Selling Food to the Ontario Government
If you are a food product manufacturer, an excellent way to expand
your business is to sell your food product to buyers who service
the Ontario government.
These buyers include:
- Ontario office building cafeterias
- provincially-run correctional institutions and educational facilities
- other institutional sites (including hospitals and long-term
care facilities).
How do these buyers purchase food products? How can you tap into
these markets? Developing these sales channels can be a key component
of your strategic marketing plan for your products.
How do these three government-related groups buy food?
There are opportunities to sell food products in three main areas.
In each case, a different purchasing model applies even though all
three groups regularly buy products from distributors.
1. Cafeterias. The Province of Ontario works with
over 25 cafeterias in office buildings across the province where the
provincial government is a key tenant. Private companies make bids
to run these operations and make their own sourcing decisions and
generally buy from food distributors.
Example: In Guelph, Ontario, cafeteria
operator Sodexho sells prepared meals to staff from several ministries.
Sodexho tracks their level of Ontario purchases and uses food in
season from Ontario in a variety of menu items.
2. Provincially-run correctional facilities and educational
facilities for youth with special needs. Ontario directly
purchases food for the province’s correctional facilities
and educational facilities for youth with special needs. Over 40
institutions make about $13 million in purchases annually. Food
purchases of over $25,000 are tendered on a computerized bidding
site (www. MERX.com). Special
packaging is often needed to ensure the safety of both staff and
clients. Canada’s federal government also tenders contracts
for their facilities regularly on MERX for opportunities in Ontario
and across Canada. Food distributors generally bid on multi-item
contracts, while large single-item contracts (such as fresh bread
or dairy products) may go to one supplier. Ontario distributors
with broad product lines frequently win contracts to service Ontario
sites as “Vendors of Record.” Most contract terms range
from three to five years. To sell to these sites, Ontario suppliers
need to obtain listings with these distributors.
Example: Meat supplies for Canadian
Forces Bases from Trenton to Alert were posted on MERX
in 2010 for public tender. Buyers at these bases can also make smaller
scale purchases that are not tendered.
3. Other institutional sites. The province does
not directly manage purchasing at sites such as universities, colleges,
schools and long-term care homes. These facilities obtain government
funds and may need to follow guidelines for the food they provide
(for example, healthy fare for schoolchildren) but make their own
buying or contracting-out decisions. They are generally free to
prioritize and allocate their food budgets and often buy food from
distributors (and may also purchase management services from specialist
companies to run their food operations).
Examples:
A central-Ontario University contracts with a
large foodservice management company to run their foodservice operations.
The firm receives a fee for this service and buys the food where
it chooses to ensure the operations run profitably.
A long-term care home run by large for-profit
firm Extendicare Inc. buys its food under the direction of its purchasing
policies through central buying and negotiation. The company receives
a per diem payment from the Ontario government based on a minimum
set amount of raw food per resident. Much of the supplied food is
prepared by the vendors.
How do I get started?
There are a variety of online resources available to help understand
government purchasing. The Ontario government also regularly
puts on seminars for potential vendors. You may want
to learn about government purchasing at the Supply Chain Management
portal - www.doingbusiness.mgs.gov.on.ca
or attend a government
seminar for potential vendors (check out Events and Seminars
section in the “doing business” website above).
It also pays to make connections other people in the industry.
Some tips here include:
- Contact manufacturers (and their trade associations)
who are already doing business with your target government-related
site. Ask their views on what the site needs from a supplier.
They may be able to show you samples of typical paperwork, such
as electronic purchase orders.
- Join trade associations for the sites you want
to reach. For instance, you can join as an associate member. Through
these groups, you can gain access to networks of suppliers. You
can ask these suppliers about their views on specific sales methods
or distributors. Some may also be keen on sharing such services
with you.
- Ask your target sites which distributor they
use. Explain that you want to make it easy for them to buy your
product, if they are interested in it.
How do I sell through a distributor?
A distributor (also known as a wholesaler) buys your product at
a discount from you and resells it to other firms (such as restaurants,
specialty food retailers and gift stores), or other parts of their
own business (and sometimes both). For example, Sysco is one
of North America’s largest foodservice distributors and sells
to restaurants across the province. Distributors tend to move large
volumes of product, often with nation-wide economies of scale. They
can be reluctant to carry slow-selling, local or regional items.
For these larger firms, small orders and partial cases can slow
down often highly automated order assembly times, adding labour
costs. Product consistency from purchase to purchase, providing
what you promise, packaging safety and great food safety are also
key.
Talk to buyers to make sure you understand their
needs. Some facilities may require specific packaging and distributors.
For example, packaging in jails must not be made of something that
inmates could turn into weapons. Many facilities require specific
food safety standards, such as HACCP (Hazard Analysis Critical Control
Point system) from their distributors. HACCP is a process control
system that helps prevent hazards from occurring in food production,
warehousing and distribution. You may need to provide
your distributors with HACCP-compliant products or services.
Build your plan: Once you have a good understanding
of the opportunities, you can:
- define your target market segment
- determine whether you will need to work with a specific distributor
to reach your objectives
- develop a strategic marketing plan
Broader Public Sector Investment Fund: Promoting Ontario Food
More fresh food will be making its way from Ontario farmers to
Ontario’s daycares, schools, colleges, municipalities, universities
and healthcare facilities. The Broader Public Sector (BPS) Investment
Fund is funded by the Ministry and administered by the Friends of
the Greenbelt Foundation and their sister organization, the Greenbelt
Fund. The fund is an application based, cost shared program
to encourage partnerships and new investments in order to increase
the amount of local Ontario food in the BPS. This initiative
also includes; an electronic marketplace called Ontariofresh.ca
that will connect local food producers with buyers in the BPS and
a Local Food Champions report that highlights and celebrates successes
and of local BPS champions. (416) 960-0001
