The Globe and Mail - 13.11.2019

Isitoutwiththeold andinwiththenew?

Frommeatlessmeattothe deathofthemall,learnabout

10 differentindustriesexperiencingtumultuouschange.

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B8| REPORTONBUSINESS O THEGLOBEANDMAIL| WEDNESDAY,NOVEMBER13,2019

Juul Labs Inc.will cut nearly
US$1-billion in costs next year, a
company official said on Tues-
day, as its new chief executive
tries to turn around the e-ciga-
rette maker after a regulatory
crackdown.
K.C. Crosthwaite, a former ex-
ecutive at major shareholderAl-
tria Group Inc., is tasked with
fixing the company’s battered
public image and shrinking valu-
ation as the regulatory moves on
vaping threaten to upend the
fast-growing industry.
The official also said that Juul
would cut around 650 jobs, or 16
per cent of its 4,051-strong work
force, starting Tuesday. The com-

pany had previously said it

would cut 10 per cent to 15 per

cent of its work force by the end

of this year.

“As the vapor category under-

goes a necessary reset, this reor-

ganization will help JUUL Labs

focus on reducing underage use,

investing in scientific research,

and creating new technologies,”

Mr. Crosthwaite said in an e-

mailed statement.

The cost cuts will have an im-

pact on Juul’s marketing budget

and are the latest effort by Mr.

Crosthwaite, who last month re-

shuffled the San Francisco-based

company’s top management

roles.

In October, Marlboro ciga-

rettes maker Altria, which has a

35-per-cent stake in Juul, wrote

down the value of its investment

by US$4.5-billion, cutting Juul’s

valuation by a third to roughly

US$24-billion.

REUTERS

Juultocut$1-billionincostsamidefforttorestructure

AmanwalkspastaJuulstoreinTorontoonSept.25.Thecompanyfacesshrinkingvaluationasregulatory

movesonvapingthreatentoupendthee-cigaretteindustry.CHRISTOPHERKATSAROV/THEGLOBEANDMAIL

NewCEO,tasked

withfixinge-cigarette

maker’spublicimage,

sayscompanywill

alsocutabout650jobs

Most small and medium-sized businesses aren’t selling

their products online or exporting to other countries, keep-

ing Canadian enterprises confined to local markets, a new

survey says.

Only 37 per cent of Canadian small businesses currently

operate on e-commerce platforms and nearly half face chal-

lenges navigating export and import processes, posing bar-

riers to expanding into global markets, according to a study

released Wednesday by FedEx Express Canada. With en-

terprises hesitating to go digital, it’s no surprise that they

are also struggling to navigate international trade opportu-

nities, said the president of the shipping and logistics com-

pany.

“Small and medium-sized businesses from the beginning

need to get their goods and services online even just to start

shipping domestically in Canada, and then get to work on

selling globally,” Lisa Lisson said. “For companies to com-

pletely ignore these new markets will affect their ability to

grow and remain competitive.”

Of 500 small-business managers surveyed for the 2019

FedEx Trade Index, which was conducted by market re-

search company Morning Consult, more than half – 57 per

cent – said that increasing trade between Canada and other

countries will help their business. Even so, most of those

companies said that significant barriers make it difficult to

get their products into foreign markets.

Of those exporting and importing companies, 81 per cent

said tariffs affect the growth of their businesses. Many of

them cited issues with variations in fees, language barriers,

unfamiliar trade terminology and differing customs regu-

lations. That accounts for a large population of Canadian

businesses. Of the 1.3 million enterprises with employees

across the country, 98 per cent employ fewer than 100 peo-

ple, according to Statistics Canada.

Ms. Lisson said most small

businesses lack the resources

available to larger companies,

such as hiring consultants and

digital and international busi-

ness specialists, to figure out

how to pay for, build and main-

tain an online sales platform and

work through complex trade

procedures. “Some of these small

businesses are so focused on try-

ing to keep their heads above

water that they’re only focusing

on their local customer base and

making sure that they maintain

controlled growth,” she said.

Many companies that would benefit from selling online

avoid e-commerce because of the cost of launching a digital

platform and shipping its products, according to the Cana-

dian Federation of Independent Business, which represents

110,000 small and medium-sized companies. And when

small businesses wade into international markets, they of-

ten risk incurring expensive, cumbersome setbacks.

Unexpected customs requirements, unpredictable regu-

lation changes in other countries and varying import and

export fees tend to arise without warning, said Corinne

Pohlmann, CFIB’s senior vice-president of national affairs.

Free-trade agreements such as the North American free-

trade agreement and the new United States-Mexico-Canada

Agreement – which 86 per cent of small businesses support,

according to FedEx’s survey – often overlook logistical and

day-to-day barriers, she said.

