GROCERY WARS – “THE EMERGENCE OF THE PLANT BASED FOOD SECTOR”!

Plants have been a staple household item for many years. Yet a different plant sector is emerging with consumers – Plant Based Foods, a sector that for the past two (2) years has been identified as a food trend to watch for. So, what is plant based food, what are category sales, what are the four (4) consumer trends driving the rapid rise of this sector and what are some associated health benefits to the consumer?

 

Plant Based Foods

Plant based foods are foods that are derived from plants including vegetables, whole grains, legumes and fruits. A plant based food diet consists of these items in addition to excluding or minimizing meat (including chicken and fish), dairy products, and eggs, as well as highly refined foods like bleached flour, refined sugar, and oil.

 

Plant Based Food Category Sales??????????????????

The plant based food category in the US exceeds $5B in sales annually. The Canadian category is estimated at between $450 – $600 million dollars. The US market grew 3.5% in 2016 and outpaced the total food and beverage industry by close to a 2:1 margin. Economic activity in the plant-based foods industry leads to sales of $13.7 billion a year throughout the U.S. economy.

The plant based market is driven by refrigerated and frozen non-dairy beverages, meat alternatives and tofu and cheese alternates, that collectively account for more than 90% of sales.

Chart 1 outlines plant based food sales.Cheese alternatives are the fastest growing sector in the category with 31.4% growth.

 

Chart 1

Plant Based Category Sales – US, 2016

April 2017 Blog Image Chart 1

Smaller categories contributing to growth include: meat alternative dishes, yogurts, meatless jerky and snacks, other dairy alternatives and vegan mayonnaise and similar products. In the US, introductions of new products with plant based proteins grew 14.7% in 2014.

Though traditional retailers account for the bulk of the sales volume, specialty and natural channels in the US are posting the fastest growth for plant based foods, up 6.8% and 11.6% respectively over the last year.

According to Mintel, 36% of consumers in the US buy plant-based meats. In Canada, a 2015 survey conducted by the Vancouver Humane Society and administered by polling company Environics “revealed that 33 percent of Canadians are either already vegetarian or are eating less meat. Seeking to capitalize on this new sector, Maple Leaf Foods recently signed a definitive agreement to acquire plant-based protein brand Lightlife Foods, Inc

 

Four Consumer Trends Driving Growth of Plant Based Foods

The steady growth of the plant based food sector is a reflection of more consumers shifting away from animal products towards plant based options. Consumers have become wary of red meat varieties because of environmental or animal rights concerns and view plant based alternatives as cleaner, more nutritious than red meat and dairy products.

Here are the four (4) consumer trends that are fueling plant based sales:

  1. Drop in Meat Consumption: Concerns about animal cruelty and the use of hormones and antibiotics has resulted in a decline in meat consumption. Since 1999 and ending September of 2015, Canadians consumption per person of pork and beef has declined 31% and 19% respectively.
  1. Drop in Dairy Consumption: Fueled by evidence of animal cruelty, Canada’s changing demographic profile and consumers’ perception of dairy’s nutritional value, per-capita consumption of milk in Canada has declined 18% to 74 litres a year between 1995 and 2014.
  1. Values Based Shopping: Consumers seek to purchase brands that have an authentic mission and a positive social and environmental impact. According to Nielsen for the 12-month period ending September 2015, sales of consumer goods from brands with a demonstrated commitment to sustainability grew more than 4% globally, while those without grew less than 1%.
  1. Power of Millennials: Millennials are one of the most powerful consumer groups in Canada. In 2014, they accounted for 37% of the work force. As a group, they recognize their food choices have a real impact on society and the environment. One in 10 is a vegetarian or vegan and they are at the forefront for the increased demand in plant based food options.

 

Perceived Health Benefits Associated with Plant Based Foods

The thought of life without steak or barbecued chicken may not sound appealing. Fortunately, consumers don’t have to make an either / or choice, A strong body of research suggests just making a shift to more plant based foods can offer significant health benefits. Some of the perceived benefits includes:

  1. Reduced blood pressure.
  2. Reduce the risk of heart disease and Type 2 diabetes.
  3. Help maintain a healthier weight.
  4. May lengthen lifespan.

It is never too early or late to embrace a healthier lifestyle. The benefits come quickly and continue to accrue with age.

 

The Impact for Small Business

Plant based category sales are outpacing the total food and beverage industry. This sales data provides evidence that plant based proteins may be here to stay. In today’s market innovation is critical and a key aspect as to why sales for smaller brands in the US are outpacing the growth of larger brands. Given most larger brands do not offer plant based food as part of their portfolio, business seeking to get into the food sector may wish to embark on a journey into this category. In fact, in the US the Plant Based Foods Association (www.plantbasedfoods.org) was established last year to advocate for better policies to meet the growing consumer demand for plant based foods.

 

For assistance in Getting and Staying Listed in Canada’s Grocery Sector, connect with us through our website: www.fooddistributionguy.com, or give us a call toll free: 1-844-206-FOOD (3662).

