social media and having a digital footprint is probably disproportionally important to our brand."
The company now has a goal of tripling its brand awareness, which right now sits at around 5 per cent, in the next 12 months, with a two-year goal of reaching 30 per cent.
To achieve that, it's looking to follow in the footsteps of such companies as Red Bull and Clif Bar & Co. by launching a brand ambassador program, recruiting full-time students to hand out samples, as well as sponsoring activities and events around campus.
The other important factor in catching on with a large U.S. distributor, and one that can often prove overwhelming for smaller Canadian businesses, is being able to meet the demand for product.
"You've got to be able to guarantee that you're able to meet the demand there so you have to have the production capacity to ensure high-quality supply," says Mr. Myers.
For Mr. Deremo, who learned about the size and complexities of the U.S. market in 10 years working with PepsiCo Inc., being able to scale up to a company the size of Wal-Mart was an important consideration from the get-go, so he and his partners built their operation around experienced and established contract manufacturers.
That ability to meet demand, as well as being associated with Wal-Mart and 7-Eleven, should stand his company in good stead moving forward.
"One thing that it does is give us an added level of credibility because it signals to any new customer that we meet that we're a real company capable of dealing with the biggest and most demanding customers in the marketplace," he says. "It certainly creates added distribution that will enable an entirely new group of consumers to connect with our brand."