Canadians already have an appetite for American products and frequently cross the border to find products not available in Canada. With the explosion in online retailing, it’s never been easier for the average Canuck to buy everything from clothes, cars, electronics and especially packaged medicines.
The demand for natural health product (NHPs) in Canada mirrors that of the U.S. According to the 2012 Ipsos-Reid report, 8 out of 10 Canadians noted that they consumed NHPs, and 56% stated that they would most likely or probably purchase additional NHPs in the future. The market for natural health products in Canada is thriving, and there is tremendous opportunity for U.S. exporters of finished formulas and raw NHP ingredients.
According to Agriculture and Agri-Food Canada, “in 2010, foreign direct investment in Canada's food and beverage & FNHP industry reached an accumulated $22.7 billion. They were attracted by generous R&D tax treatment, access to high quality natural resources, Canada's internationally recognized regulatory and food inspection systems, lower corporate tax rates, the impressive number of food-related registered patents, lower utility costs (industrial gas and electricity), financial stability, a highly skilled workforce, and specialized researchers and food development centers.”
The Canadian economy consistently ranks globally among the most competitive in the world and the future economic outlook is positive which means that Canadians have the spending power to purchase foreign products. Due to its proximity and the growing demand for American goods, Canada presents a unique opportunity for American-based nutraceutical companies looking to grow their customer base. However, before starting the process of selling in Canada, it’s vital that they do a little prep work.
In December 2013, Health Canada, the federal department that oversees NHPs, imposed a new set of regulations on imported goods. Applicants must disclose detailed information about the product, including medicinal ingredients, source, dose, potency, non-medicinal ingredients and recommended uses. Once the product has been assessed and determined to be safe, effective and of high quality a NHP number is issued.
All NHP’s (e.g., supplements) must have an identifying Natural Product Number (NPN) and all information concerning the ingredients must be properly listed to legally sell the product in Canada. If there are any errors related to dosage miscalculations, incorrect ingredients, unproven claims, lack of visible warnings regarding side effects, drug interactions or other critical health information, Health Canada may not allow the product to be distributed.
Companies that are planning on distributing specific products in Canada must also work with a facility that has a Health Canada site license in their specific product category. In the interest of public safety, there are strict requirements on storage, labeling and recall procedures. Failure to comply can cause Health Canada to impose severe regulatory fines and repercussions on both the exporter and the facility where the product is warehoused.
Where Do You Plan to Market Your Product?
Canada is astonishingly large; it’s the second largest country by total area in the world. However, the country’s population is fairly spread out with major urban centers like Toronto and Vancouver heavily concentrated along the U.S. border and sparsely populated rural areas.
Why does that matter? The major urban areas are well served by traditional logistic networks but shipping to the sparsely populated parts of the nation can be very costly, especially if your distribution center is based in the U.S. Having a Canadian fulfillment and logistic partner that has experience in shipping domestically is crucial to keeping those shipping costs down and optimizing your distribution. Consolidating your Canadian shipments and partnering with a Canadian logistics partner is another sound strategy.
Furthermore, Canada has two official languages: English and French. Bilingual labels may be necessary if you plan on marketing and selling in Quebec or distributing in national retailers.
Customs & Storage
Many U.S. retailers do not understand what happens to their product when they ship it to a new Canadian customer. All products crossing the border are subject to duties, taxes and brokerage fees, and frequently your Canadian customer is left stuck with an unexpected invoice from Revenue Canada. If you are looking to build a proper Canadian marketing strategy be sure to factor in these costs ahead of time so your Canadian customers can shop with peace of mind.
If you are selling direct to the consumer, consider either having your orders fulfilled by a Canadian distribution center or working with a specialized cross border consolidated shipping company to optimize shipping costs and clearing your goods through customs in bulk. Logistics, such as prompt delivery, order tracking, and return services, can all be facilitated by the right Canadian logistics and fulfillment partner.
If you are looking to expand outside of the U.S., Canada should be your obvious first step. Canadians are probably already aware of your product and are just looking for the opportunity to buy it at a reasonable price. Performing basic marketing and regulatory research is vital before making the decision to export. There are several qualified U.S. and Canadian partners that can walk you through the marketing requirements, fees and regulatory issues that come with doing business in Canada. So if you are considering selling your company’s products in Canada, then it might be wise to seek out a Canadian partner to help you successfully market your products.
Steven Page (email@example.com) is the president of Stalco (Stalco.ca), a gateway to the Canadian Market, providing fulfillment, consolidated cross border logistics and Canadian importing consultation for nutraceutical and cosmecutical manufacturers.