Tech takeover: How tech is disrupting the grocery game
Bulking up at the supermarket
FEBRUARY 2018
EXCLUSIVE
2017 ANNUAL MARKET SURVEY INSIDE
THE "FREE-FROM" TREND: WHAT'S IN IS WHAT'S OUT MEET FOOD FUTURIST IRWIN ADAM EYDELNANT THE U.K.'S PLASTIC PURGE
Strolling the aisles at
Vince's Market
Giancarlo Trimarchi, Vince's Market
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CONTENTS
COVER STORY
SOMETHING SPECIAL
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February 2018
Volume 132 Number 1
Vince’s Market’s new Tottenham location wows with an inviting customer experience and a focus on fresh
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OPINIONS
05 Front Desk 16 Shopper Sense 54 Checking Out PEOPLE
06 Irwin Adam Eydelnant
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Meet the founder of Future Food Studio. He’s reimagining the way we interact with food
08 The Buzz
Comings and goings, store openings, awards, events, etc.
IDEAS
11 The incredible bulk
Bulk is slowly going mainstream, as traditional grocery chains jump on the bulk bandwagon
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FEATURES
2017 ANNUAL MARKET SURVEY
25 What kind of year did Canada’s traditional grocers have? Our 2017 Market Survey reveals all
TECH TAKEOVER
37 From voice assistants to
COVER IMAGE: JAIME HOGGE
blockchain, we look at some of the innovative technology disrupting the grocery world
13 Movin' on up
Food prices are expected to rise 1% to 3% this year, says new report
14 The U.K.'s war on plastic
See how British supermarkets are tackling their plastic habit
AISLES
49 What's in is what's out
As consumers seek more natural foods and alternative ingredients, “free-from” is booming
51 Flower power
Floral-flavoured food and beverage products are trendy for 2018
52 The big chill
How are refrigerated foods performing? See what Nielsen's data has to say
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Long lineups for Amazon Go's grand opening in late January
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READY, SET, “GO”!
Is Amazon’s shiny innovation the future of retail? THE IDEA OF AN ALL-KNOWING store, one that watches your every move, allows you to grab a few groceries, pay for them virtually via an app and just walk out (no need to line up or hit the checkout) would have seemed implausible not so long ago. That, of course, was before Amazon floated the idea of a checkout-free store back in 2016. After more than a year of testing, the artificial-intelligence powered store finally opened to the public in January, causing the kind of buzz that we’ve come to expect from every move the online giant makes. Indeed, since Amazon Go made its debut in Seattle there has been much noise about what this might mean for the future of retail, with headlines shouting about how it has the potential to change “everything.” Amazon itself has been tight-lipped about its plans for Go, but you can be sure there are plans. Amazon is an agressive entity with deep pockets and is led by someone who’s not afraid to try bold things (Jeff Bezos’ ambitions extend even beyond Earth— remember last year when he voiced plans for a delivery service to the moon?). But while the tech behind Amazon Go
impresses (judging by news reports and YouTube uploads, it certainly wooed its opening day shoppers), it’s hard to imagine this being the model for food retail in the future in any widespread way. First of all, the cost to set up such a store (let alone multiple outlets) would be exorbitantly expensive. Then there’s the privacy issue—do shoppers really want their every move tracked? (then again, consumers have shown a growing willingness to forfeit privacy for convenience)—not to mention the impersonal nature of an Amazon Go. In its review, industry observer The Hartman Group said that while the tech on display at Amazon Go was “cool,” the experience was “soulless.” They likened it to shopping in a “giant vending machine.” A glimmer of hope, perhaps, for traditional grocers—give your customers what Amazon doesn’t: a personal, human experience.
Shellee Fitzgerald
Editor-in-Chief
sfitzgerald@ensembleiq.com
The grocery industry is changing rapidly. Keep up to date on the latest news by signing up for our e-newsletter. It’s free and we’ll deliver it to your inbox three times a week. Visit CANADIANGROCER.COM to subscribe. February 2018 Canadian Grocer
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PEOPLE
Who you need to know
The Facts Who
Irwin Adam Eydelnant Position
Founder and creative scientific director of Future Food Studio What’s Next?
Reinventing the retail experience
THE FUTURE IS NOW
Food futurist Irwin Adam Eydelnant is reimagining the way we interact with food By Carol Neshevich Photography by Nikki Ormerod
PEOPLE
I
rwin Adam Eydelnant loves his work, and the enthusiasm that spills out when he talks about his job is infectious. “Every day we get to think about things we never knew we would get to think about,” says Eydelnant, founder and creative scientific director of the Toronto-based Future Food Studio. “We get to create things that never existed before; we get to reimagine systems and interact with incredible people who are excited about changing the world.” He describes Future Food Studio as a food design technology studio that focuses on all aspects of food experience, engagement and interaction. “That means everything from what you eat, to the tools with which you eat, all the way up to the bigger spaces and places where you experience food,” he explains. A scientist by training, Eydelnant completed his PhD in biomedical engineering in 2013, but he had worked in foodservice since he was 15, and always had a passion for art and design. “Those were three separate things I was pursuing that slowly started overlapping with one another,” he says. “I realized those things didn’t have to be so disconnected.” As he embarked on research into ideas that melded food, science and design, he landed a consulting gig with PepsiCo that really allowed him to show off his innovation chops. “That first project was actually this immersive laboratory environment that explored the reimagination of Pepsi as a product,” he says, explaining that the goal was to take a product everyone is familiar with (Pepsi), then deconstruct it and reimagine what else it could be. It was through this project that Eydelnant created “edible clouds” (tiny, flavoured droplets of liquid suspended in a glass), something for which received much media attention. The experience led to a long-term relationship with PepsiCo—and also got the ball rolling on Eydelnant’s decision to change his career path, abandoning his original goal of a life in academia. “I decided to jump ship from the academic world and went full time into the studio,” he says. The business grew quickly and he’s had as many as 16 people working at the studio, although that
30 SECONDS WITH...
number fluctuates depending on how many projects the studio has on the go. Since founding Future Food Studio in 2014, Eydelnant has done a lot of work with large food and beverage companies including PepsiCo, Kraft, Campbell’s and Anheuser-Busch, doing everything from advanced packaging research and development all the way up to large-scale marketing activations. As an example, he points to a “sensorium” project that he worked on for Stella Artois during the Toronto International Film Festival in 2015. It was an immersive dining experience that aimed to fully engage all five senses. It ran for three weeks and tickets ($125 per person) were completely sold out nearly a month ahead of time—a fact that illustrates the incredible appetite people have for “experience” in food today, says Eydelnant. In 2016, Eydelnant worked on the launch of Food Loves Tech, a food and technology expo in New York City that he describes as “an art gallery meets a science museum meets a trade show.” As creative director, the show’s popularity and success surpassed Eydelnant’s expectations, and it marked a turning point in the way he chooses projects. “Where we used to be more client-focused, now we’ve evolved to be much more focused on our own projects,” he explains. “And the client work that we do take has to be super aligned to what I want to create.” Lately, he’s been thinking a lot about food retail. “We’ve already been exploring ideas about how we can help grocers and retailers reimagine what that [in-store] experience looks like,” he says. He gets very animated as he tosses around ideas on how grocery should evolve in the age of Amazon and online delivery, including borrowing from the luxury and fashion space in terms of creating in-store “experiences” that engage, educate and entertain the consumer. “Food is such a multi-sensorial good— taste, touch, smell, sight, sound—so why are we not engaged in that way in the store?” he asks. “We haven’t really seen major disruption in this space.” Eydelnant says he would love to work with grocers on this. “It’s time to reinvent,” he says. “It’s time to deliver a different value proposition. The time is now.” CG
IRWIN ADAM EYDELNANT Why do you enjoy innovating with food?
Everybody understands food; it’s a portal to connect people. So using food as our platform for innovation has really allowed us to talk about lots of different concepts that we’re looking to transform. Food is the one thing that really transcends every single boundary: geography, race, religion, gender, age. We all get it. When we share food, we’re communicating with one another.
What food trends will have the most impact moving forward?
I think that has to be transparency. More and more, the consumer is aware that they’re unaware—unaware of what they’re consuming, where it’s coming from, how it’s made and what its impact is on them. The entire supply chain has to be reimagined around transparency as a key value proposition.
Why is innovation important?
It’s so easy to get caught up in the day-to-day of our own lives that we often forget that even when things are great the way they are right at this moment, the world changes. As much as we want everything to stay the same, that’s not going to be the case. So focusing on innovation allows us to explore maintaining our relevance in a very dynamic world. It isn’t just about “new stuff,” it’s about reimagining our own roles in society.
February 2018 Canadian Grocer
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THE BUZZ
The latest news in the grocery biz ANNOUNCEMENTS
(L to R): Jeanette Lee, VP Developments, Quarry Bay Investments; Jeff Ambrose, VP, Petroleum, Wine Spirits Beer, Home Health Care, Calgary Co-op; Damon Tanzola, VP, Facilities Development and Real Estate, Calgary Co-op; Patricia McLeod Q.C., Board Chair, Calgary Co-op; Ken Keelor, CEO, Calgary Co-op COMINGS AND GOINGS
Dino Bianco has joined the Kruger Products team. Bianco, who once headed up Kraft Canada, has joined the paper products company as its CEO. He replaces Mario Gosselin, who is retiring. Canada Dry Mott’s has named Carol-Anne Gower its VP and general manager for Canada. Gower is a 24-year veteran of the company, most recently serving as its VP of marketing and business development. Judith McKenna, formerly Walmart’s executive VP and COO, has stepped into the role of president and CEO of Walmart International, succeeding David Cheesewright. Food Banks Canada has a new CEO. Christopher Hatch, formerly executive director of The Mississauga Food Bank (where he launched the first aquaponics farm at a food bank), took on the new role in early January.
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February 2018 Canadian Grocer
Peter Hall is the new VP of retail sales at Kraft Heinz Canada. Hall, who most recently led the company’s U.K. retail sales team, replaces Kraft veteran Dan Lafrance. Sobeys’ FreshCo has a new VP of strategic initiatives for discount, Mike Venton. Venton previously led operations for Loblaw’s No Frills banner. Dairy Farmers of Canada has named Jacques Lefebvre as its new CEO. Lefebvre was formerly president and CEO of the Dairy Processors Association of Canada. Wally Smith, previously the president of Dairy Farmers of Canada, is now executive VP at Bothwell Cheese. High Liner Foods has announced that Jeff O’Neill has stepped down from his role as president and COO of the company’s Canadian operations. High Liner says it will not fill the position.
Calgary Co-op is breaking ground on its first mixeduse development at Mission Landing, located at the corner of Calgary’s Macleod Trail and Mission Road SW. The new development will feature a nearly 4,000-sq.-ft. Co-op Wine Spirits Beer, gas bar and car wash and a 3,000-sq.-ft. convenience store. A residential building, developed by Quarry Bay Investments, will sit atop the retail space. H.Y. LOUIE CO., which operates IGA franchises and Fresh St. Market stores in British Columbia, is restructuring. Effective March 25, a new subsidiary called Georgia Main Food Group will oversee the company’s food business. The family-owned H.Y. Louie Co. will become parent company to Georgia Main, with Brandt C. Louie remaining as chairman and CEO, while GARY SORENSON becomes president and COO of the newly named group. Sorenson was previously VP and COO of H.Y. Louie Co.
