GROCERY WARS – “THE RISE OF THE DISCOUNT RETAILER”!

As I grew up it was it was not uncommon for my Mom to go grocery shopping at our local Dominion, A&P or IGA. Oh, how times have changed. First, these 3 iconic grocery banners have been bought out by Metro or Sobeys (note: IGA franchisees exist in Quebec) and second most consumers are now grocery shopping at their local discount grocery retailer. Most consumers are familiar with the Big 6 that includes, No Frills, Food Basics, FreshCo, Walmart, Costco and Dollarama. Yet, there are 2 European discount retailers on their way to North America who are projected to fundamentally change the grocery landscape as we know it. We invite you to join us as we discuss and provide further insights into the rise of the discount retailer.

 

The Change in the Grocery Landscape

The economic downturn in 2008 was a global occurrence that was felt by all consumers. Many   in the private sector Grocery Coupons In A Glass Jarlost their jobs, had their salary frozen or in certain cases cut back. As such, consumers were forced to scrimp and save, with food being at the top of their list. During this period, consumers went into frugality. Though the economic news is much better, as noted by Mr. Carman Allison, Nielsen, “I think a lot of consumers during the recession found ways to cope, and consumers have stuck with those habits”. The consumer quest to save is defining retailer trends with:

  1. 73.0% of consumers trying to spend less on groceries.
  2. 42.0% of consumers shopping more at discount retailers.

Today, nationally, 42% of all food purchases are made through discount retailers. In Ontario that number is a staggering 50%.

 

Retail Price is King

“The Canadian economy is rough and tumble, and it’s not going to get better for a while, so consumers will be even more frugal in 2017” – Bruce Winder – Retail Expert in December 2016 interview with CTVNews,ca. A Nielsen study reveals grocery shoppers continuing to push to find the lowest price is like a migraine that won’t go away. As part of their study it shows:

  1. 63.0% of shoppers decide where to shop based on the lowest price.
  2. 41.2% of dollars spent with a promotion or price cut. (+0.5%).

Prior to the recession, 27% of all grocery items were sold with promotion or price cut.

As consumers look to save money, retailers are positioning themselves as the lowest price option. Consequently, retailers are looking to adopt an EDLP (Everyday Low Price) strategy in an effort to set themselves apart from their competitors. In fact, lower regular prices are shifting the growth mix within CPG as outlined in Table 1.

 

Table 1

Lower Regular Prices Shifting Growth Mix in CPG

Table 1 June 2017 Blog 

Consumers continue to seek ways to save a dollar. They include, stocking up on items when on sale (referred to as pantry loading) to studying flyers, promotions and discounts before their shopping trip. Table 2 outlines how each consumer segment goes about to save a dollar.

 

Table 2

How Consumers Save a Dollar When Grocery Shopping

Table 2 June 2017 Blog

The No Frills chain of grocery stores recently launched a major marketing campaign as part of their marketing strategy (No Frills for You) heralding the notion that shoppers don’t require “frills” such as fancy displays, product sampling or in-store entertainment. They only want low prices.

 

Canadians Preferred Choice for Grocery Retailer

This past year, Brand Spark International (consumer insights research firm) undertook a study to ascertain, Where Do Canadians Shop for Food and Beverage Products? Across all consumer segments 4 of the top 5 preferred banners as outlined in Table 3 were discount retailers.

 

Table 3

Where Do Consumers Shop for Food and Beverage Products

Table 3 June 2017 Blog

 

No Frills are forecasted to grow at more than a 5% compounded annual growth rate through to 2019.

 

Discount Banners Stealing Market Share

With the consumer shift from conventional grocery to discount, the discount banners continue to increase their market share at the expense of their counterparts as outlined in Charts 1. Table 4 breaks down discount market share by banner.

