November/December 2013

November December 2013 Vol 3 | No 6 $9.95

The Ultimate Disrupter

Leaders on Leadership: PM # 42211029

Dino Bianco

+Marketing

to Millennials

To be earth’s most customer-centric company where people can find and discover anything they want to buy online.

November/December 2013 Volume 3, Number 6

grocerybusiness.ca

Co-Publisher and Executive Editor Karen James 416-561-4744 KarenJames@grocerybusiness.ca Co-Publisher and Content Director Kevin Smith 416-569-5005 KevinSmith@grocerybusiness.ca Executive Vice-President Content and Market Development Dan Bordun 416-817-5278 DanBordun@grocerybusiness.ca Contributing Editors Angela Kryhul, Sally Praskey Contributing Writers Peter Diekmeyer, Treena Hein Marjo Johne, Noelle Stapinsky Contributers Susan Abel, Perry Caicco, Tony Chapman Joanna Gibbons, Ken Kwong, Michael Marinangeli Creative Agency Boomerang Art & Design Inc. boomart.net Subscription changes & updates or general inquiries: info@grocerybusiness.ca

WHY GROCERY IS

AMAZON’S NEW TROJAN HORSE On October 31, Amazon.ca began selling groceries

the bookselling or electronics business. Rather, Amazon

products’ new role as a “category,” and a loss-leader one

to Tom Furphy, who once ran AmazonFresh in the U.S.

online and in one broad stroke cemented grocery

at that. It was a direction grocery was already heading

toward, as big-box retailers such as Walmart and Target beefed up their grocery offerings.

But this is different. Amazon is unlike any previous

competitor. Launching with 15,000 grocery items,

Amazon.ca will undoubtedly steal market share as

online shopping continues to grow in popularity. And,

Phil Donne, Campbell Company of Canada Tom Barlow, Canadian Federation of Independent Grocers Perry Caicco, CIBC World Markets Chris Terrio, CROSSMARK Canada Inc.

Michael Marinangeli, MIDEB Consulting Inc. Cheryl Smith, Parmalat Canada Mark Ayer, Procter & Gamble Inc. David Wilkes, Retail Council of Canada Cori Bonina, Stong’s Market © Copyright 2013. All rights reserved.

No part of this magazine may be reproduced without written permission of the publisher.

GST Registration No. 83032 6807 RT0001 Publications Mail Agreement No. PM42211029 ISSN 1927-243X Mailing Address Grocery Business Media 390 Queen’s Quay W., PO Box 40085 Toronto, ON M5V 3A6

presence in consumers' homes. It’s also a great way to sell more online advertising; collect third-party fulfillment and listing fees; gather more online behaviour data… the list goes on.

As Tony Chapman notes in his column on page 21, the

chink in Amazon’s armour could very well

habits than traditional supermarkets could ever dream

same level of authentic, face-to-face, highly-

of. Without bricks-and-mortar overhead,

Amazon is nimble enough to react to consumers’ changing needs.

Here’s a sobering thought: Amazon doesn’t consider

itself to be in the grocery business, anymore than it’s in

Nancy Croitoru, Food and Consumer Products of Canada Tim Berman, Kraft Foods Canada

Groceries, as a high-frequency purchase, is really a

Trojan Horse strategy for Amazon to increase its

because it tracks online activity, Amazon will instantly

know more about customers’ preferences and spending Grocery Business Advisory Council

is in the business of helping people buy stuff, according

Karen James and Kevin Smith, Co-Publishers

karenjames@grocerybusiness.ca kevinsmith@grocerybusiness.ca grocerybusiness.ca Follow us on Twitter @grocerybusiness Sign up for our weekly eNewsletter at grocerybusiness.ca

be that, as an online retailer, it’s unable to offer the personalized service that consumers crave and at which their neighbourhood grocers excel.

Whether this proves to be Amazon’s Achilles heel

remains to be seen. In the meantime, welcome to the wild new frontier of grocery retailing.

Grocery Business November | December, 2013 Volume 3, Number 6

contents

McEwan's Own Photographed in Chef Mark McEwan's Toronto store

DEPARTMENTS 5 Publishers’ Message

60 Launch it, List it

64 It Figures

Why grocery is Amazon’s new Trojan Horse

8 Front End

People & News

11 Open Mike

39

51 Shelf Life: Cereal

November | December 2013

Thinking outside the bowl

54 Shelf Life: Good in Bread

6

Don’t be an invisible boss

Bread is your next destination category

New and Now Products Focus on inflation

66 Perry’s Point of View

The new independent grocers

ON THE COVER

17 The Mighty Amazon

The e-commerce giant’s relentless quest to disrupt and dominate the grocery landscape

36

33

27

FEATURES 13 Focus on Food Safety 14 Dino Bianco - Kraft Foods Canada

2013 Golden Pencil recipient

21 Tony Chapman

Amazon: The world's biggest vending machine

45 On the Road

Natural Products Expo East

56 United Grocers Inc.

46

Advantage Mirror Report

59 Toonies for Tummies

Turning the tables

48

Exit Interview

27

The future of retail

44

Acquiring Dominance

Retailers turn to M&As for growth

Awards Dinner 2013 Goal: $1 million for child hunger

63 Grocery Innovations

Canada 2013

33 McEwan's fine dining comes home

Omni-channel retailing gains momentum

What Millennials Want

Parmalat's Nash Lakha

23 Changing Channels

TASTE MAKER

36 Ann Daw, Specialty Food

Association, talks trends

39 Making It: Lesley Stowe,

Raincoast Crisps

41 Gascogne of Montreal grocerybusiness.ca

November | December 2013

7

Front End

Appointments Marc Poulin succeeds Paul D. Sobey as president and CEO of Empire Co. Ltd. on Dec. 12, while retaining his current position as president and CEO of Marc Poulin Sobeys Inc. Sobey retires as president and CEO on Dec. 11, 2013, and continues as a director of the company.

Nestlé Waters Canada has appointed Debbie Moore as president. Previously, Moore was global head of customer facing supply chain/customer service, corporate supply chain for Nestlé S.A. Mary Kelly has joined Rexall Pharma Plus as executive vice-president and chief merchandising officer. Kelly previously worked at Shoppers Drug Mart as executive vice-president of merchandising and category management.

Mario Grauso has joined Joe Fresh, Loblaw’s apparel division, as chief operating officer. Grauso most recently was the president of the Vera Wang Group.

Bill Dunne has joined the board of directors of C.B. Powell Limited.

Dunne was president of Acosta Canada from 2006 to December 2012.

8

November | December 2013

Loblaw Companies Ltd. has announced executive changes.

Grant Froese Grant Froese was named chief administrative officer; Mark Butler was appointed executive vice-president, integration; Garry Senecal now leads the Conventional division; and Andrew Iacobucci leads the Discount divisions.

Mark Butler

Andrew Iacobucci

Nicolas Trentesaux is the Garry Senecal new head of the SIAL Group international food exhibition network.

Trentesaux held several international positions with packaged goods companies.

Cori Bonina, president of Stong’s Market Inc. and Cori’s Kitchen Inc., has received a Lifetime Achievement award from the Kitsilano Chamber of Commerce. The first female chair of the Canadian Federation of Independent Grocers, Bonina is an industry innovator who uses her retail outlet as a testing ground and launch pad for new products.

Bonina received the recognition at the 2013 Westside Business Awards Gala.

The White Cashmere Collection celebrated its 10th anniversary in September with a runway show at the Art Gallery of Ontario. Twenty fashion designers showcased garments and accessories crafted in Cashmere Bathroom Tissue. The show supports the Canadian Breast Cancer Foundation with 25 cents from every package sold in October going directly to the cause.

Stay informed with Grocery Business eNews Don’t miss out on all the latest grocery industry news.

Delivered to your inbox weekly, Grocery Business newsletters include the latest industry news and announcements. Sign-up at grocerybusinessmedia.ca/ newsletter

The Millennial Consumer: How they Shop 49%

All Millennials

46%

Millennial Moms 38%

40%

SEPARATING YOUR NEW POLYMER NOTES

27% 19%

22%

20%

18%

16% 13%

Close to where I live

Offers the lowest everyday prices

Provides circulars/ They price match flyers that to competitors highlight current advertised prices sale-priced items

Offers sales on brand name items

14%

Offers in-store coupons

Source:

Congratulations to Battistelli’s Independent Grocer. The Lively, Ont. store reopened on July 26 after a major renovation and now features an entire aisle dedicated to organic and natural foods, a new antipasto/olive bar and a fresh seafood counter, improved fresh and meat departments, and a complete redesign of the bakery department. Pictured: Brent Battistelli, president, Battistelli’s Independent Grocer, Loblaw district manager Doug Stickle, and the store team.

grocerybusiness.ca

LEARN MORE: BANKOFCANADA.CA/BANKNOTES

November | December 2013

9

Front End Congratulations!

September 10, 2013

Winners of the 2012-2013 Metro Inc. Managers of the Year:

METRO RECOGNIZES TOP QUEBEC MANAGERS

Metro Inc. has recognized six of its 210 Metro and Metro Plus store managers across Quebec as Managers of the Year for 2012-2013. The six managers were evaluated on a number of criteria including customer service excellence, showcasing of products, in-store execution and optimal layout.

Peter Fogarty

Metro Fogarty, Terrebonne

Marcel Laroche From left to right: Richard Frenkcuec, vice-president, retail operations, Metro Banner, West; Guillaume Cantin, co-owner of Metro Laroche in Laurier-Station; Régis Bergeron, store director of Metro Laroche in Laurier-Station; Bertrand Laroche, from Metro Laroche in Laurier-Station; Philippe Birdjandi, franchised owner of Metro Plus Beaconsfield; Denis Brisebois, vice-president, retail operations, Metro Banner, East; Steve Dumont franchise owner of Metro Sainte-Annedes-Monts; Richard Lamothe, store director of Metro Plus André-Grasset in Montréal; Peter Fogarty, owner of Metro Fogarty in Terrebonne; Sylvain Bissonnette, franchise owner of Metro Marieville; Christian Bourbonnière, senior vice-president, Quebec Division, Metro.

Metro Laroche, Laurier-Station

Groupe Messier

Metro Plus André-Grasset, Montreal

Philippe Birdjandi

Metro Plus Beaconsfield, Montreal

Sylvain Bissonnette

Metro Marieville, Marieville

Steve Dumont

Get your fresh ideas rolling.

The Canadian Produce Marketing Association invites you to Live Healthy and Eat Fresh at the 2014 Convention and Trade Show in Vancouver.

APRIL 2-4, 2014

Metro Ste-Anne-des-Monts, Ste-Anne-des-Monts

Yopa! enters Greek yogurt category Nia Vardalos, the Oscar-nominated writer and star of My Big Fat Greek Wedding, is the new spokesperson for General Mills’ new Yopa! yogurt brand. Yopa! is a play on the Greek word “opa,” and is made with stirred-in ingredients in the following flavours: Mango Tango, Very Berry, Ooh La La Strawberry Cheesecake, Va-Va Vanilla Bean and Lotta Piña Colada. Vardalos is promoting Yopa! via social media and media interviews.

cpma.ca Nia Vardalos

10

November | December 2013

Open Mike

Don’t be an

invisible boss!

By Michael Marinangeli

Do you hold a senior management position at a head office of a supermarket chain or a small group of grocery stores? Do your decisions and directives have a direct impact on sales, profits and the future viability of your organization? Do you truly understand how consumers perceive your stores? When was the last time you spent a full day visiting your stores? These are important questions to answer. Here’s why.

Retail is detail. It is imperative that senior executives stay in touch with reality. The money is made in the stores, not in the office.

The most effective leaders I have worked with were those who spent a lot of time visiting stores. Head office is there to support the stores, not the other way around. Store visits should be part of the responsibilities of senior management.

There were times in my career when I did not spend adequate time visiting stores. I got bogged down with too many projects and too many fires to put out. But those were excuses.

I should have scheduled store visits the same way I scheduled all the other important tasks I was required to perform.

However, there were also periods when I never missed a week visiting stores. At Miracle Food Mart, we had a company van just for that purpose. Every Thursday, the senior management team would jump in the van at 6:00 a.m. and spend the day visiting stores. When we travelled out of town, we didn’t get home until late at night. These were not surprise visits. The

grocerybusiness.ca

staff knew we were coming, and were proud and delighted to show us their departments and gather our feedback. The added bonus of having the senior team travelling together all day was the opportunity to exchange information with one another. Also, we were right on top of what our competition was doing, and devised plans on the go as to how we could improve our position in each market we visited.

Attracting, retaining and providing value to shoppers is a full-time effort. All of us are extremely busy. However, if you are not a visible manager, you will be out of touch with what is happening in the marketplace.

Visiting your stores on a regular basis is the best way to connect with your stores, customers and employees. Make it part of your work week!

10 KEY BENEFITS OF STORE VISITS 1. Understanding the store from the customers’ perspective.

2. Good for employee morale – somebody cares.

3. Understanding the challenges that employees face.

4. Watching and learning how tasks are performed.

5. Finding solutions to problems by asking employees their opinions.

6. Getting a good grasp on what your competitors are doing in each market.

7. Feeling the pain and understanding the issues.

8. Determining what is not working and stopping it immediately.

9. Gathering great ideas by talking to employees and customers.

Michael Marinangeli is a principal at MIDEB Consulting Inc. and a retailing veteran with more than 40 years of experience. mjmarinangeli@gmail.com

10. Evaluating and getting to know your talent base in the stores, to identify future leaders.

November | December 2013

11

©2013 ® and ™ trademarks of Kruger Products, L.P. ®’ registered trademark of Kimberly-Clark Worldwide used under license. EARTH DAY® and the Leaf & Swirl Design™ are trademarks of Earth Day Canada (1991) Inc., used with the permission of Earth Day Canada (1991) Inc. M trademark of TerraChoice used under license. ®FSC—Forest Stewardship Council, A.C 1Absolute based. 2Scope 1. 3Cube utilization.

KRUGER PRODUCTS : SUSTAINABILITY 2015 IN ACTION In 2010, we launched Sustainability 2015 and set to work on various initiatives to meet our nine targets. At the midway point of our journey we are proud to share our progress.

