Canadian Market Overview and Strategies for Success

Recipes for Growth Canadian Market Overview and Strategies for Success FACHSYMPOSIUM LEBENSMITTELEXPORT NACH KANADA Presented to the Austrian Ministerial Delegation Toronto, Canada 10 April 2017 Birgit Blain & Associates Inc. 1-416-460-2279 Birgit@BBandAssoc.com

Introduction Welcome! Herzlich willkommen! Minister Rupprechter and the Austrian Delegation 2

Introduction Birgit Blain Packaged foods specialist with 20 years experience. 17 years with Loblaw, Canada s largest food retailer. Managed $9 million President s Choice portfolio. Writes for Food in Canada magazine. Publishes The Food Biz Blog. 3

Introduction Agenda Canadian Market Overview Consumer Profile Trends Food Retail Landscape Cheese Industry Processed Meat Industry Strategies for Market Success Next Steps Questions 4

Geography 2 nd largest country in the world 9.9 million km 2 5,187 km coast-to-coast 6 time zones Source: na+onsencyclopedia.com 5

Geography Österreich 6

Key Markets 35.5% live in 3 cities Toronto 6 Million Montreal 4 Million Vancouver 2.5 Million Vancouver Montreal Toronto Source: Stats Canada 7

Market Size 35.2 Million 8

Market Size 35.2 Million 8.7 Million 9

Market Size 35.2 Million 322.7 Million 8.7 Million 10

Consumer Profile Cultural Diversity 20% born outside Canada 39% of new immigrants from Asia Philippines China India Pakistan South Korea Future population growth from immigration Source: Sta+s+cs Canada 11

Consumer Profile Cultural Diversity 20% born outside Canada 39% of new immigrants from Asia Philippines China India Pakistan South Korea Future population growth from immigration Source: Sta+s+cs Canada 12

Consumer Profile Cultural Diversity New Immigrants 2006-2011 Source: AC Nielsen from Sta+s+cs Canada 2011 Immigra+on & Ethno-cultural Diversity in Canada 13

Consumer Profile Top Concerns of Canadians #1 The economy #2 Rising food prices #3 Rising utilities prices Source: Nielsen Global Omnibus Consumer Confidence Survey Q3 2016 Canada 14

Consumer Profile Top Concerns of Canadians #1 The economy #2 Rising food prices #3 Rising utilities prices 61% trying to reduce household expenses 27% worse off financially than 1 year ago Source: Nielsen Global Omnibus Consumer Confidence Survey Q3 2016 Canada 15

Consumer Profile How Canadians Feel Time starved Stressed Energy starved Sleep deprived More health issues Food safety Living paycheck to paycheck 16

Consumer Profile How Canadians Feel Time starved Stressed Energy starved Sleep deprived More health issues Food safety Living paycheck to paycheck 17

Consumer Profile Canadians look for value 73% trying to spend less on groceries 42% shopping at discount stores more often 73% only buy on sale 63% use coupons 53% buy private label 54% only buy the basics Source: Nielsen Economic Impact Survey April 2016 - Canada 18

Trends Lifestyle Shift Health and Wellness Indulgence Ethnic Convenience Snacking 19

Trends Healthier Eating Natural clean label foods Protein from animals and plants Sugar reduction, natural sweeteners, sugar substitutes Allergen-friendly - gluten/dairy/nut-free Functional foods fortified with vitamins, minerals, bioactives Omega-3, probiotics, plant sterols Vegan Organics 20

Trends Indulgence High fat, sugar, salt Pleasure Reward Cravings Afternoon and evening Leads to guilt 21

Trends Ethnic Global flavours - Asian - Middle Eastern - South American - Hot and spicy Halal Street Food 22

Trends Convenience Portable, on-the-go Single-serve portions Minimal preparation - dinner in 15 minutes Meal kit delivery 23

Trends Snacking Portable Single serve Kits Protein Smoothies 24

Retail Landscape Channels Selling Food Grocery Mass Drug Club/Wholesale Convenience Dollar Stores Online 25

Retail Landscape Grocery Formats Conventional Supermarkets Urban Markets Specialty Health Food Stores Ethnic Discount 26

Retail Landscape Top 3 Grocery Chains 60% Market Share Formats: Full service, urban, ethnic, discount, convenience Multiple banners 27

Retail Landscape Top 3 Grocery Chains Main Banner Territory Stores Annual Sales Loblaws National 2300 $44.5 B Sobeys / Safeway National 1500 $24.6 B Metro Ontario, Quebec 600 $12.7 B 28

Retail Landscape Other Grocery Formats Regional Chains Urban Markets 1800 3700 m 2 29

Retail Landscape Other Grocery Formats Specialty stores Ethnic 30

Retail Landscape Challenges for Grocers Increasing competition Shrinking profit margins Food safety Regulations Changing consumer needs 31

Retail Landscape Competing on Price Grocers run frequent promotions. 46.6% of centre store food sales with a price discount. 42% of promotions don t make money for brands. Source: Nielsen MarketTrack: Canada Na+onal GDM = 52 wks to August 20, 2016. Nielsen Trade Promo+on Landscape Analysis 2015, Canada 32

