Canada's American cereal 'grey' market revealed
“Hey… you got the stuff?”
That was me a few years ago upon the arrival of my CraigsList contact during a clandestine public meeting one evening at Toronto’s Atrium on Bay. But it wasn’t drugs, guns or even fake Rolex watches that my dealer then proceeded to pull from his jacket – it was breakfast cereal.
At the time, only Count Chocula could be found on Canadian supermarket shelves and even that was only during Halloween. If you were like me, and you wanted to mix your Count Chocula with General Mills’ other Monster Cereals – Boo Berry and Frankenberry – you were sadly out of luck. Well, unless you happened to find a guy on CraigsList with a few extra, unopened boxes from a recent cross-border trip who was willing to sell them to you at a markup of $20.
Thankfully, due to Canadians like me who will go to such desperate lengths to recapture their childhood Saturday mornings, The Monster Cereals (minus the discontinued Yummy Mummy and Fruit Bruit) have made their return to Canadian grocery stores each Halloween. But demand for other U.S.-only sugary cereals ensures an underground market of farmer’s markets, corner stores and websites still supplies Canadian cerealphiles with American favourites, like Fruity Pebbles, Cookie Crisp and Peanut Butter Captain Crunch, despite none of these varieties being officially available here.
American Cereal Killers
If you’re wondering why Canadians never see Cinnamon Frosted Flakes, Captain Crunch Berries and Cocoa Pebbles in their supermarkets, there are several factors at play.
“In order to be allowed for sale in Canada, food products must meet Canadian requirements that are set out in Canadian legislation,” says Tammy Jarbeau, senior media relations officer foe the Canadian Food Inspection Agency.
“Foreign manufacturers that intend to sell their products on the Canadian market formulate and label their products to meet Canadian regulations. Importers are responsible for ensuring their food is formulated in accordance with acceptable limits, set by Health Canada, for a typical Canadian diet (for example, vitamin fortification) and labeled appropriately.”
Although vitamin and mineral fortification is not required for breakfast cereals in Canada, many cereal companies in both Canada and the U.S. do fortify their products, so if a food company chooses to fortify their cereal, they have to do it according to the requirements set out by the Food and Drug Regulations of Canada.
“Many American breakfast cereals contain vitamins and minerals that are in greater amounts than are allowed in Canada at a greater selection. For example, in the U.S. you’re allowed to fortify breakfast cereal with vitamin C and in Canada you’re not,” says Susan Abel, senior vice-president of safety and compliance at Food and Consumer Products of Canada who also worked in the cereal industry for over ten years.
All food sold in Canada also must comply with Canadian labeling standards and it doesn’t just mean having to switch to French-English bilingual packaging. Since Canadian measurements are based on the metric system and American measurements are based on the imperial system, the amount of any one ingredient in a single serving is assessed differently and the daily recommended values of a single ingredient is usually slightly different between countries because the daily allowances are not the same. With all these regulations, cereal companies must be reasonably confident that they can sell enough product to justify changing their packaging and adjusting their formulation.
“Every time you change over your equipment, you have equipment that’s not making product, which is why companies try to avoid changeovers as much as possible,” says Abel.
But cereal maker General Mills says their decisions come down to demand.
“Throughout the world, there are different labeling requirements and nutritional standards that we must follow. As a global company, this is a part of doing business. In Canada, General Mills decisions on which cereals to offer are based on meeting consumer demand. This really is affected by population size. Canada is roughly one-tenth the population of the U.S., and so has fewer cereals as a result of that size difference,” says Emma Eriksson, General Mills’ cereal marketing director for Canada.
A larger U.S. population means more retailers than would ever exist in Canada, each looking to differentiate themselves from their competition and Abel says that some retailers accomplish this by selling niche breakfast cereals in numbers Canada can’t even touch. But Canada doesn’t just lack the population to justify supply; flagging sales of sugary cereals are a reality because the majority of Canadians just don’t have a taste for them.
“Canadian tastes are different from American tastes in subtle ways,” says Abel. “While not vastly different, I do know that chocolate breakfast cereals sell much better in the U.S. than they do in Canada. There have been some attempts to introduce them here and they haven’t been well accepted.”
However, just because there are many barriers that prevent Canadians who do have a cereal sweet tooth from seeing some of their favourite American varieties at traditional grocery stores, doesn’t mean there aren’t some Canadian retailers fighting the good fight for cereal equality.
A Cereal Smuggler Speaks
Once or twice a week Moe Hejazi makes the long drive across the border into either Buffalo or Detroit to hook-up with an American wholesaler so he can buy three cases (12 boxes per case) of America’s sugariest breakfast cereal.
“I try to double-up in a two to one ratio on new cereals. For example, this last time I got one case of Fruity Pebbles and two cases of Fruity Pebbles Cinnamon because it’s something brand new and I think people will be excited to try it,” he says.
Hejazi owns the Milton, Ontario-based website CandyFunhouse.ca where Canadians can order rare American candy and cereal online.
“We used to have a candy store in Cambridge, Ontario, but then we went online and would sell all this candy that people remembered from their childhood, but couldn’t get in Canada anymore. These were things like 100 Grand, Almond Joy and Abba-Zabba, so it seemed only natural that we would do the same thing for cereal, especially because the cereals you couldn’t get in Canada anymore were mostly the candy cereals,” says Hejazi.
The cereal is now his number one seller. One time someone bought three boxes at a cost of $10.00 each and paid $30.00 in shipping to have them delivered to rural Newfoundland just so they wouldn’t run out. Even though Hejazi only makes a ten per cent profit on each box of cereal he sells, as opposed to 50 per cent profit for each candy bar, it’s still worth it to make the trek across the border with a NAFTA certificate because the cereal keeps flying off his shelves.
“The reaction is out of this world because as fast as they come in, they go out. It kind of sucks because to bring in a case of 12 boxes of the same cereal takes up the same space as ten different kinds of chocolate bars, so it’s really hard to bring it in at a high number because of its bulky nature,” he says.
What Hejazi is doing is not illegal, but it’s not entirely legal either, he relabels each box of cereal he sells in accordance with Canadian labeling standards, so he can avoid the potential fines from the Canadian Food Inspection Agency. Relabeling is perfectly acceptable, but if he were a real stickler, he’d also make sure that all vitamin fortifications were within Canadian allowances.
“We actually have a name for these products sold outside of traditional channels,” says Abel. “They’re called grey market products.”
So far, Hejazi hasn’t had any kind of run in with authorities and plans to continue selling American cereals to the many Canadians who want them.
“I am unaware of any risks or regulations. If government officials informed me that I was doing something illegal, I would definitely have to stop, but it would come at the expense of a lot of people’s happiness. To my knowledge there isn’t anything wrong with what we do, and as long as that doesn’t change we will continue to supply all of Canada with the cereals they desire, but have no access to,” he says.