Nick Kozak for the Toronto Star
Case Studies

Toronto’s Neal Brothers aims to sell speciality, organic foods from coast to coast

VITAL STATS
Name:
Neal Brothers Foods Inc.
Owners:
Peter Neal and Chris Neal
Address:
160 Pennsylvania Ave., Unit 8 Concord, Ontario L4K 4A9
Contact:
905-738-7955, 1-800-738-7955
Field:
Natural, organic and specialty foods
Employees:
40
Active:
25 years
Core customers:
Mid- to high-income earners age 20 to 55

Neal Brothers Foods Inc. has impressive name recognition across Ontario and Quebec and an enviable base of loyal customers. It boasts a menu of 50 healthier snack and food items that it sells to about 2,000 small and large outlets. And the company’s revenues have been increasingly strong and steady over its 25-year lifespan.

But the small business is feeling escalating pressure as its grocery store clients consolidate and expand across the country. Bigger food brands with deep pockets – Neal Brothers’ fiercest competitors – have one distinct advantage that makes them almost irresistibly attractive to grocers as the grocery climate shifts gears: They have products with coast-to-coast name recognition that they can effortlessly deliver country-wide.

Co-owners and brothers Peter and Chris Neal are working hard to maintain their current grocery foothold. To do this they are banking on a ramped-up expansion into Atlantic and Western Canada where many of their current grocery clients have expanded and are providing current suppliers with initial shelf space.

The Neal brothers’ challenge? To persuade shoppers in these new territories to grab the new and unfamiliar brand on the shelf.

While sales are unquestionably encouraging — in the last year, revenues have tripled in Atlantic Canada and doubled in Western Canada — the brothers are anxious to fine tune their marketing model. They need to see more and faster results.

“What makes us anxious is that consumers in the east and west don’t really know us yet,” says Peter. “We have to give them a reason to make a purchase. Then we need our marketing to help quickly build an order of eight cases up to 50 cases so that the shipping costs don’t kill us.”

Conquering new territories is nothing new to the brothers.

In year one of the business, as freshly-graduated university students, the brothers relied on small town charm and intuitive business sense to sell their first product — their own branded croutons — to one fruit and vegetable market in their hometown of Aurora, Ontario.

In the following years, relationship building and stellar customer service helped them close deals with health food stores, delicatessens and country markets across Ontario and later in Quebec.

Then, about 14 years ago, as the trend toward healthier eating was emerging, the company leveraged its products’ natural and organic status to conquer the big Ontario grocery chains — Longos, Loblaw, Metro and Sobeys.

Although it doesn’t discuss financial details, according to Peter, revenues have doubled approximately every five years. The brand’s top sellers are its organic blue corn tortilla chips, organic blue corn tortilla chips with flax, and organic salsa.

To accelerate the push into Atlantic and Western Canada, last year the company implemented a multi-pronged marketing strategy which included the hiring of a salaried sales rep for each new territory. (There are also 16 inside sales reps.)

The reps are selling with the same warm, soft-sell approach that has proven so successful for the brothers over the past quarter century. They also oversee promotions — from sponsoring small school events to donating $1,000 of organic popcorn to the Wolfville, N.S., Devour Film Fest — and build relationships with local food bloggers and brand champions.

Peter makes regular trips to both coasts to handle the big flagship stores and to connect with store personnel and community members on a street level. “When the owner shows up it lets people know that you really care, and it no longer makes you a faceless brand,” he says.

Peter admits that the company’s social media reach isn’t dazzling — it has 3435 Twitter followers and 2855 Facebook likes — but he says it only connects with industry influencers and true fans of the brand. He credits social media with creating regular and dramatic sales spikes that typically occur after big community events.

When it comes to packaging, Neal Brothers is doing everything right, says Kim Sewell, the creative director at Toronto’s Sewell Evans Design Group.

For example, it has just redesigned its popular tortilla chips packaging for the fifth time, which, according to Sewell, meets the industry standard.

“Packaging needs to be refreshed about every five years so it continues to be punchy and enticing,” she says. “They’re smart to share the photo of themselves as teens on their packages — it makes us want to pick it up and read their story. It also shows pride of ownership and that these chips are somebody’s baby and not just from another big commercial brand.”

Despite the current expansion demands, the brothers haven’t considered hiring a broker familiar with the new territories. They have had two “disastrous” previous experiences where brokers didn’t put in the necessary effort, says Chris. “We feel confident with the collective brain trust and experience of our team and mentors,” he says.

The Neal brothers are upbeat and optimistic about their company’s future. But there’s an urgency to polishing their current marketing plan.

“We don’t have the luxury of time on our side,” says Chris. “Today, grocers prefer to work with fewer and larger suppliers, and our niche is off-the-charts competitive. If we’re not quickly established in all regions, grocers will have less reason to place us on their shelves and they’ll simply go with someone stronger and bigger.”

EXPERT VIEWS

As Interviewed by: Rosemary Westwood

Neal Brothers should consider a more local approach to expansion by considering exporting their product to the more local and extensive U.S. market. Toronto is within a day’s drive to various U.S markets and we have a free trade agreement with the U.S. The products that Neal Brothers produces can be easily sold in the U.S. in small, independent stores like the ones they are achieving success with in Canada. They can service these stores with their existing staff in Toronto and Quebec where they say they have achieved their greatest success. Why bother trying to sell and ship their goods across the vast, unpopulated expanse of Canada? It will be difficult to compete with the bigger brands in the mass outlets in Canada which have deep pockets for marketing dollars and the chains will continue to concentrate on their private labels with regards to the niche-type products Neal Brothers sells. The City of Toronto's Economic Development and Culture Division provides one-on-one consultation to assist companies in growing their business, and is a resource for Neal Brothers to consider.

by George Spezza Enterprise

Certainly Neal Brothers has a premium product. The firm has done extremely well with its business model, building relationships in Central Canada, i.e. Ontario and Quebec, from the very beginning. But out West and and in the East Neal Brothers does not have the same brand recognition. The company has a great push strategy: promoting the product through goodwill and traditional sales efforts. In order to compete nationally, they need a more comprehensive pull (advertising) strategy. They are up against brands like Miss Vickie’s, bought by Frito-Lay, which itself is owned by Pepsi. They need to commit the necessary funds to compete or find an investor with deep pockets and industry connections to help fund and support expansion. This would mean giving up a share of the company. A third option is to develop an exit strategy and perhaps sell the whole company, while the brand is still strong. But if they want to compete on a national level, they need to be a national player, and have the funding to do so.

by Steve Tissenbaum, Ryerson

Neal Brothers have a niche product with smaller batches sizes in a competitive category. Coast-to-coast growth will require a dual pronged approach that includes a greater sales effort with grocers, as well as more direct consumer marketing in order to increase overall awareness and purchase intent. The former is a B2B push marketing strategy which will require more face-to-face time with the grocers and distributors, whether by sales staff or the Neal Brothers themselves. The latter is a B2C pull marketing strategy designed to ensure shoppers have awareness of the brand as they prepare their shopping routine. Developing this familiarity might best be accomplished with a social media campaign that engages, intrigues, and educates consumers. Using grassroots, word-of-mouth type media will increase the authenticity and perceived credibility of the Neal Brothers story and marketing messaging. Neither of these efforts is likely to be much of a stretch for this veteran company given a track record of smaller-scale successes with both types of initiatives.

by Brynn Winegard - Ryerson

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