Retail Food Sector Report - Canada

An Expert's View about Food , Beverages and Tobacco in Canada

Posted on: 24 Mar 2012

The U.S. agricultural exports to Canada accounted for 14 per cent of total U.S. food and agricultural products, which totaled over $136 billion.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 3/9/2012 GAIN Report Number: CA12011 Canada Retail Food Sector Report - Canada Approved By: Robin Tilsworth Prepared By: Maria Arbulu Report Highlights: In 2011, Canada?s 33 million consumers were estimated to have generated C$ 457 billion (US$ 451 billion) in retail sales, representing a four percent increase from 2011. Food sales in Canada contributed close to 19 percent to the retail landscape and in 2011 was projected to register at C$ 87 billion (excluding alcoholic beverages and liquor store sales). From 2006 to 2011, sales increased by 17 percent and are forecasted to grow at a constant compound annual growth rate (CAGR) of 2 % through 2016. This report provides an overview of the Canadian retail food sector for U.S. food producers that are exploring opportunities to export their products to Canada. This report does not include information on alcoholic beverages. This subject addressed in the GAIN Report on Exporting Alcoholic Beverages into the Canadian Market (CA 11017). Retail Report ? Canada March 2012 TABLE OF CONTENTS Overview of Agricultural Products in Canada Section 1: Market Summary 1A. The Food Sector in Canada?s Retail Landscape 1B. Imported Foods in Canada 1C. The Canadian Shopper 1D. Trends Driving Grocery Purchases Section 2: Road Map for Market Entry 2A. Overview 2B. Entry Strategy 2C. Market Structure i. Retail Sub Sectors Grocery Stores/Supermarkets/Superstores Club Warehouse Outlets and Mass Merchandisers ii. Convenience Stores/Mini Markets, and Gas Stations iii. Drug Chains Section 3: Leading U.S. Products and the Competition Section 4: Best Prospects 4A. Food Products with Good Sales Potential 4B. Products Facing Significant Barriers and Regulatory Challenges Section 5: Further Information and FAS/Canada Contacts 5A. Government Organizations 5B. Industry Associations 5C. Publications 5D. FAS/Canada Contacts and Available GAIN Reports 5E. Summary of Resources 2 Retail Report ? Canada March 2012 Overview of U.S. Agricultural Products in Canada In 2011, U.S. agricultural exports to Canada reached a record $19 billion. The U.S. agricultural exports to Canada accounted for 14 per cent of total U.S. food and agricultural products, which totaled over $136 billion. Consumer-oriented agricultural products accounted for 72 per cent of total U.S. food and agricultural product sales to Canada in 2011, with fresh fruits and vegetables, snack foods, processed fruits and vegetables and red meat products as the category leaders. American products account for more than 60 per cent of Canada's total agricultural imports. The U.S. agriculture exports to Canada have increased by 12 percent over the previous year. During 2011 a number of consumer-oriented agricultural categories posted record sales to Canada. The top 5 categories are fresh vegetables ($1.7 billion), fresh fruit ($1.7 billion), snack foods ($1.6 billion), red meats ($1.9 billion), and processed fruits and vegetables ($1.2 billion). Canada is also an important market for U.S. fish. Canada is the largest market for U.S. fish and seafood products, with sales increasing by 13 per cent from 2010 to 2011 to reach $900 million. Furthermore, U.S. fish and seafood products dominate Canadian imports and represent 38 percent of the country?s total imports. Under the tariff elimination provision of the North American Free Trade Agreement (NAFTA), the majority of U.S. agricultural products have entered Canada duty-free since January 1, 1998. On December 4, 1998 the United State and Canada signed a Record of Understanding, an agreement to further open Canadian markets to U.S. farm and ranch products. Trade with Canada is facilitated by proximity, similar culture, language, common lifestyle pursuits, and the ease of travel among citizens for business or pleasure. Many American products have gained an increased competitive edge over goods from other countries as the result of NAFTA. Canada's grocery product and food service trades have been quick to seize opportunities under NAFTA which permitted them to expand their geographical sourcing area to include the United States. Declining import duties under the trade agreements and an easing of Canadian packaging requirements for processed horticultural products for the food service sector have resulted in significant gains in the Canadian market for U.S. consumer- ready foods and food service products. Section 1: Market Summary 1A. The Food Sector in Canada?s Retail Landscape In 2011, Canada?s 33 million consumers were estimated to have generated C$ 457 billion (US$ 451 billion) in retail sales, representing a four percent increase from 2010. Although, sales in Canada are smaller than those in the U.S., retail spending per capita in Canada equals that of the United States. The Office of Consumer Affairs of Canada reports the retail landscape has changed considerably as there has been a shift from the independent to chain stores. The strong presence of U.S. franchises and their chain stores have resulted in a high receptivity of 3 Retail Report ? Canada March 2012 American products and services. Also, most consumers recognize and are familiar with U.S. products and services due to the geographical proximity and cultural similarities. Food sales in Canada contribute close to 19 percent to the retail landscape and estimated sales of C$ 87 billion in 2011. (excluding alcoholic beverages and liquor store sales). From 2006 to 2011, sales increased by 17 percent and are forecasted to grow at a constant value of 2 % CAGR through 2016. Table 1: Food Sales in Canada?s Retail Landscape in 2011 Source: Statistics Canada 4 Retail Report ? Canada March 2012 Table 2: Six Year Trend in Food Sales Source: Statistics Canada *P = Projected There are 21,242 stores in Canada selling food products, the vast majority of sales continue to be sold through grocery stores and supermarkets, representing 63.5 percent of the total foods sales in 2011. Foods sales through non-traditional food retailing channels as general merchandise stores, club stores convenience, drug stores, specialty stores and gas stations have grown from 33% in 2009 to 37 percent in 2011. Walmart Canada and Costco along with other non-grocery retailers as Canadian Tire, Shoppers Drug Mart, and London Drugs have been strategic in placing more food products on their store shelves, making it convenient for customers to spend some of their food dollars in these channels. Table 3: Definition of Retail Channels Type of Description Channel Grocery Store Any retail store selling a line of dry groceries, canned good or non-items plus perishable items. Supermarkets A full-line, self-service grocery store with annual sales of C$2 million or more. Mass A retailer of soft and hard goods wherein the selling of grocery products Merchandiser has been an add-on and not traditionally the prime focus of the retail format. (continued) 5 Retail Report ? Canada March 2012 Type of Description Channel Warehouse A membership retail/wholesale hybrid with a varied selection and limited Clubs variety of products presented in warehouse-type atmosphere. These 120,000 square-foot stores typically feature a majority of general