Canadian Grocer - December 2017 by ensembleiq

LIGHTER AND BRIGHTER CEO Ken Keelor on Calgary Co-op’s new look P. 22 GROCERY DELIVERY HEATS UP Grocers are stepping up their e-commerce game P. 29 POWER TO THE PLANTS Consumers are digging into plant-based foods P. 41

GREATS of GROCERY The 2017 Golden Pencil Winners

DIANE J. BRISEBOIS President & CEO, Retail Council of Canada DARRELL JONES President, Save-On-Foods

DECEMBER 2017

SHELLEY MARTIN President & CEO, Nestlé Canada

Congratulations

Darrell Jones, Shelley Martin and Diane Brisebois on your 2017 Golden Pencil Award!

from your friends at

CONTENTS December 2017

COVER STORY

Volume 131 Number 8

GOLD STARS

OPINIONS

05 Front Desk 18 Global Grocery 50 Checking Out

Meet the three Golden Pencil Award winners for 2017

PEOPLE

06 Suzie Yorke

The CPG exec-turned-entrepreneur is on a mission to put good fats back on the table

08 The Buzz

Comings and goings, store openings, awards, events, etc.

IDEAS

11 High expectations?

Canadians are interested in edible cannabis: how might it fare as a grocery category?

14 Best in show

Find out what products impressed grocers at CHFA East

16 Sweet smell of success Syrian refugee family strikes a big deal with Sobeys

AISLES

41 Power to the plants!

With health concerns top of mind, consumers are digging into plantbased foods

44 Bringing the heat FEATURES

CALGARY CO-OP

22 The retailer's new

COVER IMAGES: JAIME HOGGE AND COLIN WAY

concept store is lighter and brighter to appeal to a younger demographic

DELIVERING THE GOODS

29 Grocers are boosting their

e-commerce efforts and the home delivery battle is heating up

Hot sauce is setting tongues and sales on fire

45 Sea superfood

What's behind algae's popularity?

FRESH

48 Produce with benefits

Value-added fruits and veggies are ripe for growth

FRONT DESK

GROUP PUBLISHER Jennifer Litterick

jlitterick@ensembleiq.com

VICE PRESIDENT/DIRECTOR, EVENTS & MARKETING Michael Cronin mcronin@ensembleiq.com

AUDIENCE DEVELOPMENT MANAGER Lina Trunina ltrunina@ensembleiq.com

WEB OPERATIONS MANAGER Valerie White vwhite@ensembleiq.com

EDITORIAL EXECUTIVE EDITOR Shellee Fitzgerald

sfitzgerald@ensembleiq.com

MANAGING EDITOR Carol Neshevich

cneshevich@ensembleiq.com

ONLINE EDITOR Kristin Laird

klaird@ensembleiq.com

CONSULTING EDITOR George H. Condon condug@sympatico.ca

DESIGN & PRODUCTION DIRECTOR OF PRODUCTION & DESIGN CANADA Derek Estey

destey@ensembleiq.com

PRODUCTION MANAGER Michael Kimpton mkimpton@ensembleiq.com

SENIOR DESIGNER Josephine Woertman

jwoertman@ensembleiq.com

CORPORATE OFFICERS EXECUTIVE CHAIRMAN Alan Glass CHIEF OPERATING OFFICER Richard Rivera CHIEF BRAND OFFICER Jeff Greisch CHIEF FINANCIAL OFFICER Len Farrell CHIEF BUSINESS DEVELOPMENT OFFICER & PRESIDENT, ENSEMBLEIQ CANADA Korry Stagnito PRESIDENT OF ENTERPRISE SOLUTIONS/CHIEF CUSTOMER OFFICER Ned Bardic CHIEF DIGITAL OFFICER Joel Hughes CHIEF HUMAN RESOURCES OFFICER Greg Flores

SALES ASSOCIATE PUBLISHER Ariel Burkett aburkett@ensembleiq.com

SENIOR BUSINESS DEVELOPMENT MANAGER Vanessa Peters vpeters@ensembleiq.com

DIRECTOR OF PARTNERSHIPS David Wood dwood@ensembleiq.com

SALES, SPECIAL REPORTS Michelle Iliescu miliescu@ensembleiq.com 1-877-261-6636

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EDITORIAL ADVISORY BOARD Tom Barlow, Ross Bletsoe, François Bouchard, Mandi Fawcett, André Gagné, Annick Gazaille, Denis Gendron, Lorelle Gilpin, Florent Gravel, Won Suk Ha, Jessica Kim, Les Mann, Ken Schley, Peter Singer, Mondella Stacey, Mike Venton