 

Chart 1

Grocery Channel Market Share

Period Ending April 1/ 2017

Chart 1 June 2017 Blog

Table 4

Discount Market Share by Banner

Period Ending April 1/ 2017

Table 4 June 2017 Blog

In the past 5 years dollar stores have made large gains in penetration, sales and shopping trips. They now represent $1.7B in CPG annual sales. They are also shopped by three-quarters of Canadian households. Of interest, dollar stores are gaining momentum among higher income families with 24.4% of their sales coming from households with incomes of $70,000 to $100,000.

 

New Competition on The Horizon

Mass disruption from discount retailers in Europe could be on their way to Canada. Aldi and Lidl are two German discount supermarket chains with 20,000 locations. Between 2003 and 2013, Lidl and Aldi grew from 8,000 locations to their present number. In Germany, their combined market share of the grocery sector is 50%. In the UK, their same-store sales are growing at a staggering rate of 30%.

Senior grocery executives in the US have begun paying attention to the European discount threat as Aldi already has 1,500 locations and accounts for about 4% of the grocery market share. Lidl has plans to open as many as 600 stores in US. The first 20 will open this summer and they plan to add another 80 stores along the East Coast by mid-2018. They are promising prices that are in some cases half those at existing supermarkets.

Fred Thomas Dupuis, partner in retail at Oliver Wyman Canada predicts “They will come to Canada in due course”. Lidl the largest grocer in Europe, has opened stores in 28 different markets and they have proven they can operate well in very diverse markets. Catherine Saul, Toronto based retail strategy consultant feels “We are not a big enough market for Aldi and Lidl  to come to Canada right away”. “Probably the more immediate threat to Canadian grocers is Amazon”. This past year Amazon opened a small physical store that could be the future of grocery shopping (Amazon Go), in which one walks in, collects their purchases from the shelf and walk out – all without ever needing to line up to pay or check out.

 

Impact for Small Business

The rise of the discount banner is one small business must take into consideration recognizing:

  1. They must have a true understanding of their ideal consumer and understand what banners they shop at.
  2. They must come prepared to support their brand internally with promotions and price discounts.
  3. Does their brand identity support distribution with discount retailers? If no, they must be prepared to adjust their sales forecast and product inventory.
  4. They must have an e-commerce strategy. Though it only accounts for 0.8% market share in Canada, Walmart and Loblaws are emphasizing this channel as a way to combat Amazon.

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 – “MEAL KITS – THE NEW PHENOMENON”!

The evolution of dual careers has given rise to our ever-escalating “on-the-go” lifestyles. With both Husband and Wife enjoying full-time careers, this leaves them little time to plan for their evening dinner. This has given rise to the new phenomenon in the food sector – Meal Kits. So, what is a meal kit, what is this sector worth, which consumer segment is driving their growth and what has given rise to this new sector?

 

Meal Kit

A new comer to the Canadian food scene, a meal kit offers fresh, portioned and packaged food, all the ingredients destination-dinnersrequired to make a meal in one handy kit. The consumer follows the recipe provided and cooks it. In most cases, it is delivered to the subscribers’ door. The success of this service is drawing a small but noticeable bite of business away from traditional supermarkets.

Unlike frozen foods that also fundamentally changed how people cook at home, consumers equate fresh, not frozen meals to being healthier and better for you.

 

Meal Kit Market Growth

The meal kit trend commenced in the U.S. around 2012 and has expanded globally. In the UK, companies that deliver meal kits are gaining traction, growing by nearly 65% in the first half of 2016, compared with the same period in 2015. Globally, meal kit sales are forecast to top $10B dollars by 2020. In the US, meal kit sales topped $1.5B dollars in 2016.

 

Meal Kit Pricing

Though meal kits have become more popular over the years, they remain a relatively niche part of the food sector. They are not for the faint at heart. In the U.S, the majority of meal kits cost $60 to $75 a week for 3 meals for two people or $130 to $150 a week for four meals for four people. This compares to an average cost of $4 a meal when cooking at home and $10 a meal when ordering at a restaurant. In Canada, Rose Reisman’s Personal Gourmet service deliver meals     at about $14 a plate.