merchandise, as well as a grocery line dedicated to large size and bulk sales. Convenience A compact store offering a limited line of high-convenience items. Many sell Stores gasoline and fast food. Usually fewer than 2,400 square feet in size and they are open long hours. Drug Stores Stores (often chain) with retail pharmacies and specializing in Over-the- Counter (OTC) medication and selling health and beauty aid products. Offering a limited range of convenient groceries. Specialty Small specialized store, often 3,000 square feet specializing in a specific Stores food market sector, such as meats or health foods. Gas Stations Convenience stores operating under or in conjunction with a gasoline banner. Source: Canadian Grocer 2012 Table 4: Breakdown of the Retail Channels in Canada Channel 2009 2010 2011P Sales Sales Sales (C$ Market (C$ Market (C$ Market Millions) Share Millions) Share Millions) Share Grocery Stores/ Supermarkets 55,874.7 67.0% 55,523.0 65.2% 55,308.5 63.5% Mass Merchandiser 8.339.9 10.6% 9,452.0 11.1 % 10,190.7 11.7% Warehouse Clubs 6,087.8 7.3% 6,557.2 7.7% 6,793.8 7.8% Drug stores 4,920.3 5.9% 5,365.0 6.3% 6,271.2 7.2% Convenience stores 4,586.7 5.5% 5,024.3 5.9% 5,226.0 6.0% 2.0% S 1,667.9 2.0% 1,703.2 2.0% 1,742.0 pecialty Stores Gas Stations 1,417.7 1.7% 1,532.8 1.8 % 1,567.8 1.8% Total 83,395 100% 85,158 100% 87,100 100% Post estimates based on Statistics Canada, 2012 Who?s Who Directory, ACNielsen Banner Share 1B. Imported Foods in Canada 6 Retail Report ? Canada March 2012 The Centre for Food in Canada recently detailed the contribution that imported foods has had in the Canadian diet. In 2011 the total amount of imports registered at C$ 22.5 billion, representing 24 percent of the total food sales. The leading imports into Canada were fresh fruits and vegetables, followed by fish products. In the last two decades, Canadians have changed their eating habits to include more fruits, vegetables, cereal products and nuts. Table 5: Top Retail Food Imports of Final Goods in 2011 Percentage of Product Total Canadian Food Total Imports (C$ Millions) Fresh Fruit, excluding tropical 6.5 % 1,,467 Other vegetables, fresh or chilled 5.1 % 1,151 Tropical fruit 4.2 % 948 Fish and seafood products, canned or otherwise preserved 2.3 % 519 Chocolate confectionary 2.3 % 519 Fruit juices, excluding frozen concentrates 2.3 % 519 All other miscellaneous food products 2.2 % 459 Other confectionery 2.1 % 474 Other bakery products 1.9 % 429 Prepared meat products 1.8 % 406 Fish and seafood products, fresh, chilled, or frozen 1.7 % 384 Roasted coffee 1.4 % 316 Frozen fruit and juice concentrates 1.3 % 293 Nuts 1.3 % 293 Pickles, relishes, and other sauces 1.3 % 293 7 Retail Report ? Canada March 2012 (continued) Percentage of Product Total Canadian Food Total Imports (C$ Millions) Biscuits 1.3 % 293 Beef, fresh chilled, or frozen 1.2 % 271 Other fruit products, including dried fruit and fruit peel 1.2 % 271 Pasta products, excluding dry pasta 1.2 % 271 Breakfast cereal products 1.0 % 226 Food snacks, excluding potato chips and nuts 0.9 % 203 Poultry, fresh, chilled or frozen 0.9 % 203 Cheese 0.9 % 203 Other preserved vegetables 0.9 % 203 Fish and seafood (except animal aquaculture) live, fresh, chilled or frozen 0.8 % 181 List does not include alcoholic beverages 8 Retail Report ? Canada March 2012 Source: Statistics Canada Table 6: Total Consumer Oriented Agricultural Imports into Canada Year Total Imports Total Retail Food Sales (C$ Millions) (C$ Millions) 200 6 16,598.9 73,601.2 200 7 18,167.0 76,396.8 200 8 19,950.1 80,239.4 200 9 20,936.0 83,395.0 201 0 20,848.0 85,158.1 201 1 22,563.0 87,100.0 P* Source: Statistics Canada and Global Trade Atlas *P = Projected 1C. The Canadian Shopper The changing attitudes and demographics that have taken place in the last ten years in Canada are responsible for the types and choices of foods that most Canadians buy, as well as influencing s the foods that are found in retail stores today. Demographics o Graying Population Canada has an aging population whereby 40 percent of the population is 45 years or older and by 2026 this will increase to 48 percent. As there are more seniors and fewer children in the home, the types of food people eat and buy changes. Furthermore, as Canadians get older there is an increase in health related issues associated with aging. The National Institute of Nutrition rated heart/cardiovascular disease, cancer, diet, weight, diabetes and exercise the leading issues among seniors. Scientific studies show the foods people eat have a direct benefit to their health and the trend indicates that older Canadians are changing their diet in order to live better lives. o Household Size and Women in the Labor Force The average number of family members per household has decreased from almost 4 in 1970 to less than 3 people per household in 2008. There are more single-person households than ever before which has created market opportunities for retailers and food manufacturers to introduce smaller sized food packaging offering single portions. In addition, the number of 9 Retail Report ? Canada March 2012 working mothers with children under the age of 16 has doubled from 39.1 percent in 1976 to 72.9 percent in 2009. Added time constraints on working women and mothers, who still remain as the primary decision maker in grocery purchases has created a demand for convenient meal options. o Ethnic Diversity Cultural diversity is a critical force in the retail marketplace and many retailers are responding to this change. The arrival of new immigrants into the country has helped to grow Canada?s population. Consumers of South Asian and Chinese backgrounds make up the largest ethnic groups. Statistics Canada projects by 2031; ethnic shoppers will represent 31% of the consumers in Canada. Canadian Purchasing Attitudes In a recent survey conducted by Agriculture and Agri-Food Canada, the top four attributes influencing Canadian shoppers in their selection of (in order of importance) are: price, quality, freshness and health/nutrition. o Price Many Canadian consumers have become bargain shoppers due to a slow economic recovery and rising food prices in 2011, which increased by 4.4 percent. These factors have caused shoppers to remain cautious in their spending habits. A recent audit conducted by Deloitte Canada for leading trade magazine, Canadian Grocer, predicts ?the consumer will remain just as p 1 rice conscious as ever, with little to no evidence of change.? o Quality Consumers associate quality with freshness, nutrition, safety, appearance and flavor. Although, the annual average household expenditures on food have decreased from 18.7 percent from 1969 to 10.2 percent in 2009, real spending per person has increased. Shoppers are buying high-value and quality items. Post estimates the annual average spent on groceries per person in 2010 was C$ 3,494. In response to these buying preferences, retailers are offering specialty and gourmet foods to their customers. o Freshness Freshness is becoming synonymous with quality among Canadians as it implies good taste, nutrition, and more natural (not processed). The consumption of fruits and vegetables by Canadians has increased significantly over the last decade. Agriculture and Agri-Food Canada report Canadians have added 10.9 percent more vegetables into their diets. In 2010 retail chain, Walmart Canada seized this trend and introduced fresh produce into their stores. Also, noted earlier in Table 4 on Canada?s top leading food imports, fresh and frozen fruits and vegetables were ranked at the top of the list. o Health/Nutrition Consumers are informed of the many health benefits and risk associated with diet and many have become conscious of reading food labels to check their nutritional value and list of 10 Retail Report ? Canada March 2012 ingredients. Although, Health Canada reports Canadians have reduced their intake of daily calories from 2,500 in 2001 to 2,358 in 2009, the incidents of childhood obesity have tripled in the past 30 years. Foods that address the health concerns of younger and older consumers while offering taste will continue to show promise in the marketplace. 