MAIL PREFERENCES: From time to time other organizations may ask Canadian Grocer if they may send information about a product or service to some Canadian Grocer subscribers, by mail or email. If you do not wish to receive these messages, contact us in any of the ways listed above. Contents Copyright © 2017 by Stagnito Partners Canada Inc., may not be reprinted without permission. Canadian Grocer receives unsolicited materials (including letters to the editor, press releases, promotional items and images) from time to time. Canadian Grocer, its affiliates and assignees may use, reproduce, publish, republish, distribute, store and archive such submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. ISSN# 0008-3704 PM 42940023 Canadian Grocer is Published by Stagnito Partners Canada Inc., 20 Eglinton Avenue West, Ste. 1800, Toronto, Ontario, M4R 1K8.

VGAJIC/GETTY IMAGES

Printed in Canada at Transcontinental.

We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage.

TIME FOR GREATER TRANSPARENCY

Earning consumer trust is more important than ever THE FOOD INDUSTRY APPEARS to have a bit of a trust problem to overcome. According to Mintel, in its newly released Global Food & Drink Trends 2018, distrust is rampant among the world’s consumers. And in Canada, in particular, just one in five Canadian adults trust the health claims made on packaging. This wariness has heightened the need for food makers to be more transparent, not only about the ingredients they use but also about their processes and supply chains. And it’s not just Mintel reaching this conclusion; in its latest Grocery Shopper Trends report, the Food Marketing Institute (FMI) also found that consumer demand for transparency is on the rise. Consumers, particularly millennials, not only want to know what’s in the food they buy, they want to know the story behind it. This means full disclosure on a host of things, from animal welfare to environmental impacts and fair labour practices. Transparency, of course, is not exclusively a manufacturer issue. The FMI report also found that around particular concerns related to food, shoppers hold retailers almost as responsible as manufacturers. One thing’s for certain: demand for openness and honesty is not going away. Mintel says given the uncertainty gripping consumers, it will be more crucial in the year ahead

GIVEN THE UNCERTAINTY GRIPPING CONSUMERS, IT WILL BE MORE CRUCIAL IN THE YEAR AHEAD FOR COMPANIES TO BE ATTUNED TO TRANSPARENCY for companies to be attuned to transparency. With empowered consumers voting with their dollars, companies will need to do what it takes to earn trust. Doing so could be a good opportunity to stand out from the crowd. Many emerging CPGs and alternative food retailers, for instance, are already using transparency—which they've built their businesses on—as a powerful marketing tool and a critical point of differentiation. Speaking on the topic at Grocery Innovations Canada recently, Progressive Grocer's Joan Driggs summed it up this way: “You can't afford to not pay attention to transparency and trust with your shoppers.”

Shellee Fitzgerald

Executive Editor

sfitzgerald@ensembleiq.com December 2017 Canadian Grocer

PEOPLE The Facts Who Suzie Yorke Position Founder and CEO, Suzie’s Good Fats Company What’s New? Launch of the brand’s first two bars

LET THEM EAT FAT

Suzie Yorke, a CPG exec-turnedentrepreneur, is on a mission to put good fats back on the table By Rebecca Harris Photography by Ingrid Punwani

