ExportWise is counting down our 10 best performing stories from 2016. This story, first published on March 17, is #3 on our list.
Angela Santiago had just finished business school when her father, a serial entrepreneurial, came up with his latest idea: start a specialty potato company.
Jacob van der Schaaf, a Dutch immigrant, wanted to grow the same small creamer potatoes he savoured in his youth. He enlisted his daughter to help him test the market for little potatoes in Canada.
The father and daughter team planted their first acre by hand, washed them in a tub, and sold them to local markets and restaurants in the Edmonton area where they live.
Twenty years later, The Little Potato Company (LPC) has about 25 farmers growing 100 million pounds of potatoes each year on about 6,000 acres across North America. LPC also has one packaging facility in each of Edmonton and Charlottetown, PEI, and is about to open its third one south of the border in Madison, Wisconsin.
It was not the career path Santiago expected to take when she helped start the company. She told her father that her plan was to stick around just long enough to launch the business, and then pursue something else. She never left!.
“I fell in love with potatoes, with food and with agriculture,” says Santiago, the company’s CEO. Her father sticks to the field and runs Tuberosum Technologies, a potato research and breeding company that has developed a number of unique potato varieties.
Today, LPC own exclusive right to six potato types, including microwave and grill-ready varieties under such brands as “Baby Boomer,” “Blushing Belle,” “Dynamic Duo” and “Terrific Trio.”
While Canada has been a key market for LPC over the past two decades, the company is now rapidly expanding in the U.S. after landing deals with big-name grocery retail chains such as Safeway, Walmart and its Sam’s Club subsidiary, to name a few.
LPC sold 10 per cent of its potatoes in the U.S. in 2014. In 2016, it expects that number to be closer to 50 per cent.
“It’s interesting to be a very Canadian company that is suddenly doing half of its revenues in another country,” says Santiago.
The company’s innovative microwaveable potatoes are among the products that have taken off stateside. A rebranding in 2014, which included a new logo and packaging, also helped to sprout new sales both in Canada and the U.S.
Entering the U.S. market has been a big success for LPC to date, but took a lot of time, money and sweat equity, Santiago says.
“It has been a long process and took several years before we got a big retailer on board, but it has all been worth it.”
It also cost more than anticipated. Profit margins were low when LPC first exported to the U.S., but by sticking it out and being aggressive entrepreneurs they landed bigger customers, while also finding more cost-efficient ways of exporting.
Having big customers like Walmart also means more emphasis on ensuring product is delivered on time, or potentially face fines. Santiago says the company was used to strict shipping deadlines from other retailers in Canada and the U.S., which ultimately helped them prepare to meet the high expectations of the world’s largest retailer.
“Planning is important, as is being transparent. It’s not as scary as it might sound,” she says about working with giant retailers like Walmart, “especially if you’re upfront. There’s nothing wrong with saying ‘I can’t do it that fast.’ Then you work it out.”
Her advice to other Canadian companies looking to export south of the border is to make sure your sales at home are “rock solid” first.
“You will need that security and know-how to export into the U.S.,” Santiago says. “Entering the U.S. prematurely is a huge mistake.”
Now that LPC is gaining experience in the U.S., it’s looking at growth overseas. The company is currently testing its products in Australia, for example, and eyeing other markets where it believes there is a demand for its specialized potatoes.
5 Questions with Little Potato Company CEO Angela Santiago
1) What was your first export sale?
It was in 2005 to a small retailer in the Seattle area.
2) How did that first export opportunity arise?
It was through a government-sponsored trade mission with Food Beverage Canada to the Pacific Northwest region of the U.S. That’s where we met some of the smaller retailers to start off with.
3) When it comes to exports, what do you know now that you wish you knew then?
The cost of logistics. I wish I had known further ahead the cost of shipping – it’s a long way. I still would’ve done it, but there were some surprises. Now that we have a U.S. facility we can hit the ground running. It will be a huge advantage.
4) How has the trading world changed since you started in business?
Transportation costs are more complicated than before. There is a focus on distribution: One of the top three things a retailer looks for is whether you can deliver on time. That has changed a lot since we started exporting in 2005. Also the fluctuations in the U.S. dollar have been a factor. We buy a lot of raw potatoes in the U.S. We have a natural hedge now that we have more sales there.
5) What is the #1 thing new SMEs need to know about export and trade?
Exporting takes commitment and focus. I can’t stress it enough. It’s a long haul.