1D. Trends Driving Grocery Purchases Value Private Label: Traditionally, private label has been seen as lower quality and generally less desirable than national brands but this has changed. In 2011, private label represented C$ 11.3 billion in sales and is forecasted to grow in 2012. Economical Meal Solutions: A resurgence of traditional products that offer value as dehydrated soups. 1 Canadian Press. December 14, 2011. Food Industry Weathered Economic Report. http://www.canadiangrocer.com/top-stories/food-industry-weathered-economic-storm-report-10647 Promotional Priced Products: Higher retail food prices has caused consumers to seek out promotions and encouraged more Canadians to shop at discount retailers. This trend is expected to grow through 2013. However, Canadians are conscious shoppers and will not sacrifice quality for price. Quality/Freshness Fresh Foods: Consumers are switching to fresh foods for they equate "fresh" with better value that offers taste, health and nutrition. Canadian Grocer reports that Target Canada will offer a limited selection of fresh products at a reasonable range to the consumer. Frozen Foods: Retail sales of frozen foods grew by 3% and are predicted to increase as new technology helps to keep the flavors fresh. Microwavable frozen meals that offer steam packaging have become popular. Convenience Ready to Heat and Eat Foods: Women continue to do the majority of food purchasing, preparation and clean up. As a result, the demand for foods that are easy and quick to prepare yet tasty, fresh and nutritiously sound continues to grow. One Dish Meals: Growth in quick one-dish meal kits such as stir-fries and stew are expected to grow. Custom Quick Food: Consumers do not spend an extensive amount of time preparing meals; but it still is important to feel that they have contributed something to the preparation. Therefore, there will be an opportunity for ready meals or kits, which allow the person preparing to add their own personal touch. 11 Retail Report ? Canada March 2012 Smaller Food Portions and Packages: Individual portions sizes are in demand as there are more single-person households. The service of packaging is on the rise to meet the need "eat-where-you-are." Flexible and Portable Packaging: Eating in vehicles or ?Dashboard Dining,? as well as eating lunches at the work desk is more common. Snacks and Mini Meals: Canadian eating patterns are changing from eating three main meals a day to eating several smaller meals throughout the day. Convenient, nutritious snacks or mini meals will increase in demand (i.e. breakfast bars, wraps, sports drinks). Innovation: Convenience foods will continue to be popular but the key to success will be innovation. Physical and Emotional Energy: Stressed out consumers that are seeking energy, power and performance from food are turning to sports drinks, energy bars and snacks. Health and Wellness Correcting Condition: Food and food ingredients continue to increase in popularity as a method for self-medication and disease prevention. As a result, the demand for functional and nutraceuticals foods will continue to increase and new products will be developed. Healthy Foods for Kids: Approximately 26 percent of Canadian children ages 2-17 years old are currently obese. Food Safety: Consumers are increasingly interested in food products that provide reassurances about food safety. Gluten-Free: The demand for these products will continue to grow as they have doubled since 2005. Low Sodium: Canadian consumers are becoming conscious about the level of sodium in prepackaged processed foods and in restaurant meal foods. Health Canada is currently reviewing new recommended target levels of sodium intake. Low Sugar: Canada?s Food Guide recommends moderate consumption of sugar, glucose, fructose, and various kinds of syrups as they are the major contributors to weight gain. Low Calorie: Interest in weight loss products and lower calorie foods continues to be high among Canadians. Organics: The value of organic food products is estimated at C$ 2 billion and is predicted to grow steadily. Trans Fats and Saturated Fats: Canadians are continually concerned about fat intake and health concerns associated with trans and saturated fats. As a result, low-fat cereals, dairy products and frozen meals are rising. Pleasure/Ethnic Foods 12 Retail Report ? Canada March 2012 Economic growth and rising disposable income has made Canadians more confident about spending for products and services that make their lives easier or provide pleasure. Indulgence or Comfort Foods: Although Canadians are concerned about nutritional value of food, they still are reaching out for tasty snacks that are high in fat, sugar and salt. The demand for these foods continues to be high for they are often considered a reward for healthy eating or surviving the stresses of everyday life. Gourmet products of Meal Excitement: New, unique, high quality and expensive products will be small indulgences for consumers who are seeking meal entertainment. Regional Cuisine: Consumers are becoming more interested in seasonal, regional and high flavor foods. Ethnic Foods: Immigration to Canada and the number of visible minority groups have increased dramatically. Consumers are flocking to healthful and flavorful ethnic cuisines such as Asian and Mediterranean foods where the emphasis is on ingredients such as vegetables, grains and fish. In 2010, ethnic food markets generated C$ 65 billion in food sales and are projected to increase 15 -20 percent annually. Ethical Buying A small but growing number of Canadians are making buying choices based on where and how their foods are grown. This trend goes beyond taste and health concern and into the realm of green politics and anti-globalization. It includes the concepts of ?fair trade?, ?sustainable practices?, and ?food miles.? Buy Local Products: Consumers are concern for their local economy and where there foods come from. Although, U.S. foods are not viewed as local this may present opportunities for U.S. food companies. Canadians view U.S. products as safer and of better quality than imports from other countries. Recycled and Biodegrable Food Packaging: Many Canadian cities have instituted recycling programs for their citizens and businesses. Each sector is looking to maintain a ?green image.? Table 7: Advantages and Challenges Facing U.S. Exporters Advantages Challenges Canadian consumers enjoy a high disposable Competitive pricing as the cost of doing business income, coupled with a growing interest in in Canada for retailers and distributors are higher global cuisine. than in the United States pushing food prices up. U.S. food products closely match Canadian Tariff rate quotas for certain products. tastes and expectations. Fruit and vegetable consumption in Canada is With consolidation, sellers often face one national substantially higher than that in the United retail buyer per category; this buyer will often States. Except for its greenhouse industry purchase for all banners under the retailer. Canada?s horticulture production is limited. Buyers are constantly looking to reduce price, This provides opportunities for U.S. producers improve product quality and extend the product in the off seasons. Canadian retailers rely range with new entrants. 