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Why your food start-up needs a Regulatory Strategy

Posted on September 01 2017 | Author: Dana Baranovsky

Starting a new business in the value add agri-food space comes with its challenges. From product development, funding identification, packaging, marketing, commercialization, and promotion the task at hand is not a simple one.  With so many steps and hurdles between product concept and commercialization, it’s easy to forget a critical step – a regulatory strategy.


What is Regulatory Strategy?

A regulatory strategy aligns with your business timeline. As you progress from milestone to milestone, from product concept to commercialization, you also progress through a regulatory timeline.

It is essential to understand what acts and regulations are relevant to your product. In Canada, Health Canada is responsible for establishing the safety and nutritional requirements for food regulations, while the Canadian Food Inspection Agency (CFIA) enforces these regulations. Federal regulations such as the Food and Drug Act (FDA) and the Food and Drug Regulations (FDR) must be met by all food manufactures. However, each province may have additional regulations as well. Depending on your food product, there may be specific regulations that affect your product such as the Maple Products Regulations (MPR), Processed Products Regulations (PPR), or Fish Inspection Regulations (FIR) to name a few.

Start-ups in the agri-food space should consider the regulatory requirements from the initial planning stages. Unforeseen regulations can become huge hurdles; setting back projects and can become very costly. For example, if your product is labelled with a non-compliant health claim, it can be pulled from store shelves, and you will have to redesign and order new packaging.


Creating a Regulatory Strategy.

Creating a regulatory strategy can be difficult without any regulatory experience. Entrepreneurs doing their due diligence must search through acts and regulations and find applicable clauses. Fortunately, the CFIA is a great resource for information on food labelling and making health claims.

Regulatory due diligence is a labour intensive process and it is not as appealing as product development or marketing, however it is critical to successful food business.

Once the due diligence is complete, you should formulize a regulatory plan document. The easiest way to stay on track and organize your timelines is to conjointly develop the regulatory plan with your business milestone strategy. At each milestone (e.g. scaling up, commercialization) identify what regulations need to be met, such as food safety, packaging, health claims, etc.

Once your plan is complete, it is highly recommended to have it reviewed by a regulatory expert, who can help identify gaps in your regulatory plan and assist in implementing these recommendations into the regulatory strategy. By creating the regulatory plan yourself, you can save money by engaging a consultant to review your plan rather than create it.


The importance of regulatory strategy for a food business.

As you create your business plan, you should be considering your regulatory strategy. As you move through milestones, you should be checking off the requirements that you are compliant with. Below are some regulations that a food manufacturer may consider.


Product development.

When you are developing a product, be sure to think about what types of ingredients you are using. If you want to use a particular health claim, you must know how much of ingredient ‘x’ needs to be incorporated to use that claim. If you are using food additives, you must ensure that you are using the correct food additive for your product and in the authorized amounts. If you want your product to be labelled gluten-free, you must research different types of third party certifications, the quantity deemed acceptable, and formulate your product accordingly. These are just some examples of considerations that you may make while developing your product.

Product development is a critical time to consider your regulatory strategy. The ingredients you use and their quantities can determine what health claims and third party certifications you can achieve. These claims and certifications can open up new markets and help reach target markets. Your company may also want to consider what ingredients you want to avoid, to make “free-from” claims.


Scaling up.

 It is difficult for food start-ups to implement food safety. Working on a small scale can mean using a commercial kitchen with no food safety certifications, and product demand does not yet reach the minimum run requirements at a co-manufacturing facility. Hence, your product may not qualify at many retailers. Once your company is ready to scale up to a co-manufacturing facility, you need to ensure that the facility has appropriate food safety certifications as well as third party certifications. If you are choosing to build your own facility, you must implement Good Manufacturing Practices (GMPs), food safety certifications and employee food safety training, to name a few.


Retail.

If your company is considering selling to retailers, you should be aware of the regulatory requirements for food companies listed in their stores. Large retailers will often have their own Good Manufacturing Practices guidelines for their suppliers that can go beyond government regulations.  Failure to comply with retailer regulations can mean you lose your chance at securing a retailer or risk having your product removed from the store.

Export.

 If you are looking to export your product, you must consider the regulatory requirements of the country you are exporting to. Other countries have different standard container sizes, marketing rules, and nutrition labelling requirements.

Knowing federal, provincial, and even retail requirements allows you to effectively plan your go-to-market strategy. Companies who have not considered their regulatory strategy may experience many setbacks, including product reformulations, packaging redesign, and failure to secure retailers. These setbacks are time consuming and costly and can lead to the failure of the business. Thus, regulatory strategy is a key component for the success of your food business.

Sources:
http://ow.ly/9oOv30fbxRB

Dana Baranovsky
Food & Food Systems Analyst






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