We have experienced challenges along the way, but they have helped us tackle situations in different ways and develop solutions in an ever-evolving industry.

This has truly been a company-wide effort.

Employees from every department and each of our sites—manufacturing and head office—have contributed to projects and initiatives that are helping us achieve our targets.

We are committed to sustainable growth and innovation.

I encourage you to visit sustainability2015.ca to keep up with our progress and learn more about how we’re building a sustainable future.

Mario Gosselin Chief Executive Officer

6.7%

reduction1 in energy consumption

7.5%

reduction1 in GHG emissions2

96%

of fibre third-party certified

3.4%

improvement in logistics efficiency3

10.4%

(7.1% reduction1 since 2009)

(19.4% reduction1 since 2009)

(7.5% improvement since 2009)

increase in FSC®certified fibre utilized (FSC fibre represents 53% of total fibre)

Became Official Earth Day Canada Partner sustainability2015.ca

Canada has one of the best foodsafety systems in the world.

And now we’re on the cusp of making it even better.

A STREAMLINED

BY SUSAN ABEL

FOOD-SAFETY SYSTEM The Canadian Food Inspection Agency (CFIA) is deep into a major review of its procedures that will take Canada’s already world-class system to another level. The initiative – called the Safe Foods for Canadians Action Plan – promises to dramatically streamline our inspection regime.

Food & Consumer Products of Canada (FCPC) – as the industry association representing and supporting Canada’s food, beverage and consumer products manufacturers – has been at the table, taking a leadership role.

Industry is excited for the possibilities that lie ahead. These include an easier-to-navigate system and inspectors who are all trained the same way, so that an inspector in Newfoundland is delivering the same message as one in British Columbia. It’s the possibility of removing much of the duplication that has developed over the past 25 years, and becoming more efficient by focussing resources where they are most needed.

How did we get here?

The CFIA has recognized that, over the last 25 years, it has amassed an incredible number of rules and regulations. The existing system is a

grocerybusiness.ca

bit like a whack-a-mole game; whenever something new comes up – such as the use of technology, a food ingredient, or a food-safety procedure – the CFIA bolts on a new rule to address the change.

All these activities inevitably lead to unnecessary overlap, duplication and frustration. Currently, the CFIA manages 44,000 pages of documentation, including regulations, guidance and policy. The organization recognizes it needs to review and refresh those pages to maximize their impact on food safety while reducing the sheer volume to a more manageable set of documents.

This is not to say our present system is weak.

Far from it. This is about levelling the playing field and ensuring consistency. It is an opportunity to make sure that anyone operating in the food world in Canada is playing by the same rules.

The passage of the Safe Foods for Canadians Act (SFCA) has helped move this file along.

The SFCA gives the CFIA the power and tools it needs to make the necessary changes.

Currently, inspectors have a highly defined checklist that is used during an inspection.

In the future, they will have to use more discretion or judgement instead of a simple checklist to verify that a food meets the regulations. This will allow the adoption of new technology more quickly, but it means that inspectors will need much more training and experience to make different kinds of decisions.

I am meeting with the CFIA once or twice a month on this initiative – it’s a priority. The goal is to have the new system in place by 2015.

It’s ambitious, but I believe we can get there and continue making our food-safety system the envy of the world.

SUSAN ABEL is FCPC’s vice-president of Scientific & Regulatory Affairs. She spent close to 25 years in the food industry developing new products, including a decade of overseeing food-safety and regulatory requirements for Canada, the U.S., and the U.K. while working in the dairy and grains processing industries.

November | December 2013

13

LEADERS ON LEADERSHIP

On the eve of his Golden Pencil award, the industry’s highest honour, Karen James of Grocery Business spoke with Dino Bianco, executive vice-president and president, Beverages and Canada, Kraft Foods Group.

Dino Bianco 14

November | December 2013

2013 GOLDEN PENCIL RECIPIENT

LEADERS ON LEADERSHIP Karen James: How do you define your leadership style?

KJ: What does it mean to you to receive the Golden Pencil award?

Dino Bianco: I’ve been told I’m very competitive, driven and passionate, but in a way that I like to think is engaging, empowering, and inspirational for my staff.

DB: It’s an incredible honour. When I heard I was awarded the Golden Pencil… you always look at your peer group and you question whether you are worthy. It’s very special for me because I spend a lot of my time now working in Chicago. To be recognized in my home country is a great honour.

KJ: Did you have a mentor in your career?

DB: I really did not. I’ve worked with many people in my career and learned something from everyone. My career was influenced by all the people I’ve worked with over the years – taking the positive from some, and avoiding the negatives from others.

KJ: How did you begin your career at Kraft?

DB: In the early 1980s, I had a summer job as a sales rep for Christie Brown, and that was my first taste – no pun intended – of the food industry. I loved it. They offered me a full-time job when I graduated from university, but I was determined to get my Chartered Accountant designation first.

Then, in 1990, lo and behold, Kraft Foods called me for a job in the finance area. Interestingly enough, 10 years later, Kraft ended up buying Christie Brown.

Eventually, I became president of Kraft, which included Christie’s, the place where I started my career almost 20 years earlier.

KJ: Is the business different now?

DB: Obviously, the world has changed since the early ’80s. Technology has given us a more global perspective on business. But the things that excited me back then are still true today. This is a dynamic business. It interacts with consumers every single day, and is a total end-to-end business, from farm right through to technology. Feeding people is honourable work and I’m proud to be part of it.

grocerybusiness.ca

KJ: What advice would you have for people entering the CPG industry?

DB: I would encourage young people to let their curiosity take them wherever it can in the business, because great leadership transcends any particular role. I started my career in finance and ended up working in marketing and sales strategy, and learned a lot along the way.

And I would tell them not to be so rushed to get to the next job, the next title, the next promotion. Build the skills. Learn from others and teach others. And if you do all that, you will have a fulfilling career and lot of fun too.

SNAPSHOT Education Bachelor of Commerce, University of Toronto; Chartered Accountant designation

Career path »» PriceWaterhouseCoopers »» Several positions within Kraft, in finance, sales strategy and marketing »» President of Kraft Canada, 2005-2012 »» Most recently, was president of Kraft’s International and Foodservice business, as well as the Marketing Services and Innovation organizations

KJ: On the personal side, we understand that you enjoy playing hockey.

»» Appointed to his current

DB: I started playing hockey at age five, and at 51 I’m still playing twice a week. I always say this will be the year I retire, but I’ve been saying that for about 10 years!

I enjoy going to the gym and I golf whenever I can. I love listening to all genres of music and spending time with my family.

Personal

KJ: Is there anything you would like to add, Dino?

DB: As I reflect back, I think I was fortunate to be born, educated, married and able to raise my family, all in one city. I have friends that I met when I was five years old – we still hang around today. I was very blessed to have those advantages and to ascend to a very senior job in a great company in a great city. I think this grounding and pride in being raised as a Canadian and Torontonian, helped shaped me.

position in January, 2013

Married, with two daughters, ages 23 and 17, and a son, age 20

Giving back Past chair of Food and Consumer Products of Canada; previously served on the board of The Grocery Foundation and the Board of Trustees of the United Way Toronto.

November | December 2013

15

Brighten h t i w y a d r u o y Del Monte !

ALSO TRY THE

NEW DEL MONTE WORLD

The Mighty

E-commerce giant Amazon.com (and its offspring Amazon.ca) is on a relentless quest to disrupt and dominate the grocery landscape By Sally Praskey

It could be the industry’s biggest-ever game changer. While Canadian retailers were preoccupied with the launch of Target and Walmart’s expansion in grocery, Amazon.ca stealthily swooped in and, in October, dropped a bomb: The online behemoth added 15,000 grocery items to its online offering, sending chills down the spines of many grocers.

“The grocery category is important to us because it is important to our

grocerybusiness.ca

customers,” says Alexandre Gagnon, country manager for Amazon.ca, explaining the rationale behind the move into online grocery retailing.

“We know our customers want to buy online – they tell us that every time they search for grocery items on our site. They are looking for a large, high-quality assortment, which includes everything from healthy snacks to dry packaged goods, and we want to provide that to them.”

November | December 2013

17

Around the same time that Amazon launched its grocery store, came word that the company had signed a lease for a 91,000-sq.ft. office space in a high-tech building in Vancouver. Due to open in 2015, the space will reportedly accommodate 1,000 employees.

The company, which already has an office in Vancouver, is hiring as many as 90 software developers, and program and product managers, as well as filling additional positions at its fulfillment centre in Delta, B.C. Another fulfillment centre in Mississauga, Ont., reflects the company’s strategy of placing its warehouses in dense urban areas where it can deploy a variety of delivery models.

As it continues to add categories to its online arsenal, Amazon is growing in, well, Amazonian proportions. Over the past five years, it has acquired such sites as shoe seller Zappos.com, and Quidsi Inc., the parent of Diaper.com, Soap.com, Wag.com and BeautyBar.com.

Book stores, electronics retailers, video outlets and others have paid the price of Amazon’s take-no-prisoners growth strategy.

Are grocery retailers next?

According to a 2012 report from Kantar Retail, titled The Future of Online Grocery Shopping in the United States . . . is Here, Amazon already dominates south of the

Jeff Bezos, CEO

Bezos is willing to lose money on shipping and services in exchange for loyalty. The average Prime [Amazon’s $79-per-year delivery program] member spends an astounding $1,224 a year on Amazon, which is $700 more than a regular user.

Fast Company magazine, September 2013

2012 AMAZON PERFORMANCE $61.1 billion revenue (+27%)

Online is the new Any grocery retailers who think they can go toe-totoe with Amazon in the online grocery retail arena, are kidding themselves, according to the man who once headed AmazonFresh in the United States.

-$39 million net income

“The bottom line was weaker as the company continues to spend on fulfillment centres,” according to Kerry Rice, an analyst with Needham & Co. Source: Nasdaq

18

November | December 2013

While Amazon delivers fresh groceries in the U.S., and recently launched an online grocery and gourmet food store at Amazon.ca (selling packaged goods only), former Amazon vice-president Tom Furphy told an audience at the recent Grocery Innovations Canada conference that Amazon “could care less if it makes money on the goods it brings in for resale,” and that includes groceries.

The reason is that Amazon makes most of its money from as many as 12 “ridiculously large income streams” ranging from third-party fulfillment and listing fees, to advertising fees on its network and cloud computing services, Furphy explained.

border with more than half of online grocery shoppers indicating they shop for groceries at Amazon.com.

To the dismay of U.S. food retailers, Amazon is using grocery as a loss leader to get in more customers’ doors, more often. That allows the company to not only forge lasting relationships, but also to bundle groceries – which people buy regularly – with higher-margin products like electronics. In other words, Amazon doesn’t really care if it makes money selling groceries – and that’s a frightening prospect to grocers.

The company’s ace in the hole in this strategy is Amazon Prime, its $79-a-year two-day

DIVERSE DELIVERY MODELS AMAZON PRIME »» Annual membership fee of $79 »» Free two-day shipping when customers order more than $35 worth of eligible products »» Access to thousands of streamed Instant Video programs and free e-books in the Kindle Owners’ Lending Library

SUBSCRIBE & SAVE »» Automatic scheduled delivery of subscribed items »» Discount off each order, and free standard shipping

AMAZONFRESH (SEATTLE AND LOS ANGELES ONLY)

grocery frontier It’s enough to send a chill down one’s spine, according to Peter Larkin, president and CEO, National Grocers Association, who said AmazonFresh has delivered a wake-up call to American grocery chains that have been slow to offer online grocery and home delivery services.

There is a silver lining to Amazon’s grocery strategy, according to Stephen Tallevi, co-founder and general manager of Grocery Gateway. “Amazon might take some share, but independents can hold their own and may actually find incremental revenue [by getting into online retailing and home delivery],” he says.

“I think it comes down to trust. Where you do your shopping today is where you will place your trust online. Customers already have a comfort level with you… and that trust will carry through online.”

– Angela Kryhul

grocerybusiness.ca

»» Overnight delivery of fresh groceries, including produce, dairy, meat, seafood, and even full-course meals (as well as other Amazon.com items) »» Delivery: Doorstep (three-hour window) in temperature-controlled tote bags; or attended (one-hour window) »» $10 charge; free delivery on qualifying order amounts

PRIME FRESH (LOS ANGELES ONLY) »» Upgraded version of Amazon Prime, providing free shipping of products and free delivery of grocery orders over $35 »» Annual fee of $299

AMAZON LOCKER »» Large metal cabinets installed at convenience and other chain stores in selected cities »» Amazon is also working with the U.S. Postal Service to deliver packages on Sundays to its Prime members in certain U.S. cities.

November | December 2013

19

“In the new digital world, you can’t convince people you have the low price; you actually have to have the low price.”

Jeff Bezos, Fast Company magazine, September 2013

delivery service. CEO Jeff Bezos freely admits, in media reports, that he is willing to lose money on shipping in exchange for loyalty.

After all, Prime users, having paid their yearly fee, are inclined to order more to leverage their $79 as much as possible. Meanwhile, the company’s “Subscribe and Save” feature lets customers schedule regular replenishments of essentials like toilet paper and cereal – a kind of standing order for household basics.

While Amazon.ca is not selling fresh foods, it may only be a matter of time as the parent company is already testing its AmazonFresh concept in two U.S. cities in a bid to convert monthly customers into weekly or even more frequent purchasers. But Canada is not in the plans – yet. “We’re thrilled to launch the grocery category and provide Canadians with a wide variety of dry grocery products. We have nothing else to announce at this time, but will keep you posted as we increase selection, “ Gagnon told Grocery Business.

Meanwhile, Walmart Canada isn’t about to let Amazon.ca walk away with its centre store business and recently announced the addition of 2,000 grocery items to its online offering.

Walmart is also piloting a program with Canada Post called Delivered Tonight that will offer free same-day delivery of products, including non-perishable foods, in the Greater Toronto Area.

In the U.S., Walmart will be ramping up its game by going head-to-head with Amazon Fresh by launching Walmart to Go, a same day grocery service in select U.S. cities.