13 Retail Report ? Canada March 2012 heavily on imports to supply the domestic market all year round. Continued, Advantages Challenges Canada and the U.S. share a 3145-mile of Canada has a very high ethnic population with border with 2/3 of the Canadian population specific dietary preferences. [The three largest living within 200 miles of the U.S. border. This cities consist of more than 1/3 new Canadians]. geographical proximity facilitates This consumer ethnic diversity tends to be a communication and transportation. There is challenge for some large scale mass marketing also significant over flow of U.S. television and companies with products and marketing print media in most Canadian centers, which campaigns more targeted at the U.S. market. On can reduce advertising costs for U.S. the other hand the different ethnic markets in companies with media campaigns in U.S. cities Canada can create niche opportunities for smaller bordering on Canada. companies. Canada?s strong dollar is an advantage for Retailers and brokers/distributors may charge high U.S. exporters. listing/placement fees. Canadian ethnically diverse population Food labeling, including bilingual packaging provides opportunities for specialty products in requirement, and nutritional content claims are populated centers. highly regulated and frequently differ from the United States. Retail consolidation favors large-scale Retailers are interested in category extension, not suppliers and increases sales efficiency with cannibalization. Products entering the market must fewer retailers to approach. be innovative; not duplicative. Duty free tariff treatment for most products Differences in Food Standards may require special under NAFTA production runs and packaging due to Canadian standard package sizes. High U.S. quality and safety perceptions. Differences in approved chemicals and residue tolerances. Private label presents opportunities for custom Private label brands continue to grow in many packers of high quality products. categories; sometimes taking shelf space from American national brands. The total population of Canada is slightly less than California and much more spread out, making marketing and distribution costs generally higher than in the United States 14 Retail Report ? Canada March 2012 Section 2: Road Map for Market Entry 2A. Overview Food processors from the United States seeking to enter the Canadian marketplace have many opportunities. The United States is Canada's largest trading partner with 63% per cent market share of Canada?s manufactured food imports originating from the United States. This is a result of a number of factors, including a convenient shipping corridor and a familiarity with consumer tastes and expectations, and most importantly the North American Free Trade Agreement (NAFTA). There are a number of challenges U.S. exporters must meet before exporting to Canada. Some of these include currency, customs procedures and labeling requirements. To meet these market challenges U.S. exporters entering the Canadian market are recommended to take the following steps: 1) Contact your State Regional Trade Group, 2) Research the market for your particular product, 3) Locate a Canadian partner: broker/distributor/importer, and 4) Understand the Canadian government standards and regulations that pertain to your product. 2B. Entry Strategy Step 1. Contact your State Regional Trade Group/State Regional Office State Regional Trade Groups (SRTG) are non-profit organizations that offer many services to U.S. food/agricultural product exporters. They are comprised of representatives from their regions? Department of Agriculture and work together in supporting U.S. food companies. Primarily, they assist in providing privileged information about the various food sectors in a respective global market. Also, key contact information on buyers and specifics about important trade and consumer shows in Canada is available for potential exporters. Through the SRTG, branded food products and agricultural commodities can be promoted with assistance from Market Access Program (MAP) funds administered by USDA?s Foreign Agricultural Service. Packaging and label modifications, product tasting/demonstrations, in-store promotions, point- of-sale materials, advertising, and trade show participation, are some of the activities for which eligible participants can obtain partial reimbursements. 15 Retail Report ? Canada March 2012 Table 8: State Regional Trade Groups State Regional Trade Group Web Site States Food Export http://www.foodexportusa.org Connecticut, Delaware, USA Maine, Massachusetts, Northeast New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont Food Export http://www.foodexport.org Illinois, Indiana, Iowa, Association of Kansas, Michigan, the Midwest Minnesota, Missouri, USA Nebraska, North Dakota, Ohio, South Dakota, Wisconsin Southern U.S. http://www.susta.org Alabama, Arkansas, Trade Florida, Georgia, Association Kentucky, Louisiana, (SUSTA) Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Puerto Rico, Virginia, West Virginia Western U.S. http://www.wusata.org Alaska, Arizona, American Agricultural Samoa, California, Trade Colorado, Guam, Hawaii, Association Idaho, Montana, Nevada, (WUSATA) New Mexico, Oregon, Utah, Washington, Wyoming National http://www.nasda.org/cms/7195/8617.aspx State Directory of the Association of State Departments of State Agriculture Departments of Agriculture (NASDA) Step 2: Research the Market for Your Specific Product A thorough understanding of consumer trends and needs are required in developing an effective market strategy in Canada. There are many organizations in Canada with a wealth of information for U.S. exporters interested in researching the many aspects and particularities of the Canadian food sector. Fortunately, as Table 7 indicates, much of that information is available via the internet. Though some consumer data can only be obtained with a fee, there 16 Retail Report ? Canada March 2012 are several industry specific publications that continuously report on specific developments of interest for U.S. exporters. These publications are Canadian Grocer (www.canadiangrocer.ca) and Grocery Business (www.grocerybusiness.ca), closely follow key developments in the food retail industry in Canada. 