Jeff Chats Canadian Brands

This article originally appeared in The Globe and Mail.

It works for Canada Goose, but how far can ‘made in Canada’ go? by Shelley White

Sun, sand and surf are not three things we’re internationally renowned for in Canada. Yet one of our hottest exports of the moment is Shan, a line of chic, high-end resort and swimwear that is designed and manufactured entirely in Laval, Que.

In addition to flagship stores in Montreal and Toronto, Shan has boutiques in Miami and the Hamptons, and 65 per cent of its revenue comes from the 30-odd countries it ships to, says Jean-François Sigouin, vice-president at Shan.

Shan is a line of high-end resort and swimwear that is designed and manufactured in Laval, Que., which allows it to retain full control over its product. As 65 per cent of its revenue comes from abroad, the “Made in Canada” brand works for the company because its international buyers recognize that to mean quality, the company says.

The suits aren’t cheap – they run about $300 each – but that’s sort of the point, says Mr. Sigouin.

“The philosophy of the brand is to offer quality instead of quantity,” he says. By manufacturing in Laval instead of overseas, the company has full control over its product. “We are totally vertically integrated from the design to production to retail because we have everything in the same building.”

Mr. Sigouin says it does cost more to manufacture in Canada. (“You cannot imagine,” he says.) But although lower margins can be a challenge, the “Made in Canada” brand works for Shan, says Mr. Sigouin, because the international buyers that carry its swimsuits have come to know it means quality.

“Some retailers only care about margins, they don’t care where it comes from, from but for retailers that want to sell quality, they care,” he says.

“Last winter I visited our main distributors and I was in Russia and I had a chance to ask, would you like us to outsource our products to give you better margins, better profit when you sell Shan products? They said, ‘No, it’s the inverse, give us higher quality product rather than lower, because we have so many problems with the other brands on the market.’”

But is “Made in Canada” brand a valuable selling point for Canadian businesses, especially considering the extra costs of manufacturing here?

It can be, says David Soberman, professor of marketing at the University of Toronto’s Rotman School of Management. He says the “Made in Canada” label probably works particularly well for products where Canada’s image is intrinsically linked to them, like ice wine, maple syrup or winter apparel, but he points out that when it comes to manufacturing, Canada is actually most well-known for planes, trains and automobiles.

“Bombardier is the biggest train manufacturer in the world and one of the largest aircraft manufacturers,” he says. “Does the Canadian reputation have a big effect? To the extent that Canada is educated and highly sophisticated, yes it does. For example, people feel they are comfortable dealing with Bombardier and negotiating deals, they will get what they expect, which is why Bombardier is successful.”

This “dependable, reliable” reputation of Canada could give businesses an advantage on the world stage, says Dr. Soberman.

“It would be a secondary consideration so that when two products are perceived as being very similar, ‘Made in Canada’ can create an advantage,” he says.

Melissa Aronczyk, associate professor at the school of communications and information at Rutgers University and author of Branding the Nation: The Global Business of National Identity, says that the world’s view of Canada is a positive one, and those feelings tend to stick.

Canadian brands in the spotlight – from Canada Goose parkas to Toronto superstar Drake’s OVO clothing line – have added a cool factor to Canadian goods that also resonates. (Photo: Drake greets fans during the 2013 Much Music Video Awards in Toronto. By Aaron Vincent Elkaim/The Canadian Press)

“Canada is admired abroad,” says Dr. Aronczyk. “The moose, mountains, Mounties stereotype, believe it or not, still really holds sway. And of course, there’s [the Canadian] reputation for niceness, which you wouldn’t think would have anything to do with ‘Made in Canada.’ What does niceness have to do with a good quality product? But people tend to lump all of those qualities together and have a positive impression of Canada in general.”

This year, Wharton School of the University of Pennsylvania released its Best Countries report, conducted with BAV Consulting and U.S. News & World Report. The survey asked more than 16,000 people worldwide to evaluate countries across a wide range of criteria. Canada came in second in “Best Overall Countries” (after Germany), and came first in the “Quality of Life” subcategory, and in the top three for subcategories including “Education,” “Citizenship” and “Open for Business.”

But Dr. Soberman warns that while the whole idea of “Canadianness” can give a brand and image topspin, it can’t compensate for weaknesses or deficiencies in terms of product functionality.

“In fact, people can feel violated because they have a positive feeling about Canada,” he says. “They buy this product feeling that it’s going to be right for them and then it doesn’t work and they get really mad.”

Quality and safety is one of the attributes foreign buyers see as a feature of Canadian products. This is especially true for food and beverage items, such asmaple syrup or wine. “They can trust the product, it’s not going to be a fakeice wine or unhealthy for them to drink,” says Allan Schmidt, president ofVineland Estates. (Photo: Winemaker Brian Schmidt replugs a barrel afterpulling a sample at Vineland Estates in Vineland, Ont. By Brendan Bannon/TheNew York Times)

William Allaway, vice-president of operations at Acadian Maple Products in Upper Tantallon, N.S., says being made in Canada definitely has an advantage on the international scene when it comes to maple syrup.

