China's rising middle class is driving demand for B.C.'s agrifood products at a time when food sales are forecast to be flat in Canada and the Canadian brand is considered a mark of quality abroad.
B.C. entrepreneurs tend to have the most success when they export high-end products because the cost of transporting the food drives up the end price and is best absorbed when the initial product cost is higher.
Many of the business lessons that local producers are learning apply across the board, regardless of the product. They include:
•signing exclusive distribution contracts with wholesalers for regions within China instead of for the entire country;
•getting money upfront whenever possible; and
•using packaging that clearly states that the food or beverage is from Canada.
"The middle class in China is growing like crazy," said Vancouver's Barry Macdonald, who is the immediate past chairman of the Federated Hong Kong Business Associations Worldwide. "There are 300 million middle class in China right now. That's the size of the U.S."
B.C. agrifood exports to China rose more than 25% to $148 million in 2011 compared with $118 million in 2010.
Wine sales helped spur that growth. Total B.C. wine exports rose to $5.5 million in 2011, compared with $1.4 million in 2008. China consumes about 80%, or $4.4 million, of those exports.
"Over half of our production goes to Asia," Paradise Ranch Wines Corp. owner Jim Stewart told Business in Vancouver. "One potential mistake I made was when I gave a wholesaler an exclusive contract for all Paradise Ranch-branded wines sold in the entire country of China. What I learned subsequently is that China doesn't have the national distribution systems that other mature markets do."
Stewart subsequently demanded the national wholesaler commit to buy an annual quota of his wine, and he got money up front when he signed the contract in 2009's dismal economic climate.
Delta farmer and winemaker Terry Bremner has similarly been expanding sales in China and now exports about 15% of his Bremner Foods' $1.95 million in annual sales to that continent. Exports of fruit wine from his Wellbrook Winery are slower to take off, he said, but account for roughly 5% of that company's sales.
The high-end juice market is different in China than it is in Canada, Bremner explained, because there's more competition from across the globe.
"In China, there are products coming from Japan, from Australia and New Zealand. It's more competitive. Typically, in Canada, we don't have juice from Australia."
One of Bremner's strategies for raising awareness of his fruit wines and 100% pure cranberry, blueberry, black cherry and other juices is to attend trade shows in Asia.
"There's a uniqueness when you can say, 'Made in Canada,' and that has helped lift a lot of brands that have gone to China," said Kirk Homenick, who is general manager of Maple Ridge's Naturally Homegrown Foods Ltd. (NHFL), which claims to be B.C.'s only manufacturer of potato chips.
About 20% of NHFL's "millions" in revenue comes from Asia.
Former NHFL owner Sepp Amsler sold NHFL to Wes Heppell and Peter Schouten, who also own potato-grower Heppell's Potato Corp., for an undisclosed amount last summer.
"We make all our chips in small batches by hand," Homenick said. "We're not a big factory. We're an artisanal food company, and that helps us differentiate our product in Asia as being a premium product."•