17 Retail Report ? Canada March 2012 Table 9: Organization and Data Sources within Canada Organization Function/Purpose Website Agriculture and Agri- Provides information, research and www.agr.gc.ca food Canada, Agri- technology policies and programs. Trade Food Service Also provides access to statistics. This Ministry is the counterpart to the U.S. Department of Agriculture. Food & Consumer FCPC is national, non-profit www.fcpc.ca Products of Canada organization representing the food (FCPC) and consumer products industry in Canada. Canadian Federation of CFIG represents Canada?s www.cfig.ca Independent Grocers independently owned and franchises (CFIG) supermarkets. Canadian Restaurant The largest foodservice and www.crfa.ca and Foodservices hospitality association in Canada. Association(CRFA) Centre of Food in A non-profit organization addressing www.conferenceboard.ca Canada issues related to food and its impact on Canadians. Consumers' Association Represents consumers to all levels www.consumer.ca of Canada of government and to all sectors of society. Industry Canada Trade databases. www.ic.gc.ca Statistics Canada The official source for Canadian www.statcan.gc.ca social and economic statistics and products. I.E. Canada (Canadian I.E. Canada is a national, non-profit www.iecanada.com Association of Importers organization committed to providing and Exporters) services to develop and enhance the international trade activity and profitability of importers and exporters. Step 3: Locate a Canadian Food Partner- Broker/Distributor/Importer It is recommended that most new entrants to the Canadian market strongly consider securing the services of a broker/distributor/importer. Local representation provides exporters with a domestic advantage to understanding the local, regional and national markets and opportunities available. Brokers and distributors provide guidance on best business practices, sales contacts, market development, logistics and government regulations. Many also provide 18 Retail Report ? Canada March 2012 merchandising and marketing programs and their volume purchasing power can help reduce retail slotting fees. A partial listing of Canadian food brokers is available on our latest brokers report, Agent/Broker Directory ? Central Canada (CA 11025) available online at: http://gain.fas.usda.gov. Exporters from the United States are advised to consult with their regional SRTG as export programs may be available in qualifying appropriate Canadian partners. Step 4: Understand Canadian government standards and regulations that pertain to your product. The Canadian Government has multiple acts that govern importation and sales of foods. Some of the most important ones are: Canada Agricultural Products Act and Associated Regulations Consumer Packaging and Labeling Act Customs Act Fish Inspection Act Food and Drug Act Importation of Intoxicating Liquors Act Meat Inspection Act Weight and Measures Act The Canadian Food Inspection Agency, Health Canada, and the Department of Foreign Affairs and International Trade are the main government bodies U.S. exporters can contact for specific information when studying regulations with which they need to comply. Though Canada and the U.S. share many consumer trends, cultural similarities and lifestyles; nutritional facts, ingredient declarations and health claim labeling regulations are different. 19 Retail Report ? Canada March 2012 Table 10: Canadian Government Organizations Related to Food Government Bodies Function Information Canadian Food Inspection Government of Canada?s regulator for www.inspection.gc.ca Agency (CFIA) food safety [along with Health Canada], animal health and plant protection. Canada Customs and Its mission is to promote compliance with www.ccra-adrc.gc.ca Revenue Agency (CCRA) Canada?s tax, trade, border legislation and regulations. Canadian Food and Drug A regulatory document provided by Health www.hc-sc.gc.ca/food- Act Canada, which outlines information aliment regarding specific food import restrictions. Health Canada Administers the Food Safety Assessment www.hc-sc.gc.ca Program, which assesses the effectiveness of the Canadian Food Inspection Agency's activities related to food safety. Foreign Affairs and Responsible for allocating tariff rate quotas www.dfait- International Trade (DFAIT), to importers. maeci.gc.ca/eicb Export & Import Controls Bureau Measurement Canada Administers and enforces the Weights and www.strategis.ic.gc.ca Measures Act for food labeling purposes. The Canadian Food Inspection Agency (CFIA) has prepared a Guide to Food Labelling and Advertising and is accessible through the internet. The guide details the regulatory requirements for selling packaged foods and beverages in Canada. The CFIA has the authority to refuse entry, detain, return, or remove from retail shelves any imported processed food product that does not meet the federal food labeling requirements. The CFIA Guide includes information on: Basic Labeling Requirements * Advertising Requirements Claims as to the Composition, Quality, Quantity and Origin of Foods Nutrition Labeling * Nutrient Content Claims * Health Related Claims * New regulations on food allergens * Other Product Specific Requirements as alcoholic beverages, processed fruits and vegetables, honey, meat and poultry, fish and supplementary products. *Regulations differ from the United States and require adherence for retail sales in Canada. 20 Retail Report ? Canada March 2012 For more information on food labeling regulations and other information useful to U.S. food exporters, refer to the Exporter Guide, Canada, Annual 2011 (CA 11065) available online at: http://gain.fas.usda.gov. In order to supply more and better information, The Canadian Food Inspection Agency and the Canada Border Services Agency have established three regional Import Service Centers across the country. The staff at these centers can be contacted to obtain pertinent information on specific import requirements and documentation. Table 11: Canadian Import Service Centers Import Service Hours of Center Ope tact rtation Con Eastern Canada ISC 7 a.m. to 11 p.m. Telephone: 1-877-493-0468 or 514-493- [local time] 0468 Fax: 1-514-493-4103 Central Canada ISC 7 a.m. to 12 a.m. Telephone: 1-800-835-4486 or 905-795- [local time] 7834] Fax: 1-416-795-9658 Western Canada ISC 7 a.m. to 12 a.m. Telephone: 1-888-732-6222 or 604-666- [local time] 1577 Fax: 1-604-666-1577 21 Retail Report ? Canada March 2012 2C. Market Structure and Retail Food Distribution Channel 22 Retail Report ? Canada March 2012 Imported food products into the Canadian marketplace may be sold directly to the retailer or to importers, brokers, distributors and wholesalers. A significant amount of U.S. agricultural and food products is shipped as a intra company transfer to the Canadian corporate entity as a branch or subsidiary operation. Traditional supermarket outlets are split between chains and independent stores. All major Canadian supermarket chains are involved in wholesaling and retailing operations. They maintain sizable distribution centers strategically across Canada. These distribution centers not only supply to their store outlets, but may also supply to franchised stores and independent grocers. Some independent grocers may be affiliated with a wholesaler through a voluntary buying group. Convenience stores and smaller grocery retail chains are often supplied by wholesalers and the distribution arm of a leading grocery retailer. Importers, distributors and some wholesalers can sell a specific category or line of products to the chain distribution centers, as they will breakdown the quantities to ship to their stores. In addition, as in the U.S., some brokers, distributors, and importers sell directly to specified chain units by providing a direct store delivery. However, the product and designated stores must be approved by the chain?s head office. Larger retailers often procure perishable products, such as dairy, produce, meat, poultry and value-added items, direct. Some Canadian retailers, such