Regardless of Amazon’s potential threat to grocers, bricks-and-mortar retailing isn’t going to go away anytime soon. Some traditional

retailers, such as Walmart and Macy’s, are using their stores as fulfillment centres as well as places to shop, while the “click and collect” model is showing great promise for several grocery chains in the U.S., mirroring its success in Europe.

The Kantar report says that, although the balance will shift more heavily to online, bricks-and-mortar will still dominate, at least for the short term.

The question is, how much erosion of their crucial centre store sales can grocers sustain without having to ramp up an online business or to completely re-oriented their business model to a predominantly fresh one.

While retailers have been focusing their energies bulking up to fend off Walmart and Target, Amazon.ca, with its focus on convenience and low prices, may just have quietly taken the inside track with the consumer.

Common ground with suppliers In what may be a major disrupter to the traditional vendor/retailer relationship, Amazon has set up shop inside the warehouses of Procter & Gamble (P&G), according to the Wall Street Journal.

P&G’s warehouse and distribution networks. P&G loads the products onto pallets, and passes them to Amazon in a designated area. Amazon employees then package, label and ship them.

The program, called Vendor Flex, allows Amazon to reduce the costs of moving and storing goods by piggybacking on

The article says Amazon has similar arrangements, or is in discussions with, a number of other key suppliers.

Online shopping in Canada of households are currently shopping online – up 25% from previous year

37%

36% 40%

household $332 average 1.3% spending online, per year Source: Nielsen Homescan, 52 weeks ending June 29, 2013

20

November | December 2013

of households shopping online are purchasing food

of households shopping online are purchasing health & beauty products

of CPG sales in Canada

AMAZON: THE WORLD’S

BIGGEST VENDING MACHINE With the New York Times calling Amazon’s go-to-market strategy “scorched earth capitalism,” marketing guru Tony Chapman says retailers can survive by giving shoppers something they can’t get from a dot-com: Real people and face-to-face interaction.

grocerybusiness.ca

Tony Chapman

Clicks, Bricks, Big Box, Specialty, Premium, Value, Discount, High Street,

Shopping Mall, Full Service, Self Service… Marketers have a name to describe every type of offering. And analysts have their descriptors for the overall marketplace: saturated, hyper-competitive, price-driven and confusing.

However, the only thing that truly matters is how consumers value

their shopping experiences; and in almost every occasion their value proposition will change. What combination of convenience, price,

or shopping simply as a social interaction, matters most? Is this a solo

expedition, or are they shopping for friends or family? Are they shopping for a gift, or something for themselves?

November | December 2013

21

This is what makes driving traffic and basket

so difficult. If you don’t know what the con-

sumer values on that shopping occasion, how can you put your best foot forward? How can

you ever manage inventory, labour, marketing and location for true operational efficiency?

There is one retailer that has made an art

form out of knowing what each consumer

values. Amazon.com not only puts its best foot forward, it is smashing its footprint across

and where they can bring each consumer a

personalized snapshot of what they covet. Offer significant discounts to other online or high

street retailers, and reward your top customers with free content, hardware and shipping.

Amazon also deploys mobile price-compar-

ison apps that reward the shopper for kicking tires at other retailers, as long as they end up buying the product at Amazon.

Rather than being one of many that sells

every retail category. What started as an online

Apple tablets, Amazon created its own tablet:

snowball with few, if any, indiscernible limits

on the way.

bookstore 20 years ago, has become a runaway to growth. It is picking up new customers, new categories and new markets at an unprecedented rate:

What Amazon’s got »» 160 million customers »» 20% growth »» 10% of North America’s e-commerce sales »» Engagement & value metrics that shatter eBay, Google, and Facebook Amazon’s traffic and basket strategy is simple:

Use competitive intelligence and data to create the world’s biggest, most efficient and price-

competitive “vending machine.” Do it all online where there is a significant cost advantage,

22

November | December 2013

the Kindle Fire. A phone and desktop TV box is Amazon has acquired dozens of online

retailers, and its goal of having a warehouse

without people has motivated the company to

buy productivity firms like Kiva Systems, which manufactures robots that move items around the warehouse.

In the last fiscal quarter, Amazon launched

in India, expanded its grocery business in

Canada, opened a website to sell high-end art, and announced the creation of two television

hWill h Amazon’s insatiable appetite to cut costs and pass those savings on to consumers remain its obsession? Yes.

hWill h Amazon’s ability to drink data from a

firehose to customize and shape today and tomorrow’s offering continue? Yes.

hWill h Amazon’s footprint continue to smash categories, marketplaces and competitors?

Yes – without exception.

Your key to survival is to strike at Amazon’s

underbelly. You have to give the shopper

something they can’t get from a dot-com: Real people and face-to-face interaction.

You have to steep your offering in person-

alization and differentiation, with unique

products, services and experiences. You have to offer each consumer a compelling reason

to visit your store and, more importantly, buy from you at a price you can still profit from.

Then, and only then, can you unplug the

series. In addition, Amazon’s Web services

vending machine.

of thousands of technology companies,

Tony Chapman is founder and CEO of advertising agency Capital C, and co-founder of online research agency Fresh Intelligence, and social media agency Lola.

division handles the computer infrastructure universities and government agencies, and it generates 17 per cent of its revenue selling advertising on its website.

If you are in Amazon’s path, can you survive?

Let’s do a reality check.

Changing channels

While still in its infancy in Canada, omni-channel retailing is breaking down the barriers between bricks and clicks to enhance the shopping experience By Sally Praskey

Omni-channel retailing: With the brand as

retailing, as the Big Five traditional grocers –

“dark stores,” or dot-com stores, that fulfill

retailing strives to deliver a seamless experience

– battle it out for digital supremacy. Although

Tesco piloted a service allowing consumers to

a hub, omni-channel (or multi-channel)

at every customer touchpoint – in-store,

online, mobile, digital kiosk, television, radio, direct mail, catalogue, or any other available shopping channel.

Rapidly evolving technology and an increas-

Sainsbury’s, Tesco, Morrisons, Asda and Waitrose most of these retailers have offered online

grocery shopping for several years, it has only

been in the past few years that they’ve ramped up their infrastructure to accommodate multi-channel retailing.

a quarterly report issued in August that its

Shoppers want to be able to purchase their

and bricks’ strategy, accelerating investment in

groceries in many different ways, whether it be on-the-go, at home, in the store, or through a

combination of bricks and clicks – for example, buying online and picking up at the store or

elsewhere, known as “click and collect.” Grocers are scrambling to meet the needs of this new

multi-channel formats “remain central to its ‘clicks technology and infrastructure to make shopping

more convenient; allowing customers to shop for

what they want, when they want it.” Asda expects that 75 per cent of its customers will shop

through multiple channels this Christmas.

grocery retailing is British behemoth Tesco PLC,

multiple, seamless channels.

homes a week and boasts some 200 click-and-

The U.K. is ground zero for omni-channel

grocerybusiness.ca

in their communities, such as schools, libraries

and sports centres. It has also introduced “Scan as you Shop” in several of its larger stores.

“The aim has to be a seamless blend between the stores and the digital business”

Perhaps the most advanced in omni-channel

customer, making the transition from selling through separate and distinct channels to

pick up their groceries from convenient locations

For example, Walmart-owned Asda confirmed in

ingly demanding consumer are fuelling a growing trend to omni-channel retailing.

grocery orders but have no customers. Recently,

which delivers food to more than half-a-million

Matt Atkinson Chief marketing officer, Tesco

collect stores – and counting. It also operates six

November | December 2013

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Can Canadian retailers deliver the goods?

Grocery Gateway

Tesco is turning its bricks-and-mortar stores into “leisure destinations”

Canadian grocery retailers have lagged behind their European counterparts when it comes to omni-channel retailing. But Grocery Gateway, owned by Longo Brothers Fruit Markets, is one of the few players of note in the online arena, however, it has remained a regional entity.

Walmart.ca Although the country’s largest grocer has

struggled of late with flat sales and a costly

retreat from its Fresh & Easy chain in the U.S.

wherever they want,” says the press release about the Hudl tablet.

Tesco is not turning away from its bricks-and-

market, Tesco is investing heavily in digital. In its

mortar stores, but rather, is turning them into

that establishing multi-channel leadership in all

example, it acquired the restaurant group

latest interim results, CEO Philip Clarke noted

of the retailer’s markets is one of its top three

strategic priorities. “We have continued to invest in improving the integration of our customer

offer across all of our store formats and channels,” he said.

The first to introduce grocery home shopping

and supermarket drive-throughs (click and

collect) in the U.K., as well as a virtual store in

South Korea, Tesco recently introduced a specially designed, affordable seven-inch tablet that

offers instant access to its full range of digital

“leisure destinations.” Earlier this year, for

Giraffe to incorporate casual dining into some of its larger stores. It is downsizing some

stores’ trading areas to incorporate gyms and soft play areas, while others offer economical

It’s going head-to-head with the formidable Amazon.ca site which recently launched a grocery store with more than 15,000 non-refrigerated dry grocery products.

beauty treatments. “What stores are best

While neither delivers fresh food in Canada, yet, they both do in the U.S.

said chief marketing officer Matt Atkinson in a

Walmart is also testing same-day delivery in the Greater Toronto Area in a pilot project with Canada Post called Delivered Tonight.

for are the things you can’t replicate online,”

speech to the British Retail Consortium earlier

this year. “Our stores should be the hubs of the communities they serve.”

In other words, entertain customers when

services, all in one place. “The move is part of

they choose to go to the store, but offer the

customers can shop whenever, however, and

when they don’t.

Tesco’s multi-channel strategy, ensuring that

Walmart Canada, without fanfare, has begun selling grocery items, including non-perishable foods online, as part of its strategy to deliver an omni-channel shopping experience.

convenience of alternative shopping channels

E-commerce on the radar Dwight Konings, vice-president, program innovation and commercialization, Advantage International, says that, based on interviews the company conducted for its Advantage Report annual survey of major grocery/mass/club/drug retailers, e-commerce is “definitely on the radar for some,” although other Canadian retailers just don’t see it.”

grocerybusiness.ca

Konings recently returned from a conference in London, Eng., where he talked to people who rarely visit grocery stores anymore because they are fulfilling most of their shopping needs via e-commerce. With Canada’s large urban population, he believes a similar business model will work here, as well.

November | December 2013

25

Canada’s top home coffee brands1 are now available in a new single serve format compatible with Keurig® K-Cup® Brewing Systems!2

MAXWELL HOUSE is the #1 home coffee brand in Canada1 Available in three varieties: • House Blend – #2 SKU in On-Demand3 • Decaf – #1 On-Demand decaffeinated SKU3 • Dark Roast – #3 R&G SKU in mainstream segment5

NABOB is the #2 home coffee brand in Canada (#1 brand in On-Demand3) with a 23% share of the premium segment1 Available in three varieties: • 100% Colombian – #1 SKU in On-Demand3 • Breakfast Blend – #3 SKU in On-Demand3 • Midnight Eclipse – award winning variety4

GEVALIA, originally from Sweden, is a premium brand currently only available in On-Demand Available in two varieties: • Signature Blend – full of body and perfectly balanced • Dark House Blend – savoury, woody flavour profile 1 Nielsen – Dollar Sales – All Sales – GB DR MM – Total Coffee – 52 Weeks ending June 02, 2013.

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4 International Taste and Quality Institute – Superior Taste Award, 2012 – www.itqi.com 5 Nielsen – Dollar Sales – All Sales – GB DR MM – R&G Coffee – 52 Weeks ending June 02, 2013.

START SHIP: FEBRUARY 3, 2014

M

Grocery Business magazine and TEN81 Lifestyle Inc. invited a group of Millennial consumers as well as some of the industry’s leading retail and consumer packaged goods executives, to discuss shopping attitudes and preferences. Learn how this health-conscious, informationhungry and community-minded generation is impacting the future of grocery retail

Price vs. Assortment

grocerybusiness.ca

Marketing to Millennials

What Millennials Want The Future of Retail

Ethnic Foods

Shopping Habits

Meals to go

November | December 2013

27

M

Millennials Defined: Members of the Millennial generation (also known as Generation Y, or Echo Boomers) were born between 1980 and 2000, and represent about 30 per cent of the Canadian workforce.

Shopping Habits

How do you typically shop for groceries?

MODERATOR

Kate: I try to plan meals and shop with a list. I do one big grocery shop on the weekends, and go back to the store twice more during the week for small items.

Jana Masiewich, Director, lifestyle marketing, TEN81 Lifestyle Inc.

James: I might go to the grocery store six times in a week on my way home from work, depending on what I want to eat that day. I do try to buy the essentials every one or two weeks.

Michelle: I like to plan my grocery shopping, but if I have cravings I will stop somewhere on the way home and buy more things. I could drive out to a big box store, but I’d rather shop somewhere close my home, downtown.

INSIGHT

Where do you prefer to grocery shop?

Jesse Jones: Consumers want to hear directly from the brands they’re spending their money with, and the digital space has helped to break down some of the walls between brands and consumers.

I think there’s a real opportunity for brands to understand that, in order to connect to this generation, you really have to humanize your approach.

Kate: Fortino’s is within walking and driving distance from our new house. It’s beautiful and has really good quality breads, locally sourced meats, and a really large organic section.

James: I recently moved into a new area of the city, so I’m still discovering the standard grocery stores plus the delis and fresh bakeries. But I still sway towards Loblaws because I’m a President’s Choice fan. I also like to go there to do a bulk shop, and because they have a deli and fresh bread.

Michelle: I go to various places to get various things. I live downtown, so I will go to the express-sized Loblaws or Metro stores to buy basic stuff. I also head to Pusateri’s or Whole Foods at some time during the week for organic and healthier meals. I also like the Healthy Butcher for organic meat.

Kate: For me, bread has become almost an indulgence. It’s something that I look forward to but I want it to be good, so I don’t buy the sliced whole wheat bread anymore; I buy more expensive fresh baked bread.

THE MARKETERS Paul Del Duca Former general manager, Ontario Sobeys Canada

28

Jesse Jones President & chief innovation officer TEN81 Lifestyle Inc.