 

Consumer Sector Driving Meal Kit Sector

Though meal kit pricing would seem to align with well – educated households in which both parents hold senior level management roles and incomes well above the family norm, research reveals meal kits also appear to align strongly with Millennials between the ages of 18-35 and even consumers 70+.

 

Popularity of Meal Kits

More and more Canadians are spending less time cooking meals from scratch at home and increasingly turning to the convenience of meal kits. The NPD Group suggests 75% of all meals are now typically prepared in 15 minutes or less as Canadians rely on more shortcuts in the kitchen. In the U.S., 1% of all food spending now goes to meal kits, with close to 20% of the U.S. population (50M consumers) having an interest in trying a meal kit. Of those who have tried the kits, 67% were either extremely or very satisfied with their purchase, per The NPD Group.

 

The Rise of Meal Kits

The meal kit has filled a major void in consumers lives. They offer an easy to prepare meal, which saves time and requires little meal planning and tastes homemade. Rightly or wrongly, many consumers also consider meal kits to be a way to eat healthier foods. Harris Insights & Analytics, is a market research firm, known for “The Harris Poll”. They recently concluded a study of the meal kit sector and identified the Top 5 reasons why consumers purchase meal kits as outlined in Chart 1.

 

Chart 1

Top 5 Reasons Why Consumers Purchase Meal Kits

Chart 1 May 2017 Blog

 

The immediate future for meal kits is divided. Whereas some analyst believes that high prices for meal kits will discourage consumers once the fad dies down, others see the segment as a lucrative business opportunity that will only broaden in the years ahead.

 

The Impact on Supermarkets

Canadian supermarket chains are in the midst of flat sales growth. For February 2017, food and beverage store sales in Canada increased .5% (J.C. Williams Group National Retail Bulletin). Though an extremely niche market, meal kits are another source of food for consumers, and this “share of stomach” battle is directly targeting grocery retailers and restaurants. Canadian supermarkets must embrace this new sector or be left behind. In a recent study cited by Technomic,

  1. 54% of consumers indicated that they would cut back on grocery purchases if they signed up for a meal kit delivery service.

In the UK, research also reveals:

  1. Consumers who utilize meal kit services spend 2.8% less at Supermarkets, and
  2. The same consumer also spends 2.2% leas on eating out at restaurants.

 

Grocery retailers can do well in this space. Today’s consumers want convenience more than ever, and picking up a retailer-branded meal kit at the end of a shopping trip is an easy way for them to quickly get dinner on the table.

 

Impact for Small Business

Small business should concentrate on the new niche markets and less on those well-established categories. Meal kits is a new niche market and an area in which they could offer an array of difference from the big CPG conglomerates. Even home goods guru Martha Stewart is getting on the bandwagon. This market is viewed by most as a trend, not a fad. Small business must think out-side the box to be different, and this sector represents out-side the box thinking.

 

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).

 

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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.

GROCERY WARS – “CONNECTNG WITH CONSUMERS ON AN EMOTIONAL LEVEL IS THE KEY TO SUCCESS”!

When CPG brands connect with consumers on an emotional level, there is in most cases a strong anticipated ROI. For instance, “Within a year of launching products and messaging to maximize emotional connection, a leading household cleaner turned market share losses into double-digit growth”. (The New Science of Customer Emotions, Scott Magids, Alan Zorfas, Daniel Leemon). Yet, despite success stories and today’s consumer having so much choice, many CPG companies are leaving money on the table by failing to connect with their customers on an emotional level. So, what is an emotional connection, what are the four steps to connecting emotionally, and what is the value of an emotional connection?

 

What is an Emotional Connection?Consumer Behavior

“Consumers Shop Rationally, They Purchase on Emotion”. These were the words of my branding mentor and instructor Mr. John Torella – Senior Partner with JC Williams Group. From my perspective, this sentiment is the first commandment of Branding.