Ten SAFEWAY stores in British Columbia will close in the coming months. Parent company SOBEYS says it is shuttering the Lower Mainland stores because of falling sales and changing customer demand. The company said it may reopen five of the locations under its FreshCo banner. Two Overwaitea Foods stores in Interior B.C.—located in Kimberley and Creston —have been converted to the SAVE-ONFOODS banner. The company says these are the first of nine conversions expected to take place this year, which will see all remaining Overwaitea Foods stores in B.C. change to Save-On-Foods.
CALGARY CO-OP, KRUGER PRODUCTS, CANADA DRY MOTT'S, WALMART INC.
«
THE BUZZ
GIVING BACK EVENTS
At its 11th annual Share the Love ceremony (left) Galleria Supermarket donated $24,922 to local charities in the Greater Toronto Area. Galleria, which operates five Korean-focused stores around Toronto, launched the program in 2007 and to date has donated $200,000 to good causes.
The Convenience U CARWACS Show will be held at the Toronto Congress Centre from March 6 to 7. For more info visit convenienceu.ca Seafood Expo North America will take place at the Boston Convention and Exhibitor Center March 11 to 13. Visit seafoodexpo. com/north-america for info.
GALLERIA SUPERMARKET, JOHN GOLDSTEIN PHOTOGRAPHY, OCADO, GOVERNMENT OF ONT.
Chicago’s McCormick Place will host GlobalShop 2018, running March 27 to 29. Visit globalshop.org Grocery & Specialty Food West will take place at the Vancouver Convention Centre from April 23 to 24. Visit cfig.ca for details. The Canadian Produce Marketing Association’s Annual Convention & Trade Show heads to the Vancouver Convention Centre from April 24 to 26. For info, visit cpma.ca
AWARDS Call for nominations! Do you know an outstanding woman working in the grocery industry? If so, please take a moment to tell us about her! Nominations are now open for Canadian Grocer’s 7th Annual Star Women in Grocery Awards. Visit canadiangrocer.com/microsite/starwomen to complete the nomination form. Greenbelt Microgreens has received the Premier’s Award for Agri-Food Innovation Excellence—Ontario’s top honour for innovative solutions supporting the province’s agri-food industry. The Lynden, Ont.-based company received the award for its development of an eco-friendly process to grow organic microgreens year-round.
OPENINGS
A new Nesters Market opened in the Surrey Gateway area of B.C. in midDecember. The opening brings the number of Nesters locations to 14. British Columbiabased Buy-Low Foods is expanding its reach, opening its first location in Saskatchewan in the town of Tisdale. There are currently 20 Buy-Low Foods locations in Western Canada.
(Below) L to R: Ontario Premier Kathleen Wynne, Ian Adamson and Michael Curry of Greenbelt Microgreens, Minister Jeff Leal DEALS
Sobeys has inked a partnership deal with U.K.-based Ocado Group to ramp up its online grocery business. Online retailer Ocado, which has helped drive online shopping in the U.K., will partner exclusively with Sobeys in Canada, and under the agreement the companies will develop a customer fulfillment centre in the Greater Toronto Area over the next two years.
Want more? Visit Canadiangrocer.com for the latest industry news February 2018 Canadian Grocer
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IDEAS
Retailers, suppliers, shoppers, insights
BULK FOODS
JAMES MATTIL/SHUTTERSTOCK
The incredible bulk Long a staple of natural food stores, bulk is slowly going mainstream By Chris Powell
T
he Loblaws store near Valerie Leloup’s Ottawa home has a sizeable bulk section, which you might think spells trouble for a small business owner whose nearly one-year-old bulk store is still trying to find its footing. But Leloup says that by embracing bulk, major grocers such as Loblaw are actually bringing more credibility to the category. “I always say that the worst thing that could happen to us is for bulk to remain niche,” she says. “The more big chains actually grow their bulk sections, the better it is for us, because it brings us into the mainstream.” Sales at Leloup’s zero-waste store, Nu Grocery, have continued to rise since it opened last summer, and now total around $60,000 a month. “It’s not an explosion, but steady growth month after month,” says Leloup, who notes that her eventual goal is to grow Nu Grocery’s product assortment to around 600 to 700 SKUs with annual sales of $1.2 million. February 2018 Canadian Grocer
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IDEAS
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February 2018 Canadian Grocer
In 2017, P&G launched this shampoo bottle made from recycled beach plastic
PACKAGING
Packaging power From reducing waste to helping oceans and improving customer engagement, Mintel predicts big things for packaging in 2018 PACKAGING HAS LONG received a bad rap, often deemed superfluous and wasteful. But innovative packaging can play a role in helping combat some of today’s big issues, according to Mintel’s Global Packaging Trends 2018. Here’s a quick look at some of the packaging trends Mintel has identified for the year ahead.
REDUCING WASTE
With packaging innovations that extend shelf life and ensure safe delivery of a product, consumer attitudes toward packaging are shifting. According to Mintel, 50% of U.S. shoppers believe the “right” packaging can help cut food waste and 61% of Canadian fruit and vegetable shoppers say they would be interested in packaging that keeps food fresh longer. But brands will need to act quickly to educate consumers on the benefits packaging can offer, says the research firm.
KEEPING IT CLEAN
Too much information or too many claims on a label can be a turnoff for consumers, causing confusion and even mistrust. The way Mintel sees it, clear on-pack communication that focuses on key product qualities while eliminating excess information and design elements can lead to greater customer engagement at the store.
SEA CHANGE
By some estimates there will be more plastic in the sea than fish by 2050, and packaging is deemed a big contributor to the problem. Amid growing concerns about safe disposal of packaging, initiatives to source waste plastic from the sea and re-use it in new packaging will raise awareness, but won’t solve the problem, says Mintel. To keep plastic out of the sea, “a renewed effort towards the circular economy is needed to keep valuable packaging material in use.” Some companies, such as Coca-Cola, are leading the way by bumping up their commitment to use recycled plastic in their products.
PROCTER & GAMBLE
Several grocers contacted for this story, including Metro, Farm Boy and Bulk Barn (which has grown to 265 locations across Canada, up from 190 in 2013) did not respond to interview requests; however, Diana Sheehan, director of retail insights at Kantar Retail in Chicago, says bulk is indeed gaining traction among traditional grocers. In the United States, for example, chains including Giant Eagle’s Market District, as well as Kroger and Wegmans, have all “bulked up” in recent years, adding sections like make-your-own trail mix and bulk candy. Sheehan says growth of bulk foods is being fuelled by three key factors: Growing consumer demand for natural and organic products, an increased emphasis on sustainability, and the desire to offer customers a superior in-store experience. “When people walk into a store, they walk into something that’s truly different, that they can’t get from the convenience of shopping online,” she explains. Sheehan says bulk has evolved to become more sophisticated. “You’re not just saying to customers, ‘Here’s a bunch of bins with bulk products’—it’s build your own granola or build your own trail mix. It’s not just the products themselves, but the solutions they provide," she says. “It’s the ultimate personalization. If you think of shoppers wanting things that are very specific and catered to them, bulk products allow you to create the mixes that really get at what they want to eat.” Dry foods like nuts are among Nu Grocery’s best-selling items, which Leloup attributes to shoppers’ familiarity with those types of products from traditional bulk stores. However, she says cleaning products such as dish soaps are also popular at her zero-waste store. “People love to come with their plastic bottle and refill their dish soap,” says Leloup. “It’s very easy for them to do because the plastic bottle doesn’t weigh much.” Vince’s Market partner Giancarlo Trimarchi first started noticing growing customer interest in bulk about four years ago. While the company’s stores in Sharon, Uxbridge and Newmarket, Ont. have offered repackaged bulk for several years, it decided to install 58 loose bins—plus another 60 repackaged SKUs—at its newest location in Tottenham, Ont. “So far it’s justifying its place in the store,” says Trimarchi. While bulk feeds into growing consumer demand for healthy eating, Trimarchi says bulk candy has also emerged as a customer favourite. A “fill-a-cup” program at Vince's Market's Newmarket location, which enables customers to choose from among 16 varieties of loose candy, is currently doing between $1,500 and $1,600 in sales each week. Trimarchi says its popularity reflects changing consumer attitudes towards foods like sweets, which have become a permissible indulgence. “They’re not scared of a little candy every once in a while,” he says. “Now they say, ‘I work hard and take care of my body, and on the weekend I’m going to have a little candy.’” While Kantar’s Sheehan predicts bulk foods will continue to gain in popularity, it also adds a layer of complication for retailers, who must work to protect the bulk section from children—and some adults—who may be tempted to sneak a few treats while shopping. “If you don’t have personnel able to keep a good eye on that department, what you have is shoppers who see an open bin and just grab a handful of the stuff,” she says. “You run into shrink issues and food safety issues.” It’s a legitimate concern, but what can grocers do? Sometimes customers feel like a nut, sometimes they don’t.
IDEAS SHOPPERS IN SEVERAL provinces—including Newfoundland and Labrador, Nova Scotia and British Columbia—can expect to see an above-average increase in food costs this year, according to a new report. The eighth annual edition of Canada’s Food Price Report, a joint release by Halifax’s Dalhousie University and the University of Guelph, predicts Canadian food prices will rise between 1% and 3% this year, with annual food costs for a family of four increasing by $348, to $11,948. The report's authors say it is a “modest threshold,” manageable by all stakeholders, which enables the food industry to provide higher-quality products at a relatively affordable price. Food prices for British Columbians will continue to increase as a result of a higher general inflation rate, while prices in the Atlantic provinces are expected to rise after a year of stagnation. The report predicts that a “more competitive marketplace” in Ontario and Alberta will entice grocers to keep their prices low. Recent minimum wage increases in the two provinces are not expected to adversely impact prices, it says, since most grocery retailers are finding innovative ways to reduce their operating and labour costs. Vegetables are expected to see the biggest price increase among everyday food items, with the report saying that “unaccommodating” climate patterns will lead to a 4% to 6% rise in prices. Fruit prices are expected to increase between 1% and 3%, while the report predicts that dairy, bakery, meat and seafood prices will all increase between 0% and 2%. The report lists nine factors expected
MOVIN’ ON UP Food prices are expected to rise 1% to 3% this year, says new report By Chris Powell
to have either a very significant or significant impact on prices (up or down). They include climate, currencies and trade environment, food retail and distribution landscape, the food processing industry, consumer food awareness and trends, and consumer income and income distribution. Climate change, for example, has become a significant threat to global food security, with a November fore-
cast from the U.S. National Oceanic and Atmospheric Administration predicting a second consecutive winter of La Nina conditions, potentially resulting in below average precipitation in farming-intensive regions such as California. Historical data also suggests a fundamental structural change in the price of major grocery items such as bread, rice, eggs, milk, cheese, coffee, tea, sweeteners and oils, all of which have seen less-than-expected price increases in the past two years. The report also says the aggressive discounting practices of the country’s major supermarkets are keeping prices “artificially low.” This year’s release of a significantly revamped version of Canada’s Food Guide is also expected to impact food purchases. In its “guiding principles” released last year, Health Canada advocated a shift to more plant-based foods, along with less red meat consumption and “limited intake” of processed or prepared foods high in sodium, sugars and saturated fat. Canada’s Food Price Report co-author Catherine Mah, associate professor at Dalhousie University’s Faculty of Health, says adhering to the new food guide will require that consumers make tough decisions when budgeting their time and shopping. The report also warns that traditional grocery stores could be the next victims of Amazon, which is positioning itself to become the most powerful retailer in the world. Amazon’s ability to combine efficient distribution with strong strategic insight could ultimately transform it into Canada’s leading food retailer, according to the report.