November | December 2013

Peter Neal Co-owner Neal Brothers Foods

Cheryl Smith Executive vice-president, sales & merchandising Parmalat Canada

Lisa Zdunich Director business development Tree of Life

Price vs. Assortment

Ethnic Foods

James: I’m just starting to learn more about organics, but I’m wary about paying triple the price for something I don’t know that much about.

Michelle: I cook a bit of everything. I like Mexican food, and I do a lot of Asian stir-fries because they’re fast. My background is West Indian/Caribbean, so I do some things in that genre. But it can take a lot of prep work – like making roti or curries. I shop the ethnic aisles of mainstream stores because it’s more convenient than going to an ethnic food store.

Does price influence your decision on whether to pay more for organics or premium products?

Michelle: I usually will pay a premium price for organic products. I’m slowly educating myself towards a healthier lifestyle, so you will see me in a store with my smartphone comparing brands and if someone recommends the more expensive one, I would probably buy it.

Kate: When it comes to toilet paper, toothpaste, laundry detergent and other basics, I shop the sales.

Paul Del Duca: It sounds like this group is a little more inclined to look at food less as a commodity purchase, versus an older generation that is buying for price and planning the meal around what’s on sale.

Cheryl Smith: What I’m hearing is that the assortment is critical, which is why maybe some of the discount channels don’t appeal as much because there’s a lack of assortment there.

What types of food do prepare at home?

James: The deli sections at grocery stores could be improved with the types of meats and cheeses you’d find at a Polish deli or at local markets.

Are traditional grocery stores beginning to offer more authentic ethnic food choices?

Lisa Zdunich: I think retailers are starting to understand their ethnic sections because they’re getting bigger and better. But what was once considered ethnic, Indian and Thai, for example – really aren’t today.

Peter Neal: When we were at the SIAL show in Paris last year, people were talking about ethnic foods, but taking more of a western approach to it by having ethnic products made locally using local manufacturers.

Lisa Zdunich: Many of the premium brands don’t necessarily need to discount. There is loyalty amongst people who want a certain brand.

They will purchase it if it’s a higher quality product, a trusted brand.

THE MILLENNIALS Michelle Thansingh Age: 26 Profession: Marketer Residence: Downtown Toronto Lifestyle: Works long hours; likes discovering new restaurants, attending city festivals and working out at the gym.

Favourite Retailer: Shoppers Drug Mart.

grocerybusiness.ca

James Savage Age: 24 Profession: Financial Services Residence: Downtown Toronto Lifestyle: Works long hours; likes discovering new restaurants, exploring city neighbourhoods, escaping to cottage country on weekends, running and skiing.

Favourite Retailer: Apple.

Kate Robichaud Age: 32 Profession: Real Estate Agent Residence: Burlington, Ont. Lifestyle: Married; busy mom to a toddler while she juggling work with family responsibilities such as cooking healthy family meals Favourite Retailer: Loblaws and Real Canadian Superstore.

November | December 2013

29

ls

Meals to go Paul Del Duca: Grocers are going down the path of offering prepared meals. Are you interested in home meal replacement options?

Kate: Yes, but it goes back to the information… do I know what’s in it and how it was prepared. I want to make sure that it’s healthy. I’m pleasantly surprised to find that Fortinos is offering me more than chicken wings and fries.

James: I will occasionally buy a whole chicken at the prepared food counter, but I will usually get take-out from some sort of quick restaurant where you can drop in and buy prepared food. I would definitely be more inclined to buy a fresh sandwich [at a grocery store] if it was put together for me right on the spot, like they do at a sandwich shop.

Adventurous Eaters

The most diverse generation has the most diverse tastes

87

Photography by Rodney Daw

INSIGHT Cheryl Smith: It’s a huge challenge.

You’re giving up real estate for some niche products for assortment. But they may take shelf space from much higher turning products with broader appeal.

You could be reducing your dollar sales per square foot by increasing the assortment. Manufacturers aren’t happy, and retailers aren’t happy with that. But if you don’t offer assortment, consumers will quickly move on to shop somewhere that does.

%

88%

interested in trying new foods

Willing to splurge on a nice meal even when feeling pinched

About TEN81 Lifestyle TEN81 Lifestyle Inc. helps brands create an authentic connection with Millennials by understanding this demographic’s activities, interests, opinions and passions.

The company begins with meaningful insights to create strategies using digital, social and mobile media. Public relations helps build awareness among key influencer groups, Jesse Jones and sponsorship opportunities allow brands to speak to audiences and to drive business across multiple platforms.

“TEN81 helps brands integrate themselves with more authenticity on multiple levels within the lives of consumers,” explains president and founder Jesse Jones. “If you value and care for the consumer, you will have that value and care reciprocated.”

30

November | December 2013

ten81.com

Marketing to Millennials

Decoding the Millennial Mom

What does it all mean?

Declining Loyalties

Pressed for Time

Millennials have been described as being driven by “cravings, cost, and convenience.”

Time is a major factor for Millennials who often choose food away from home.

Living in the Moment

Information-Hungry

Compared to earlier generations, Millennials tend to make more spur-of-the-moment food choices. They are “always-on” and rely on their networks for advice on where and what to eat.

Millennials love knowing the story of where their food comes from and how it was produced. They use their phones to help them shop in the aisles.

Desire Variety and Authenticity

Eat Anything Anywhere

According to the Center for Culinary Development, Millennials “hanker for authentic diversity” and global cuisines (but also love mashups). They enjoy intense, extreme, and unusual flavors and textures.

Just as Millennials do not distinguish working at home from working “at work,” they believe that all foods are appropriate for all settings.

1

2

3

Offer Social Dining Experiences

More Handheld Foods

Empower Millennials as Influencers

30

Regularly consume certified organic foods

»» MMs are interested in cooking even though she may not know how. Because she is timestressed, retailers and brands can help her by providing easy and convenient meal planning suggestions. »» Despite the trend to online shopping, MMs enjoy shopping – a great opportunity for retailers to engage her in ways she can share with her online community. »» While her kids are literally growing up in an online world, they enjoy the hands-on experiences stores provide. Retailers will need to keep kids engaged with fun and colourful displays and try-before-you-buy opportunities, however.

Business Opportunities

%

In her role as director of marketing for the Frozen Business Unit at Sofina Foods, Linda Fox has come to the know Millennial Mom well. Canada is undergoing a mini-baby boom and Millennial Moms (MM) are looking for guidance navigating this new life stage, says Fox, who shares her insights with Grocery Business: Linda Fox

55

%

Like communal dining experiences

41

%

Purchase from traditional grocers

»» MMs spend a lot of “me time” online, reading product reviews and seeking input from friends and family. She’s very visual and looks to websites such as Instagram and Pinterest as valuable sources of information. »» Brands can help her by providing curating tools for the overwhelming amount of information she finds online. For example, Top 10 lists and templates for storing household tips and recipes. »» She values family time and wants to put more than just food on the table. The MM is willing to invest in creating an interesting meal if that’s what it takes to bring her family together. »» MMs expect brands to listen to her, as a trusted friend would. It’s important to know that her experiences, good or bad, will be shared with her online community through social media.

Grocery Business and TEN 81 Lifestyle are rolling out a series of videos recapping the key insights from the Millennials Forum.

Watch them at grocerybusiness.ca

Innovaro: Millennials and Food

grocerybusiness.ca

November | December 2013

31

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TASTE MAKER

Despite the increasing commoditization and online availability of groceries, specialty food retailers are resonating with customers through a combination of highly personalized service and unique offerings

FIne Dining Mark McEwan

BY ANGELA KRYHUL

A

customer recently walked into the McEwan store in Toronto and asked for fresh mulligatawny, a curry-flavoured soup he’d enjoyed in England but couldn’t find at any of the city’s supermarkets.

McEwan didn’t stock it either; however, the store general manager called upstairs to the second floor to see whether the team of professional chefs – who daily prepare hundreds of restaurant-quality takeaway foods – could do a special order. Twenty-four hours later, a fresh supply of the classic soup was ready to be picked up by the customer.

This is the restaurant-style “fine dining comes home” vision that has guided the McEwan store through growing pains and market challenges since renowned Canadian chef Mark McEwan opened it in 2009.

A successful restaurateur, cookbook author and television personality, McEwan decided four years ago to add grocery retailer to his long list of entrepreneurial accomplishments. One of the first things he did was to turn the traditional concept of grocery store design on its head by showcasing dozens of restaurant-quality, prepared gourmet foods right at grocerybusiness.ca

comes home

the front of the store where traditional grocery stores typically locate their produce departments.

The store made a huge media splash when it debuted and was hailed by foodies, professional chefs, tourists, and a clientele that doesn’t blink at spending $500 for a bottle of aged balsamic vinegar.

However, grocery retailing turned out to be a steep learning curve for McEwan, who very quickly realized how challenging and extremely competitive a business it is.

“It was much more difficult than I had imagined it to be. It’s a very complicated world, and there are a lot of balls in the air,” McEwan says. “Bringing the store along the way I want it to evolve has taken constant effort. And not everything has been as successful as you would want, so you change it and morph it . . . and just keep moving on every single front.”

Three years ago, McEwan recruited George Bachoumis to be his store general manager. A specialty store veteran with several years of

November | December 2013

33

Customers can buy McEwan-branded cooking utensils in the store, as well as chef McEwan’s latest cookbook and a McEwan-branded five-year-old barrel-aged balsamic vinegar imported from Italy. People are taking home fresh McEwan-branded packaged foods – such as pasta, lasagna, soup, and various rubs and spices.

In fact, the McEwan’s Own private-label program is about four times the size it was in 2009.

McEwan

presents a truly integrated brand strategy

Above: The McEwan's Own private-label; McEwan's "restaurant meal replacement" department

experience working for Toronto-based Bruno’s Fine Foods and Pusateri’s Fine Food, Bachoumis saw immediately that the McEwan store needed to broaden its customer base if it was going to be viable for the long term. “The image of this place was that it was so expensive. So I went through a price restructuring, just to make sure we were competitive.”

Bachoumis placed a suggestion book at the front of the store so that customers have an easy and immediate way to give feedback, and he broadened the offering so that selection and price points are more accessible. The store stays on-trend – most recently by tripling its organic produce selection, and integrating vegan and gluten-free options throughout the store. Bachoumis has also introduced an olive oil and balsamic vinegar tasting bar, as well as a fruit station that lets customers select their preferred pre-cut fruits.

The star of the show remains the prepared-foods area or, more accurately, the “restaurant meal replacement” department.

Everything is made fresh, in small batches, throughout the day.

Whenever any of the dozens of dishes runs low, a call goes upstairs and the kitchen starts prepping a fresh batch, just as any restaurant would.

According to Bachoumis, customers who’ve eaten at a McEwan

34

November | December 2013

restaurant or have seen him on television come to the store to “experience Mark.” There’s no shortage of opportunities to sample the McEwan brand in the store.

Customers can cook at home the same gourmet burger famously served in McEwan’s Bymark restaurant, or the same pizzas that are served at Fabbrica restaurant. “I have a full team of people who do nothing but cook all day long, so if you buy our stock, for example, or our soup, our Bolognese sauce, or sausages from the butcher shop, it’s the same quality and the same recipes that we use in the restaurants,” McEwan says.

Bachoumis is starting to see a shift in store clientele. There are more young mothers perusing the aisles, and busy professionals regularly drop in to grab ready-made breakfasts. Families sometimes come in and push together the café tables so they can share hot meals from the curry bar and selections from the salad station. Time-pressed customers are picking up prepared items, such as marinated whole chickens, that can simply be popped in the oven when they get home. And the store has downsized many of its prepared dishes to medium and singleportion sizes, while offering more dishes that appeal to families with young children. For example, the store offers its famous truffled mac ‘n’ cheese alongside a plain, kid-pleasing version.

“We don’t want people to only come in for special occasions or at holiday times. We want them to be able to come here 365 days of the year and find everything they need,” Bachoumis explains.

“People see the words ‘fine food’ and think that means high prices. I think we’re more mid- to high-end now.”

McEwan says he’s managed to maintain a high-end restaurant level of quality without the sticker shock: “I think you would find a softer edge to the store today, but you wouldn’t find any less

The McEwan group

George Bachoumis, store general manager

complexity in terms of the offer. We’ve struck a very nice balance between high-end, everyday food, grab and go, prepared food and special occasion, so that people can relate to us at a high frequency.

And that’s what we hoped for.”

The formula appears to be working. McEwan says store sales are up 15 per cent compared to a year ago.

Ever the entrepreneur, McEwan is talking to other specialty retailers across the country that would like to

carry McEwan-branded foods. He’s also scouting out potential locations in mid-town Toronto where he can open a second, 15,000-sq. ft. McEwan store.

Meanwhile, McEwan is watching with interest as the major grocery chains beef up their home meal replacements and position them as a high-quality alternative to home-cooked meals. According to McEwan, the majors will find it challenging to live up to that promise while responding almost instantly to market trends and customer demands.

“I think the Achilles heel of the grocery business is that they’re not very good at that. It’s a big challenge for them to change the concept of how they operate, because it’s a whole different world when you get into the production of really high-quality prepared foods, made in small batches and available fresh every day,” McEwan says.

“Every single day, we’re adding new elements to the store. We’re about genuine production of food on a chef level, and having that very tight relationship with the customer. And having a product that actually lives up to what you say it is.”

McEwan Store Established: 2009 Size: 22,000 sq.ft.

Store staff: 150 Store brand: McEwan’s Own Services: Personal shopper; home delivery; catering; floral; personal and corporate gifts.

Restaurants: North 44 Bymark ONE Restaurant Fabbrica Nobel Burger Bar Fetta Panini Bar Catering: North 44 Caters Books: Great Food at Home Fabbrica Cookware Line: Mark McEwan by Fresco Television: Top Chef Canada The Heat Superstar Chef Challenge

McEwan’s in-store Farmers’ Market

One of the reasons why urban farmers’ markets have been so popular recently is that people love to discover new and unique products. The McEwan store regularly presents its own version of the farmers’ market where local artisans have the opportunity to demonstrate and tell the stories behind their products.