An emotional connection is a bundle of subjective feelings that come together to create a bond between a consumer and a brand. An example of an emotional connection is that of a watch. Rationally, all watches tell time. Yet on an emotional level many consumers would not buy a watch from the Dollar Stores. The emotional connection is not as strong in a discount store as a watch purchased from a jewelry store.

 

Four Steps to Being Emotionally Connected

Companies that create and sustain an emotional connection with customers will reap strong financial benefits as consumers exhibit a strong brand loyalty. CPG companies that gain this advantage via emotional connection typically follow the following four (4) steps:

  1. They understand and comprehend the value of building their brand’s emotional connection.
  2. They identify the precise emotions that drive the most profitable customer and prospect behaviours. Brand investments are focused directly on these critical emotional drivers.
  3. They test and implement change to these critical emotion detectors.
  4. Monitor these emotional connections over time to ensure they are generating the highest return from their investments.

 

What is the Value of an Emotional Connection?

Emotional motivators vary across customer segments. What motivates one purchase from another is hard to distinguish because customers themselves may not even be aware of them.

Although brands may be liked or trusted, most fail to align themselves with the emotions that drive their customers’ most profitable behaviours. Brands that deliver a seamless customer experience at every touch point, whether in-person or online, and have little to no barriers to purchase are the ones that maintain repeat sales and loyalty. In a study undertaken by Mr. A. Zorfas and Mr. D. Leemon, they found customers whom they term “Emotionally Connected” generate anywhere from 30 to 100 percent greater annual value to the brand, than those customers who merely perceive the brands functional benefit.

 

Apple is a strong example of a brand that has an emotional connection with their consumer. In 2015, Apple’s new worth was $733B dollars. Seventy percent (70%) of their net worth ($513B) was attributed to unaided awareness, service satisfaction, loyalty, and advocacy purchase intent from their customers.

 

THE WORTH OF THE BRAND

 Feb 2017 Blog image


What is the Impact for Small Business?

With the CPG market as competitive as it is, brands – small or big can no longer stay relevant relying on products functional benefits and price promotions to connect with consumers. In the past, that would have proven difficult for small business. But yet, due to social media, this new technology has leveled the playing field for small business to compete with Brand icons. Those small brands that embrace social media, engage with their customers and connect on an emotional level with them will be the big winners. Those who don’t will be looking from the outside in and will keep asking themselves the same question, “Could I Have Become the Next Apple”?

 

 

GROCERY WARS – “FOOD WASTE IN CANADA – AN EPIDEMIC!”

With families feeling the pinch in their grocery bills, many are doing everything they can to save on foods; this includes, switching grocery stores to coupon shopping or opting for cheaper brands. Yet, many continue to overlook the one area that can have the biggest impact on their wallet, cutting waste. Food waste in Canada and around the world has become an epidemic. So, how much food do Canadians waste each year, what can families do to cut their food waste and how could better communications with respect to expiration dates be critical to success?

 

Food Waste is a Global Epidemic!

Globally, roughly one third of the food produced in the world for human consumption each year – approximately 1.3B tones is wasted annually. Food waste amounts to US$680B in industrialized and US$310B in developing countries. Globally North American and Oceania (Islands of the tropical Pacific Ocean) regions waste the most amount of food at consumption and pre-consumption stages as outlined in Chart 1.

 

Chart 1

Per Capita Food Waste, at Consumption and Pre-Consumption Stages (kg / year)jan-2017-blog-chart-1

How Much Food Do Canadians Waste?compost de restes

In Canada, $31B worth of foods ends up in landfills or composters each year. The average Canadian household waste $31 a week, that translates into $1,600 per year. A tragedy any way you look at it especially given close to 900,000 Canadians and 37% of those being children or youth rely on the assistance of food banks each month. Asked why so much food is wasted, the typical responses included:

  1. Food goes bad too quickly (57%).
  2. It’s past its expiration date (44%).
  3. Cooked too much (19%).
  4. Do not finish their meals (11%)

Chart 2 outlines how often families throw away food.

