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


For more information:
Toll Free: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca
Author: OMAFRA Staff
Creation Date: dd SPACE fullmonth SPACE yyyy
Last Reviewed: 10 August 2011