A notable success story is Toronto-based Laura Slack Chocolates. Slack demonstrated her fresh, handmade luxury chocolates in-store last December. Customers loved the product so much that McEwan switched chocolate suppliers and handed Slack a prominent, front-of-store display space.

Stasis Preserves, Whitestone Cinnamon buns, De L’Aubier sap water and Grateful Bread are among the brands that have tested product successfully enough to make it onto McEwan store shelves.

“It’s a win-win to have artisans such as Laura in our store,” McEwan explains. “It’s a great incubator for new lines, it’s very entertaining for the client, and creates a wonderful buzz in the store.”

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November | December 2013

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TASTE MAKER

SPECIALIZING IN GROWTH There’s lots of action in the specialty food category these days. Savvy grocers know that offering consumers unique products can build loyalty and margins.

Ann Daw, the president of the Specialty Food Association shares her insights on trends and growth drivers.

Karen James: What’s driving the double-digit growth of the specialty food category?

Ann Daw: One of the main growth drivers is the younger consumer who is very informed about food trends and eager to embark on what we call taste adventures. This consumer is looking for stories about the people behind the products, and for foods that have a healthy halo.

The Millennials are the most exposed generation in terms of food from other cultures. Plus, they are interested in knowing where their food comes from and consciously seek out locally-produced products with top-quality ingredients.

They enjoy talking about their food discoveries and are eager to share their finds with friends through social media.

Another driver for all age groups is that, in times of economic downturn or slow recovery, consumers pull back on big-ticket purchases, but will indulge in small ways like with a premium cheese, chocolate or cooking sauce.

36

November | December 2013

Ann Daw, President Specialty Food Association

Those who are dining out less often look to specialty food to add panache to their dining and entertaining at home, or to use as affordable gifts.

KJ: We noticed at the New York Fancy Food show this summer, that traditional specialty food items and health-focused foods are beginning to merge.

AD: Yes, vegetables are showing up in traditional snack foods, not only in snack chips but also in sweet items such as cookies.

Recently, we’ve seen spinach-nutmeg-shortbread cookies and ice pops made with kale. Alternative grains are a growing trend and, like vegetables, they are turning up in sweets. For instance, quinoa in chocolate bars, and chia and hemp in cookies.

KJ: Are retailers doing enough to capitalize on the growth of the specialty food market?

AD: It depends on the type of retailer and the needs/ tastes of their customer base. A small grocer is often

26% +22% +15%

+

74%

GROCERY CHANNEL SPECIALITY FOOD GROWTH 2010-2012

of consumers buy speciality foods in supermarkets

in a position to take a chance with a new product or line and see how it does, whereas large supermarket chains have more limitations and rules around shelf space.

In either case, consumer demand drives a lot of decisions. Consumers want to buy local products and stores should be encouraged to support their local vendors, no matter the size of the retailer.

Retailers should make sure they have active social media platforms and ways for their customers to share photos and information about favourite food finds and recipes.

Also, “Meet the producer” sampling events are a great way to boost interest and sales by introducing shoppers to the person behind the products who can share their passion and the craft and joy they bring to their food.

PROJECTED GROWTHALL CHANNELS FOR 2013 Source: Mintel

FANCY FOOD SHOWS Specialty Food Association specializes in bringing buyers and sellers together We have several key programs to bring buyers and sellers together at our Fancy Food Shows, and throughout the year. We have numerous local initiatives where all aspects of the trade – producers, distributors, brokers and retailers – have the opportunity to meet.

One of our most popular Fancy Food Show programs is Business Builders, a form of speed-dating for the specialty food industry.

Our team pre-arranges one-on-one meetings with buyers and exhibitors the day before the exhibit halls open.

We also facilitate private meetings throughout the show.

To help navigate the complex and competitive marketplace for specialty foods, we present one-day workshops on how to develop successful go-to-market strategies. The events bring together industry experts and specialty food practitioners to share insights on how to prepare for a buyer meeting, what specialty stores and supermarkets are looking for, and how to work with a distributor.

Looking for new and unique products? Attending the Fancy Food shows is a great place to start.

The Winter Fancy Food Show, San Francisco, January 19-21, 2014

83%

of specialty food consumers use social media

grocerybusiness.ca

SPECIALITY FOOD GROWTH 2010-2012

The Summer Fancy Food Show, New York City, June 29-July 1, 2014

Source: Mintel

November | December 2013

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TASTE MAKER

TOASTING TASTE Raincoast Crisps aren’t just crackers; they’re a specialty item, conversation starter and category game changer

By Noelle Stapinsky Lesley Stowe

When Lesley Stowe pulled her first batch of Raincoast Crisps out of the oven in 2000, it was a recipe she’d developed for her catering business – something she thought would go nicely with a smoked salmon appetizer. But little did she know just how big her doublebaked ultra-thin gourmet breads, packed with dried fruits and nuts, would become… or that she had just invented a new segment of the cracker category.

Stowe admits that she’s always loved food and experimenting in the kitchen, but it was La Varenne, a Parisian cooking school that really drew her into the industry. And after studying there for a year, Stowe returned to Vancouver to start up a small cooking school.

Salty Date and Almond Raincoast Crisps – which Stowe’s team calls “the man cracker” – won a prestigious sofi Gold Award from the Specialty Food Association for Outstanding Cracker at the 2013 Summer Fancy Food Show. grocerybusiness.ca

“I wanted to do something more and Vancouver was lacking in specialty food stores,” says Stowe. That’s when she opened Lesley Stowe Fine Foods, a 2,000-sq.ft. kitchen and storefront from which she ran her catering business and offered prepared meals, specialty foods, cooking classes and tasting sessions. This is where she also started retailing the Original Raincoast Crisps. “But as fast as we could make them, they were flying out of the store,” says Stowe. “Then we thought we’d try selling them to independent grocery stores in Vancouver.”

It didn’t take long for the local grocers to catch on – and for Stowe to fold her catering business so that she could focus solely on crisps. Stowe realized that to gain an even bigger reach with her products, she needed a distributor.

Enter Neal Brothers Foods, an Ontario-based distribution company owned by Peter and Chris Neal.

Today Neal Brothers distributes Raincoast Crisps throughout Ontario, Quebec and the Maritimes. “Now there are a number of copycat products, but Lesley’s are the original,” says Peter Neal. “She’s truly an inspiration, an innovator.

Her product is the one to be measured against.”

Raincoast Crisps got its big North American debut when Whole Foods opened in Vancouver.

Raincoast Crisps have made Oprah’s O List and were recently featured in Martha Stewart’s Whole Living magazine.

The crisps were such a hit in Whole Foods’ B.C. and Ontario locations that the retailer decided to list her product across North America.

For Stowe, staying on top of trends – she recently launched a wheat-free Oat Crisp that plays into the gluten-free trend – and sourcing quality ingredients for her products is key, but maintaining the “handmade” process of making the artisan-style crisps is imperative. Now housed in a 27,000-sq.ft. facility in Richmond, B.C, Stowe manages a staff of 80 that produces and hand-packs the finished product.

Stowe is eyeing the European market, and WestJet recently selected the company’s Raincoast Crisps and StartWell Cookies as part of its complimentary inflight snack program.

What new tasty creations does Stowe have in store? “We’re looking at other things in the cracker category. I can’t tell you… I need to keep up the suspense.”

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R e g i s t e r

T o d a y !

CONNECTIONS,NEW PRODUCTS,TRENDS. M A Y

Y O U R

C A R T

RUNNETH

OV ER

, , If it s out there, it s in here.

FMI Connect is the new FMI Show, redesigned to connect the industry and inspire the future of food retail. From consumer goods to capital goods, fresh produce to fresh ideas, 900 of the world’s leading suppliers will be here with the latest innovations for you – plus a full educational program and plenty of networking opportunities. If it has to do with food retail, you’ll find it here. Register today at FMIConnect.net.

TASTE MAKER

CATERING TO THE NEW BOURGEOISIE

Jean-Michel Cabanes

Gascogne is broadening the specialty offerings at its five high-end retail stores to better target the post-boomer generation

By Peter Diekmeyer

“People realize that occasionally spoiling themselves with good food at home is far cheaper than alternatives such as going to a restaurant.”

— Jean-Michel Cabanes

grocerybusiness.ca

Jean-Michel Cabanes, president of Gascogne, is a typical Quebec baby boomer: Healthy, nattily-dressed and well-spoken, this 62-year-old specialty food retailer has built the company his father founded more than 50 years ago, into one of the province’s most recognizable brands by catering to people much like himself.

There’s no better indication of Gascogne’s influence on Quebec food retailing than the fact that, in recent years, all of the province’s major grocers have introduced the type of specialty products and services that Jean-Michel’s father, Francis, started providing decades ago. These range from premium pastries to artisanal breads, cheeses, meats, quiches, fine chocolates and food-service offerings.

With high consumer expectations, Cabanes is constantly being pushed to stay ahead of the curve.

“We are a destination store,” says Cabanes. “We need to give customers a good reason to come here. So we stock a variety of specialty products that bigger

players cannot efficiently market.” These range from low volume SKUs such as foie gras, to custom-prepared dishes made using premium ingredients (such as butter as opposed to margarine).

The company also has fresh bakery capabilities in all of its outlets. That means bread is not only baked fresh daily, but the dough is also hand-made each day.

The good news is that higher quality offerings command premium prices. For example, Gascogne’s house lasagne (which feeds two) contains a significant quantity of premium meat. However, the retail price of $20 is far higher than the tomato sauce version selling for just $4.95 at a nearby major grocery chain outlet.

Judging from the line-ups at the Ville-Saint Laurent outlet, customers appear to be willing to fork over the dough. “The economy here is a bit rough right now,” admits Cabanes. Health, too, is a major concern for both Quebec baby boomers and their adult children, whom Gascogne is increasingly targeting, says marketing director Chantal Laforest.

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GSW 2014 APRIL 6 AND 7, 2014, AT THE VANCOUVER CONVENTION CENTRE

APRIL 6 & 7, 2014 VANCOUVER CONVENTION CENTRE

GS W

GROCERY SHOWCASE WEST

Improving the in-store experience Marketing director Chantal Laforest has been paying close attention to in-store experiences, which are a key part of Gascogne’s marketing strategy: “We are selling pleasure. That means customer service has to be top-notch. This starts with employees, who, as the primary point of contact with customers, need to ensure that they feel they are getting something special.”

The visual experience is also key. “Food is consumed with all of your senses,” says Laforest. “That means it not only has to taste good, it has to smell good and look good.”

“Today’s boomers are getting older,” says Cabanes, a native of France, and who operates outlets in five affluent Montreal-area neighbourhoods: Westmount, Plateau Mont-Royal, Pointe Claire, Ville Saint-Laurent and Laval. “As a result, they don’t want to spend a half-hour walking around a big-box store to just pick up a baguette on their way home from the office. They want quality, service and a wide variety of premium choices.”

“Recent news about the dangers of sugar has hurt dessert sales,” says Laforest, who joined the Gascogne team two years ago. “As a result, we have been rebalancing our product line to focus more on savoury items.”

This rebalancing is playing out in Gascogne’s marketing efforts, which include a gradual rebranding of its corporate identity and brand name. Since March, Gascogne has been gradually shedding its old “Patisserie de Gascogne” banner, a process that should be complete by early 2014.

Laforest has also paid close attention to social media such as Facebook, in a bid to get closer to younger Quebecers – a move that has yielded surprising results. “I am amazed at the quality of feedback we are getting about all aspects of our offerings,” says Laforest. “But it is not just young people. All age groups have been participating.”

Cabanes says that, despite Quebecers’ increased focus on healthy eating, many are ready to check those feelings at the door when they come to Gascogne. “The public clearly recognizes the need to

grocerybusiness.ca

Special attention is paid to everything from store displays to designs, layout and colouring used in pastries and other products made on-site so that there is a cohesive brand experience for the consumer.

exercise more and cut down on junk food,” says Cabanes.

“So when they do indulge in desserts, they want the best.”

To meet that demand, Gascogne is investing a considerable sum to design its own premium dark chocolate recipe. This 75-per-cent cocoa mix (costing as much as $50 per kilo, compared to $15 for ordinary chocolate) will be manufactured in France, and end up as a key ingredient in Gascogne’s candy and pastries. Cabanes also intends to market the product separately as a premium private-label chocolate bar.

Cabanes got a good look at the Quebec bourgeoisie’s well-known ambivalence towards overdoing the health issue recently when Gascogne introduced a “diet” mille-feuilles pastry alongside its regular offering.

A contest was held to see whether clients preferred the healthy option or the rich regular one, for which the topping alone contains 600 calories. “Reaction on our Facebook page was surprisingly strong in favour of both,” says Cabanes. “We eventually decided to keep selling the two options. It’s not for us to tell clients what they ought to eat.”

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ACQUIRING DOMINANCE

RETAILERS ARE TURNING TO MERGERS & ACQUISITIONS IN THEIR QUEST FOR GROWTH

RECENT M&A ACTION Loblaw acquires T&T Supermarket for $225 million

Sobeys acquires Canada Safeway Inc. for $5.8 billion

Loblaw acquires Shoppers Drug Mart for $12.4 billion*

Metro acquires 55% stake in Adonis and its distributor, Phoenicia Products Inc. *Pending Competition Bureau approval

By Joanna Gibbons

The Canadian grocery sector has experienced robust activity in recent years, with megamergers, rapid square footage expansion and the arrival of new entrants.

This year, two large deals were announced – the Sobeys acquisition of Safeway and Loblaw’s purchase of Shoppers Drug Mart – which is continuing to put pressure on other grocers to increase market share through acquisition.

This mergers and acquisitions (M&A) activity is a strong indicator that Canadian retailing is

undergoing a massive shift not only in response to local competition but also because of the impact of American competitors Target, Walmart and now Amazon.

Organic growth is difficult to come by. As we’ve seen with the recent mega-mergers, M&A is critical in order to grow retailers’ market share.

The need to access new consumer segments, particularly ethnic consumers, is driving much of this growth.