SHOPPING BAG: NILSZ/GETTY IMAGES; INFOGRAPHICS: GURZA/SHUTTERSTOCK
EXPECTED PRICE INCREASES
How much will food prices climb this year? Here’s what the experts at Dalhousie and Guelph are predicting:
Restaurant 4% to 6%
Dairy 0% to 2%
Fruits 1% to 3%
Bakery 0% to 2%
Meats 0% to 2%
Vegetables 4% to 6%
Seafood 0% to 2%
Other 0% to 2%
February 2018 Canadian Grocer
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IDEAS Waitrose plans to stop using black plastic packaging
POLL RESULTS
RISING WAGES A NEW YEAR, new wage hikes—at least for some. On Jan. 1, the hourly minimum wage in Ontario rose to $14 (from $11.60) making it the highest in the country, and it’s set to climb to $15 at the start of 2019. Alberta, meanwhile, is set for a hike on Oct. 1 of this year, when its minimum wage becomes $15. While there has been no shortage of objections to the increases, now that they’re here (at least in Ontario) we wanted to know how you plan to tackle the extra costs to your business.
We asked readers on CanadianGrocer.com:
How will you deal with the minimum wage hike?
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The U.K.’s war on plastic Across the pond, pressure is mounting for supermarkets to tackle their plastic habit By Shellee Fitzgerald WHILE CANADIAN cities continue to grapple with whether or not they should ban single-use plastic bags, the United Kingdom is attempting to get tougher on the material they're made from. When unveiling her government’s “green plan” recently, British Prime Minister Theresa May declared it is time to stop avoidable plastic waste and “end one of the great environmental scourges of our time.” The PM’s comments came on the heels of The Guardian’s report that major British supermarkets generate more than 800,000 tonnes of plastic package waste each year. While pledging that the U.K. will ban all avoidable plastic by 2042, May also offered grocers some tips on how they can help meet the goal. Among her suggestions, the PM encouraged supermarkets to apply a charge to single-use plastic items such as food containers, and to set up plastic-free aisles in their stores. The latter appears to have consumer support: a poll conducted last summer revealed that nine in 10 Britons want plastic-free aisles in their grocery stores. Here’s a look at how some U.K. grocers are purging plastic:
brands—which include more than 1,000 product lines—by 2023. Iceland, a frozen food specialist with about 900 locations in the U.K., has already removed plastic disposable straws from its own label items and says new food ranges hitting shelves in 2018 will feature paper-based rather than plastic-based trays. WAITROSE —High-end grocer Waitrose announced, also in January, that it will stop using black plastic packaging for meat, fruit and other perishables by the end of the year and will not sell any of its private label food in black plastic beyond 2019. Black plastic is particularly troublesome, as waste processors in the U.K. cannot recycle it with current systems. Waitrose, which has 352 locations, says it will also stop selling packs of disposable plastic straws by September.
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14
February 2018 Canadian Grocer
ICELAND—In January, Iceland vowed to be the first mainstream food retailer globally to eliminate plastic from all of its house
MORRISONS — F o l l o w i n g i t s b a n o n microbeads and plastic cotton buds in its own brand products, Morrisons (the U.K.’s fourth-largest grocer with 491 stores) also uses returnable bins for its fish products to reduce the use of polystyrene boxes in the supply chain. The grocer has also been piloting a program where single-use plastic bags have been removed at six of its locations. CG
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SHOPPER SENSE
Carman Allison
“MADE IN” MATTERS … OR DOES IT? Consumer preferences are tipping toward global brands over local ones in most categories THANKS TO GLOBALIZATION and connectivity, consumers today have access to a wider array of products than ever before. Most Canadians are exposed to both multi national and local brands from birth, and expectations around choice and quality are well ingrained. But when it comes to country of origin, just how much does the “Made In” moniker influ ence purchasing behaviour? New Nielsen research indicates that across the majority of categories, there is a growing shift towards a preference for global brands. In fact, the only categories
be helpful in shaping companies’ go-to market strategies. When it comes to food—traditionally the mainstay of local brands—overall consumer preference is also beginning to shift toward globally manufactured products, but with a few notable exceptions: Fresh food: Typically, consumers pre fer to buy fresh items from their local store or market. The bulk of Canadians (60%) say they prefer to shop locally for produce such as fresh fruit and veg etables. However, preference for local outlets becomes less pronounced when it comes to fresh meat, sea food and eggs (50%); bakery products (49%); rice, grains and pulses (22%); chilled or frozen fruits and vegetables (24%); and chilled or frozen meat and seafood (24%). Overall, fresh food brand preferences tend to be more affected by perishability and quality as selection criteria, which increases the likeli hood of preference for brands/products made or harvested close to the source of purchase. However, the shift away from local brands indicates this driver may carry less influence in the future. Chilled/frozen foods: While in the past, consumers’ preferences in chilled and frozen foods have been balanced across global and local brands, a slight shift toward global brands is now evident. Although, strictly speaking, there is no “perishable” barrier impeding the growth of global brands in these categories, local
The only categories where there was a strong preference toward local brands were dairy and fresh foods where there was a strong preference toward local brands were dairy and fresh foods. This shift in sentiment could be the result of a several factors: consumers using the category less, reduced availabil ity of local brands or the perception that a local brand is actually global, and vice versa. Or it could simply be the case that consumers have a growing affinity for products that are manufactured by global or multinational brands. Understanding consumers’ attitudes and preferences for brand origin can
16
February 2018 Canadian Grocer
tastes still play a part in consumers’ pref erence for local or global brands. When it comes to dairy products such as milk, butter, cheese and yogurt, Cana dian consumers prefer local brands (55%); however, the desire for local is decreasing in categories such as ice cream (32%), fro zen meat and seafood (28%) and frozen meals (20%) compared to 2016 figures. Globally, consumers across the board indicated that longevity and quality in the chilled/frozen food categories are key factors in their selection criteria. Packaged foods: Within the pack aged foods and snacks categories, there has also been a shift in preference toward global brands, but results vary within regions. Among Canadians who purchase the category, preference has moved slightly away from local brands across all categories. Less than one quar ter (22%) prefer local biscuits, chips, snacks and cookie brands. Preference for local brands in other packaged good categories were also low: chocolates and confectionery (23%); sauces and condi ments (19%); breakfast cereals (22%); instant noodles (11%); and canned/ tinned food products (16%). The move away from local brands can, to a cer tain extent, be attributed to expanding online offerings as well as increased con sumer exposure to global brands. In many markets, it’s clear that multi national and global brands are winning the battle for consumers’ hearts and minds. In an increasingly global world, where brands are available online and perceptions around quality, freshness and trust are firmly rooted in globally produced products, local brands will need to increase efforts in manufactur ing, distribution and promotion to com pete with their global counterparts. CG
Carmen Allison is vice-president of consumer insights at Nielsen in Toronto. @CarmAllison. A copy of the report cited in this column is available to Nielsen clients at answers. nielsen.com
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SHOPPER INTELLIGENCE DELIVERS THE MISSING PIECE IN RESEARCH Scan, panel and loyalty data only tell you what shoppers are buying, not why they’re buying it
G
rocery retail has always been a tough business, but the challenges are only intensifying. On the retailer side, consumer baskets are shrinking and profit margins are increasingly thin. CPG companies, meanwhile, are faced with a consolidating retailer market and retailer demands due to low growth for centre-of-store. “There’s a lot of pressure to grow in a market that’s not growing,” says Kelly McGinnis, president of Shopper Intelligence, a global syndicated shopper research program. With competitive pressure on the rise, it’s never been more important to understand shoppers’ buying habits. To find insights for growth, retailers and manufacturers typically turn to their existing sources such as scan, panel and loyalty data. But in doing so, they’re missing a key piece of the puzzle. “Those data sources only tell you what, how much and when shoppers are buying, not why they’re buying it,” says
McGinnis. “Shopper Intelligence supplies the missing piece by finding out what shoppers think and how they buy. This helps companies solve the seemingly unsolvable challenges in grocery.” How does Shopper Intelligence work? In Canada, Shopper Intelligence has a panel of over 100,000 shoppers (1,500 per category), providing views into more than 100 categories across all major retail banners. For each survey, 80 shoppers are interviewed per category and per retailer, and participants must have shopped within the last three days. While companies often use expensive custom research to fill in the “shopper gap,” Shopper Intelligence has two key advantages: it’s more cost-effective and it provides metrics about shopper behaviour and attitudes for a category, benchmarked to all categories in a store and across all stores. “The depth of information is much more insightful
Shopper insight is the missing piece of the puzzle WHY?
WHAT? Existing data sources: Panel/POS/Card • Quantify the size of problems • Measure and categorize shopper behaviour • Provide trends in shopper behaviour
Shopper Intelligence: • Why shoppers behave as they do in the category • Provides trends in shopper perceptions
Little insight on drivers of the behaviour
SPECIAL PROMOTIONAL FEATURE IN CANADIAN GROCER–FEBRUARY 2018
Unlocks value in your existing data
What’s more, the inclusive data set is provided through an intuitive, easy-to-use online portal, and additional insights are provided through topline reports, retailer packs and category deep dives. “Our portal is another advantage that sets us apart, allowing clients to review and analyze the data in a very user-friendly way,” says McGinnis.
Game-Changing Insights in Grocery Gaining an advantage in today’s grocery retail landscape also requires staying on top of shopper and technology trends. To that end, Shopper Intelligence has introduced new analytical enhancements that uncover game-changing insights for retailers and CPG brands.
and allows companies to make more educated decisions because they can compare their brands to other brands and to other categories,” says McGinnis.
A New Path to Category Growth With its shopper-centric approach, Shopper Intelligence answers today’s most important questions for retailers and CPG brands under three key themes: • Category DNA: What makes the category ‘tick?’ Is the category driving traffic or spend? What is the engagement level with the category? • Importance and Satisfaction: What do shoppers want and think? How do they rate retailers’ performance? What are their desired improvements? • Path to Purchase: How are purchases made and what influences them? What are the purchase triggers? What impact do promotions have? All of these shopper insights can be sliced and diced by multiple shopper dynamics, including demographics, basket size, category spend, brand and segment purchased, and loyalty to the store. The bottom line for retailers and manufacturers is a new path to category growth. “Shopper Intelligence drives bestin-class category management and shopper marketing strategies based on rich shopper insights,” says McGinnis. “It also allows for deeper partnerships between retailers and manufacturers who can work together on common goals.”