“When we do trade shows in China or Europe, people are always willing to buy from us because they know we have a lot of food safety, modern equipment and people doing things right,” he says. “It’s also perceived as being clean, with wide open spaces, so all that plays into it.”

Ice wine is another area where being a Canadian product seals the deal. Vineland Estates Winery in Vineland, Ont., does about 25 per cent of their sales internationally, most of which is ice wine sold to China.

“They can trust the product, it’s not going to be a fake ice wine or unhealthy for them to drink, so there’s a trust level there,” says Allan Schmidt, president of Vineland Estates.

Jeff Swystun, president and chief marketing officer of Swystun Communications in Toronto, is a marketing adviser to startups and creative agencies. He agrees that the traditional “moose and Mounties” idea of Canada persists internationally, but that most Canadian brands are just too unknown to create any kind of following based upon country of origin.

“At best, we are seen as safe,” says Mr. Swystun. “If I was in charge of industry and innovation in Canada, I would focus on producing a host of commodity offers that represent quality at a lower price rather than anything that claims outright differentiation or innovation.”

Toronto-based business strategist Tony Chapman says that “wrapping your brand in your country’s flag does little unless the tenets of your brand match how your country is perceived by your target consumer.”

With Canada, he says, the most obvious connotation is “We the north. We can protect you from the cold. We make great ice wine. Come here to ski and snowboard. Then there are the more intangible qualities: our moral code, our values, our tolerance.”

Viberg Boot President Glen Viberg inserts laces into a hiking boot at his factory in Victoria, B.C. One of the products attractions is for buyers in places like Germany and Japan, where consumers have more of an ingrained sense of buying less and buying quality. (Photo: Chad Hipolito/The Globe and Mail)

In other words: beer, maple syrup, ice wine, Ski-Doos, parkas – yes. “But ‘Made in Canada’ umbrellas, cars, suits?” says Mr. Chapman. “No.”

Raised by Wolves is a Montreal-based clothing and shoe line that might not immediately be pegged as Canadian – there’s not a Canadian flag in sight. But it produces most of its line in Canada – more than 80 per cent, according to co-founder Pete Williams – selling to 90 stores in 15 countries.

Mr. Williams says it costs, in some cases, three to four times more to manufacture in Canada, but “U.K. and European customers seem to be drawn to the place of origin and the Japanese customers specifically place a very high value on a ‘Made in Canada’ product,” he says.

He says recent Canadian brands in the spotlight – like parkas by Canada Goose and Toronto superstar Drake’s OVO clothing line – have added a cool factor to Canadian goods that also resonates.

“For us, it is worth it. The high cost is sometimes a struggle to deal with, especially with fluctuating currency rates. However, our customers have shown they are consistently willing to pay a premium for ‘Made in Canada,’” he says.

Whether “Made in Canada” works for a company or not depends on what the product is, according to business strategist Tony Chapman. So, beer, maple syrup, ice wine, Ski-Doos, parkas – yes. But umbrellas, cars, suits – no. Asia simply has lower manufacturing costs. And Mr. Chapman is skeptical that consumers care enough about ethically-sourced products to radically change their spending habits. (Photo: An escalator in the shopping district in Beijing, China. Tomohiro Ohsumi/Bloomberg)

Another “Made in Canada” success story is Viberg Boot Manufacturing Ltd., a family-run boot and shoe company that has been manufacturing in Victoria for more than 80 years. Guy Ferguson, brand director at Viberg, says being made in Canada can hold a lot of sway with foreign markets.

“Almost the further away you get, the more it matters,” he says. “Because our product is so quality-driven and detail-driven, we’ve found success in places like Japan and Germany where they have a real ingrained sense of buying less and buying quality.” (Viberg footwear runs to about $700 a pair.)

He also says the “nature-loving Canadian” connotation works for them.

“For a lot of markets, their idea of Canada isn’t a daily commute in Toronto or a restaurant in Montreal, it’s mountains, lakes and trees. I definitely think that’s a huge factor for us because we have roots in the Pacific Northwest, roots in logging, forest fire fighting, hunting, a lot of these industries in the past fuelled this company.”

Manufacturing Viberg products in Canada also tells customers that its products are made under safe working conditions by people being paid a living wage, adds Mr. Ferguson.

“I think there’s a heightened awareness on the part of the consumer right now and I like to draw parallels between other industries, like the slow food movement, third-wave coffee,” he says. “We have all of these things right now where people are starting to pay more attention to where products come from, and clothing and footwear are components of a comprehensive lifestyle that people are becoming aware of.”

Mr. Chapman is skeptical that consumers care enough about ethically-sourced products to radically change their spending habits, and the higher cost of manufacturing in Canada is a hindrance that will hamper most companies.

“Sadly, Asia has a tremendous cost advantage, even when using our raw materials,” says Mr. Chapman. “[People] talk a big game, but rarely buy beyond immediate gratification.”

Mr. Sigouin says that when it comes to Shan, manufacturing in Quebec goes beyond profitability.

“We had so many options in the past to outsource and put out more volume and increase the margin, but for us we want to be proud of what we do more than being rich.”

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