The rising prominence of the ethnic consumer has been top of mind for grocers, with an

BRANDS MATTER MOST

CANADIAN FOOD RETAIL MARKET 37% 33%

2009

2012

Total Market Sales $82.4

Total Market Sales $89.8

19% 18% 14% 12%

12% 8% 8%

Loblaw

Sobeys

Metro

6%

8% 5%

The Canadian grocery industry has experienced significant disruption in the past decade and this is expected to continue as market conditions test retailers, who will look to M&A and financing activity in gain dominance in an increasingly competitive environment.

3% 3%

Canada Costco Walmart Jim Safeway Canada Canada Pattison Group

Other

As the chart shows, the Canadian retail grocery landscape was once dominated by a handful of key market players. However, with growth in the number of smaller and diverse retailers, the once untouchable giants have been losing market share, which has driven them to look for strategic acquisitions to grow their businesses.

November | December 2013

Despite the changing retail landscape, one thing remains clear: brands matter. Whether retailers are seeking growth through acquisitions or by partnering with established consumer brands at the operational level, brands will become a valuable tool in increasing their market dominance.

8%

6%

Sources: Macquarie Research, Canadian Grocery Retailing; CIBC World Markets Inc.

44

estimated 70 per cent of Canadian consumers’ spending growth expected to come from visible minorities. Acquisition is the quickest and perhaps only way to extend a retailer’s ethnic offering and to secure access to key suppliers so they can better service Canada’s fastest-growing consumer segment.

Loblaw’s pending acquisition of Shoppers Drug Mart, and Metro’s recent announcement that it will operate 18 Target pharmacies in Quebec, is driven by the need to be the retailer of choice for Canada’s aging population.

Giant Tiger is reported to have retained Goldman Sachs Group Inc. to explore the possibility of a sale.

Potential value: $800 million

Joanna Gibbons is a Vice-President and Director at Deloitte Corporate Finance Inc., and leads Deloitte’s Food & Beverage business for Corporate Finance in Canada.

On the Road Natural Products Expo East – Hit or Miss?

Over my 23-year career attending trade shows in North America and Europe, I’ve learned how important it is to narrow down the winning shows from the also-rans. So, when I’d heard that Natural Products Expo East was a show in decline, I decided to attend with an open mind and to check for myself.

Natural Products Expo East, held every autumn in Baltimore, Md., hosts more than 1,200 exhibitors covering categories ranging from organic, natural, functional and specialty foods, beverages, supplements, beauty, household and pet, and boasts more than 22,000 international visitors. Still, it has half the number of exhibitors and one-third the number of attendees as its sister show, Natural Products Expo West, held in Anaheim, Calif., each spring.

What I discovered is that if you’re a buyer, the Expo East show is not to be missed, and here’s why: • The ratio of attendees to exhibitors favours the attendee. If you’re a buyer, you have 66 per cent less competitive traffic to deal with; • The show is easy to navigate with new trends and products easy to identify; • Baltimore’s convenient proximity to Canada, the U.S. and Europe means the quality and variety of the exhibitors was exceptional. All major categories are covered, plus new and emerging ones.

Psyche up your sences.

1,300 exhibitors are ready to wow you in San Francisco

The natural product category continues to generate interesting new products, and some notable trends from Expo East stand out: • • • • •

GMO-free certifications New plant-based sweeteners and proteins Ancient grains-based products Gourmet natural foods Increasing variety of healthy snacks

While not generating all the excitement of Natural Products Expo West, if you are a serious buyer interested in natural products, I can recommend Expo East as a must-attend gathering.

KEN KWONG is the Vice-President of Sales and Marketing at New Age Marketing & Brand Management. The opinions expressed in this column are solely his own. ken@newagemarketing.ca, Twitter (@kenkwong) or LinkedIn.

Discover the craft, care and joy behind 80,000 specialty foods and beverages.

Meet 1,300 exhibitors from all over the world.

Enjoy the most delicious business trip of your life.

Be there January 19-21 Register now at fancyfoodshows.com Enter priority code WAD7

THE MIRROR REPORT: TURNING THE TABLES It’s the manufacturers’ turn to rate the retailers in The Mirror Report, the flip side of The Advantage Report.

By Sally Praskey Manufacturers are, for the most part, getting along just fine with their retailer customers. In fact, the majority of manufacturers think that relationships with retailers are improving, according to the latest Advantage Mirror Report, an annual survey of manufacturers conducted by Toronto-based Advantage. “From our qualitative research, we can see that a large number believe that relationships are strengthening,” says Paul Cussons, director, client

services – Canada, Advantage. “More than double of those polled feel this way versus the relationship weakening.”

But whether respondents thought relationships were stronger or weaker, the rationale behind their response was increased competition, be it from new retailer entrants into the market or pricing battles in key markets.

Interestingly, relationships in the grocery channel

November | December 2013

ICATION UN M

COMMI

G

ING IZ

RMATIO FO

HA N S RIN

T NT S RATE I JO

CO M

I

ST TRU AND 46

Y GRIT E T N

When you reflect on these relationships, what are the key drivers of a strong relationship between customer and supplier?

IN

U R’S B SINES E S TH

UNDERSTANDS OUR BUSINESS

G

IVING EACH R O D

We asked suppliers:

ENT TM

improved dramatically in Ontario over the past year, while remaining relatively consistent in the West, Quebec, and the Atlantic provinces. Remarking on the improved score manufacturers gave retailers in Ontario, Cussons says that this marked improvement can be traced to a stronger link in both communication and retail execution. “The retailers are putting more focus on joint planning. The vendors are then able to execute against those plans,” he says, “and this reflects positively in the scores.”

Respondents also perceived relationships as improving significantly in the club/mass and drug channels, but declining in the convenience and gas channel.

The top priority for manufacturers is still “implements agreed-upon business plans,” unchanged from 2012. “Manufacturers are looking for further stability in the relationship with their customers,” says Cussons.

Priorities For Account Support

1

Implements agreed-upon business plans

3

2

Stores execute promotional and retail marketing plans in accordance with commitments

82

1

3

Works productively with us to build profitable business for both parties

79

“It is important that both parties benefit from the relationship.

Some banners are more aggressive and do not care whether we gain from the relationship.”

“There should be a mutually beneficial relationship. With some banners we deal with now, there is almost no working relationship. We need some interaction to help drive mutual business, and trust is important.”

…ON TRUST AND INTEGRITY “First and foremost is integrity; they should do what they say and execute plans based on what they promise.”

“Transparency and trust are key drivers; when creating a new relationship, both parties should be open and do their best to align strategies.”

83

1

…ON DRIVING EACH OTHER’S BUSINESS

“Collaboration, a sense of partnership, a mutual businessbuilding admiration for one another, and an honest and open relationship.”

IMPORTANCE RATING

2012 2013 PRACTICE

MANUFACTURERS SPEAK OUT . . .

…ON COMMUNICATION “Communication and face time are key drivers; we can make business plans but without face time, nothing happens.”

“It comes down to having access to people and communicating with them as often as possible.”

…ON JOINTLY STRATEGIZING “The key is understanding each other’s businesses. Each party should be willing to go out of their way to help the other even if it is not necessarily in their best interest.”

Net Favourable Scores By Channel 2012

2013

2012

2013

35

32

Net Favourable (NF) Score

30

“They must be working to solve problems and capitalize on opportunities. Also, we must share as much information with each other about our strategies as we can.”

26 25

23 20

20

20

16

15

15 12

12

12

10

“The key is aligned goals, clear strategies, good understanding of what both parties want to achieve, and some collaborative thinking on how to achieve this.”

9

Founded in Canada in 1988, Advantage™ operates in more than 30 countries. Its jointly sponsored programs provide an ongoing industry benchmark for retailers and manufacturers to measure and track their relationships with key business partners.

5

For more information or to participate, contact Paul Cussons at 416-863-0685, ext. 170; pcussons@advantagegroup.com

4

Atlantic/Quebec

Ontario

West

Mass/Club/Value Convenience/Gas

Drug

GROCERY

grocerybusiness.ca

November | December 2013

47

PARMALAT’S

NASH LAKHA Alnashir (Nash) Lakha, president and CEO of Parmalat Canada, retires on February 28, 2014. His career with Parmalat and its predecessor companies, Ault Foods and Silverwood Industries/Dairies, spans 33 years. Previously, he was chief financial officer for Parmalat North America. Lakha is a Fellow member of the Chartered Institute of Management Accountants of the U.K., Chartered Global Management Accountant, Certified Management Accountant, and a Chartered Director.

EXIT INTERVIEW

Why did you choose to work in the grocery industry?

I moved to Canada from England to better my life, and would have worked for whatever company in whatever industry would hire me!

Silverwood Industries gave me my first opportunity. Thirty-three years later, and having survived three takeovers, here I am. I love the business. It is very dynamic – truly never a dull moment. And dairy is particularly challenging. It has hundreds of points of contacts on a daily basis, each with its own opportunities and challenges. The supplymanaged system adds another dimension to running the business.

How would you rate your performance during your tenure as president and CEO of Parmalat?

Parmalat Canada was historically a poor performer. It lacked focus, was organizationally bloated, and the business drivers were not fully understood. Innovation was slow and investments were not strategically allocated.

In order to transform the business and mindset of the organization, I put in practice what I had been emphasizing as CFO for years.

First, I reduced the executive team and changed some of the functional leaders. Next was to give the new executive team the courage to develop an ambitious new strategic plan and execute with a single-minded focus, while continually analyzing and understanding the drivers of success in the running of their various support functions, including the business channels (Retail, Food Service, Exports/Imports and Ingredients). Investing in our factories and brands was crucial.

Since I took over as CEO, Parmalat Canada

grocerybusiness.ca

has progressively had the best results in its history. Today, we are one of the largest CPG companies in Canada, with recognizable brands that have the best-selling nationally ranked item in each of the key dairy case categories. Within Parmalat worldwide, Parmalat Canada represents over one-third of the total group.

What was your greatest challenge?

Giving Parmalat Canada a new life. As you may recall, in 2004, Parmalat Canada’s parent company was embroiled in one of the largest crises/frauds in European business history.

At the time, I was the CFO guiding the organizations in Canada and the U.S. through unchartered waters. It was a real challenge to ensure there was enough liquidity to keep the business operations in Canada and the U.S. going while trying to recapitalize the Canadian business, and divesting non-core assets in both Canada and the U.S. How did you succeed?

The Italian government-appointed administrator who was put in charge of Parmalat global was extremely supportive, which gave me the authority to implement survival action plans without local interference. And, of course, the employees were instrumental; without their support, we would not have survived. They were used to my management style, having seen me operate as both a CFO and an unofficial COO, and that made for expedient execution of certain key decisions. The justice system was also helpful in unwinding a major inter-company transaction, which I considered was undertaken fraudulently by the parent company.

What is something not many know about you?

I was born on the shores of Lake Victoria in Tanzania, East Africa, and I speak Swahili, Hindi and Gujerati.

From East Africa but educated in the U.K.?

Tanzania was going through turbulent political times during my high school years, so my parents parceled me off to England, via Trinidad (spent a year there—what wonderful carnivals they have!), to complete my education. It was in England that I completed my formal finance education.

Why retire early, and what’s in your future?

I’d like to say REST, but that is not likely to happen.

It’s been a long journey, starting from a very early age. I do want to keep active, but not be a slave to business. I can now enjoy life a little bit, and be present and participate in the experiences of my two sons’ futures. I intend to be active with a charity I support, Bracelet of Hope, which supports orphans and fights AIDS in Lesotho.

I have been invited to remain on Parmalat Canada’s Board, and hope I will have an opportunity to be of service to other boards in the industry. And if nothing worthwhile pans out, I will go roam the Serengeti with the lions and elephants!

What will you miss most?

The people. I have been privileged to lead and work with a highly motivated executive and leadership team, as well as the full employee base, and a valued and respected external stakeholder group.

November | December 2013

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SHELF LIFE

THINKING OUTSIDE THE BOWL Boost your business by highlighting the new healthier choices in the cereal aisle

By Treena Hein The breakfast cereal category in Canada has faced many sales challenges over the past few years. Consumers are more likely to grab something quick at a coffee shop or fast-food restaurant, or bring something along to eat while they commute, rather than sit down with an old-fashioned bowl of cereal. But grocers who highlight the new super-nutritious offerings – and uses of cereal outside the bowl – can still grow their sales of this breakfast staple.

It’s a rush these days in the morning for most Canadians. Whether it’s parents getting their kids out the door or baby boomers heading off to the local curling rink, everyone is looking for quick and nutritious breakfast options. Portable items like yogurt, cheese strings and breakfast bars have been pushing cereals

grocerybusiness.ca

to the sidelines over the past few years.

Changing ethnic demographics and not always having milk on hand, are also contributing factors to slipping cereal sales, says Ipsos vice-president Kathy Perrotta.

But cereal makers, who represent some of the strongest brands in the food and beverage industry, are fighting back and producing just what consumers want. Shoppers are taking notice of today’s cereals, with extra antioxidants in the form of berries and dark chocolate, more fibre and protein, organic or all-natural ingredients, and exciting new flavours and formulations.

These days, Canadians expect their foods to multi-task and go beyond supplying basic nutritional needs, and cereal is no exception. Perrotta says Kellogg, for example, just got Health Canada approval for Vitamin D fortification and launched Special K Protein with soy protein.

AND THEY'RE OFF! Breakfast Cereals Canada polled more than 800 parents with at least two young children in the family, to find out what it’s like on a typical Canadian morning:

77 min

The average amount of time It takes parents from the time they wake in the morning, to get everyone out the door.

84

British Columbians spend the most time in the mornings getting ready.

62

Quebecers spend the least amount of time getting ready for the day.

min min

78%

Of parents say they try to take steps in the evening to make their mornings go more smoothly.

November | December 2013

51

Advertising in

GROCERY BUSINESS MAGAZINE

was the natural choice.