 

Chart 2

How Often Do You Throw Out Food?

jan-2017-blog-chart-2

What Foods are Most Likely to Get Tossed?

Fresh fruits and vegetables are the most commonly wasted food item in households. Surprising, as nearly three-quarters of consumers claim they have trouble affording produce. Chart 3 outlines the most commonly wasted food.

 

Chart 3

Most Commonly Wasted Food Items

jan-2017-blog-chart-3

What Can Consumers do to Reduce Food Waste?

Planning, prepping, and storing food can help households waste less food.

  • Planning: Simply making a list with weekly meals in mind can help households save money and time. Conduct an inventory of the refrigerator and cupboards to avoid buying food you already have.
  • Prepping: Prepare perishable foods soon after shopping. Freeze food such as bread, sliced fruit, or meat that you know you won’t be able to eat in time.
  • Storing: Research how to store fruits and vegetables so they stay fresh longer.

 

Communications with Expiry Dates is Critical to Success!

All parties involved in the food chain process play a role in reducing food waste. Better communications among all participants is critical, especially when it comes to expiration dates. Regardless of terminology utilized: “Best by”, “Enjoy by”, “Use by”, most consumers do not understand these are not expiration dates but suggestions as to when the product is at its freshest. Most food is often safe to eat days, weeks, even months after these printed dates.

A recent report from the U.S. Department of Agriculture suggests switching the phrase to “Best If Used By” would help reduce food waste.

 

Canadian Government Intervention – Beware!

Government intervention in private sector business usually translates into additional taxes for business and higher retail prices for consumers. Parties in the food chain process, beware. You have been put on notice. Though Canada won’t be serving up any food waste solutions for at least a year, “Food waste is part of the food policy that we’re going to deal with in the next year or two”. Agriculture Minister Lawrence MacAulay in conversation with CBC News, October 2016.

We all play a role in reducing food waste. Either we can act on our own initiatives or wait for Government intervention. The choice is ours to make.

 

For more help 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 – “DOLLAR STORES – THE EMERGING FOOD RETAILER FOR CONSUMERS”!

The popularity and growth of Dollar Stores in this country is a story for the ages. First introduced into the Canadian market more than 30 years ago, selling discount greeting cards and gift wrap, today they have become Canada’s fastest growing grocery channel. So, who are Canada’s leading Dollar Store chains, why have consumers turned to Dollar Stores, who is their typical shopper, and what growth have they achieved in the food sector?

Canadian Dollar Store ChainsShopping

Canada’s leading Dollar Store chain is Dollarama. September 2014, they operated over 900 stores. Their expansion plans include 70-80 new stores per year with a goal to operate over 1,200 retail outlets. Their main competitor is Dollar Tree, a US based firm with over 13,000 retail outlets. Presently operating 200 stores in Canada, their expansion plans are to operate 1,000 stores. Dollarama currently controls 60% of the Dollar Store market share.

 

Decline in Consumer Spending Leads Consumers to Dollar Stores

Canadian families are increasingly becoming cash strapped as they have seen their personal finance situations deteriorate the last couple of years. A new study suggests nearly one-quarter of Canadians are worried about how to pay for groceries, with more than 50 percent shifting their shopping habits amid fluctuating food prices.

Nielsen’s study entitled “What Makes the Consumer Tick”, identified consumers top 3 concerns as:

  1. Economy: Canada has become a part-time job creation nation with stagnant wages.
  2. Food prices: Food prices have increased steadily over the last couple of years.
  3. Utilities: Electricity prices, specifically in Ontario are among the highest across North America.

As part of the same study, Nielsen segmented the consumer into 3 different shopper categories. Their research revealed “Canadian Spending Power in Decline”. Table 1 breaks down the shopper segments and the decline in their shopping power over the past 5 years.

