Food Retail and Consumer Trends in Ontario and Canada Jacquelynn Ellis Business Development Consultant Ontario Ministry

1. Food Retail and Consumer Trends in Ontario and CanadaJacquelynn EllisBusiness Development ConsultantOntario Ministry of Agriculture, Food and Rural Affairs

2. Food Stores • Loblaw - #1- locations throughout Can • Real Canadian Superstore: flagship banner • No Frills: discount banner • Other banners: Loblaws, Zehrs, Dominion, Provigo, Fortinos, Valu-Mart, Maxi

3. Food Stores • Sobeys Inc. - #2 - locations throughout Can • New distribution centre in Vaughan to Summer 2009 • Sobeys: flagship banner • Price Chopper: discount banner • Other banners: IGA, Lumsden, Foodland, Thrifty Foods, BoniChoix • Metro Ontario Inc. - #3 - locations in ON, PQ • Converting all its banners to Metro (A&P, Ultra Mart) • Metro: flagship banner • Food Basics: discount banner

4. Food Stores

5. Future for Food Stores/Manufacturers • Food stores investing more in their buildings than general merchandise stores • Economic slowdown a time to build competitive advantage, differentiation • Advertise staple products • Consumers would prefer that manufacturers change their price by: • 47% - Offer larger sizes (lower cost per use) • 15% - Introduce smaller sizes at lower prices • 14% - Downsize but keep same price • When making a price increase, consider new size format

6. Future for Food Stores/Manufacturers • Canadian food store are consolidating • Channel blurring between mass merchandisers/drug retailers and food stores • Greater growth from discount food stores than conventional food stores • Growth in international themed restaurants • British, French, Italian and other European foods have a strong influence in Canada • Baby Boomers and some Generation Y have fueled growth in natural and organic foods

7. Food Stores

8. Food Stores • Although general merchandise stores have started to sell food, Canadians still get most of their groceries in food stores • 83.9% food stores VS 10.6% general merchandise • Regional consumer packaged goods inflation

9. Evolution of Food Stores • Food stores have diversified products • Sales of deli, salad bar and prepared foods for take-out grew 6.6% annually 1998-2004 • Frozen food sales increased 5.9% annually 1998-2004 • Less spending in restaurants, more spending in food stores • Reverse trend from 1980s and 1990s • 77.6% of food expenses in food stores, 21.9% in restaurants in 2003

10. Other Food Stores • Independent food stores • Canadian Federation of Independent Grocers (CFIG) • Represents over 4000 grocery retailers in Canada • Enables independent, franchised and specialty grocers for sustainable success • Facilitates educational and training programs, • Speaks for its retail members to industry, government, and the consumer • Highland Farms: 5 locations in the GTA • Longo’s: 17 locations in Toronto and GTA • L&M Food Markets: 6 locations • Michael-Angelo’s: 2 locations

11. Other Food Stores • Specialty food stores • Organic, functional food, kosher, halal, fair trade, special diets (gluten-free, diabetes-friendly) • Pusateri’s: olive oil and balsamic vinegar, fine catering, luxury chocolates, home and garden • Vincenzo’s: fair trade coffee/tea, ethnic ingredients, oils and vinegars, chocolate, spices, jams, • T&T Supermarket: Asian cuisine, order cakes and sushi online • Sun Valley Fine Foods: olive oil and balsamic vinegar, bakery, exotic fruits

12. Other Food Stores • Health food stores • Natural & organic foods, vitamin and mineral supplements, herbal products, homeopathics, sports nutrition products, health and beauty aids • Canadian Health Food Association (CHFA) • Noah's Natural Foods: largest full-service health food store

13. Food Distributors

14. Top 700 Grocery Composite Share of Retail Trade

15. Top 700 Grocery Composite Share of Retail Trade52 Weeks Ending October 4, 2008

16. Consumers and Shopping Behaviour • Consumer confidence • Although decreasing, Canadian consumer confidence is significantly higher than Global and American confidence

17. Consumers and Shopping Behaviour • Rising prices: food and gas • 89% of Ontarians are “very” or “somewhat concerned” about food price increases • Impact on Ontarians due to higher gas prices Expenditure trips/household decreased 4%, from 149 to 143 per year from 2007 to 2008

18. Consumers and Shopping Behaviour • Economic impact: Ontario • Recession proof food items: 0% would stop buying fresh meat and seafood • Recession indifferent consumers = smaller households with high incomes not likely to change shopping behaviour • Recession sensitive food items: 13% would stop buying frozen foods • Panic stricken consumers = larger families that will do whatever it takes to save money • Primarily located in the GTA and South Western Ontario

19. Canadian Demographics – Age

20. Canadian Demographics – Immigrants Population by immigrant status, 2006

21. Canadian Demographics – Immigrants Canadian immigrants’ place of birth, 2006

22. Canadian Demographics – Immigrants Canadian immigrants’ place of birth, 2006

23. Consumer Eating Trends • Mediterranean diet is associated with lower LDL cholesterol, lower risk of heart disease and cancer • Consumers will be disconnected from food preparation, food will become more portable • Increased spending on prepared meals and takeouts • Shopping and eating will be sporadic, snacking will replace whole meals

24. Consumer Eating Trends • Adoption of adopt healthier lifestyles to combat obesity (heart disease, diabetes) • Reading food labels is more common, more conscious of trans-fats, sodium, fibre, sugar, allergen identification, fortification, and health claims • Immigration, travel, job mobility and religious influences will lead to food diversification, fusion of cuisines, different cooking methods

25. Consumer Eating Trends • More meatless meals, but no dramatic increase in true vegetarianism • Organic, functional, gourmet, and slow food, as well as boutique brands, high quality, smaller portions, and nutritious foods will replace demand for fast, big and cheap foods • Foods tends will mirror current news/health report of the day • Trans-fats, animal diseases, safe food production, additives, ethical treatment of animals

26. How We Can Help • Finding co-manufacturers in Ontario • Sourcing ingredients • Finding a site location • Linking you with people and information

27. Efharisto ! • Jacquelynn Ellis Business Development Consultant Ontario Ministry of Agriculture, Food and Rural Affairs jacquelynn.ellis@ontario.ca