as Loblaw Co. Ltd. and Sobeys Inc., employ procurement offices in the United States for this purpose. On the grocery side of the business, retailers rely on brokers, importers and distributors, particularly in identifying unique products to sell in their stores. Both retailer and supplier are seeking efficiencies to reduce costs in their operations. Among some of the strategies is reducing the number of vendors that category buyers work with. In response to this trend, the broker/distributor industry is making efforts to consolidate products while introducing unique novel products into the market. Larger firms are purchasing smaller brokers/distributors to offer national coverage, while regional organizations are forming alliances across the country to stay competitive by securing national coverage. Brokers and distributors focus on selling to the appropriate category buyer of a head office. Larger brokerage or distribution firms offer merchandising services to help in monitoring product movement and placement as smaller companies will outsource these services. Consolidation in the food distribution sector has an important impact on the rest of the agri- food system as fewer buyers control more of the business through selected suppliers. This may place greater pressure on suppliers to deliver quality products at lower prices as well as continuously updating the product line with new offerings. The food distribution sector is playing an increasingly important role in the Canadian agri-food system by generating significant economic activity and contributing to the provision of one of the world's most affordable food supplies. Today?s growing non-traditional channels are forcing brokers/distributors to focus on specialized sales teams to call on drug stores, c-stores, grocery stores (g-stores) clubs and mass merchandisers. Furthermore, with new technologies being introduced at the home office and store level, some brokerage and distribution firms are offering value-added services to their suppliers/principals. Services like promotional and sampling support, merchandising, computerized ordering, logistical support, and data collection remain competitive in the market. 23 Retail Report ? Canada March 2012 To partner with a broker/distributor, food manufacturers pay a percentage of the product sales revenue. Fees can range from 3% to 10% depending on the volume and the amount of time and labor is required. The percentages are influenced by several factors: the type of product line, expected sales volume, additional special services such as planning promotions or data collection. Pioneering product lines may have a monthly retainer fees until the products generate enough sales volume to switch to a percentage-of-sales format. All fees are negotiated between the principal and the broker prior to future transactions. In trying to introduce a new product and obtain a product listing, a broker will call on the head office of key store chains and wholesale groups. Once a product listing is secured, there may be a listing fee on new products unless the retailer views the product as a ?must have? item. This fee will vary and will be determined by the product?s uniqueness, the demand for the item, along with the advertising and promotional expenditures required to launch the product in a store. i. Retail Sub Sectors Grocery Stores/Supermarkets/Superstores, Club Warehouse Outlets and Mass Merchandisers The majority of retail foods continue to be sold through Canada?s traditional grocery retailers. Canadian-based retailers Loblaw Co., Ltd., The Empire Company Ltd. (referred to as Sobeys?s) and Metro Inc. Together, all three companies are responsible for 43% of retail food sales in the country. These market leaders have positioned themselves as the food specialists over their mass merchandising competitors. They offer discount banner stores that compete with some of the merchandisers. In the last year, the price differential on certain foods has been minimal among store, indicating retailers are responding to a price conscious Canadian shopper. All three companies have been aggressive in developing their private label brands, including their discounted private label. In the coming year, it is forecasted that these retailer leaders will aggressively compete with one another by offering discount promotions and enticing shoppers with customer loyalty programs that offer award points and specials on groceries. Loblaw Company Limited is the largest grocery retailer in the country with 1, 027 stores across the country and 20% share of the food market. The company?s 22 banner stores cover the complete spectrum in types of stores as they include: large Superstores selling one third general merchandise products, conventional supermarkets, discount units, convenience and club stores. Loblaw?s reported they attracted 14 million customers to their stores in 2010. The company has earned a strategic advantage among their competitors with their control-label brands or more commonly referred to their private label brands. Some of their brands compete head-to-head with the national brands. Last year management launched over 1, 200 new control brand products. Among their 13 private label brands, their most recognizable ones are ?President?s Choice (PC)? and the ?No Name? brand representing over 5,200 products. (As a note of interest selected PC brands are now widely distributed in certain regions in the U.S.) With rising food prices and added discount competition, last fall, Loblaws launched an aggressive television campaign to promote their ?No Name? brand in the larger urban centers. Also, the company has invested more than $ 700 million in store improvements on 200 of their existing retail units. Some of the improvements included added floor space to their produce and seafood departments, along with more counter space for meals on the go. To reach the growing Asian market, Loblaws acquired T & T Supermarkets in Canada in 2009. The stores 24 Retail Report ? Canada March 2012 offer Asian food products not found elsewhere. Today, there are 22 stores, primarily located in British Columbia and in Ontario. Today, Sobeys, is behind Loblaws with 13% share of the retail market however, they offer more stores than its leading competitor; 1,334 locations across the country. Between 2008 and 2011, the company reported a 14% growth rate. In 2011, their sales topped over $ 16 billion. The company?s success has largely been attributed to real estate choices and responding to the country?s changing demographics. For example, with Canada?s population residing in dense urban areas, along with the growing number of single and double person households, Sobeys introduced a new banner store called ?Urban Fresh.? The stores are smaller but efficient. They are located in high traffic neighborhoods next to high-rise apartments and condominiums, catering to singles and smaller families living in downtown areas. Sobeys also moved to expand its private label category and now offers seven brands with their ?Sensations Complements? line being the most recognizable one on their store shelves. To capture the ethnic and discount shopper, Sobeys moved to rebrand their former banner store, ?Price Shopper? and converted the stores to ?FreschCo? in 2010. The new stores were redesigned to display more produce, baked goods and meats as well as provide more shelf space to ethnic packaged goods. Lastly, the forecast for increased