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November 3, 2003 - Strategy Magazine
Special Report: Western Canada

West Coast icon eyes Ontario
Purdy Chocolates plans to parlay 90% share in the West to growth in the East

by Sara Minogue
page 28

R.C. Purdy Chocolates is looking for the sweet spot in Ontario. In an audacious gambit - its first foray into eastern Canada - the 96-year-old company is vying for a bite of the Ontario chocolate market.

The Vancouver-based gourmet chocolatier is busy scouring the Toronto landscape for permanent inroads. In the meantime, the company is setting up shop with two Christmas kiosks in malls located in the greater Toronto area to cash in on the holiday shopping season.

"People have been asking us for years when we're going to come east," explains Purdy's president and owner, Karen Flavelle. "There is already a strong awareness in Ontario, and an eagerness to have us there. This isn't just a test. We are actively looking for permanent locations."

The initial thrust into Ontario will be concentrated in the GTA, Flavelle says, with a view to eventually extending the company's reach into other major cities.

Purdy's is a household name on the West Coast with 47 specialty shops in British Columbia and Alberta. The company operates a 5,295-square-metre factory that makes about 100 different types of chocolate, ranging from a metre-high rabbit called Big Charles, to other moulded items and boxed sweets.

The plant combines modern technology with a homespun flare. For example, Flavelle personally taste tests many of the chocolate batches to ensure they are up to company standards.

It's a formula that appears to have worked. The company, Flavelle says, dominates the B.C. market with an astounding 90% share of boxed chocolate sales.

In its initial Ontario launch, the company will set up two mini-stores in November in Mississauga's Square One Shopping Centre and at Upper Canada Mall in Newmarket. By the end of the decade, Purdy's hopes to add another 10 stores to its roster, the bulk of them in Ontario, Flavelle adds.

Company research, undertaken three years ago, shows that a stunning 13.5% of Ontarians recognize the Purdy's brand name despite the company having no physical presence in the province. Some of that recognition, Flavelle believes, is due to the presence of Vancouverites in Toronto and the increase in the number of Torontonians vacationing in B.C.

However, the company's online store - launched in 1999 - has undoubtedly added to brand recognition. Purdy's currently has more than 1,000 loyal customers in the Toronto area, many of them culled from the company's online presence. In fact, part of the strategy behind the launch of the company's e-tail site was to test the viability of a thrust into new markets such as Toronto, Flavelle adds.

Canadians have a sweet tooth when it comes to boxed chocolates. Still, spending gains fell by more than half last year to a 2.7% increase in 2002 from 7.2% growth the previous year, according to market researcher ACNielsen, which monitors boxed-chocolate sales in supermarkets, drug stores, department stores and warehouse clubs.

Flavelle believes Purdy's is poised to penetrate an untapped market in Ontario.

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