For example, with the rise of the health-conscious consumer and the growing trend towards “clean” labels, Shopper Intelligence now asks shoppers what attributes they’re looking for in health and wellness-related products, such as organic, all natural, salt-free and GMO-free. The data is segmented across categories, departments and the store, allowing companies to capitalize on shoppers’ needs and preferences in the health and wellness category. There’s also a deeper dive into the competitive pricing nature of the grocery industry, including the push towards “value for money” and “everyday low price” strategies. “With the re-emergence of ‘everyday low price’ in Canadian grocery, our research can uncover what the effects will be on a category or brand,” says McGinnis. And with the growing use of mobile devices and e-commerce, Shopper Intelligence has introduced questions to uncover insights about shoppers’ usage of mobile devices in store and their online purchases. “This is a growing trend and a real area of focus for the industry, so we’re providing deep insights on technology and e-commerce,” says McGinnis. To get the full picture of your category’s shoppers, contact Kelly McGinnis, president of Shopper Intelligence, at kmcginnis@lucros.ca or visit http:// shopperintelligence.com/ca.
SPECIAL PROMOTIONAL FEATURE IN CANADIAN GROCER–FEBRUARY 2018
COVER STORY
IT’S NOT JUST THE CHICKEN that’s air-chilled when Vince’s Market partner Giancarlo Trimarchi strides into the company’s newest store in Tottenham, Ont., a bedroom community of just over 7,000 about an hour north of Toronto. He’s a few minutes late for our 2 p.m. appointment on this frigid January day, having made the 30-kilometre drive from the chain’s Newmarket location in white-knuckle driving conditions that include blowing snow and limited visibility. I’ve used those extra few minutes to stroll up and down the aisles, checking out cool items like an intriguing red raspberry and pomegranate fruit spread from French brand St. Dalfour, as well as a $62 bottle of balsamic vinegar from Sarafino, the Uxbridge, Ont.-based importing and distribution company. There are also numerous other regional
20
February 2018 Canadian Grocer
products from suppliers including the Georgian Bay Granola Company and the King City, Ont.-based nut butter company Julia’s Best Ever. The store is well stocked with items from the 10-year-old Vince’s Own brand as well, including a 900-ml jar of chili for $7.99, meatballs, and a wide variety of soups. Many of the Vince’s Own foods are made at the company’s 3,000-sq.-ft. commissary in Newmarket, which opened about 18 months ago and now produces up to 160 items per day. Trimarchi, a former commercial banker who became a third-generation grocer several years ago, leads me on tour of the 14,500-sq.-ft. premises. Befitting Tottenham’s status as a bedroom community, the majority of the store’s business takes place from 4 p.m. to 8 p.m. on weekdays, as well as on weekends. “We know how to slow it down Monday
SOMETHING SPECIAL By Chris Powell Photography by Jaime Hogge
The fourth store in a growing network, Vince’s Market’s new Tottenham location wows with an inviting customer experience, a focus on fresh and a wellcurated selection of unique regional foods
February 2018 Canadian Grocer
21
The designers worked hard to make the Tottenham store as welcoming as possible; Bottom right: Vince’s partner Giancarlo Trimarchi (far right) with some of the Tottenham team members
22
to Friday and make sure we’re running clean and efficient, and then ramp up for a good weekend of sales before repeating the cycle,” he says. The store, which occupies what used to be an IGA location, is Vince’s fourth, joining other Ontario locations in Sharon (its first), Newmarket and Uxbridge. It was originally slated to open in January 2017, but what Trimarchi describes as “landlord delays” wound up pushing it back to September. “The building needed a lot of work, so what we originally thought was going to be a six-month [job] turned out to be over a year,” he says. Trimarchi and his partners spent just over $2.5 million and five months building out the store, which is airy and modern, with high ceilings and wide aisles that showcase a well-curated selection of fresh foods. “A lot of it is clean lines and imagery that people relate to, but we wanted the food to do most of the talking,” says Trimarchi, noting that the new store will provide the template for future Vince’s Market stores—including the replacement store for its original Sharon location, set to open in 2019. Although there were a few cost overruns, Trimarchi says they were judicious in how they spent their money. It’s this kind of thinking, no doubt, that helped land Vince’s Market on Deloitte/CIBC’s list of Canada’s Best Managed Companies in 2017. “I learned from my father [Carmen, who purchased the business from the Vince family in 1986]
February 2018 Canadian Grocer
that every penny counts, and you want your money to go a long way,” says Trimarchi. The dark “wood beams” that line the store’s ceiling, for example, are actually a digitally printed vinyl laminate wrapped around PVC. “The original thought was to do it with wood and MDF and plywood, but nobody’s going to see it [up close] and it’s a tenth of the cost,” says Trimarchi. He also hired a former employee-turned-illustrator to create some of the imagery for the various departments, such as the lemon tree that sits above the produce department. The designers worked hard to make the store as welcoming as possible. Shelving units, for example, stand only 65 inches high (compared to 80 for most grocery stores), enabling customers to easily access products on the highest shelf. As an added bonus, the shelves’ low profile means customers can immediately identify every key department (meat, seafood, deli, etc.) from wherever they are in the store. “One of the things our customers tell us is that the reason they shop with us is because our stores are not large,” says Trimarchi. “The first thing you think when you enter a store is, ‘Where am I going?’ You should be able to see a way-finding sign for any department no matter where you are.” Reflecting Vince’s longstanding emphasis on fresh, much of the Tottenham store’s footprint is taken up by perimeter sections such as produce, meat, dairy and deli, which account for about 70%
COVER STORY of the total floor space. To accommodate those departments in a relatively small footprint, Vince’s has trimmed down the number of SKUs among centre-aisle staples such as soft drinks, water, paper towel and laundry detergents, focusing primarily on category leaders. “If someone needs to come in and get dishwasher detergent and fabric softener, we’ll have it, but we’re only going to have one or two options,” says Trimarchi. “But if you want to come in and find an imported olive oil, we’re going to give you 12, 15, maybe even 20 options.” There’s also an abundance of items from small regional producers that aren’t readily available in traditional stores, such as cookies from Southampton, N.Y.-based Tate’s Bake Shop; Ontario maple syrup from Trillium Ridge Sugarworks (a Vince’s supplier since 1988) and Fraktals handmade Belgian chocolate buttercrunch (an Aurora, Ont.-based company that sells $80,000 worth of product a year through the Vince’s network, according to Trimarchi). “I’ve got brands all over the store where I could say to you that we were their first grocery store,” says Trimarchi proudly. Vince’s also continues to expand its home meal replacement offering, although for now it is focusing on what Trimarchi describes as “core items” like rotisserie chicken, lasagna, pre-cooked spareribs, etc. “It’s all simple stuff, but winners,” says Trimarchi. “We’re growing this with the approach that we’re not experts, but we’re going to learn as we go along.”
At 3 p.m., just as our tour is wrapping up, the in-store system blares out an announcement about “Quality Time.” Instituted by Trimarchi and his business partner Brian Johns about two years ago, the program requires every employee, whether they’re office staff or a butcher, to spend a few minutes sprucing up the store, making sure labels are facing outward, price tags are in the right place, the floors are free of debris and so on. “It’s all the little things that kind of get away from you sometimes,” says Trimarchi. “We said to ourselves, ‘If we just had five minutes twice a day, this would never happen.’” Like the old quote says: you can’t rush perfection. CG
Vince’s continues to expand its home meal replacement offerings; the Vince’s Own store brand currently includes items like chili, meatballs and a wide variety of soups
The Facts Location
Tottenham, Ont. Number of employees
70
Size
14,500 sq. ft. Specialties
Unique items from regional producers; small footprint; welcoming environment; an emphasis on fresh
February 2018 Canadian Grocer
23
th e 2 A M A N 01 N 7 R SU K UA RV ET L EY
ANNUAL MARKET SURVEY
By
Ge
or
ge
Co
nd
on
What kind of year did Canada’s traditional grocers have? Our Market Survey reveals all
February 2018 Canadian Grocer
25
ANNUAL MARKET SURVEY
A BUMPY YEAR ACROSS THE BOARD, retailers had a rough go of it in 2017. The tumultuous year was marked by store closures (so long, Sears Canada!), changing consumer expectations and behaviours, rapidly-evolving technological advancements and, of course, the looming threat of Amazon and what it might do next. Contending with all of the above pressures—along with unprecedented competition, oh, and let’s not forget a lingering price war—Canada’s grocery retailers also had a less-than-stellar year. Still, our annual Market Survey, based on Statistics Canada data with estimates from Canadian Grocer, reveals that despite
all of this, the nation’s traditional grocers managed to squeeze out a 1.4% increase in total sales over the previous year. All tallied, traditional grocers rang up sales of $95.8 billion in 2017. But how well grocers fared in 2017 really depended on where they were doing business. Once again, the survey revealed significant regional disparities. Ontario, for instance, led the pack with sales growing by 5.8% in 2017, while British Columbia saw a 4.2% increase. Quebec, which enjoyed the biggest sales increase in 2016 (2.7%), saw its sales grow by 2.6% last year. In other areas of the country, however, the sales figures tell a less encouraging story. In Atlantic Canada, total grocery store sales plunged by 9.1%, the result of store closures, a slow economy and competition from non-traditional food stores. In Alberta, grocers’ woes also continued and sales slumped by nearly 7% as the province struggled to emerge from a recession. On a bright note, things appear to now be turning around for the beleaguered province, with the Conference Board of Canada reporting that Alberta’s economy is growing again, thanks to rising oil production and increased drilling. We’ll have to wait and see if this good news will translate to better sales this year for the province’s traditional grocers. Canadian Grocer’s Market Survey looks at sales generated through the traditional grocery industry
10-YEAR FOOD STORE SALES TOTAL SALES
CHAINS
($000)
% change
($000)
2008
79,277,293
3.9
2009
82,340,768
3.9
2010
84,449,941
2011
85,291,822
2012 2013
I N D EPEN D EN T S
% of total
($000)
47,829,010
60.3
31,448,283
39.7
49,370,520
60.0
32,970,248
40.0
2.6
50,763,726
60.1
33,686,215
39.9
1.0
51,392,991
60.3
33,898,831
39.7
87,909,344
3.1
53,364,506
60.7
34,544,838
39.3
87,550,013
-0.4
53,000,277
60.5
34,549,736
39.5
2014
89,190,441
1.9
54,106,987
60.7
35,083,454
39.3
2015
91,009,189
2.0
55,393,723
60.9
35,615,466
39.1
2016
% of total
94,496,645
3.8*
57,502,474
60.9
36,994,171
39.1
2017
(EST)
95,841,357
1.4
58,382,034
60.9
37,459,323
39.1
2018
(FORECAST)
96,895,612
1.1
59,106,323
61.0
37,789,289
39.0
* STARTING WITH APRIL 2017, RETAIL FIGURES ARE CALCULATED USING A NEW SAMPLE TO IMPROVE EFFICIENCY. IN ADDITION, SURVEY ESTIMATION METHODOLOGY HAS BEEN ENHANCED. THE ADJUSTMENT GOES BACK AS FAR AS 2012.
26
February 2018 Canadian Grocer
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ANNUAL MARKET SURVEY 2017 SALES GROWTH AND SHARE BY REGION
How well grocers fared in 2017 depended on where they were doing business. Ontario, for instance, led the pack with sales growing by 5.8% in 2017, while British Columbia saw a 4.2% increase. In Atlantic Canada, however, grocery store sales plunged 9.1%, and grocers’ woes continued in Alberta, with sales slumping by nearly 7%.
