According to Euromonitor retail sales in the packaged food market reached US$44.5 billion in 2019. That ranks Canada the 11th largest foreign market in the world. That also represented a growth rate of nearly 7.5% or US$3.1 billion from 2015. They also forecast growth in this category to reach over US$52.1 billion by 2024. This is an increase of US$14.2 billion, and a period growth of 6.4% from 2020. High growth categories in the forecast include:
- Savory snacks
- Ice cream and frozen desserts
- Ready meals
- Baked goods
- Dairy products
- Sweet Biscuits, Snack Bars and Fruit Snacks
- Processed Meat and Seafood
- Confectionery
Post reports that Canada’s retail market is mature and consolidated with five major stores that include three traditional grocers and two general merchandisers that command 77% of the US$75 billion market. Retail sales among the
traditional grocers have been flat since 2015, but Costco, Walmart and other general retailers (including dollar stores) have contributed to US$3.4 billion to grocery sales. Ontario, Quebec and British Columbia represent 74% of Canada’s retail
market and are the provinces in which most of the convenience, drug, grocery and mass merchandise stores are located.
In 2018, food and beverage sales in Canada exceeded US$96 billion representing a 3% increase compared to US$94 billion in 2017. Grocery stores represented 75% of sales followed by alcoholic beverages at 19% and specialty food stores at 6%. Canada retailers rely on imported foods to fill their shelves for consumers with relatively high disposable income. Through access to established global food supply chains, fresh produce and many iconic U.S. brands are readily available throughout the year.
The Canadian food market displays a dichotomy of demand. One for low priced quality foods and the other for premium and specialty food items. Some premium consumer packaged food products can sell for three times the U.S. retail price.
U.S. companies offering natural, organic, or specialty foods tend to create product demand and to generate sales through smaller, independent retailers before tackling the majors. Proven sales in Canada can be important when persuading major retailer
category buyers to list new products.
The three major grocery chains market their products to consumers across the country under the following main banners:
Loblaws: | Sobeys: | Metro: |
- Provigo
- The Real Canadian Superstore
- nofrills
- Maxi
- Fortinos
- Zehrs markets
- Shopper’s Drug Mart
| - IGA
- Thrifty Foods
- Safeway
- FreshCo.
- Foodland
| - Food Basics
- Marché Adonis
- Super C
- Jean Coutu
|
Euromonitor reports that ethnic food retailing is growing rapidly in Canada, bolstered by the growing ethnic population, as well as the increasing consumer desire to seek authentic ethnic food. Sobeys, Metro and Loblaw, the big three
companies in supermarkets in Canada, have been expanding their ethnic brands, offering a more diverse product mix to meet consumer demand. Metro acquired the majority stake in Marché Adonis in 2011 to tap into the interest in Mediterranean
and Middle Eastern food. Since purchasing the minority interest from Adonis’s three founders in 2017, Metro aims to continue expanding Adonis in Quebec and Ontario. Owned by Loblaw since 2009, T & T is expanding quickly and has become the
largest Asian supermarket in Canada, with a strong foothold in British Columbia, Alberta and Ontario. With a positive outlook for ethnic food, ethnic supermarkets are set to continue their rapid expansion to serve the ethnically diverse population
in Canada.
According to Euromonitor, Organic Garage, an independent organic and natural foods grocery chain, aims to lead in natural food grocery with fast outlet expansion. The chain positions itself as the go-to place for 100% certified organic
products while offering prices 18-24% less than those in other organic shops. Organic Garage increased its Canadian store network again in 2019, and though its main focus is Toronto, it has locations in Ontario and has now set its sights on British
Columbia after further development in the former two provinces.
Meanwhile, Canadian chef Mark McEwan has opened a third McEwan grocery store with an emphasis on casual dining experience. Located at the base of the One Bloor East skyscraper, it is a hybrid grocery store and restaurant (“Grocerant”)
that offers grocery, grab-and-go and sit-down dining options. While the grocery store area mainly offers brands from the McEwan Group, the foodservice areas include a café featuring Lavazza coffee, a Fabbrica pizza counter and a sushi bar,
all of which boast offerings prepared with freshly made, organic or homegrown ingredients.
Moreover, as supermarkets face intense price-competition from discounters and warehouse clubs, many are moving to the mini-restaurant model to offer healthy and affordable food service options. For instance, T & T has launched a seafood
bar at its Richmond location, which invites shoppers to purchase fresh prawns, lobsters and clams in the store and have them cooked for eating on-site. This serves to maximize consumer time at the supermarket and thus their spending.
The supermarkets channel in Canada faces increasing competition from many alternative channels. Convenience stores offer consumers an easy option for shopping for small-value items with their extensive retail networks. Pure online players
such as Amazon provide fast home delivery and offer a large selection of household products. Pharmacies such as Shoppers Drug Mart also compete in groceries with expanded offerings of fresh produce.
With more challenges ahead, some supermarkets are trying to enhance their value proposition by focusing on downtown areas in major Canadian cities, as there is a high population with income levels sufficient to justify taking up a premium positioning. As points of differentiation, premium fresh food offerings and high-quality products are marketed to residents from upmarket condominium towers and professional workers from nearby office buildings.
Euromonitor reports that as the biggest chains expand in the country, the convenience stores channel is seeing increasing consolidation. The two leading players, 7-Eleven Canada (7-Eleven) and Alimentation Couche-Tard (Circle K and Couche-Tard)
increased their combined share once again in 2019, accounting for the majority of value sales within convenience stores. Their combined value share increased by three percentage points over the course of the review period, at the expense of the share
of “others”. It is likely that this consolidation trend will continue in the forecast period, especially as these two leaders are actively innovative. For instance, 7-Eleven has partnered with Foodora and launched a delivery service in
several major cities across Canada, including Toronto, Vancouver and Calgary. It is a trial with the aim of making convenience stores even more convenient.
Growing through acquisition has been a long-term strategic focus of Alimentation Couche-Tard Inc. Aside from acquisitions, the company also places emphasis on organic growth by evolving and building on its current strong position. To
build a stronger image internationally, Alimentation Couche-Tard is developing its global convenience brand Circle K in over 20 countries, including Canada, where some other established brands and newly acquired sites have been converted and rebranded.
To increase its product offering in growing categories, the company concentrates its efforts on providing more made-on-site food and positions itself as a convenient one-stop-shop for quality food at competitive prices.
Post reports that the bulk of Canadian food imports are predominantly imported directly by a large importer, broker, distributor or wholesaler; perishable items and multinational food companies may ship directly to a national retail chain’s distribution
center.
Best Product Prospects
Post reports that the demand for organic, healthy, and natural products market in Canada is growing briskly. Prospects are excellent for organic and natural ingredients, consumer-ready processed foods and beverages and fresh organic fruits and vegetables.
Canadian health-conscious consumer are continuously looking for products that are all natural; no artificial colors; low sugar/sugar free; no artificial flavors; and low fat/fat free.