Business Advisor: October 2012

Here are the facts you need to know before opening a wholesale bakery.

Here are the facts you need to know before opening a wholesale bakery. Label laws evolve, so be sure to keep yourself up to date on what's required of you and your bakery packing.

You’ve decided to establish a bakery wholesale business of providing quality pre-packaged baked products to supermarkets and retail stores. When preparing your business plan, you should consider the following food label requirements.

General label regulations
There are numerous requirements relating to the labels of pre-packaged foods sold in Canada. While most food policy is established by Health Canada, the Canadian Food Inspection Agency is responsible for enforcement of food labelling requirements, including monitoring compliance, inspecting manufacturers and issuing fines when necessary.

All labels must include, among other things: a nutrition facts table, an ingredient list, a net quantity declaration, the durable life date (“best before”) of the product and the name and address of the responsible party. Furthermore, the mandatory information must be in both English and French.

Nutrition content and other general claims about a product (for example, natural, organic, pure, no preservatives and gluten-free) are also regulated and the product will have to meet established criteria.
Then there are additional requirements and considerations for many of the labelling criteria:

• Nutrition facts tables must be in a prescribed format and there are rules for calculating the nutrition content.
• Ingredients (including food additives used in accordance with the section B.16.100 of the Food and Drug Regulations) must be listed in a certain order and components (ingredients of ingredients) must be declared for some ingredients.
• The net quantity of bakery products may be by numerical count and/or weight, depending on the product. For example, a numerical count must be provided for dinner buns or rolls in a package whereas the weight must be designated for brownie squares.

Allergens
There are regulations for the labelling of allergens, glutens and sulphites. In recent years, food allergies and intolerances have come to the forefront in the food industry, making it critical to have appropriate labelling. If, for example, an individual who is allergic consumes peanuts, the result can range from adverse reactions to anaphylactic shock or even death. Similarly, for those suffering from celiac disease, consumption of gluten can result in long-term health complications.

Health Canada has implemented labelling requirements for the following foods to be listed on food labels whenever they (or their protein derivatives) are added to pre-packaged foods. These labellings apply whether the foods are added as ingredients or components of ingredients.

Food allergens – Any protein or modified protein derived from any of the following foods:

• Almonds, Brazil nuts, cashews, hazelnuts, macadamia nuts, pecans, pine nuts, pistachios or walnuts
• Peanuts
• Sesame seeds
• Wheat, kamut, spelt or triticale
• Eggs
• Milk
• Soybeans
• Crustaceans
• Shellfish
• Fish
• Mustard seed

Gluten source – “Any gluten protein [or modified protein] from the grain of any of the following cereals or the grain of a hybridized strain produced from at least one of the following cereals: barley, oats, rye, triticale or wheat, including kamut or spelt.”

Sulphites – “When either directly added to a food or when the total amount of sulphites present in the food is 10 parts per million or more.”

Manufacturers must declare food allergens, gluten sources and sulphites by name either in the list of ingredients or in a “Contains x” statement at the end of the list of ingredients.

Exceptions
Baked goods packaged by the clerk at the time of sale are not considered pre-packaged and are therefore exempt from the labelling requirements. Baked goods packed from bulk at retail are exempt from the list of ingredients and may be exempt from the nutrition facts table requirements.

Pre-packaged baked goods sold in individual servings for immediate consumption are exempt from the nutrition facts table requirement, as long as they have not been subjected to a process or special packaging to extend their durable life. It is possible to lose these exemptions, for example, if a nutrition content or health claim is made.

Bruce Roher is a partner in the business valuations practice at the Toronto office of Fuller Landau LLP, Chartered Accountants. He can be reached at broher@fullerlandau.com or at 416-645-6526.

Lewis Retik is a partner in Gowlings’ Ottawa office in the area of corporate commercial and regulatory law. He can be reached at lewis.retik@gowlings.com or at 613-783-8849.