Local retailers fight back on food prices

By Andrew Heck

As consumers continue to wait impatiently for Canada’s largest grocers to pony up with an explanation – and a solution – for high food prices, some smaller, regional companies are taking advantage of the collective discontent and working to bridge the gap between producers, processors and retailers.

In Alberta, Sunterra Market and Freson Bros. are two examples of grocers looking to make a positive difference by not only drawing on their direct connections to local pigs and pork but also by competing with the big guys on price – a challenging yet principled approach to business.

This summer, Sunterra Market and Freson Bros. worked with Alberta Pork to conduct activities under the banner of ‘June is Pork Month,’ including the use of special in-store promotions, contest giveaways and mainstream media to leverage the opportunity to win shoppers over and have them think differently about not only where their food comes from, but where it’s most affordable and accessible.

For Alberta Pork, the initiative was an opportunity to reach consumers who may have limited knowledge of the sector, to enhance their understanding of how pork makes it from farm to fork, and what that means for producers.

Sunterra’s vertical integration creates efficiencies

Sunterra Market celebrated ‘June is Pork Month’ at all of its Alberta locations, featuring activities that helped build pork demand. Ray Price, CEO, Sunterra Group and Jose Lomeli, Vice President, Operations and Purchasing, Sunterra Market are shown here with the Value Pork Pack specially created for the initiative.

The Sunterra Group includes ownership of multiple farms across Alberta, in addition to a federally inspected slaughter facility, a further-processing facility for cured products and a handful of retail outlets in the province’s largest cities: Edmonton, Red Deer and Calgary.

More than four decades ago, hog farmer Stan Price began to blaze a trail that has blossomed into a fully vertically integrated system of producing pigs and processing pork, which is sold domestically and internationally, providing a strong position for the entire company, which remains closely tied to the Price family.

“Our company has an incredible commitment to growing, producing and retailing the best quality foods for Albertans. We are committed to feeding our communities well,” said Kristi Mehr, Vice President, Marketing and Communications, Sunterra Market. “We think our company has a great Alberta-based story, and we want Albertans to know it. Looking at where our pigs and pork come from, we have a lot of people behind that, and they’re the best ambassadors for it.”

Last month, at all of its nine retail outlets, Sunterra set aside each weekend to celebrate ‘June is Pork Month,’ including a Value Pork Pack for $49, featuring more than five kilograms of fresh chops, ribs and tenderloins, perfect for BBQ season, but also a great opportunity to tie the offer back to the Sunterra story. A comparative analysis of similar products in the marketplace, at that time, suggests the package cost around 40 per cent less than what competitors were selling.

The package was offered to Sunterra Market’s loyalty members first, for pre-ordering and picking up the limited supplies. After those orders were filled, any remaining packs were made available for purchase by anyone who happened to frequent their stores. It was a smash hit.

“Sales volumes for the Value Pork Pack were outstanding,” said Mehr. “We’re humbled by the support of our engaged customers and their commitment to support local. We’ve had many customers thank us for the opportunity to enjoy savings while also receiving the highest-quality pork around.”

As part of the weekend festivities at each location, other local food vendors whose products are carried by Sunterra were invited to join and give out free samples. To help spread the word about the events, Sunterra also sought the help of local news media in Red Deer, after the company opened its first store there just a few years ago.

Sunterra Market’s fresh pork offerings were promoted heavily in June. In fact, all of the company’s products were price-compared with bigger retailers, coming in at a competitive or even lower price point.

But a story alone is not a compelling enough value proposition for many consumers. While Sunterra’s advantage in this area is clear, the company acknowledges that the current high-price environment, and assumptions about its status as a regional retailer, creates additional barriers.

When it comes to keeping costs low, in theory, volume matters. Large grocery chains will almost always win when it comes to certain generic packaged goods found on its shelves, but when it comes to fresh food, like meat, there’s a lot more at play.

Sunterra’s shortened supply chain means a more direct connection to the source and how products arrive in-store, which equals fewer costs to pass down to consumers. Not only is Sunterra’s pork lower in price to what a shopper might find somewhere else, it’s arguably better-quality and certainly more obvious where it comes from. As a result of their efforts, they’ve examined the margin from farm gate to consumer plate and have taken a bold position to offer the best pricing on individual cuts within their meat departments, reducing prices across the board to maintain this edge in the long-term.

Given the success of last month’s efforts, the company intends to ride the momentum well into the summer and fall by creating more deals to attract customers.

“We don’t just want this to be a one-and-done,” said Mehr. “We want to keep showcasing these great products while also remembering that times are tight, and people are concerned about their grocery bills.”

By using the company’s own pigs and pork, Sunterra has effectively cut middlemen out of the equation, which translates into price flexibility for consumers without sacrificing the attributes they want: healthy, tasty pork raised right around the corner. Unlike large-volume retailers, which will purchase pork from practically any available source at any time, based on the best possible margins, Sunterra hopes to continue punching above their weight when it comes to returning value to its customers and supporting the people who make Alberta-raised pigs and Alberta-processed pork possible.

Freson’s province-first approach inspires pride

Freson Bros.’ commitment to selling fresh pork from Alberta’s federally inspected processors affirms its support for local producers and comes with quality assurance guarantees.

Across the Canadian pork value chain, spreading the ‘eat local’ message can be difficult. For more than 99 per cent of Canadian pigs, which enter into the federally inspected system, a pig on-farm in one province can be shipped to another for slaughter, and then, most of that pork leaves the country.