“There are just so many things that business owners have

to know to be able to deal with borders and duties and it

can be very complicated,” Ms. Pohlmann said. “This is what

discourages small businesses from even bothering.”

To avoid these risks, Carleton Place, Ont.-based Sam Bat,

a maker of maple baseball bats, expects its sales managers

to stay up to date on the trade regulations of the markets

they oversee, which include the U.S., Mexico, Australia, Ja-

pan, South Korea and Taiwan, said president and co-owner

Arlene Anderson. Rather than hire a trade consultant, the

business also connects with sales and trade experts at ship-

ping companies such as FedEx and works with dealers in

other countries that speak both English and the local lan-

guage and provide insight into the foreign market.

Even so, Sam Bat has incurred financial setbacks when

exporting to other countries. Five years ago, it shipped a

large order of small novelty bats to Australia using a new

courier. In an error, the bats were processed at the price of

full-sized bats, causing the business to receive a bill for

$12,000 in additional fees. But Ms. Anderson said that, de-

spite these types of risks, the company would not be able to

grow without its international clients.

“We’ll ship a bat and find out if it’s a disaster,” she said.

“There’s nothing like trial and error.”

Sam Bat has sold its baseball bats online since 2007 when

it launched its first e-commerce platform – a costly endeav-

our that saw the site crash one year after launch. Twelve

years later, maintaining its online sales website consumes a

hefty portion of Sam Bat’s advertising budget, which ac-

counts for about 15 per cent of its operating costs.

Special to The Globe and Mail

Canadiansmallbusinesses

facebarrierstoexporting

globally,surveyfinds

STEFANIEMAROTTA

Forcompaniesto

completelyignore

thesenewmarkets

willaffecttheir

abilitytogrowand

remaincompetitive.

LISALISSON

PRESIDENTOF

FEDEXCANADA

Burger King is introducing a
plant-based burger in Europe.
But it’s not the Impossible
Whopper that’s been a hit with
U.S. customers.
Instead, a Dutch company
called The Vegetarian Butcher
will supply the new soy-based
Rebel Whopper. It will go on sale
Tuesday at 2,400 restaurants
across Europe.
Impossible Foods’ burger
hasn’t been approved for sale in
the European Union because it
contains genetically modified in-
gredients. The EU requires test-
ing on such products before they
are sold.
A spokesman for the Dutch
government confirmed that Im-
possible submitted an applica-
tion last month and is awaiting a
ruling from the European Food
Safety Authority.
The Vegetarian Butcher was
founded in 2007. Unlike Impos-
sible, which only makes burger
meat, The Vegetarian Butcher
makes plant-based chicken, hot
dogs, sausages and even tuna,
and sells its products in 17 Eu-
ropean countries. Consumer
goods company Unilever ac-

quired The Vegetarian Butcher at

the end of 2018.

The Impossible Whopper –

made by California-based Impos-

sible Foods – attracted many new

U.S. customers to Burger King

when it debuted this spring.

Miami-based Restaurant

Brands International – which

owns Burger King – said the

chain’s U.S. sales rose 6 per cent

in the third quarter, compared to

growth of 1 per cent the prior

year.

The Impossible Whopper was

such a success that Burger King

is now testing other versions –

including a kid’s Impossible

Cheeseburger – at 180 U.S. res-

taurants.

Impossible gets heme – the

protein that gives its burger

meat-like flavour and texture –

from soy leghemoglobin, which

is found in the roots of soy

plants. To make heme in high

volume, Impossible inserts DNA

from soy into yeast and ferments

it.

The U.S. Food and Drug Ad-

ministration doesn’t approve

foods before they go on the mar-

ket and relies on companies to

ensure their safety. But the FDA

does require approval of addi-

tives such as artificial colours.

Since soy leghemoglobin also

gives Impossible burgers their

colour, the agency required Im-

possible to get approval before

selling uncooked burgers in gro-

cery stores. The FDA approved

Impossible’s petition in July.

Impossible Foods wouldn’t

say when it expects to sell the

Impossible burger in Europe. Im-

possible burgers have been sold

in restaurants in the United

States, Hong Kong and Singapore

for years.

Burger King said it partners

with different suppliers globally

for many of its products, not just

plant-based burgers.

“Given the positive reactions

to the product in the U.S.A. and

raising demand in Europe, Burg-

er King wanted to bring this cate-

gory to Europe as soon as pos-

sible,” the company said in a

statement.

Sales of plant-based meat sub-

stitutes have grown an average

of 22 per cent annually in Eastern

Europe over the last five years,

and 13 per cent annually in West-

ern Europe, according to Euro-

monitor International. That’s

even faster than the 12 per cent

annual growth in the U.S.

ASSOCIATED PRESS

BurgerKingbringsaplant-basedWhopper

to2,400restaurantsacrossEurope

DEE-ANNDURBIN