sales looks promising for Sobeys as its wholesale division will become the primary supplier of frozen, dairy and dry goods to Target Canada. Metro Inc., represents 9% of the market as they operate a total 564 food stores, along with 257 drug and convenience stores in Ontario and Quebec. The conventional supermarkets make up most of Metro?s portfolio of stores however the company also operates discount stores under the Food Basics banner in Ontario and Super C in Quebec. The company as well, increased their number of private label products under the ?Irrestibles? and ?Selection? brands. To attract shoppers with food allergens, Metro Inc., partnered with the Quebec Association of Food Allergies (AQAA) to identify certain Metro brands as ?Certified Allergen Control? (CAC) products. Metro recently partnered up with Quebec based Marche Adonis, an ethnic food retailer offering Mediterranean style foods. The company intends to open stores in the Ontario markets and capture more business from the growing ethnic market. Although, Loblaws, Sobeys and Metro continue to be the market leaders, there are regional stores that should not be overlooked. They are U.S. based Canada Safeway and Overwaitea Food Group in Western Canada, along with Federated Co-ops stores in Alberta. Many of these retailers are also moving forward with similar corporate strategies that reflect the changing demographics in the country. For instance, Overwaitea Food Group with 124 stores offers an impressive selection of international foods that includes 7,000 Asian food products to its customers. Also, Toronto based chain store, Longo?s with a total of 23 stores in the metropolitan/suburban region, opened three stores in high traffic locations where available parking is at a premium. Warehouse Clubs stores as Costco Canada have left a permanent foothold in Canada?s retail landscape. With fewer weekly shopping trips made by Canadians some shoppers, particularly younger shoppers prefer the convenience of loading up on their groceries even if it means spending more on their grocery bill in a single store visit. The warehouse format does not offer much frills but do offer competitive prices by buying larger quantities directly from manufacturers. Club products carry an average profit margin of about 11 percent, while other retailers market their goods anywhere from 25 to 50%. Stores like Costco actively engage their customers by sampling all kinds of food products in their stores on a regular basis. 25 Retail Report ? Canada March 2012 Walmart Canada, is the largest mass merchandiser in the country. In comparison to the market leaders, the company?s share of the grocery receipts is only six percent. However, food sales grew exponentially for Walmart Canada from $ 130 million in 2006 to $5.2 billion in 2011. A significant gain was made in the last two years as they introduced frozen foods and produce in their stores, making it convenient for time conscious shoppers to pick up all their items in a single shopping trip. Target, another merchandising giant is scheduled to open 135 stores in 2013 and will also offer basic groceries. ii. Convenience Stores, Mini Marts, and Gas Stations The Canadian Convenience Store Association reported 10.4 million visits are made each day to Canada?s 23,000 convenience stores and gas stations. The sector is expected to continue to grow at a steady pace. This growth has attracted newcomers and forced players to reinvent themselves to keep their position in the market. Floor space for food products such as sushi, baked goods and snacks is growing as many stores are expanding their premises to accommodate the increasing number of products and services. The focus has been on equipment to prepare and stock high quality convenience foods, particularly chilled items as soft drinks. Much like the trend in the supermarket sector, products that are perceived to be healthy are now becoming readily available in these types of stores. iii. Drug Chains Grocery sales through the drug stores remains small in comparison to the other retail channels however, a few drug store chains have expanded their grocery section and will continue to increase their food sales. Although, food prices are for the most part higher in drug stores, retailers like Shoppes Drug Mart have been aggressive in offering price specials on items like boxed cereal and other basic groceries. These tactics are done to capture more food dollars among regular shoppers. The following table lists the leading retail chains and their major respective banner store as reported at the end of 2011. Provinces Abbreviations: AB: Alberta NU: Nunavut BC: British Columbia ON: Ontario MB: Manitoba PE: Prince Edward Island NB: New Brunswick QC: Quebec NL: Newfoundland and Labrador SK: Saskatchewan NWT: Northwest Territories YT: Yukon NS: Nova Scotia 26 Canadian Regions: Eastern: NB, NS, PEI, NL Central: ON & QC Western and Prairies: AB, BC, MB, SK Store Type: SS: Superstore SC: Super Centre SM:Supermarket C: Convenience Price Category: D: Discount M: Medium U: Upper L: Low W: Wholesale Source: Canadian Grocer, Who?s Who 2012 and 2012 Directory of Retail Chains in Canada, Dun and Bradstreet Canadian Business Directory 2012 * Food sales Table 12: Grocery Stores/Supermarkets/Superstores Banners Retailer Name of banner Store Price No type category units Location Loblaw Total Chain Sales = C$ 31.46 B. Companies Ltd. loblaw.ca Eastern Canada Atlantic Superstore SS D 51 NB, NS, PEI Dominion SM M 11 NL NB, NS, PEI, Save Easy Foods SM D 45 NL Central Canada Cash & Carry SM D 15 ON, NS Fortinos SM/SS M 20 ON L?Intermarche SM M 64 QC Loblaws SM/SS M 75 ON, QC Maxi SM D 90 QC Maxi & Cie SM D 16 QC BC, AB, ON, NB, NS, NL, NoFrills SM D 173 PEI Presto SM M 12 QC Provigo SM/SS M 76 QC Real Canadian BC, YT, AB, Superstore SS D 110 SK, MB, ON Real Canadian BC, AB, SK, Wholesale Club SS D 36 MB, ON Valu-Mart SM M 61 ON Your Independent SM M 53 ON Retail Report ? Canada March 2012 Retailer Nam ore Price No e of banner St type category units Location Grocer Zehrs SM/SS M 45 ON BC, YT, NT, AB, SK, Western Extra Foods SM D 78 MB,ON Canada/ Real Canadian BC, AB, SK, Prairies Wholesale Club SS D 36 MB, ON BC,AB, SK, Shop Easy Foods SM D 34 MB SuperValu SM D 19 BC, YT, SK T & T SM M 20 BC, AB, ON Sobeys Total Chain Sales = C$ 16.25 B. (Empire Company Ltd.) Sobeys.com All Provinces BC, AB, SK, MB, ON, NB, Sobeys SM M 281 NS, PEI, NL NB, NS, NL, Cash & Carry SM W 6 MB ON, NB, NS, Foodland SM M 197 NL Freshco SM L/M 27 ON IGA Extra SM M 98 QC, NB Marché Bonichoix SM M/U 89 QC, NB Les Marché Tradition SM M/U 31 QC ON, MB, NB, Price Chopper SM D 110 NS, PE, NL Rachelle-Bery (Natural Health Foods) SM M/U 19 QC Metro Inc. Total Chain Sales = C$ 11.44 B. Metro.ca Central Canada Food Basics SM D 115 ON Marché Richelieu SM M 86 QC (1 in ON) Metro SM L/M 371 ON, QC 28 Retail Report ? Canada March 2012 Reta ice No iler Name of banner Store Pr type category units Location Super-C SM D 78 QC Canada Safeway Total Chain Sales = C$6.8 B. Safeway.ca All provinces BC, AL, SK, Family Foods SM M MB BC, AB, MB, Safeway SM M ON Federated Co-Operatives Total Chain Sales = C$ 3.35 B. Ltd. coopconnection.ca Central /Western/ Prairies Bigway BC, AB, SK, Foods SM M MB, ON, YT Cash & Carry Depots SM W AB, BC Co-op Food BC, AB, SK, Store SM M MB BC, AB, SK, Super A MB, NWT, Foods SM M YT, ON The Grocery People SM M BC, NWT, YT TAGS SM M AB, SK, YT Overwaitea Food Group Total Chain Sales = C$ 2.87 B. Owfg.com Western Bulkley Valley Wholesale SM D/W BC Cooper?s SM M BC Foods Overwaitea Foods SM M BC Price Smart Foods SM L/M BC Save-On- Foods SM M BC, AB Urban Fare SM M BC Source: Canadian Grocer, Who?s Who 2012 and 2012 Directory of Retail Chains in Canada 29 Retail Report ? Canada March 2012 Table 13: Club Warehouse Store Banner Reta Name of Store Price No. iler Banne on r Type Category Unit Locatis Costco Total Chain Sales = C$ 7.0 B * Canada Inc. Costco.ca Costco CW W 82 BC, AB, SK, MB, ON, QC, NS, NB, NL Source: Canadian Grocer, Who?s Who 2012 and 2012 Directory of Retail Chains in Canada * Food sales 2011 30 Retail Report ? Canada March 2012 Table 14: Mass Merchandisers Retailer Name Store Price Sales No. Units Location Banner Type Category (C$ 000) Canadian Canadian MM MM 10C$10.3 B. 487 All Tire Tire provinces Corporation Dollar Tree Dollar Giant MM D N/A 101 BC, AB, Canada SK, MB, ON Dollarama Dollarama MM D C$ 1.4 B. 667 All Stores provinces, mostly ON and QC Giant Tiger Giant Tiger MM D C$ 1.4 B. 196 All Stores provinces The Northern MM M C$ 1.4 B. 196 All Northwest North provinces Marts L/M Company QuickStop L/M Wal-Mart Wal-mart MM/SC D C$ 5.2 B * . 328 All Canada provinces Corporation Supercenters D 146 Zellers Inc.- Zellars MM L/M C$ 5.9 B 279 All A Division provinces of Hudson?s Bay Company Source: Canadian Grocer, Who?s Who 2012 and 2012 Directory of Retail Chains in Canada * Food sales 2011 31 Retail Report ? Canada March 2012 Table 15: Convenience Stores, Mini Marts, and Gas Stations Retailer Name of Sales (C$ 000) No. Units Location Banner Alimentation Couché-Tard 1000 QC Couche-Tard, Inc. Becker?s 12 ON, MB Daisy Mart 203 ON Dépanneur 7 jours $ 392 QC 1.2 B* BC, NWT, SK, Mac?s 1,171 MB, ON Tabatout 23 QC Western Winks 19 Canada Husky Oil Marketing Husky and 500 BC, AB, SK, Company Mohawk ON Metro Marché Ami N/A 84 QC Marché Extra 209 QC Servi-Express 94 QC Sobeys Needs N/A 140 Eastern Canada Parkland Industries Fas Gas LP Fas Gas Plus Short Stop N/A BC, AB, SK, 150 Sho MB rt Stop Express Petro Canada SuperStop N/A 1,421 All provinces SuperStop Express Quickie Convenience Quickie N/A 50 ON, QC Stores 7-Eleven Canada Inc. 7-Eleven N/A 468 BC, AB, SK, MB, ON Shell Canada Select N/A 632 All provinces Products Limited Source: Canadian Grocer, Who?s Who 2012 and 2012 Directory of Retail Chains in Canada * Food sales 2011 32 Retail Report ? Canada March 2012 Table 16: Leading Drug Chain Retailer Name of Banner Sales (C$ No. Location 000) Units Shoppers Drug Shoppers Drug $ 590 M * 1257 All Mart Mart provinces Source: Canadian Grocer, Who?s Who 2012 and 2012 Directory of Retail Chains in Canada * Food sales 2011 Note: Internet Shopping Grocery internet shopping has been slow to take off in Canada and very few retailers have invested in this sales channel. IGA, operated by Sobeys operates only in Quebec and Grocery Gateway, owned by Longo Brothers Fruit Market, Inc. operates only in Metro Toronto. 33 Retail Report ? Canada March 2012 Section 3: Leading U.S. Products and the Competition (Table 16) Product Major Strengths of Key Advantages and Category Supply Supply Countries Disadvantages of Local Sources Suppliers FRESH FRUITS & ? Canada is the largest foreign ? Dry onions, carrots, lettuce, VEGETABLES buyer of U.S. fruits and sweet corn, cabbage are the vegetables. The U.S. benefits leading vegetables sold in the from relatively unimpeded fresh market. VEGETABLES: VEGETABLES: export access into Canada ? Apples are the largest CANADIAN GLOBAL during Canada?s winter or production item, followed by IMPORTS: 1. U.S.: 66% non-growing months. blueberries, cranberries, grapes 2. Mexico: 25% ? Among imports, U.S. fruits and peaches. U.S.$2.2 BILLION 3. China: 2% and vegetables are viewed by ? Seasonality poses a constraint most Canadians as their to growers; Canada imports number one choice to other 80% of its fresh vegetables imports. between November and June. ? Mexico gained significant ? The ?Buy Local? campaigns are FRUIT: FRUIT: share of the market due to well supported by grocery lower prices. Their leading retailers starting in June CANADIAN GLOBAL 1. U.S.: 48% products are tomatoes, through October. IMPORTS: 2. Mexico: 11% peppers, avocados, mangos, 3. Chile: 10% and limes. Recently, are U.S. $3.1 BILLION 4. Costa Rica: offering strawberries. 6% ? Chile is competitive with their leading exports of grapes, berries. They offer apples and cherries as well. PROCESSED FRUITS 1. U.S.: 59% ? The U.S imports amounted to ? Canadian companies process a AND VEGETABLES 2. China: 9% U.S$ 1.2 billion. There is a wide range of canned, chilled, 3. Thailand: 4% full range of prepared and and frozen products. CANADIAN GLOBAL frozen products. Major ? Adoption of advanced IMPORTS: products are prepared technologies in food processing potatoes, tomato paste, has been fairly extensive U.S. $ 1.9 BILLION mixes fruits, and variety of among Canadian processors. processed vegetables. Statistics Canada reported ? U.S. is a major player in the almost 50% companies market with established reported adopted more than 5 process brands in the market. new technologies in their ? China has seen a 15% operations. growth in the category of ? Higher manufacturing and dried fruits and vegetables. operation costs than in the U.S. ? Thailand major products are pineapples and fruit mixtures. 34 Retail Report ? Canada March 2012 Product Major Strengths of Key Advantages and Category Supply Supply Countries Disadvantages of Local Sources Suppliers SNACK FOODS 1. U.S.: 58% ? The U.S. dominates this ? Canada?s snack food imports 2. Germany: 5% category considering the have grown by U.S. $ 316 CANADIAN GLOBAL 3. Belgium: 5 % more perishable and bulky million since 2006. The IMPORTS: natures of some products category includes chocolate such as chips, which adds and non-chocolate U.S. $ 1.5 BILLION significantly to shipping costs. confectionary, cookies, (excluding nuts) (U.S. share of ? Competitors vary by sub crackers, potato chips, corn sub category category with the main chips, popped popcorn, 82%) competitor and sub category pretzels, and extruded cheese as follows: Germany: cocoa, snacks, seed snacks, mixed confectionaries and nuts, peanuts and peanut chocolate; Belgium: chocolate butter, as well as pork rinds. and confections. U.K. and ? The snack food industry is Switzerland; chocolate, along served primarily by domestic with confection and non- manufacturers however confection items. domestic market share is being lost to imports. The rapid increase in imports is due both to the strengthening Canadian dollar and a number of new products in the category, many targeted at specific ethnic groups ? Canada does have domestic raw materials for the grain based products but has to import sugar, chocolate, cacao, and nuts for manufacturing and is not competitive on dairy and egg ingredients used in some of the processing. RED MEATS 1. U.S.: 79% ? Beef imports fall into two ? Canada maintains a narrow (Fresh/Chilled/Frozen) 2. New distinct categories. The acquired feed cost advantage. Zealand: largest portion of imports ? Canada continues to grow as a CANADIAN GLOBAL 12% being chilled cuts traditionally key U.S. pork export market. IMPORTS: 3. Australia: 6% from the U.S. Midwest heavily Canadian hog production destined for the Ontario numbers have been declining U.S. $1.7 BILLION region. The other part is a
Posted: 24 March 2012

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