But for Freson Bros., with 16 locations across Alberta, purchasing pigs through federal plants brings with it on-farm and in-plant quality assurance guarantees, along with a reliable supply that may not exist with smaller abattoirs, while still adhering to a consistent narrative that the company’s fresh pork is, indeed, local.

“We like to make it known all over our stores and in our flyers that we sell fresh Alberta pork and only Alberta pork,” said Brian Petty, Meat and Seafood Director, Freson Bros. “It’s really important to our customers and upholds the philosophy behind everything we do.”

To help gain some momentum for ‘June is Pork Month,’ Freson Bros. worked with Alberta Pork to acquire prize packages for all its stores, featuring high-end BBQs and other items, which were given away based on fresh pork purchases made by loyalty members. These giveaways were promoted in Freson Bros.’ flyer during the first week of June, further amplified using TV ads in the Edmonton market.

Freson Bros. gave away BBQs at each of its stores in June, to incentivize purchases of fresh pork by loyalty members. Results showed a 15 per cent increase in sales over the monthly average.

Freson Bros. places a lot of pride in its offerings, which go above and beyond what most major grocers are prepared to deliver. The company’s in-store butchering capacities include expertly cut fresh pork, along with house-made sausages, ham and bacon – products that customers can purchase and cook themselves or find already prepared in Freson Bros.’ restaurants, at various locations.

Freson Bros.’ presence in many smaller and remote communities drives home the importance of what many of its customers value. By sticking to their commitments, it enhances not only customer understanding and appreciation but also, perhaps, keeps them shopping closer to home, rather than running off to the city to chase down a deal.

Producers and processors need supportive retailers

Across Canada, conscientious retailers like Sunterra Market and Freson Bros. can be found everywhere, often overshadowed by the dense proliferation of stores operating under various names, owned by multi-billion-dollar giants like Loblaw, Empire, Metro, Costco and Walmart, which have effectively gobbled up the majority of market share. And while these retailers, too, may sell Canadian pork quite frequently, they have a habit of not making that totally clear, and it’s far from certain.

While exports have undoubtedly formed a solid foundation for the pork value chain for years, our reliance on overseas markets can sometimes conflict with the idea that Canadian-raised pigs and Canadian-processed pork sold in Canadian-owned retail outlets is truly focused on Canadian consumers. For the average domestic consumer, understanding the business side of agri-food is often confusing, which creates blind spots and adds to frustrations.

Anyone visiting select Federated Co-op food stores this summer can pick up Verified Canadian Pork (VCP) promotional materials for inspiration, courtesy of Canada Pork, Alberta Pork, Sask Pork and Manitoba Pork.

The Verified Canadian Pork (VCP) program, which is intertwined with the Canadian Pork Excellence (CPE) program, aims to set the record straight in Canada and around the world.

“VCP lets domestic and foreign buyers know that all of the pork coming from Canada is high-quality, safe and meets or exceeds their expectations,” said Jeremy Yim, Domestic Marketing Manager, Canada Pork. “VCP captures everything good about our pigs, how they’re processed, and what that means for those who eat the pork.”

Yim has been working with provincial pork producer organizations to support their consumer marketing efforts, through the creation of point-of-sale materials extoling the virtues of VCP through attractive products like recipe cards, brochures and instructional videos.

Timed with Alberta Pork’s ‘June is Pork Month’ activities, Canada Pork worked with Alberta Pork, Sask Pork and Manitoba Pork to develop and distribute materials to Federated Co-op food stores – more than 100 total across western Canada – often located in settings with just a couple thousand people each. The materials include QR codes for shoppers to easily access content on their mobile phones, showing how to prepare various pork-based dishes at home.

“VCP-branded materials not only inspire consumers to be creative and think differently about their food, but they help transmit the positive messages about the program,” said Yim. “By offering consumers something helpful and interesting, the goal is to get them to pick pork over something else.”

Thanks to the power of collaboration and combining resources, Canada Pork’s line-of-sight to the Canadian Pork Council’s (CPC) producer members and the Canadian Meat Council’s (CMC) processing members places the organization at a critical crossroads for brokering relationships at both ends of the value chain, which is needed now more than ever.

When consumers win, we all win

Getting Canadians to recognize pork’s value among many other options in the grocery store is a worthwhile pursuit. Thanks to pork’s inherent advantages over other foods, it’s also very possible, but not without putting in the required effort.

Much discussion has been had about the inherent pricing disparities between producers, processors and retailers. While it is always a matter of perspective, from wherever you happen to view the situation, a united front is clearly the most valuable offense we can provide in the face of growing consumer defense, which includes stingy purchasing habits.

On the basis of price by weight, and the nutritional value provided, meat is often wrongly assumed to be an expensive option relative to other types of food, which bodes badly for everyone in the sector, unless minds can be changed.

It’s no secret that consumers are highly price-conscious, over and above all of the great stories and marketing claims behind their food. As we look to become increasingly more effective at sharing why Canadian pork is the best in the world, we cannot get too stuck in the intangible side of things that are easily overlooked by those who buy the end product.

Sympathy for producer concerns around high input costs and low pig prices, processor concerns around labour issues and political tensions, and retailer concerns around narrow margins are, frankly, less important to the average Canadian than his or her own financial standing. Overcoming the complex internal value chain disputes is fundamental to its overall success, and thanks to the efforts of everyone involved, there should be no question it is both essential and possible, with the right focus.