CANADA
1.4% sales increase 100.0% national share
BR ITISH CO LUMB I A*
4.2% sales increase 15.6% national share
AT L A N T I C P ROV IN C E S
*Includes Yukon, Northwest Territories and Nunavut
9.1% sales decrease 6.8% national share
MA N I TOBA
ALB ERTA
6.8% sales decrease 12.6% national share
1.4% sales decrease 3.8% national share ON TA RI O
SAS K ATCHEWA N
4.3% sales decrease 2.9% national share
QU EB EC
2.6% sales increase 25% national share
CHAINS' MARKET SHARE (OF GROCERY STORE SALES)**
Once again, chains had the highest per cent market share in the Atlantic Provinces (78.3%), and lowest in Quebec (36.8%)
2017 (EST)
2016
(%)
(%)
Atlantic Provinces
78.3
79.0
Quebec
36.8
36.8
Ontario
62.0
60.0
Manitoba/Saskatchewan
71.1
72.3
Alberta
75.9
76.4
British Columbia*
73.1
73.4
CANADA
60.9
60.9
** Includes Yukon, Northwest Territories and Nunavut ** Does not include department store, food or specialty stores
28
5.8% sales increase 33.3% national share
February 2018 Canadian Grocer
(chains and voluntary franchise groups), independent supermarkets, major banner convenience stores and unaffiliated independents. For the purposes of the survey, chains include any grocer with four or more stores, which means a number of independent grocers are included in our analysis, along with the likes of the big corporate chains—Metro, Sobeys and Loblaw. It’s the independent chains such as Longo’s and Farm Boy that helped boost Ontario’s chain sales figures by 9.3% last year. Not included in this analysis are food sales through mass merchandisers, warehouse clubs, drugstores and specialty stores. But growing sales in these channels continue to impact traditional grocers’ bottom lines. CIBC Capital Markets estimates Walmart’s food and grocery sales have increased 4% year-over-year, while Costco’s are up 12%—considerably better than the 1.4% growth experienced at traditional grocery. Looking at the grocery industry at a national level,
chain supermarkets and major banner convenience store chains increased their dollar sales by 1.5%. They managed this despite a slight reduction in the number of supermarkets (eight fewer) and also a decline in convenience stores (35 fewer) last year. Voluntary group stores, which are primarily franchised grocers, increased in number by 10 stores in 2017. This appears to be mainly from former chain stores being converted to franchises. As a result, overall sales of this group grew by 1.7% last year. Unaffiliated grocers also saw a boost in store numbers (by 50) during 2017. This growth, however, was not reflected in sales, which dropped by 3.3% in 2017 to $3.1 billion. Unaffiliated grocers are independent operators, including many small mom-and-pop type stores that have no permanent affiliation with a wholesaler.
Commenting on the plight of independents, Tom Barlow, president and CEO of the Canadian Federation of Independent Grocers, says: “Independents do not have the ability to leverage their scale the way the large corporate grocery retailers can, and this is impacting not only their revenue and margins but also their ability to stay in business.” In other words, they don’t have the clout to force their suppliers to help offset rising costs from higher energy prices and minimum wage increases. Still, all independent stores, both franchise and unaffiliated, managed to maintain their 39.1% share
EXPLANATIONS:
CANADIAN FOOD STORE SALES 2017 ($000s)
In 2017, dollar sales generated at Canada’s chain supermarket and convenience stores reached $58.4 billion, inching up from $55.9 billion the year before.
BRITISH COLUMBIA
ALBERTA
MANITOBA & ONTARIO SASKATCHEWAN
QUEBEC
ATLANTIC PROVINCES
CHAI NS
TOTA L STORES
Supermarkets
Convenience
Voluntary Groups
Unaffiliated
No. of stores
278
379
182
789
971
1,628
Dollar sales
5,138,278
1,308,690
119,052
1,427,742
6,566,020
19.9
1.8
21.7
100%
2,279
2,004
4,283
6,353
14,237,736
899,158
15,136,894
23,957,789
% of total
78.3
No. of stores
478
Dollar sales
8,820,895
% of total
910
Dollar sales
19,792,507
% of total
183
Dollar sales
4,566,670 285
Dollar sales
9,164,767 374
Dollar sales
10,898,917
Dollar sales % of total
1,064
75.9
No. of stores % of total
550
71.1
No. of stores % of total
2,178
62.0
No. of stores % of total
1,592
36.8
No. of stores
No. of stores CANADA
I N D EPEN D EN T S
791
73.1 2,508 58,382,034 60.9
6,554
Total Independents
59.4
3.8
63.2
100%
678
2,214
2,892
5,980
10,834,950
1,271,979
12,106,929
31,899,436
34
4.0
38.0
100%
701
563
1,264
1,997
1,747,453
106,520
1,853,973
6,420,643
27.2
1.7
28.9
100%
298
555
853
2,202
2,547,028
369,689
2,916,717
12,081,484
21.1
3.0
24.1
100%
194
681
875
2,040
3,653,645
363,423
4,017,068
14,915,985
24.5
2.4
26.9
100%
4,332
6,806
11,138
20,200
34,329,502
3,129,821
37,459,323
95,841,357
35.8
3.3
39.1
100%
Chain Stores: Four or more stores under single ownership. Sales figures are Canadian Grocer estimates based on Statistics Canada data and include convenience and supermarket stores. Store numbers from Canadian Grocer’s Who’s Who 2018 directory, and later information supplied. Voluntary Groups: Franchised independents operating in major or secondary wholesalesponsored group programs. Store numbers from Canadian Grocer’s Who’s Who 2018 directory. Sales and market share data estimated by Canadian Grocer. Not included: Food sales through department stores (mass merchandisers), drugstores and club stores.
** Includes Yukon, Northwest Territories and Nunavut
February 2018 Canadian Grocer
29
ANNUAL MARKET SURVEY SPECIALTY FOOD STORE SALES Specialty food stores in Canada—which include meat markets, bakeries, green grocers, fishmongers, etc.—experienced a significant increase (7.6%) in 2017 over 2016. Growth since 2010 is even more impressive, with a 50.6% increase over the seven-year period.
Specialty Food Store Sales Estimated ($000s) 2017
2016
% Increase 2017/2016
222,630
213,762
4.1
Quebec
1,987,522
1,973,666
0.7
Ontario
3,023,841
2,673,569
13.1
Manitoba/Saskatchewan
268,074
308,130
- 13.0
Alberta
692,616
557,286
24.3
British Columbia*
1,191,097
1,140,817
4.4
Canada
7,385,780
6,876,230
7.6
Atlantic Provinces
Per cent Change Specialty Food Store Sales
$84,449,941
$7,385,780
% Increase 2017/2016
% Increase 2017/2010
7.6
50.6
of the total Canadian market. Supermarket and major banner convenience chains also maintained their 60.9% share from a year ago. Marc Fortin, who until recently was the president of Distribution Canada Inc. (and who has now assumed the role of president and CEO of the Retail Council of Canada, Quebec), says 2017 was a rollercoaster of a year for independents. Along with a rainy, cool summer in parts of the country, he says 2017 also saw the introduction of new government legislation, financial restructuring by both suppliers and retailers, and a changing consumer. “These changes have shaken up all parts of the supply chain and had a major impact on all independent retailers across Canada,” Fortin says. “It is now time to review our strategies and action plans to ensure we are well positioned for growth and success in 2018.” Part of those strategies for all retailers—and not just independents—should include an overhaul in their approach to pricing. At Canadian Grocer’s Thought
30
$95,841,357
2017
** Includes Yukon, Northwest Territories and Nunavut
CANADA
Specialty Food Store Sales versus Canadian Grocery Food Store Sales Canada Totals Comparison estimated ($000s)
February 2018 Canadian Grocer
Specialty Food Store Sales
2010
$4,902,634 Canadian Grocery Food Store Sales
Specialty Food Store Sales
Canadian Grocery Food Store Sales
Leadership CEO Conference in November, Carman Allison, vice-president of consumer insights at Nielsen, said the ongoing price war with aggressive promotions that retailers are engaged in has curtailed growth. Faced with pressures such as rising labour costs (in certain provinces), retailers face the predicament of shuttering stores or cutting jobs if they don’t get more strategic and start taking prices up, he warned. Canada’s Food Price Report 2018, a recent joint release from Dalhousie University and the University of Guelph, also brings up the pricing issue and contends that the major grocers’ aggressive discounting cannot continue indefinitely. The report forecasts that prices will rise between 1% and 3% this year. But it also warns that as Amazon gathers strength, it could pose an even bigger threat to Canadian grocers this year. Restaurants may also steal away sales, according to the report, as this channel is expected to grow between 4% and 6% this year. Faced with intense competition coming from all directions, as well as higher costs and deal-seeking consumers, it looks like Canada’s traditional grocers may be in for another challenging year in 2018, with sales growth expected to hover around just 1%. CG
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YTD YA
Consumers want higher quality products
YTD
Nielsen Marketplace data YTD Jan–Aug, 2017
of category users are interested in seeing higher quality or gourmet prepared meals. Mintel, Product Innovation, 2016
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* Source: Nielsen BASES Concept/ Volumetric Test, Crave, March 2017
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Why consumed? Coffee (Kantar Wordpanel) 45%
Like The Taste
32% 45%
To Wake Me Up
52% 14%
Quick Energy Provide Lasting Energy
$ Sales (MMs)
Millennials drink coffee for energy more than taste
14%
600 400 200 0 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17
22% 7%
800
Total Population Millennials
Energy drink sales in Canada – Mintel Food and Drink
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FEATURE By Rosalind Stefanac and Rebecca Harris
TECHTAKEOVER There’s no stopping technology. From voice assistants to blockchain, here’s a look at some of the innovative tech that, if it isn’t already, may one day disrupt the business of selling food
AMAZON.COM
Amazon Echo Plus
VOICE ASSISTANTS
TALK TO ME Voice assistants may hold the key to improving the grocery experience Anyone who talks to their smartphone to send a text or get information can attest to the convenience of voice technology. No pushing buttons or looking at screens. No scrambling for pen and paper. It’s no wonder, then, that voice assistants are talking their way into grocery shopping as well. Case in point: retailers such as Walmart and Costco have partnered with Google to introduce voicebased shopping to their customers. Last year, Morrisons was the first major grocer in the United Kingdom to integrate Amazon’s Alexa into its online service so shoppers could make their weekly shop using voice commands. According to the latest research from consulting firm Capgemini, we can expect the adoption of voice assistants to keep on growing. Its 2018 report, Conversational Commerce, Why Consumers are Embracing Voice Assistants in Their Lives, showed 40% of people expect they will be using voice assistants instead of a website or mobile app in the next three years. In fact, the data already shows 35% have bought products such as grocery items via voice assistants. Aside from the convenience, the real
opportunity of voice assistants for grocers will be in having an ongoing record of customer behaviour, says analyst Brian Kilcourse, managing partner at U.S.-based Retail Systems Research. “They’re dropping digital breadcrumbs [with each interaction] that can help retailers on the other side detect what they’re interested in,” he says. “This can then become a digital path towards purchases before they happen, instead of just transactional data.” To truly take advantage of all of this additional data, he says retailers need networks powerful enough to support “all that noise,” and analyze where the trends are. With new competition from online giants such as Amazon, Kilcourse says retailers will have to “up their game” in terms of the in-store food shopping experience, and voice assistants could be the key. He points to having product codes that shoppers can scan to hear more about the origins of a product or the ingredients listed in small print. Another option could be for shoppers filling prescriptions at the grocery pharmacy to get instructions read in their native language via voice assistants. “The potential for all of this is possible with artificial intelligence,” he says.