 

Table 1

Canadian Shopper Segments

dec-16-blog-pic-1

The consumers quest to save is defining retail trends.

dec-16-blog-pic-2

Seeking ways to reduce their food bills, consumers have turned to Dollar Stores. Today Dollar Stores household penetration level is 76.3%. Their household penetration level in 2011 was 72.3%.

 

Dollar Stores Shopper Profile

Though Dollar Stores continue to skew to lower income households, they are starting to gain greater prominence with higher income households. In the US, +40% of Dollar Store business comes from households with incomes of more than $70,000. Table 2 breaks down the Canadian Dollar Stores shopper profile.

 

Table 2

Dollar Stores Shopper Profile

dec-16-blog-table-2

Dollar Stores Growth in Food

Dollar Stores CPG sales growth is 10%, tops in the grocery sector. Today food now accounts for over half of Dollar Store CPG sales. Table 3 outlines Dollar Stores product mix.

 

Table 3

Dollar Store Product Mix

dec-16-blog-table-3

Though Dollar Stores sell products at various price point, those units priced between $1.00 – $1.99 still account for over half of all units sold. Table 4 breaks down their sales by price point.

 

Table 4

Unit Sales by Price Point (Average price per unit)

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 With consumers purchasing more food from Dollar Stores, their forecasted market share of the CPG sector is anticipated to reach 1.9% by 2020. Chart 1 outlines Dollar Stores CPG market share growth since 2011.

 

Chart 1

Dollar Stores CPG Market Share

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Dollar Stores – The Opportunity for Food Brands

Dollar Stores as a potential distribution channel for food brands can no longer be dismissed. They have arrived and overtaken the destination place for many CPG consumers. Those brands who embrace this channel will come out ahead in the long run as today’s economy continues to sputter along. Do not dismiss them just to shelf stable foods. Though not available now, milk and cheese may become the next food categories to enter this channel as they have in US. Skeptical! Who ever thought Drug Stores would sell milk, cheese and frozen foods?

 

For more help 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 – “WINNING CUSTOMER LOYALTY IN THE AGE OF PRODUCT TRANSPARENCY”!

Higher product transparency is increasingly becoming a global business requirement for companies across multiple markets and industries. So what is the definition of product transparency with respect to the food sector, which consumer segment is driving this initiative and what does it mean for the brand?

 

What is Product Transparency?blog-pick-rb

Consumers are demanding value transparency when it comes to the packaged goods sector. Though the definition of
transparency has not been widely understood, a consumer survey defines a transparent brand as “One that provides all information about a food or personal care product to allow shoppers to determine for themselves if the product is a fit”. Chart 1 outlines the Top 5 factors that consumers use to determine whether a food manufacturer is being transparent.

 

Chart 1

Factors That Determine if Food Manufacturer is Being Transparent

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What Consumer Segment is Driving Product Transparency?

Though most consumers today seek full product transparency, in particular it is the Millennial Mom who is leading this charge. Specifically, when it comes to food products, they want access to detailed product information in order to determine for themselves what food is healthy for them. In a recent study, Millennials Moms revealed it is 4x more important they understand the product ingredients of the product they wish to purchase than the brand they have chosen. Food safety, nutritional information and environmental impact are their greatest concerns. Chart 2 outlines the Top 3 ways consumers determine if a product is healthy.

 

 

Chart 2

How Consumers Determine if Product Is Healthy

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The Demand for Product Transparency!

The demand for product transparency evolves around:

1. Consumers trust in brands and

2. Consumers’ dietary needs.

 

A recent study revealed 35% say they are sometimes confused by what the labels on the food are actually saying and in the process is losing faith in brands. In the same study, the majority of consumers (81%) revealed they had consumed a packaged product with an ingredient they did not recognize in the past month. In addition, 53% of the respondents revealed they shop according to a specific diet.

 

Evolution in the United States!

In the United States DigiMarc has created a technology driven mobile engagement barcode for food manufacturers. By scanning this code, consumer can access all relevant information with respect to a products ingredient. For example, Unilever, a strong supporter of this new technology now allows consumers who purchase Hellman’s mayonnaise to learn what US state provides the soybean for this product.