GROCERY WARS: THE EMERGENCE OF THE ETHNIC SHOPPER

Canada is recognized as being the most cultural diverse society of any Western country. Yet, despite ethnic consumers being identified as a segment, brands must embrace to sustain growth in the CPG sector, a Nielsen study revealed “Most Canadian companies either don’t have (36%) or don’t know (27%) of any objectives or goals tied directly to any particular group”. So, what is the make-up of the new Canada, what impact will this segment have on CPG spending, where are they shopping and how best to engage with them?

 

The New Canada!

The old Canada (white, rural focus society) is giving way to the new Canada (urban-suburban, multicultural society). By the end of 2011, Canada had a foreign-born population of 20.6%, with 59% of Canada’s immigrants coming from AsiaSmiling couple shopping in grocery section including the Middle East. Europe was the second region of birth for immigrants coming into Canada, accounting for 16% of all immigrants. It is estimated by 2030, 30% of the Canadian population will be foreign born. Toronto and Vancouver represents Canada’s most multicultural cities:

  • Toronto – 50% of Toronto’s population foreign born.
  • Vancouver – 40% of Vancouver’s population foreign born

Over the next ten years Canada’s population is expected to grow by around 7-8 million consumers, with close to 60% of this increase attributed to immigration.

 

Ethnic Spending in the CPG Sector!

Immigrants have and will continue to be a vital source to Canada’s economy. This may be in direct correlation to a change in Canada’s immigrant entry classification. Since 1986, there       has being a change in the immigrant entry classification with a greater emphasis on economic immigrants. In 2013, 57% of all immigrants were classified as economic immigrants, as compared to 36% in 1986. Chart 1 outlines Canada’s 2013 immigrant entry classification.

 

Chart 1

Immigrant Entry Classification – 2013

MARCH 2017 CHART 1

From 2008 to 2013, visible ethnic groups far outpaced the average non-visible resident in consumer spending as outlined in Table 1. In fact, it is estimated over the next decade some $12B in additional grocery store sales will be attributed to immigrants.

 

Table 1

                 MARCH 2017 TABLE 1

 

Grocery Store Destination for Ethnic Shoppers!

In a study undertaken by Loyalty One, entitled The Modern Grocery Shopper: Attitudes and Opinions Survey, nearly 9 out of 10 ethnic Canadian grocery shoppers indicated the selection of ethnic food and ingredients is an important feature in choosing which grocery stores to shop at. Yet as part of the same study:

  • 63% of visible minority shoppers in Canada believe the big box store does not stock a sufficient selection of ethnic foods.
  • Independent grocers outperform, big box grocery stores in terms of customer satisfaction amongst visible-minority communities regarding ethnic food selection.
  • 69% of visible minority Canadians state they are satisfied with independent retailers compared to only 54% for large grocery chains.

In fact, most ethnic shoppers seek out local stores operated by their own ethnic group, rather than shop at a local supermarket. This gives rise to the increase in grocery sales through ethnic supermarkets. Though difficult to judge, Mr. P. Caicco of CIBC World Markets estimate sales at between $4B and $5B per year while Mr. B.K. Sethi of BK Sethi Marketing figures sales are between $2B and $3B annually. Whatever the actual number is, it represents substantial sales loss for conventional food stores.

 

Engaging with the Ethnic Consumer!

The million-dollar question marketers are asking themselves today is, how to reach out to the ethnic shopper as current marketing efforts including promotions and advertising do not work. Of particular interest is how to reach out to the Ethic millennial. The Millennial ethnic consumer wishes to fit in and the key is to be connected with them. They are savvy on social media:

  • 77% log into social media between 1-5 times per day.
  • 44% will follow a brand on Facebook.
  • The ethnic consumer will use YouTube to connect with the world around them.

Nielsen undertook a study entitled “Ethnic Consumers, How to Tap into Canada’s Unprecedented Growth Opportunity”. Their best practice tips for engaging multicultural consumers:

  1. Integrated marketing initiatives. Reach multicultural consumers where they learn and network in digital space and in languages that they speak.
  2. Identify cultural interests and behaviours. Understanding and activating multicultural consumers’ diverse eco-niches will pay dividends to savvy marketers.

 

The Impact for Small Business!

Visible ethnic groups are impacting grocery sales in Canada. Over the next 10 years, period ending 2023, about 70% of the growth in Canadian consumer spending will come from visible minorities.The choice is simple. Ignore this segment at your own risk or embrace them to reap unprecedented growth opportunities. The key is to research this segment, understand what motivates them and engage with them in dialogue. Do not rely on traditional marketing efforts. Embrace social media and identify the influencers for this segment. A recent study undertaken by influencer marketing platform MuseFind revealed 92% of consumers trust an influencer more than an advertisement.The power of influencers does not necessarily lie in their follower count, but in their ability to actually influence through authenticity and curation.