February 2018 Canadian Grocer
37
ROBOTS
INVASION OF THE GROCERY ROBOT? For the average grocer, smarter systems may be the better investment
38
February 2018 Canadian Grocer
Tally by Simbe Robotics
Last year Schnuck Markets, a U.S. chain of grocers founded in Missouri, conducted a six-week pilot at three of its stores using a robot called Tally. Its job was to scan the aisles three times a day to check stock and ensure each product was placed with its appropriate shelf tag. The data collected by Tally was then used to help the company keep on top of having the right products on shelves at the right time. Schnucks’ spokesperson Paul Simon noted that customer reaction to Tally was mostly indifference. “Every day, customers are surrounded by more and more advancing technology in all aspects of their lives, and the supermarket is really just a part of that.” Gary Saarenvirta, the founder of Toronto-based technology firm Daisy Intelligence, says robots can certainly be useful in tracking or re-stocking shelves, as well as in improving warehouse efficiencies. But he sees the bigger value-add for grocers in the potential to improve merchandising and inventory management via AI-based operational systems. “Sure, the big retailers may be using drones and robotics, but at a cost of several billion dollars, most retailers won’t
waste their time on that,” he says. Instead, Saarenvirta sees the greater impact of AI, especially for mid-market grocers, will be in using it to create better systems for inventory allocation and merchandise planning. “That’s the secret sauce these bigger retailers are already using and aren’t talking about,” he says. “Right now grocers are having to eat costs to stay competitive, but being able to pick the right products to promote at the right price points, with the right inventory at the right location—that’s the big benefit.” Aaron Cheng, vice-president of product development at Toronto-based digital market firm Flipp, says the ultimate goal is to use AI to help grocers be more relevant to their customers. “Showing someone who is health conscious not just the cheapest chicken but [also] when the organic chicken is on sale would be much more meaningful to them,” he says. ZAPP2PHOTO/SHUTTERSTOCK, SIMBE ROBOTICS
ONCE THE FODDER of sci-fi movies, robots are steadily making their way into grocery as retailers look to faster, more efficient ways to run their businesses. The U.K-based online supermarket Ocado—which just inked a deal with Sobeys to bring its e-commerce platform to Canada—is a prime example. Ocado operates a warehouse that uses cloudbased technology and swarm robots to collect grocery orders. Meanwhile, Walmart has been testing two-foot-tall robots on wheels in a number of U.S. stores. These machines use artificial intelligence (AI) to scan for incorrect prices or missing labels. The company reported that the robots were 50% more productive and could scan shelves three times faster than humans.
FEATURE THE TECHNOLOGY that powers Bitcoin is currently showing big promise for the grocery sector as well. Blockchain is essentially a shared, encrypted ledger that stores and shares information in a peer-to-peer network. The technology allows users to view realtime data and transactions, permanently recorded into files called “blocks.” “Blockchain technology will provide complete transparency, integrity and authenticity to retailers, allowing them to see items move through the supply chain every step of the way,” says Judy Fainor, chief architect at management software company Sparta Systems. “Because ledger entries in the blockchain are time-stamped and immutable, the data on product production, trans-
portation, storage conditions and delivery is verified and available to all parties with access. This type of visibility and traceability helps retailers ensure the quality of their product while reducing fraud or counterfeit attempts.” Blockchain would be particularly valuable for the produce sector. “In our world, we don’t have a very linear supply chain. It’s more like a supply web,” says Ed Treacy, vice-president of supply chain at the U.S.-based Produce Marketing Association (PMA). “There are so many different entities—from a grower to a shipper to a packer—and so many paths the product can travel.” One key benefit of blockchain is that it allows for near-instant traceability. In a proof of concept, Walmart tested
BLOCKCHAIN
HOW BLOCKCHAIN COULD CHANGE THE GROCERY WORLD
DENCG/SHUTTERSTOCK
Traceability and transparency are seen as the biggest benefits of blockchain technology
blockchain technology for sliced mangoes. Without blockchain, it took six days, 18 hours and 26 minutes to trace a package of sliced mangoes back to the original source. With blockchain, it took 2.2 seconds. In a webinar hosted by PMA, Frank Yiannas, vice-president of food safety at Walmart, said, “What we’ve been able to achieve is food traceability at the speed of thought.” He added that being able to identify a potentially contaminated product in 2.2 seconds could prevent a lot of illness that would occur over seven days. But for Walmart, traceability “isn’t the end game,” said Yiannas. “It really is transparency.” For example, with blockchain, Walmart would be able to see audit certificates from the farms and hot water treatment certificates from the packer. “[You can] get documents that are relevant to production, that show you not only data attributes related to traceability—what, where and when—but more importantly, how was the product produced,” said Yiannas. “This idea of transparency has the potential to be a game-changer for food and certainly for the produce industry.” Yiannas said Walmart has joined IBM and nine other companies, including Driscoll’s, Dole, Unilever and Kroger to form a coalition that will further pilot, test and scale blockchain. Sylvain Charlebois, dean of the faculty of management at Dalhousie University in Halifax, says blockchain’s potential for the grocery sector depends on the buy-in. “Blockchain is an excellent technology and an excellent concept, as long as everyone buys into it,” he says. “Walmart has bought into it, but Walmart is Walmart. I couldn’t see a producer or a processor on his or her own adopting blockchain and pushing everyone else to do the same.” Sparta Systems’ Fainor says it will still be a while before we see the leap to widespread adoption in sectors other than financial. “Compliance, regulations and standardization are all concerns to be further addressed,” she says. “[However], as the technology matures and standards are formed over time, the adoption of blockchain will soar.”
February 2018 Canadian Grocer
39
LAB-GROWN MEAT
BRAVE NEW BURGER Food startups are developing lab-grown meat as a protein alternative for the future ONCE A FUTURISTIC IDEA, lab-grown meat (also called clean meat or cultured meat) is now a real-world innovation that’s gaining traction. Around the globe, food-tech startups are making inroads in creating meat from animal stem cells,
without the need to raise and slaughter animals. San Francisco-based Memphis Meats announced a few “world firsts” over the past couple of years, including a beef meatball and crispy chicken strips made from animal cells. Israel-based food-tech startup SuperMeat is working on developing labbased chicken. And San Francisco Bay Area startup Finless Foods is working on producing lab-grown Bluefin tuna. Matt Ball, a spokesperson for The Good Food Institute, a U.S. non-profit that promotes meat alternatives, says clean meat is gaining traction because of two converging factors. “First, there is a growing awareness of the problems associated with how meat is currently produced,” he says. “Secondly, there are rapid advances in cellular agricultural technology.” Proponents of lab-grown meat say it’s more sustainable and environmentally friendly than conventionally grown
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meat. “Right now, we get our animal products from animals that are mostly born and raised in the factory farming system, which is extremely hard on the environment and on the animals themselves,” says Erin Kim, communications director at New York-based New Harvest, a donor-funded charity that invests in cellular agriculture research. “In theory, the hope is that [lab-grown meat] will require fewer resources and will produce less waste. Because it’s yet to be done at a large scale, it’s still speculative, but it offers a very promising hope.” Once extremely expensive to produce, lab-grown meats have come down significantly in cost, although there’s still a long way to go. In 2013, Mark Post, a Dutch scientist and co-founder of Mosa Meats, unveiled the world’s first labgrown burger, which cost $325,000 to develop over two years. Memphis Meats CEO Uma Valeti told the Wall Street Journal in 2017 that his company can make a pound of meat for less than $2,400, down from $18,000 in 2016. “It’s got immense potential once we get the economics to work,” says Mike von Massow, associate professor, food agriculture and resource economics at the University of Guelph. “More people are concerned about the environmental footprint of meat production and if we can do this cost-effectively, it becomes a reasonable option.” That said, putting lab-grown meat on the dinner table is still a long way off. Ball says the first clean meat products will probably be in high-end restaurants within five years. “It will simply be a question of scaling production before these products reach grocery stores,” he says.
LIGHTSPRING/SHUTTERSTOCK
FEATURE
FEATURE
AMAZON.COM
FRICTIONLESS SHOPPING WILL THE FUTURE BE FREE OF CHECKOUTS? TAKING GRAB AND GO TO A WHOLE new level, Amazon debuted its automated convenience store to the public last month in Seattle, Wash. The lineup of shoppers waiting to get a first glimpse of Amazon Go stretched down the block—amusing, given that the chief attraction of the checkout-free store is that shoppers don’t have to wait in a line to pay for goods. With its “just walk out” artificialintelligence powered technology, Amazon Go shoppers need only scan
their smartphone (pre-loaded with the Amazon.com app) when they enter the store, pick their items and leave. Cameras and sensors installed in the ceiling track a shopper’s movement; if they pick up a bottle of juice, the cameras recognize and add it to their virtual cart. Upon exiting the store through an electronic gate, the customer’s Amazon account is charged the cost of the goods. Amazon has not announced plans for more Go stores, but more are expected with industry observers also speculating as to whether the concept will make its way to the retail behemoth’s Whole Foods Market locations. Of course, it’s not just Amazon attempting to woo shoppers wanting to skip checkout lines. Walmart is reported to be developing its own cashier-free store and has been expanding its scan-and-go service over the past year. And U.S. supermarket
chain Kroger has rolled out its Scan, Bag, Go technology to 400 of its stores. With the enormous expense of setting up and maintaining such a high-tech operation, and its lack of a personal touch, it remains to be seen how much of a game changer the Amazon Go experiment will be—at least in the immediate future. CG
Canada’s largest event dedicated to the fruit and vegetable industry
Tuesday, April 24, to Thursday, April 26
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PROUDLY WOR K ING WITH FINICA FOODS
5 0 TH A N N I V E R S A R Y R E P O R T
FINICA
food specialties Finica Food leads the way for gourmet fare in Canada Company celebrates 50 years of delivering exceptional tastes to the masses It’s hard to imagine that a two-person business launched from a home basement back in 1968, would grow into one of the leading importers and distributors of specialty foods across Canada. But that’s exactly what Finica Food Specialties has accomplished since its inception 50 years ago. Today, thanks to the company’s foresight around specialty cheese and gourmet fare, Canadians are accessing some of the finest, award-winning products from around the world at their local grocery stores. At the same time, retailers are
stepping up to provide shelf space for more and more globally and locally sourced specialty items.
The recipe for success
It’s a relentless passion for bringing quality food to the masses that has been the key to Finica’s success over the past five decades, says President Paul Blake. “With a focus on ‘best in category,’ we’ve never gone after me-too products and we’re always on the lookout for new and exciting things.”