 

Product Transparency, The Opportunity For Food Brands!

Woman Buying Sandwich From Supermarket

Brands that understand these evolving behaviours and successfully address the need for greater product transparency and increased consumer access to information will be poised to increase their market share. According to acomprehensive new survey from Label Insight, they revealed,

  1. 94% of shoppers will be loyal to a brand that offers complete transparency.
  2. 73% would be willing to pay more for a product that offers complete transparency.
  3. 39% more likely to switch to a brand if it offered full product transparency.

Brands that embrace this initiative will reap the rewards. Those who don’t will continue to look from the outside in – trying to get listed in the grocery sector.

 

For more help 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 – EMERGENCE OF THE KOSHER CERTIFIED MARKET!

Like a stealth plane that can fly virtually undetected, the Kosher food market has carved a significant niche for itself with little or no fanfare. So exactly, what is Kosher, how big is the market and what are the implications for food brands? This week I had the pleasure to interview Mr. Kalman Emanuel – MK to answer these questions and to understand the importance of it to society as a whole.

 

What is Kosher?Delicious kosher food, 3D rendering, blue street sign

Kosher is much more than responsible food preparation. “Kosher refers to a set of intricate biblicals that detail the
types of food that a Jewish person may eat and the way in which it may lawbe prepared”. Mr. Kalman Emanuel.

For the product to be certified Kosher, all ingredients in every product and the process of preparing the product must be certified for Kosher compliance. Health and cleanliness are hallmarks of Kosher food.

 

Kosher Food Sector

The demand for Kosher-certified products has increased dramatically and is currently one of the hottest food trends globally. The global Kosher market was projected to top $300B by 2013, fostered by an annual growth rate of 15%. In Canada, Kalman Emanuel estimates the Kosher market is an over $2.8B sector, which represents an increase of up to 12% over two year period. Within North America supermarkets (Canada / US), Kosher products are becoming increasingly available and currently represent up to one-third of all products offered by supermarket chains.

 

Market Appeal for Kosher Products

There is strong market appeal for Kosher products. The top reason why Kosher is being purchased is due to the perceived quality of the product and for health reasons, and not for Kosher dietary restrictions. Chart 1 outlines the Top 5 reasons consumers purchase Kosher products.

 

Chart 1

Reasons For Buying Kosher

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Research suggests consumers not of the Jewish or Muslim faith are fuelling the demand for Kosher products. A new report by a leading “consumer intelligence” firm has found that as many as 28% of Americans buy Kosher food products because they are Kosher. Chart 2 outlines the Kosher consumer and reveals the theory that Kosher products are only consumed by the Jewish / Muslim community are misguided.

 

Chart 2

Kosher Consumer

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The demand for Kosher products is solidified by Kosher Fest, the world’s largest and most attended Kosher-certified products trade show in which more than 6,000 industry professionals are expected to attend, and more than 325 exhibitors will feature Kosher-certified products and services for the Kosher market.

 

Kosher Certification Process

The business of becoming Kosher remains tightly regulated by certification agencies. MK (www.mk.ca) has established themselves in Canada as the leading player responsible for the certification of Kosher food products. As per Kalman Emanuel, “Certifying a product Kosher tells the consumer that the owners of the product or establishment take their customers very seriously. The bottom line is that the company’s growth is upgraded and enhanced, with everyone – owners and purchaser’s benefiting”. Those firms that receive MK’s certification are allowed to feature the MK logo on their packaging.

 

Implications for Food Brandskosher

The Kosher food market has yet to become mainstream, and remains a niche category. The limited supply of Kosher products in retail outlets also provides notable opportunity for ingredient suppliers and manufacturers of Kosher products. Kosher products appear to be a lucrative market opportunity; particularly as Kosher consumers spend significantly more (50%) than average consumers.

 

For more help 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).

 

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