8 rules of the road for expanding into Canada
In the 1984 comedy Protocol, the would-be (and completely ill-suited for the position) US diplomat Goldie Hawn is asked if she has ever traveled abroad. She “diplomatically” responds, “No, but I have been to Canada but it’s attached so that doesn’t really count.”
If you are a US OTC brand owner planning northern expansion and have that mind set, please let me know. I would like to watch.
While Canada and the US share many similarities and the longest unguarded border in the world, it’s the differences that trip up American companies. More often than not, Canada is the first export effort for smaller U.S. OTC players. It’s worth the effort but it’s not as straightforward as one would expect. Sometimes it is the subtle things and sometimes it is the big things that remind me that we are truly distinct and different nations. As part of a long general list, I admire their more rationale banking system, their passion for winter sports (it’s simply called “The Shot”), their humility and Tim Horton’s for donuts.
In the OTC world, there are a few rules of the road worth noting:
If you think the US Trade is concentrated, try Canada. The number one Drug Chain AND number one Grocery Chain—Shoppers Drug Mart and Loblaw’s—are owned by the same corporation.
Logistics are challenging. Think lots of space and a lot fewer people. Although 62% of the population is concentrated in Ontario and Quebec, count on higher costs.
Health Canada is not the FDA. They are serious about bi-lingual packaging, claims and brand names not misleading the consumer and the required QA testing of each load imported into the country.
Canadian Provinces and not Health Canada decide whether a product is Rx or OTC. While most products can be sold in the same way in each province this isn’t always guaranteed especially in Quebec.
Marketing efforts are effectively a two-countries-under-one-flag effort. You can’t ignore Quebec; the largest chain, Jean Coutu, can account for 12% of your entire Canadian business.
US Marketing doesn’t spill over to Canada. Most US Networks shows are shown simultaneously by the Canadian Networks with Canadian TVC. Occasionally US Network shows (and consequently US TVC) are the only choice but this is the exception not the rule.
When updating Canadian trade partners, tread lightly on reviewing the US business. They want to hear about Innovation/pipeline/new products and, of course, pending trade promotion plans.
I like to blend two general guides for projecting how big your Canadian business can be. Combine the average of the 10%-of-your-US-business rule and the size-of-your-WAG-business Rule into one. This gives you a starting point and I have found it surprisingly accurate.
And one warning—allow time at the Toronto airport. US Customs and Immigration are completed in Toronto and the lines can be slooow and looong. You can miss your flight. Enjoy a Tim Horton’s donut in that case. They really are good.
Ed Rowland, founder/owner of Rowland Global LLC is providing DSN a series of 2016 blogs focusing on non-US markets. Rowland Global assists companies in their global growth strategies, tactics and execution. He thanks his Canadian Alliance Partners, David Skinner, founder of Heuristix Consulting and Roman Forys & Jacque Cousineau of Alliance Retail Management for their helpful suggestions in preparing this blog.