SPECIAL PROMOTIONAL FEATURE IN CANADIAN GROCER–FEBRUARY 2018
50 T H A N N I V E R S A R Y R E P O R T
That means staying ahead of emerging food trends by travelling to gourmet fairs around the globe, and meeting with suppliers on a regular basis to find out about the latest and greatest in specialty foods. It also means building connections with retailers. “At the end of the day, we’re in the relationship business and it’s our obligation to bring value to our clients and act as consultants while supplying good-quality foods,” says Blake. “If you’ve got a good relationship with your clients and are on the same wavelength you can do anything together.” Tom Gellert, vice-president of U.S.-based Atalanta Corporation, Finica’s sister company, says more and more consumers want the ‘who, what, where and why’ of the food they consume. “I think we’re in a great position to bring that clarity through our retail partners,” he says. “Our goal really is to bring a better understanding and excitement to consumers around the food they eat.” More than two decades of collaboration with Atalanta and parent company, Gellert Global Group (which acquired Finica in 1995), has resulted in a 10-fold increase in sales and a portfolio of award-winning products for Finica. Gellert says being able to draw from resources on both sides of the border has been essential to growing the business. “Finica can pull from the best of what has worked in the U.S. and we can look to their success too,” he says. “It’s great that the Canadian consumer has been open to fresh ideas and that’s what drives us.”
Cheese to please
When it comes to its mainstay of food offerings, specialty cheeses are at the core of Finica’s product portfolio. From the very beginning Finica was the exclusive importer of Finlandia branded cheeses to Canada, however, since joining the Gellert Global Group, its cheese and Specialty Food portfolio has expanded to include products from Italy, Spain, Netherlands, Wales and the U.S. In fact, Finica’s Zerto branded Zerto Asiago cheese imported from Wisconsin became one of its larger sales items and solidified a distribution partnership with what is now Sartori Cheese. That eventually led to the introduction of Sartori’s Reserve collection of BellaVitano Cheeses. “I wouldn’t have thought to bring specialty cheeses in from the U.S. but then I went to Wisconsin and attended a cheese pairing with suppliers,” says Blake. “I discovered they had a wide range of artisanal cheese options exploding over there.”
little dairy farm has expanded to a 50,000-square-foot plant in Lindsay. “What we used to produce in a year we do in a day now,” he says. “Finica has honoured our products in the best possible way and I see this partnership continuing for many years to come.” Even more impressive is that Celebrity goat cheeses have garnered some of the most prestigious industry awards in North America. “We introduced new flavour offerings which, weren’t currently on the market and brought more consumers into the goat cheese category,” says Blake, noting that Finica was the first in Canada to offer the now popular goat cheese logs with cranberries and cinnamon (with blueberry, fig and other flavours to follow). “Rather than taking away from our competitors, we made the goat cheese category even larger and it continues to grow.”
Advocating for high-quality Canadian cheeses from local producers has been another feather in Finica’s cap. Celebrity goat cheese from Mariposa Dairy in Lindsay, Ont., is a prime example. Owner Bruce Vandenberg still remembers when Finica approached him back in 1996 to expand his goat cheese business. Today, Mariposa is the second largest producer of goat cheese in the country and Vandenberg’s
SPECIAL PROMOTIONAL FEATURE IN CANADIAN GROCER–FEBRUARY 2018
CONGRATULATIONS ON 50 YEARS!
CANADA’S #1 GROCERY INFORMATION BRAND
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A passion for food for over
50 YEARS
Finica Food Specialties Ltd. | 905.696.2770 | www.finica.com
50 T H A N N I V E R S A R Y R E P O R T
Blake says promoting local cheese will continue to be a priority for the business. Another award-winning introduction was a partnership with a local producer to manufacture Zerto brand ‘Fresh mozzarella logs’ only using 100% Canadian milk. In fact, working with a small manufacturer in Northern Ontario called Thornloe, Finica recently launched a new line of cheddar cheeses made with 100% Canadian milk from grass-fed cows. “This line is doing very well and will be available in more chains this year,” he says. “You don’t have to be big necessarily to get our interest. We really like to work with producers, no matter how small, on up and coming trends.” Canadians can expect even more interesting artisanal cheeses from here and abroad coming to grocery retailers in the near future. “We just launched a line of cheeses in waxed truckle format,” notes Blake. “They’re a younger, creamier version of our artisanal hard cheeses, produced in Ontario under the Lenberg Farms brand.”
Specializing in specialty
Outside of cheese, Finica has been wowing Canadian palettes with a host of other specialty items over the last 50 years. “We keep the same philosophy in specialty foods as we do in the cheese market,” says Blake. “We look around the world for the best in category.” Case in point, after tasting Dalmatia Fig Spread at a trade show in New York, Finica was the first to bring the jam to deli cheese counters in Canada, pushing it to number #1 in the category. “In the early days we were told it was not a cheese compliment but we stuck to our guns and it has paid off.” Others wins in specialty food for Finica include Menu Pomodorina (pasta) sauces, which are rated #1 across Italy’s restaurant sector. (In addition to sauces, the line features a bevy of other delicacies such as canned artichokes and eggplant). Rather than simply provide product to retailers, Finica facilitates bringing an Italian chef in to work with retailers on developing ideas for meal options. “The product has performed very well at specialty independents and was recently introduced to major retail grocery and
the HMR category ” says Blake. “That’s just another example of how we work with retailers to provide new and exciting options.” Three Little Pigs Pate is another brand distributed by Finica that Blake expects will push the category forward. “People like the fact it’s a clean product without nitrates and I definitely see the category for clean patés getting even bigger,” he says.
The future of retail is still bright
Despite rapid technology changes in the retail food landscape with the introduction of new players like Amazon, Finica is excited about the future. “We believe competition is always healthy in the industry, but we still believe people will buy with their eyes and their noses,” says Blake. “Good food is like theatre.” Finica’s National Sales Manager Marc Bethune says Canada’s recent trade agreement with the European Union will also open up new opportunities even though the implications of the UK’s Brexit deal are still to be determined. Bethune says more and more retailers are now interested in ‘raising their game’ and showcasing specialty items is a great way to do that. “They want to be able to differentiate themselves to become a destination. “Primary market drivers are either local and/or specialty and Finica is in a great position to satisfy both fronts.”
Milestones in Finica Food’s history 1968 The company is launched by German expats Gunther Mueller and Henning Strait. Their focus is on German food specialties as well as Finnish cheese, for which Finica gains exclusive import rights. 1995 Acquired by U.S.-based Atalanta Corporation (of the Gellert Global Group) Finica repositions itself to expand its cheese import to premium exclusives. 2003 Finica introduces the world to Celebrity International’s cranberry goat cheese with cinnamon, which has a huge impact on the market. 2011 Finica, with its Canadian partner Mariposa Dairy, introduces Lindsay Bandaged Goat Cheddar and wins First Prize in the category, as well as tieing for 2nd place ‘best in show’ out of more than 1,672 other cheeses in the prestigious American Cheese Society Competition. 2013 To accommodate its growing business, Finica relocates to its current home, a state-of-the-art facility in Mississauga, ON. It features a boardroom that opens up into a test kitchen.
SPECIAL PROMOTIONAL FEATURE IN CANADIAN GROCER–FEBRUARY 2018
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Products, store ops, customers, trends
FREE-FROM FOODS
B CALKINS/SHUTTERSTOCK
What’s in is what’s out As consumers move to more natural foods and alternative ingredients, “freefrom” is booming By Rebecca Harris
F
or many consumers today, it’s not just about what’s in the food products they buy, it’s about what’s not in them. The “free-from” trend is booming as consumers increasingly seek foods that don’t include things like gluten, dairy, fat, preservatives, artificial flavours, antibiotics and more. According to Euromonitor International, global sales of free-from foods increased 7% in 2016, reaching US$32 billion. The research firm said rising demand for lactose-free and hypoallergenic options has contributed to the growth of freefrom, which is set to generate an additional US$9.5 billion in sales by 2021, and is expected to become the fastest-growing category in North America, Asia Pacific, Latin America and Europe, with an average of 5.4% growth. In Canada, 80% of consumers claim to buy free-from foods, according to the Free-from Food Trends Canada 2015 report by Mintel. The top claims on free-from foods are trans-fat free (54%), fat free (48%) and preservative free (46%). Among February 2018 Canadian Grocer
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AISLES free-from consumers, 59% agree that free-from products are healthier to eat or drink, and 52% agree these products help them address specific health issues. Fat-free claims may be tops, but Joel Gregoire, associate director of food and drink at Mintel, says there’s now an evolution happening in the free-from category. “Claims about reduced fat or sugar content are still going to be important, but we’re seeing a movement towards flexibility,” says Gregoire. “There’s a lot of talk about the ‘flexitarian’ diet and we’re seeing a move towards plantbased foods.” For example, dairy-free and meat-free products (such as vegan sausages) are increasingly popular with younger consumers. “Young people tend to be experimental and more interested in different foods, and the science [of alternative ingredients] is coming along too,” adds Gregoire. “So, it’s not just about the free-from labels, but what are some of the alternative ingredients or alternative processes [manufacturers] can use to create the food?” Francis Lo, co-founder of Cambridge, Ont.-based Yoso, is witnessing the movement towards dairy-free products firsthand. His company, founded in 2002, produces a range of dairy-free cultured products such as almond and cashew yogurt, coconut yogurt and cashew cream cheese spread. According to Lo, his sales were up 40% in 2017. Lo believes the popularity of dairy-free products is driven by a combination of factors. First, there’s a growing population of consumers with food allergies or intolerances. Secondly, “becoming vegan and eating less dairy and less meat is a life statement,” says Lo. “There’s a famous quote from [author] Anna
Raw, which makes vegan and dairy-free products such as vegan cheesecake. The retailer is also stocking dairy-free cheese products from P.E.I.-based Fresh Start Fauxmage, as well as a dairy-free frozen dessert line from Dartmouth, N.S.-based Common Confections. “We can’t keep that stuff on the shelf. It’s been really popular for us,” says Yunace. While dairy-free products are clearly hot right now, demand for gluten-free foods also continues to grow. According to Euromonitor International, the global gluten-free market has grown from US$1.7 billion in 2011 to US$3.5 billion in 2016, and is forecast to grow to US$4.7 billion in 2020. Ryan Dennis, director of communications at Nature’s Emporium (a popular health food market with three locations in the Greater Toronto Area), says gluten free stands out as a major growth area. “Lots of these products are inherently gluten free, but companies are much more savvy about highlighting [this attribute] on their packaging more boldly,” he says. But, with products that are not gluten free by nature, Dennis says there’s a lot of innovation from both big and small companies. “We’re regularly bringing in new breads that are closer to that texture people love,” he says. “There are more quality gluten-free foods that have a much better taste profile and give a different food experience.” Pete’s Fine Foods operates Pete’s Gluten Free Eatery at its Halifax store, selling in-house gluten-free sandwiches, salads, pizza and baked goods, as well as local gluten-free baked goods. “Our gluten-free business has grown quite significantly in the past couple years, especially our in-house products,” says
Among free-from consumers, 59% agree that free-from products are healthier to eat or drink Lappé who said, ‘Every time you spend money, you’re casting a vote for the kind of world you want.’ Consumers want to align their purchase habits with their own values and beliefs.” Frank Yunace, operations manager at Pete’s Fine Foods in Halifax, has seen a huge rise in dairy alternatives being launched in the marketplace, and many of them are local. For example, Pete’s Fine Foods is now carrying products from Porters Lake, N.S.-based In the
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February 2018 Canadian Grocer
Yunace. And it’s not just allergies or intolerances that are a driving force: Yunace says both gluten-free and dairyfree products keep getting tastier. “People are able to make these products high quality and they’re using really good ingredients,” he explains. Another big trend for CPG brands over the last few years has been to remove artificial ingredients and preservatives from their products. Last year, artificial colours, flavours and preservatives were
removed from five (of six) varieties of Conagra’s Orville Redenbacher brand of microwaveable popcorn. Aaron Minocha, senior brand manager at Conagra Brands, says Canadians are looking for snacks made with simpler ingredients. “We did a survey and found that for those consumers who had actually cut back on eating microwaveable popcorn or stopped eating it all together, this change in behaviour was mainly to avoid eating artificial flavours and additives,” he says. Minocha believes the free-from trend is driven by a range of factors, from allergy concerns and restricted diets to consumers who are more conscious of their well-being. “Apart from price, the No. 1 factor driving purchasing decisions for food and beverage products is ingredients,” he says. “Consumers are increasingly becoming knowledgeable about the ingredients in their products.” On the meat side, there’s growing demand for meat from animals raised without the use of antibiotics or hormones. Within the lunch meat category, for example, Nielsen data shows products that are antibiotic and hormone free, as well as those with no artificial preservatives, are driving significant volume. In the United States and Canada, antibiotic- and hormone-free lunch meat experienced 14.5% volume growth, while preservative-free lunch meat had 7.2% volume growth (for the 52-week period ending April 1, 2017). U.S. figures show that from 2011 to 2015, meat products labelled antibiotic free posted 28.7% growth and products labelled hormone free posted 28.6% growth. Cynthia Beretta, co-founder of Beretta Farms, attributes the growth to consumers becoming more enlightened about the meat industry as a whole. “People are educating themselves; they’re hearing more about their food supply and are becoming more interested,” says Beretta. “[Free-from] is becoming mainstream and people are just expecting these attributes in the food that they eat.” What’s next? Nature’s Emporium’s Dennis believes we’ll see more innovative food startups in the free-from space. “Large producers will increasingly get in on the action, but I see increasing niche product development,” he says. “We’ve just seen the beginning of it and it’s going to create micro-segments of foods that people are really enthused about. It’s definitely here for the long haul.” CG
AISLES
Flower power Lavender, elderflower, rose, violet, hibiscus— these fragrant flowers look lovely in the garden, but these days they’re also increasingly finding their way into food and beverage products. Floral flavours appeared on several “top trends” lists for 2018, including those from Whole Foods Market and Novotaste, as manufacturers are expected to launch a growing number of floralflavoured teas, dairy products, snacks, soft drinks and more. Here are just a few flower-powered products showing up on shelves:
DRY SPARKLING
Made in Canada
RISE KOMBUCHA
BOTTLEGREEN DRINKS
Elderflower appears to be the flower of choice for Bottlegreen Drinks, a U.K.-based producer of sparkling beverages and cordials. Bottlegreen’s elderflower-flavoured offerings include Delicate Elderflower Sparkling Infusions, HandPicked Elderflower Cordial, Pomegranate & Elderflower Cordial, and Hand-Picked Elderflower Sparkling Pressé.
