How Retail Partnerships Are Fueling Growth For Canadian CPG Brands

The retail landscape is a dynamic platform for Consumer Packaged Goods (CPG) brands, offering a gateway to broader consumer reach and increased brand visibility. For burgeoning brands, selecting the right wholesale partner is a strategic move that can shape their growth trajectory. This step has been analyzed by many, including ModernRetail, which investigated the retail distribution of various CPG start-ups last year and found that retail partnerships were a more cost-effective marketing method. However, it’s even more critical and complicated for international brands entering the US market.

The initial step involves careful consideration of alignment in values, market reach, and logistics efficiency. Arte*, an emerging Canadian packaged salad company, exemplifies this strategy by successfully partnering with retailers such as Longo’s and Loblaws to expand its Canadian presence. Brands like SmartSweets and Blume have already established a significant Canadian presence and are rising in the US market thanks to various retail partnerships.

The Importance Of Selection

As CPG brands evolve, the criteria for selecting wholesale partners transform. Initially, that focus may be on simply getting the brand out there and into the hands of as many consumers as possible. But as the brand grows and establishes its customers, values and target demographics become more significant. Arte*’s other selective factors are the supply chain and transportation timing. “We recognized the importance of being present in retail spaces where our potential customers already shop, thus maximizing our market penetration and brand recognition. Furthermore, logistics and supply chain efficiency also play a large factor in partner selection. Retailers with reliable distribution channels ensure product freshness and customer satisfaction is maintained,” stated Ezio Bondi, cofounder of arte*.

Similarly, Blume, a brand specializing in superfood lattes that support energy, digestion, and sleep, just launched a new partnership with Target
TGT
. The company is on pace for its first eight-figure year and is seeing 30% year-over-year growth, mainly attributed to its retail partnerships. Although Target reached out to Blume regarding its home latte product offering, Blume already had the national retailer on its list of hopeful future partners.

“We had this direct relationship with customers [through DTC] where we knew where they wanted to shop and which grocery stores they went to. Many of our shoppers are Target shoppers already. So that helps us develop a list of ‘go gets’ where we know which products they want and which stores they go to,” stated Karen Danudjaja, cofounder and CEO of Blume.

The collaborative relationship between CPG brands and retail partners extends beyond selection and involves shelf placement. In-store marketing and co-merchandising initiatives become vital strategies for capturing consumer attention. Therefore, it’s an added element to the partnership selection process and can ultimately make or break its success.

The Effect On DTC

In the same way that DTC business can help guide wholesale partnerships, those partnerships can impact the performance of a brand’s DTC business. SmartSweets, a notable player in the low-sugar candy category, exemplifies the broader distribution achieved through collaborations with major US retailers. With a presence in 50,000 stores across the USA & Canada, including Target, Walmart
WMT
, Kroger
KR
, and Whole Foods, SmartSweets strategically leverages retail partnerships for increased brand visibility.

“By establishing partnerships with reputable retailers, we extend our brand presence, reaching a wider audience. SmartSweets’ ultimate goal is to be anywhere our friends want to shop, be that in our retail partners’ candy aisle, from their online website and mobile app, or on SmartSweets’ direct-to-consumer sites,” said Tara Bosch, founder of SmartSweets, adding that “we tend to see a lift in traffic and sales volume on our direct-to-consumer properties when a new retailer carries an existing or new SmartSweets item.”

Retailers become invaluable partners in unlocking not only creative merchandising strategies and in-store placements but also the impact of those placements on overall brand awareness. This collaborative approach drives foot traffic and directs consumers to the brand’s online platform, resulting in a substantial uptick in DTC sales.

Impact Of Stores, Small, And Big

For Canadian CPG brands eyeing international expansion, the role of retail stores becomes a key driver for growth, particularly in the competitive US market. SmartSweets’ journey into the US market exemplifies this strategy, starting with a strategic partnership with Whole Foods Market
WFM
. This collaboration provided a launchpad for the brand to introduce its products to the American market, establishing credibility and opening doors to further retail opportunities.

It’s much easier for Canadian CPG brands to first partner with smaller retailers and local grocers. But those eventually lead to more significant national partnerships down the road. For Blume, Target is its first national US partner and signifies a major milestone for the brand. It builds awareness and allows the brand to adapt products for their customers. In the case of Target, Blume is offering four core flavors: Blue Lavender, Salted Caramel, Matcha Coconut, and Reishi Hot Cacao in individual serving pouches. It had to select the right products in a suitable format for the Target customer.

However, the smaller partnerships are still valuable for experiential and educational purposes. As Danudjaja says, “Food services is a really important part of our retail strategy… It’s a sampling opportunity where you get to go into a place, maybe your corner store, or maybe you’re on a trip visiting a new cafe, and you have a memorable experience trying a pink latte. There is no amount of digital ads that can recreate that moment.”

Ultimately, all consumer-packaged goods brands need retail to grow from a revenue standpoint and for unique experiences, product education, and visibility. The strategic selection of wholesale partners is a crucial foundation for the growth of CPG brands. And the symbiotic relationship between retail partnerships and direct-to-consumer business further amplifies the brand’s reach and impact. For Canadian brands venturing into international markets like the US, retail partnerships become catalysts for growth, providing a launchpad for brand introduction and sustained success.