Food is becoming more of a national business

We used to think of food in Canada as a regional business. If you produced product in one of the four regions (West, Ontario, Quebec & Atlantic) you usually had access to the stores or wholesalers in that particular region. Many of the retailers were set up with this regional structure and their distribution network supported the regions.

This regional network also satisfied consumers who say they want more ‘local food’. There are different definitions of local but this regional network was probably the most practical solution to balance economies of scale and the make up of the country.

This is all changing.

The interesting thing is that it is changing in two different directions. Consumers appear to be looking for more local food and more information about where their food is coming from. In the retailer’s race to compete and out price each other they demand lower costs and they are willing to ignore the unwritten regional rules to find a lower price.

With consumers we all have to remember that what they say and what they do are often two different things. Last fall I was in a store where there were demos of locally produced items. One consumer stopped to share her dedication to purchasing local produce. She explained how she adapts her diet through the year to only consume locally produced items. The irony comes as she walks away and not 12′ from us bends down to select a nice shiny watermelon produced with pride in Texas!

The retailers also have to be careful. They have to manage the balance between satisfying the demand for local and maintaining an image of supporting the local producers. I believe some of them don’t even realize they are doing anything. Walmart and Loblaw are running their business from Ontario and some of their people don’t see anything wrong with filling a truck in Ontario to maximize freight and get a lower cost. After all that is their mandate, to deliver better value.

If the consumer picks it up and puts it in the shopping cart the retailer will see it as the right decision. Only when consumers change purchasing habits and suppliers illustrate true points of differentiation will the decision be made to maintain a regional food industry.