Ken Berger Canadian Sales Manager, Natural Delights Medjool Dates

E DUC PRO

VENDISOORR ADV

ES DAT

SPONSORED BY:

HUGE SALES GROWTH IN CANADA Natural Delights Medjool Date Sales to Canada

34.7%

$6.7 Million

VOLUME GROWTH IN 2012 *

Natural Delights Medjool Dates Medjool dates have a lot to offer: a melt-in-your-mouth caramel taste and a chewy texture; amazing versatility; lots

NATURAL DELIGHTS IN CANADA

17.5%

$3 Million

ANNUALIZED

of antioxidants; a lovely amber colour and easy portability.

Yes, even though these Medjools are a fresh—not dried—date, they can be enjoyed anywhere, anytime. Medjools are grown today in the Bard Valley straddling California and Arizona, and these dates flourish there because they need a hot, dry

GROWTH OVER THE LAST 5 YEARS

123%

2007-2008

2011-2012

* IRI/Nielsen

climate with plentiful groundwater.

Datepac Datepac, LLC is the largest Medjool date packing and marketing facility in the US. The Natural Delights Medjool Date of the Bard Valley. Benefitting from an

FAMILY IS EVERYTHING

ideal climate and the nearby Colorado

More SKUs = more customer trial more often

River, this area produces the finest

Research proves that a sale’s lift occurs—even when

industry is based in Yuma, AZ in the heart

Medjool dates year after year. Datepac was established in 2002 to consolidate the packing of Medjool dates for the Bard Valley Medjool Date growers.

This consolidation enhances the quality of dates produced and distributed throughout the world.

sold at a higher price point—when carrying a larger family of Natural Delights SKUs, and merchandising and promoting them. Natural Delights Medjool

40

PRODUCT SKUs

Dates are available in a wide variety of grades, packages, sizes—including 11 lb. bulk boxes, 1 lb. tubs, 12 oz pitted dates and date rolls, organic product and Snack Packs—designed to appeal to different customer segments.

“ We’ve been advertising in the magazine and using the Grocery Business e-mail program for less than a year, but the results have been stellar.

Each time one of our ads or e-mail announcements comes out, I’m contacted by retailers and wholesalers interested in learning about our newest products.”

Natural Delights Medjool Dates offer a caramel-like taste and chewy texture, amazing versatility and lots of antioxidants. The biggest and sweetest of the date family, they are grown in the Bard Valley in the southwestern U.S. and are available in 40 different skus.

Visit

naturaldelights.ca

HEALTHY CEREAL IS

Health and convenience drive purchase behaviour

BOOMING

The Healthy Starter Consumers want to start the day in a healthy way and set a high priority on health in the morning. However, "Hurry," "Hunger" and "Habit" are also key drivers for cereal consumption.

Datamonitor research shows that boomers account for more than half of all consumer spending and 20 per cent of food spending, the highest percentage among all age groups Baby boomers, who represent 20 per cent of the population, are very concerned about their health, particularly in the morning, says Kathy Perrotta of Ipsos. That makes high-nutrient cereal a great breakfast choice.

For a variety of reasons, seniors have increased nutrition requirements. Health Canada says foods that provide higher levels of protein, vitamins, mineral nutrients and calories in smaller volumes can help them meet their needs.

The Fibre Fanatics Fibre and whole grain are critical to boomers who eat cereal at breakfast. Though most boomers do not report dietary restrictions, the healthy aging trend is likely driving boomers to consider the functional benefits of foods they consume, particularly at breakfast.

On the Go Though the majority of breakfasts are still consumed at home, hectic schedules and long commutes see more boomers spending time in-transit than ever before, necessitating portable carried-from-home breakfast solutions.

Source: IPSOS

11%

sales of convenience wheat-based hot cereals

Starting your day by helping others Nuterra is the first Fairtrade cereal to hit the North American market and is distributed by A & V 2000 of Boisbriand, Que. Currently available in two flavours, Granola Nuts & Raisins and Dark Chocolate & Hazelnuts, the products offer North Americans a responsibly-sourced cereal.

$ Sales Hot Cereals

Market Share

% Change

100.0

3

MERCHANDISING IDEAS Most consumers, but women in particular, are looking for higher protein products to keep them feeling full and avoid temptation between meals.

Convenience oat based hot cereals excl. oat bran

75,824,679.00

48.3

-1

Convenience wheat based hot cereals

1,978,835.00

1.3

11

With the manufacturers stepping up new healthy options, Breakfast Cereals Canada suggests:

Standard oat based hot cereals excl. oat

65,481,522.00

41.7

7

Standard wheat based hot cereals

10,698,582.00

6.8

4

• Creating secondary displays near the dairy aisle or in the fresh fruit section to help shoppers recognize cereal as a healthy snack, not just a breakfast food.

Other

775,570.00

0.5

28

• Build cereal products into recipe ideas at all consumer touch points

Source: Nielsen MarketTrack National All Channels

For more ideas check out: breakfastcereals.ca

52 weeks to September 21, 2013 Powered by:

grocerybusiness.ca

November | December 2013

53

SHELF LIFE

GOOD IN BREAD Can bread really become a destination category?

By Marjo Johne Some days, customers fight to get a parking spot at Monastery Plaza, a neighbourhood shopping centre in Oakville, just west of Toronto. The delicious scent in the air explains the constant influx of people: they're here for the bread, baked fresh daily by Monastery Bakery & Delicatessen.

“By late afternoon they’ve already run out of most things,” says Michael Marinangeli, president and owner of MIDEB Consulting Inc., an Oakville-based grocery retail consulting firm. “This place has become a destination for bread, even for people outside Oakville.”

As he watches customers crowd into the bakery, Marinangeli wonders: What if grocers could turn their bakery departments into a bread destination where consumers come to shop even if it’s out of their way?

In a market that’s seen bread volume sales go almost as flat as focaccia, it’s a notion worth considering because while Canadians may not be putting more bread in their shopping baskets, they have been upselling themselves to healthier and artisanal varieties. And this is in spite of the trend to low carb, low glycemic and gluten-free.

But can bread really become a destination category? Well, how many categories can boast that consumers are willing to spend more, rather than less, on its products?

Because of this trend to quality, “Bread is gaining back its letters of nobility,” says Isabelle Marquis, marketing director, retail and foodservice at Première Moisson, a bread producer and bakery retailer headquartered in 54

November | December 2013

KNEAD TO KNOW Bread is one of those rare products that has a 100 per cent household penetration,” says Svetlana Uduslivaia, senior research analyst at Euromonitor International. Bread accounts for about 12 per cent of total food and beverage sales through grocery stores, according to Euromonitor.

BREAKING BREAD Paul Hetherington, president and CEO of the Baking Association of Canada, says disinformation about bread – primarily that it’s a culprit for weight gain – continues to be a threat to this category, as is the broader shift in how some people view food today: as a problem, instead of a solution to their health problems.

TRENDING Connie Morrison, senior vice-president, marketing, fresh bakery at Canada Bread Company, in Toronto, points to three key factors that are influencing the bread category: • Changing demographics as boomers age, with rising instances of diabetes and heart disease; • A rapidly growing immigrant population that considers bread to be a staple; • Greater awareness, in all age brackets, of the importance of managing weight and leading a healthy lifestyle.

“People are looking to improve their diet without radically changing the way they eat,” says Morrison.

Vaudreuil-Dorion, Que. “In restaurants, we’re seeing chefs paying more attention to the bread they're using, making sure they've got the right texture and taste. People are picking up on this trend and are becoming more selective about the bread they're using at home.”

Bread with ancient grains such as spelt, kamut, teff, red fife and purple wheat continue to be popular among consumers, says Marquis.

Lee Andrews, president of Toronto-based Ace Bakery, says consumers are increasingly reaching for breads with ingredients and shapes from different cultures – think flatbreads studded with premium olives and

tomatoes and flavoured with herbs such as thyme and oregano.

They're also taking more time to study product labels, says Andrews.

“The less ingredients that are listed, the better the product is,” he says. “Keeping things simple, natural and pronounceable is definitely on the rise as consumers become more label aware.”

For bread producers and food retailers, these trends translate into more opportunities to continue to move consumers towards higher-value breads.

BE A BREAD BOOSTER Serve Up Excitement Get on the P.A. system and let your customers know your in-store bakery is about to put freshfrom-the-oven products on the shelves.

breads topped by a descriptive card. At Sobeys, it’s hard to miss the big “freshly baked artisan bread” sign planted right beside bread bins.

Serve Up Meal Ideas Serve Up Safety The way bread is handled can make all the difference to consumers. Pay close attention to producers’ instructions and ensure all bakery workers are trained properly.

Serve Up Merchandising Create an attractive display area for bread. Metro Inc., for example, piles wooden tables with artisan

Inspire your customers by displaying recipes featuring bread right in the bakery department, along with all the key ingredients they’ll need.

Serve Up Sampling Launch a sampling program highlighting a “Bread of the Week” or a small selection of breads. Create cross-selling opportunities by pairing samples with dips or deli products.

BREAD TYPE

$ SALES

$ SHARE

$ VOL % CHG

Commercial

1,678,547,084

100.0

-0

White

423,686,831

25.2

-3

Whole wheat

295,400,285

17.6

-5

Multi grain

182,920,427

10.9

2

Italian

156,370,368

9.3

7

Specialty rye/pumpernickle bread

124,384,049

7.4

0

Baguette

83,656,491

5.0

-5

Raisin

52,668,923

3.1

3

Garlic

32,970,823

2.0

3

French

22,120,246

1.3

-10

Sourdough

5,290,454

0.3

9

Milk bread

2,068,752

0.1

-11

Egg bread

1,168,275

0.1

5

Other bread types

295,841,160

17.6

5

Source: Nielsen MarketTrack National All Channels

“In fresh bakery today, consumers are looking for quality, freshness, taste and price. Some of the biggest trends are artisan breads, smaller serving sizes, trans-fat-free, ancient grains, gluten-free, low-sodium, omega-3s and chia. But customers are also looking for an affordable indulgence. Don’t be afraid to make a great all-butter product, or a great real cream dessert, and charge for it, because the customer will pay for a great product.”

— John Klecker, consultant, Klecker Bakery Solutions

BEST SANDWICH CONTEST

ACE Bakery and Food Network Canada went looking for the best sandwich in Canada and found it in a recipe created by Jean Émond: North African Lamb Sandwich with Harissa and Figs on ACE Bakery Ciabatta. Émond triumphed over hundreds of recipes that were submitted from across Canada as part of a contest celebrating ACE's 20th anniversary.

52 weeks to September 21, 2013 Powered by:

grocerybusiness.ca

November | December 2013

55

UNITED GROCERS INC. AWARDS Denis Gendron, the president of United Grocers Inc., and his staff, welcomed vendors and guests to an entertaining evening featuring entertainer André-Philippe Gagnon.

Denis Gendron, president, United Grocers Inc.

Congratulations to the vendors who were recognized for professional excellence.

Best Private Labels Supplier: A. Lassonde Inc. Pictured (l-r): Brian Heppell (Overwaitea Food Group), Lyne Jetté (Metro), Josianne Légaré and Peter Mattson (A. Lassonde)

Best New Supplier-Grocery: Boulder Brands.

Pictured (l-r): Brenda Kirk (Overwaitea Food Group), Robert Mortensen (Boulder Brands), Pat Pessotto (Longo’s)

Innovation Award – Grocery Suppliers: Kraft Canada Inc. Pictured (l-r): Albert Lum (Buy-Low Foods), Bill Strang (Overwaitea Food Group), Sofia Thompson, Jo-Ann Cole, Tim Berman, Craig Vendramin (Kraft)

Partnership/Most Valuable Performance: Kruger Products L.P. Pictured (l-r): Pierre Charron (Metro Inc.), Matt Blixt, Steeve Lamontagne, Michel Manseau, Mario Gosselin (Kruger), Ron Welke (Federated Co-op)

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November | December 2013

OCTOBER 24, 2013 – TORONTO

DINNER

Best New Supplier – Services and Equipment: TD Merchant Services.

Pictured (l-r): Tom Mainville (Co-op Atlantic), David Chatyrbok (The North West Company), Vivian Farrugia, Andrew Hagen (TD Merchant Services)

Special Recognition UGI Important Partner/Supplier: Old Dutch Foods Ltd. Pictured (l-r): Kevin Power (Colemans), Steve Maddeaux (Old Dutch Foods), John MacNichol (H.Y. Louie)

Special Recognition: UGI Important Member Contribution – Co-op Atlantic.

Pictured (l-r): Anthony Longo (Longo Brothers), Sandy MacPherson (Co-op Atlantic), Denis Gendron (United Grocers Inc.)

grocerybusiness.ca

November | December 2013

57

Brings you Quality & Convenience

A proud Canadian brand, Janes makes high quality fish and chicken products for families looking for nutritious yet convenient meals.

Janes’ fish products are all wild-caught, MSC-certified, whole fillets, never minced. And our chicken burgers, strips and nuggets are 100% all-white meat. Other benefits include being trans-fat, preservative and artificial flavour free, while being low in saturated fat.

Check out some new and some improved products from Janes:

Three popular whole muscle products now offer more value.

Janes Cracked Black Pepper Chicken Strips, Janes Chicken Breast Fillets, and Janes Garlic & Pepper Fillets now include our specially developed Signature Sauce, created especially to enhance the flavour of Janes products. Now in a 1-kg pack.

NEW

Janes Battered Fish Bites and English Style Fish Value-priced products that are a source of DHA Omega-3. Battered Fish Bites are bite-sized pieces of fish, ideal for dipping or in fish tacos. English Style Fish are large, battered fillets.

NEW

Janes Panko Breaded Fillet of Sole and Janes Multigrain Haddock Both of these favourites have been improved with updated coatings.

Fillet of Sole features a light panko breading, with a hint of lemon; Multigrain Haddock has a delicious breading that includes ancient grains, quinoa, and millet.

Janes Ultimate Chicken Burger Ready for the grill, this burger is now juicier, with an improved taste and texture.

Janes Natural Goodness Chicken Strips and Nuggets Two options for consumers looking for convenient, back-to-basics foods.

Minimum ingredients.

Maximum taste!

NEW Disney Cars Chicken Nuggets 100% all-white meat, these fun-shaped chicken nuggets will appeal to children.