Retail Landscape What grocers want Incremental category sales On-trend innovation Promotional support Point of difference 33

Cheese Overview Dairy is second largest food manufacturing sector in Canada. Cheese-making tradition 1000+ varieties Cow, goat, ewe, water buffalo Top producers: Parmalat Saputo Agropur Private label sales 6% 34

Cheese Production by Province Province Share of Total Metric Tons Quebec 48.7% 227.8 Ontario 30.2% 141.5 Other 21.1% 98.6 Total Canada 467.9 35

Cheese Production by Variety Variety Million Kg (2016) Cheddar 155.2 Mozzarella 136.4 Cream 41.2 Parmesan 10.8 Monterey Jack 9.4 Suisse/Emmental 9.1 Ricotta 8.4 Feta 7.7 Havarti 7.3 Gouda 5.1 Brick 3.3 Provolone 3.8 36

Cheese 37

Cheese 38

Cheese Trends Flavoured Artisanal Ethnic Convenience Snacks Non-dairy 39

Processed Meat Overview Meat is Canada s largest food manufacturing sector. Beef consumption -20% Chicken consumption +4% 70% products from pork Top Brands: Maple Leaf Schneiders Piller s Source: Sta+s+cs Canada 2005-2015 40

Processed Meat Trends Free-From: preservatives, nitrates, antibiotics, gluten Local 41

Processed Meat Trends Artisan Ethnic 42

Processed Meat Trends Lunch kits Snacks 43

Processed Meat Trends Free-From: preservatives, nitrates, antibiotics, gluten Local Artisan Ethnic Lunch kits Snacks Flexitarianism Vegan 44

Regulations Safe Food for Canadians Act Impact on Importers Importer licensing Foreign supplier verification Preventive control plans Traceability Recall plans 45

Regulations New Labelling Requirements Nutrition Facts Table 46

Regulations New Labelling Requirements Ingredient List 47

Regulations New Labelling Requirements Ingredient List 48

Regulations Labelling Requirements Separate packaging is required for Canada. Adding stickers to European packaging does not meet labelling requirements. Statements cannot be false or misleading. 49

Regulations Labelling Requirements Separate packaging is required for Canada. Adding stickers to European packaging does not meet labelling requirements. Statements cannot be false or misleading. misleading 50

Regulations Bilingual Labelling Requirements All label information must be in English and French. Québécois French is different from Parisian French. French must have equal prominence. 51

Regulations Bilingual Labelling Requirements All label information must be in English and French. Québécois French is different from Parisian French. French must have equal prominence. 52

Regulations Risks of Non-Compliance What are the risks? Causing illness or death Lost customers Lost sales Liability to the importer Damage to brand reputation RECALL 53

Regulations Investigation Triggers Illness outbreaks CFIA routine testing Consumer complaints Competitor complaints Social media posts Recalls in other countries Canadian Food Inspection Agency 54

Strategies for Success Research Understand Canadian consumers and competitors. Visit stores and identify where your product fits. Conduct a detailed competitive analysis. Attend trade shows to see competitors and distributors. 55

Strategies for Success Differentiation Products must have a point of difference compared to the competition. Meaningful to target consumer On-trend Fulfill an unmet consumer need 56

Strategies for Success Marketing Investment You own the brand. It will not sell itself. Invest in ongoing advertising and promotions to: Raise awareness of your brand Drive trial and repurchase Build your brand 57

Strategies for Success PRODUCT%&% PACKAGING% PRICE% DISTRIBUTION% SALES%TEAM% MARKETING% MERCHANDISING% CUSTOMER% SERVICE% YOUR%BRAND% COMPETITORS! CUSTOMERS! SALES% 58

Next Steps Product Compliance Review Market Analysis Label Development Ingredient Review Brand Assessment Label Compliance Review Complies with Canadian Regulations Research Trademark Search Sector & Channel Analysis Regulatory Copy Development Does NOT Comply with Canadian Regulations Category Review Prep Instruction/Recipe Review Cannot move forward without reformulating Competitive Analysis Marketing Copy Development Competitive Benchmarking Proofreading Adapt Brand Strategy for Canadian market French Canadian Translation 59

Next Steps Regulatory Label Development 1. Ingredient compliance review 2. Ingredient statement development 3. Review of allergens 4. Nutrition Facts table development 5. Review of claims 6. Marketing copy 7. Formatting 60

Recap 5 Takeaways 1. Understand the Canadian consumer. 61

Recap 5 Takeaways 1. Understand the Canadian consumer. 2. Adapt your packaging to the market. 62

Recap 5 Takeaways 1. Understand the Canadian consumer. 2. Adapt your packaging to the market. 3. Think like a retailer. 63

Recap 5 Takeaways 1. Understand the Canadian consumer. 2. Adapt your packaging to the market. 3. Think like a retailer. 4. Invest in marketing and promotions. 64

Recap 5 Takeaways 1. Understand the Canadian consumer. 2. Adapt your packaging to the market. 3. Think like a retailer. 4. Invest in marketing and promotions. Manage Your Brand! 65

Recipes for Growth Vielen dank für ihre Aufmerksamkeit 66