Riding the wave of the growing popularity of kombucha (a fermented sweet tea drink with purported health benefits), Montreal’s Rise Kombucha is selling its bottled kombucha beverages in a variety of hip, fun flavours, including a couple of interesting floral blends: the calming Hibiscus & Rosehips, and the energizing Rose & Schizandra.
GOODPOP
Touting “real, wholesome and clean ingredients,” GoodPop’s Hibiscus Mint popsicles are made in micro-batches with steeped fair trade organic dried hibiscus flowers, organic mint and fresh lime juice. They’re also non-GMO Project Verified, vegan, gluten free, kosher, dairy free, and only 70 calories per pop. Although these frozen floral treats aren’t being sold in Canada yet, the Texasbased manufacturer says it’s researching the potential of a Canadian launch.
Dry Sparkling has released Lavender Dry: a sparkling beverage featuring purified carbonated water, pure cane sugar and natural lavender flavour. The Seattle-based company’s website—which refers to lavender as “rose mary’s more beautiful, refined sister”—notes that Lavender Dry can be sipped and enjoyed on its own, but it also makes for a tasty cocktail when mixed with vodka, gin or Frangelico.
STASH TEA
As a producer of more than 200 different teas, Stash Tea hasn’t shied away from the blooming floral trend. Stash’s floral teas include Jasmine Blossom, Wild Raspberry Hibiscus and Organic Lavender Tulsi. There’s also the flowery Breakfast in Paris, described as a “unique blend of rich black teas, fragrant lavender, and citrusy bergamot.”
February 2018 Canadian Grocer
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AISLES NEW ON SHELF! Sodas, sauces and spreads … oh my! Are your customers seeking something new and interesting to add to their carts? Check out these three new products:
NATURE’S NUTS ORGANIC ALMOND BUTTER Organic spread available in smooth or crunchy Nature’s Nuts has launched Organic Almond Butter, a tasty protein-packed spread available in smooth or crunchy varieties. These madein-Canada nut butters are certified organic, nonGMO Project Verified and have no added sugar.
THE BIG CHILL FROM STAPLES SUCH AS cheese (in its many forms) and milk to juice, eggs and more, refrigerated foods ring up big sales at the checkout. Take a look at this data from Nielsen to see how some of these cool categories are performing.
Refrigerated food & beverage sales in Canada - 52 weeks, ending Dec. 9, 2017 $ Vol % Chg
Units (000s)
Units Vol % Chg
2,542,040,769.0
-1
669,358,296.5
-2
NATURAL CHEESE
2,044,701,469.0
2
349,852,731.0
3
YOGURT PRODUCTS
1,576,363,528.0
-1
2,020,631,522.5
-2
EGGS
971,029,603.0
0
287,135,621.8
4
JUICES & DRINKS
810,442,428.0
1
241,596,821.4
-2
2. BUTTER & DAIRY SPREADS
569,291,125.0
5
142,553,921.5
5
3. DIPS
364,391,781.0
6
109,827,223.1
CREAM
281,882,437.0
4
103,406,512.2
4. MARGARINE
275,997,602.0
-6
80,634,183.2
CREAM CHEESE
252,079,408.0
4
74,868,969.3
7
PROCESSED CHEESE SLICES
213,881,582.0
-4
51,250,733.0
-3
SOUR CREAM
147,058,166.0
1
60,418,476.1
1
COTTAGE CHEESE
121,112,738.0
2
34,860,209.2
-1
480,671.0
48
162,072.0
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COFFEE CREAMERS (EXCLUDING FLAVOURED)
1. With $2.5 billion in sales, milk still
reigns as king of the dairy case, but sales and units have both dropped in the latest 52 weeks. 2. Butter boom. It’s good times for this dairy staple: both dollar sales and units are up 5%.
February 2018 Canadian Grocer
It’s the same old Diet Coke formula, but with a sleek new can design and four new fruity flavours: Feisty Cherry, Twisted Mango, Zesty Blood Orange and Ginger Lime. The new flavours—like the original—are sweetened with aspartame and acesulfame potassium (aceK), and have zero calories and sugar.
4 3 -5
3. Canadians are diving into dips.
These popular refrigerated foods have jumped 6% in dollar sales and 4% in units. 4. Margarine … oh dear. Butter’s poor relation has seen better days; both sales and units are in decline. SOURCE: NIELSEN, NATIONAL, ALL CHANNELS, ALL SALES, EXCLUDING N.L.
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DIET COKE New look and new fruity flavours
SMOKE SHOW HOT SAUCE Lightly smoked jalapeño hot sauce This jalapeño-based hot sauce is equal parts smoky, spicy and sweet. Smoke Show Hot Sauce—which debuted in Montreal, where it’s made—is now also available in the Ontario marketplace.
FLOORTJE/ISTOCK/GETTY IMAGES PLUS
1. MILK
$ Sales (000s)
Just one ingredient, 6g of protein per POGO Source of Iron No by-products Reduced in trans fatty acids
110210 Toonies For Tummies Ad_v3.indd 1
ORANGES
©PepsiCo Canada ULC, 2018.
2018-01-30 11:54 AM
CHECKING OUT
DESPERATELY SEEKING INNOVATORS Canada’s grocery industry needs to start innovating, or risk being left behind ONE HAS TO WONDER why Canada’s grocery industry lags the rest of the world when it comes to innovation. We’re still testing click-and-collect and home delivery while other countries appear to be much farther ahead in experimenting with virtual supermarkets, drone delivery and shelf-scanning robots. On the merchandise side, innovative new products have a tough time just getting onto Canadian supermarket shelves. Meanwhile, SuperBrugsen, a grocery store in Denmark, is using a crowdsourcing app to allow its customers to suggest new and interesting products they want the retailer to stock. Perhaps one reason why innovation is slow in Canada is that, until lately, there has been no pressure on our big retailers to do anything but what they’ve already
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February 2018 Canadian Grocer
been doing for years. But supermarkets must recognize they have an important role to play in both retail and product innovations. Marion Chan of TrendSpotter Consulting recently wrote in a blog that “one of the crucial points of differentiation for retailers will be product assortment. Providing the consumer with more than just the most common brand choices is going to be key … To be known as an innovator and to build loyalty, a retailer will need to put a stake in the ground for what they stand for to get the consumer to make the journey to their store.” She adds: “Unfortunately, manufacturers can’t innovate in isolation. Retailers have to be supportive and encouraging of the innovation.” Some of our large grocers’ supplier fees do not encourage
innovation by manufacturers and, in fact, may act as deterrents. One retail innovation that has grabbed attention is the virtual store. Tesco made waves several years ago when it installed large kiosks at U.K. subway stations with photos and UPC codes of hundreds of products. At these kiosks, the shopper need only scan the products they want with a cell phone and the order gets delivered to their home. Payment is made via the same cell phone. Tesco set up similar kiosks in Seoul, South Korea. Then there’s China’s BingoBox, where large storefront kiosks are on wheels and can be moved to different locations. The kiosks contain actual products and automatically track by camera which products are taken and which ones are put back. Customers are billed automatically through their cell phones after a camera makes a final check of the order. There is no staff and no cashier. This is the same concept used by Amazon Go, which has caused a stir in the grocery industry. Amazon Go’s launch was delayed when it was discovered the cameras it uses to track shoppers got confused when there were too many people in the store. Those bugs appear to have been cleared, and Amazon Go opened to the public in January. The 1,800-sq.-ft. automated Seattle store boasts no checkout. Shoppers need a cell phone and an app and they can “just walk out” of the store, with their items automatically being charged to the app. Like Tesco, Jumbo in the Netherlands has also experimented with the virtual store, locating one at the busiest bus stop in the city of Utrecht. And Australia has created a robot called Shelfie that monitors shelves for out-of-stock or misplaced items and incorrect facings, reporting them to staff and to warehouse robots for immediate correction. The world, it appears, is passing us by. Let’s step up our game now, before we’re left completely in the dust. CG
George Condon is Canadian Grocer’s consulting editor. He’s based in Toronto. condug@sympatico.ca
IGOR BUKHLIN/SHUTTERSTOCK
George Condon
2018
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