Introducing Janes Ultimates Battered Chicken Breast Fillets with Signature Sauce – Our newest addition to the Janes family of whole muscle chicken, these tender chicken fillets are wrapped in a light, crispy batter.

There is nothing else like it!

Sofina Foods, Inc.

Toonies for Tummies

aims to raise $1 million to feed kids

Michelle Scott

The Grocery Foundation has revamped and relaunched its Toonies for Tummies initiative with the goal of raising $1 million in 2014 for school nutrition programs.

Michelle Scott, executive director of The Grocery Foundation, heads the campaign.

Grocery Business: How is the relaunched Toonies program different from previous years?

GB: How can companies (brands) participate in the campaign?

Michelle Scott: The program no longer uses coupons on shelf. Instead, we will offer shelf-talkers to sponsor brands that will highlight participating products. Sponsor companies can also work with participating retailers outside of the Toonies program to negotiate promotions.

MS: Participating companies will have use of the Toonies for Tummies logo in advertisements and on packaging for one full year through to December 31, 2014. Sponsor brands will have the opportunity to manage promotions tied to the Toonies program, outside of campaign sponsorship.

GB: When will the program run?

GB: How will The program be promoted?

MS: The 2014 program runs from Feb. 6 to Feb. 16 in participating markets; Ontario and Atlantic Canada.

MS: Participating brands will be showcased in branded Toonies for Tummies flyers. We’re planning: »» A creative campaign (public relations, social media outreach and paid media) that emphasizes the positive impact that a Toonie can have on improving school nutrition programs; »» A microsite where consumers can see how their Toonie donations are being used by breakfast programs in their communities; »» Working with our partners and social media influencers to help bring the message to consumers;

GB: Who are some of your retail partners?

MS: The Toonies program will be supported by Colemans, Co-op Atlantic, Food Basics, Foodland, Freshco, Galati Market Fresh, Highland Farms, Longo’s, Metro, Michael Angelo’s, Price Chopper, Rabba Fine Foods, Sobeys and more than 100 independent stores across Ontario and Atlantic Canada. We are also actively exploring the possibility of expanding the Toonies campaign.

»» Providing tools to our industry to help them rally behind the Toonies program and become more aware of the issue so we can play a role in helping change the current reality for many children.

GB: What happens to the money raised?

MS: One hundred per cent of the consumer funds collected through the Toonies for Tummies initiative will be donated to school nutrition programs.

“I can think of no better focus for our industry than helping children who are in need of nutritious meals. In February, 2014, we have the opportunity to come together and take a visible role rallying consumers behind a program that is meaningful to all of us.”

Andre Gagne, chairman & president, The Grocery Foundation, and vice-president, fresh merchandising, Metro Ontario Inc.

GB: Can you give us more detail on the program?

MS: The Grocery Foundation aims to have 60 companies join the 2014 campaign. The cost of sponsorship for a single product is $20,000 ($15,000 for Ontario and $5,000 for Atlantic Canada). Companies also have the option to sponsor four products for $65,000. grocerybusiness.ca

“The Grocery Foundation’s efforts to help children at risk – including their work with Kids Help Phone, Breakfast Clubs of Canada and Breakfast for Learning – are important initiatives for us to continue to support, and be active ambassadors with consumers at retail and within our own companies.”

Cheryl Smith, executive vice-president, sales and marketing, Parmalat Canada

November | December 2013

59

LIST IT

New and now products

Première Moisson debuts 189 Harwood Première Moisson, a QuÊbec bakery chain specializing in high-end gourmet products, recently launched the 189 Harwood line: a new label developed specifically for grocery and superstore consumers.

The first products debuting under this new label are

The lowest calorie yogourt in Canada Astro ZerO% yogourt is a great choice for the yogourt lover who understands the benefits of maintaining a healthy body weight. Now with only 30 calories per 100 g serving, Astro ZerO% is naturally flavoured and Health Check endorsed. With ZerO fat, ZerO aspartame and ZerO sugar added, there is ZerO need to compromise!

Astro.ca

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November | December 2013

bake-at-home mini-pastries. All go directly from freezer to oven and are ready in 30 minutes or less.

They are made from top quality ingredients for exceptional taste and texture. premieremoisson.com/en

Feeling bloo?

Made in Canada, the taste of bloo juice is a result of high quality ingredients, a proprietary process and innovative packaging coming together to create the ultimate fresh juice experience. Drive your chilled juice category sales with these three premium bloo family members: Blueberry, Blueberry/Strawberry and Blueberry/Citrus. bloojuice.com

Two new flavours from Green & Black's Green & Black's introduces two new flavours: Burnt Toffee and Sea Salt. One combines Yorkshire toffee pieces with 60 per cent smooth dark chocolate. Milk chocolate lovers will enjoy the new Sea Salt flavour, with Anglesey Sea Salt crystals.

Contact your local Tree of Life Canada representative for more information. treeoflife.ca

Warm up with Starbucks – At home Flavours inspired by Starbucks customer favourites, these gourmet, hot cocoa mixes are available in Double Chocolate, Salted Caramel, Marshmallow and Peppermint. All SKUs are made with high quality ingredients including ethically sourced and sustainable cocoa powder, natural marshmallows, ethically sourced chocolate pieces, natural caramel and peppermint pieces, and real vanilla powder.

Contact your local Tree of Life Canada representative for more information. treeoflife.ca

grocerybusiness.ca

November | December 2013

61

LIST IT Be sure to grow your basket ring sales with these 2 new fabulous cereals from General Mills

Honey Nut Cheerios Hearty Oat Crunch

The #1 brand in cereal is expanding with a new variety! Honey Nut Cheerios Hearty Oat* Crunch provides the fun of Honey Nut Cheerios, combined with oat flakes, and oat & nut clusters. Your customer’s already enjoy Honey Nut Cheerios, put this great new cereal on the shelf and add some crunch to their day!

Fibre 1 Almond Cluster

You won’t believe fibre can taste this good! From the Fibre 1 brand, comes a perfect cereal that’s crunchy, with just the right sweetness, and just the right amount of almonds.

Consumers are nuts about the taste!

Cereal is by far the #1 food eaten by Canadians at breakfast, enjoying a household penetration rate of over 92%. Households buying cereal spend 33% more total Grocery dollars in a year than non-cereal households – and when cereal is in the basket on a trip, the basket spend doubles.

With only 50 calories/100g serving, Source Greek offers 2x the protein of regular Source, has no sugar added, and is a stirred yogurt with a thick texture. Offer it today and drive your yogurt profits!

General Mills introduces ground breaking innovation with these 2 new tasty protein bars from Nature Valley and Fibre 1.

Nature Valley Protein bars offer the protein you need, with the taste you crave. With two tasty flavour options, it’s a delicious chewy bar loaded with real nuts and 11 grams of protein per bar.

Fibre 1 Protein is a deliciously magical combination of fibre and protein. It’s a chewy snack bar with the feel-good benefits of both fibre and protein, loaded with caramel and peanuts, or creamy peanut butter, all covered in an indulgent chocolatey coating. It offers 6-7g protein per 33 gram bar, and 20% of your daily fibre.

With a variety of tasty new flavours, Yopa! offers all the goodness there is to love about Greek yogurt with only 80 calories/serving. It’s made with real fruit, has no artificial flavours or colours, and no gelatin. It has 2x the protein of a regular yogurt, is fat free, and cholesterol free

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November | December 2013

GROCERY INNOVATIONS CANADA

2013 CONFERENCE AND TRADE SHOW September 30 - October 1, 2013 Toronto, Ontario

P H O T O S : R O D N E Y D AW A N D C F I G

grocerybusiness.ca

November | December 2013

63

it figures > Focus on

Inflation Only

3%

increasing trips to the store

Only

9%

increasing dollars per trip

Takeaway With less money to spend

and hungry mouths to feed, consumers continually look for ways to stretch their budgets and find the best value for their money.

51

%

Only 51% of Canadians say they're living comfortably

Takeaway Only 8% of Canadians say they

have free spending ability (compared to the global average of 14%), despite having among the world's highest household incomes.

64

November | December 2013

When food prices rise:

37%

will buy more private-label brands

Takeaway The price must be right and marketing must be effective

for private-label brands to become successful. Packaging impacts trust and quality perceptions, especially when private label extends beyond commodity or low-risk product categories.

Canadians love promotions

50% 44% will stock up on regular use items when they're on sale

will only purchase sale items if prices are trending upward

35%

will purchase large economy sizes when inflation hits

11%

will do more online shopping if prices rise overall

Categories showing resilience to inflation Fresh or frozen fruits

24% look to the Internet to find deals Takeaway More people are searching the

Internet for money-saving deals. Innovation is vital to sustaining profitability and building a strong platform for growth.

74%

would buy the same

Loose, unpackaged, unbranded cereals

54%

would buy the same

Vegetables, canned fruits and vegetables

61%

would buy the same Takeaway Consumers make trade-offs, determining

Retail channels showing resilience to inflation: »» Discount/dollar stores »» Restocking/clearance stores »» Warehouse/club stores

which categories have staying power and which ones are more vulnerable to tough in-store decisions.

Carman Allison is director of consumer insights for The Nielsen Company in Canada and is responsible for creating thought leadership reports and insights for CPG manufacturers and retailers.

A L L S TAT S C O U RT E S Y: N I E L S E N

grocerybusiness.ca

Carman Allison

November | December 2013

65

Perry’s Point of View

THE NEW

INDEPENDENT GROCERS There have been few times in Canadian supermarket history when someone has not predicted the demise of the independent grocer. In a consolidating world where the Big Three grocers will soon control more than 60 per cent of Canadian grocery sales through all channels, the sheer buying power of the behemoths is almost impossible to overcome.

Most grocery stores in Canada source product, in one way or another, through various distribution arms of Loblaw, Sobeys or Metro.

But a new class of independent grocer has risen in Canada – the ethnic grocery store.

Most are owned and operated by Asian families or concerns, but many are popping up with eastern European or Middle Eastern themes. Some, such as T&T and Adonis, have already partnered with one of the Big Three grocers. Others are parts of small chains or family affiliations. We have counted more than 70 large-scale ethnic grocery stores in the Greater Toronto Area, and would not be surprised if an equal or greater number are spread across the rest of Canada. These are generally clean, bright, well-stocked, lowpriced, high-service stores with 40,000 60,000 SKUs, usually including excellent produce, and strong and separate seafood departments.

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November | December 2013

Some individual stores can be classed among should be without a strategy to serve them. the best new supermarkets in the country.

Take the time to walk these stores, speak to Initially, they serve the fast-growing visible their distributors, check the pricing and minority and immigrant populations of the understand the challenges. Just like earlier country, most of whom actually cook from waves of independent grocers in Canada, they scratch and are extremely value conscious. But will become stronger, create alliances, increasingly, non-ethnic clientele are discovergenerate sophisticated distributors and ing these stores and valuing the cleanliness, participate in consolidation. low prices and excellent produce. In fact, some Do not ignore or dismiss them. of these stores have reported non-ethnic customers at close to one-third of their traffic base.

If you add up the sales volumes, we believe For all of their market power these stores are, in aggregate, selling at least and growth, these stores can be as many groceries as Walmart Canada, and difficult for competitors and suppliers to understand. They are growing at least as fast. are generally characterized by: confusing joint or cross-ownership; a variety of supply channels; unique pricing strategies; unusual buying practices; unclear planograms; and high-speed decisionmaking.

A few ethnic grocery stores have already closed their doors, leading some to believe Perry Caicco is the managing director for that they’re a passing fad. That assumption CIBC World Markets. He has worked for 15 years in would be a mistake. For the most part, these the supermarket, general merchandise and are excellent stores. No grocer should be packaged goods industries with Loblaw Companies, without a strategy to either partner or Coca-Cola and Consumers Distributing. compete with these new players; no supplier

Congratulations dino & eric

2013 GOLDEN PENCIL Outstanding Service Award Recipients

Dino Bianco

Eric R. La Flèche

Executive Vice President & President Beverages and Canada Kraft Foods Group

President & CEO Metro Richelieu Inc.

From Your Friends at Kraft Canada

DRIVE GROWTH

IN THE DAIRY AISLE IN 2014 WITH LEADING INNOVATION FROM

KRAFT CHEESE!

Kraft Shredded Cheese with a Touch of Philadelphia

CANADA’S #1 NATURAL SHREDDED CHEESE1 JUST GOT CREAMIER! Leverage the success of two power brands, Kraft Shredded Cheese and Philadelphia, to drive growth in 2014! We have specially blended our Kraft natural shredded cheese with a hint of Philadelphia to deliver a softer, creamier melt. Launching three delicious flavours: Creamy Mozza, Creamy Herb & Garlic and Creamy Mexicana.

Cracker Barrel Mozzarella Natural Cheese Slices

Cracker Barrel Herb & Garlic Cheddar

Philadelphia French Onion Dip

Cracker Barrel is the branded leader and #1 choice for consumers in Slices! Leverage Cracker Barrel Mozzarella to optimize and extend the impressive growth of the Cracker Barrel Slices portfolio, up 83% YTD and driving 28% market expansion.2

Capitalize on the incredible success of Cracker Barrel Jalapeño Cheddar with new Cracker Barrel Herb & Garlic Cheddar – a smooth, creamy cheddar seasoned with the perfect balance of parsley, onion and garlic.

Exceeding product indicator benchmarks of overall flavour, liking and purchase intent, it’s clear consumers love it!

Leverage Philadelphia’s branded share leadership3 to drive sales and win with consumers in the leading French Onion flavour! Philadelphia French Onion is the ONLY French Onion dip that starts with the dairy goodness of Philadelphia.

Start ship for all products is January 20, 2014.

CONTACT YOUR KRAFT SALES REPRESENTATIVE TODAY! 1. Nielsen MarketTrack: NAT XNFLD GB + DR + MM, L52 weeks ending 24Aug13 2. Nielsen MarketTrack: NAT XNFLD GB + DR + MM, L52 weeks ending 24Aug13 3. Nielsen MarketTrack: NAT XNFLD GB + DR +MM, L52 weeks ending 28Sept13, Refrigerated Non-Mediterranean Dairy Category, Branded Share Leader