December 2017 Canadian Grocer

Who you need to know

PEOPLE

uzie Yorke had enjoyed a successful career as a marketing executive at big CPG and weight-loss companies when her entrepreneurial “aha” moment happened. In early 2016, she read two myth-busting books about the importance of fat to overall health and wellness: Eat Fat, Get Thin by Mark Hyman and The Big Fat Surprise by Nina Teicholz. “I thought, ‘Wow, that’s it,’” says Yorke, a triathlete and ironman competitor who had been on a low-fat diet for 20 years, but had developed health issues such as irritable bowel syndrome and high blood pressure. “Two things became clear. One is, I need to change what I’m eating. And two is, there is a bigger idea here. It’s not just that we need to get the message out with books. There’s also a role for a brand.” Yorke had been thinking about launching her own brand for about three years, but the books gave her the kick-start she needed. She quickly got to work, coming up with a brand name, working with a packaging partner and conducting consumer research. Her big fat idea? Suzie’s Good Fats Company, a line of food products based on the premise that “fat is back and sugar is out.” The brand launched in September 2017 with two products: coconut chocolate chip and peanut butter chocolatey snack bars, which are low in sugar and loaded with good fats such as nut butters, coconut oil and butter. “The bars are packed with good and wholesome ingredients, at least 50% fat, moderate protein—about eight grams in a 200-calorie bar—and the lowest amount of sugar possible,” says Yorke. In coming up with the first product idea, Yorke drew on her vast marketing experience. A Montreal native who studied electrical engineering at McGill University, Yorke moved to Toronto in 1990 to work for Procter & Gamble in a marketing role. From there, she held various marketing roles at Frito-Lay, Heinz, Conagra and Swiss Herbal Remedies. She then held vice-president of marketing roles at Weight Watchers and Wellnx Life Sciences before running a consulting

30 SECONDS WITH… firm for four years, with clients in the natural health products sector. “I have worked on bars many times through my career, so I knew the basics,” says Yorke. “Bars are portable, they’re low cost and they’re great for trial. Trial is the challenge when you launch a brand, not usually repeat. It’s getting into enough bellies quickly enough so your brand can have a chance to break through the clutter. So, bars made the most sense.” Suzie’s Good Fats Company plans to launch a total of six varieties of bars by 2018. However, bars are just the beginning. The company is working on a range of formats, including snacks, butters and oils, and frozen foods. “It is about scaling up our bars, but also offering a whole range of products that are low carb and high fat,” says Yorke. While Yorke certainly has the marketing chops to helm a startup CPG brand, the biggest challenge she has encountered to date has been on the product development side. The company’s first co-packing partner was able to do small pilot batches, but it didn’t have the right equipment or expertise to scale up. Yorke spent a few months looking for a new co-packer, educating herself on things such as coatings and fat binding, and working with experts. “Through working with the right people, asking the right questions and going back to the product brief, we found a phenomenal partner in Ontario that had the right equipment and expertise,” says Yorke. “They were able to save the day and come up with a bar that meets all of our criteria.” This past June, Suzie’s Good Fats was chosen to participate in the Cohort IV District Ventures Brand Accelerator Program, launched by marketing guru Arlene Dickinson. “There are a lot of programs to help entrepreneurs now because a lot of people want to do this,” says Yorke. “I’m getting into it a little bit later in life, but I have a pretty strong skill set in building brands. That allows me to dream much bigger in terms of developing a brand that is large enough to change how people eat and how they feel about it.” CG

SUZIE YORKE What’s the biggest adjustment in going from big business to startup? You’re constantly in a state of fear. It’s a big change going from managing a brand and having the cushion of the multinational if your innovation doesn’t go well, to the buck stops with me. You just have to know that things will go wrong and you’re going to figure out a solution.

What’s the best part about your job? I adore the energy of the people I’m working with. As an entrepreneur, I’m now surrounded by people who want me to succeed and want to be part of it.

What advice would you give aspiring entrepreneurs? Persevere! If you strongly believe in something, and you know in your gut that you’re on the right track, just persevere. If you put the right people, the right plans and the right thinking in place, it’s going to unfold how it needs to unfold. But just don’t give up.

What’s your favourite food? It has to be butter. In Quebec, I grew up liking rich, high-fat foods and then I gave them up for 20 years. Now, I adore all the best things that come with high fat. But I can slather butter over everything, anything, all day long, and I’m in heaven.

December 2017 Canadian Grocer

THE BUZZ

The latest news in the grocery biz

OPENINGS

Calif.-based Seafood City Supermarket made its Canadian debut on Sept. 28 in Mississauga, Ont. The 50,000-sq.-ft. store offers a large assortment of Filipino specialties as well as conventional fare and, of course, seafood. In addition to the new Canadian store, the chain has 24 locations in the United States. In late October, Colemans opened its 12th grocery store. The new location is on Newfoundland Drive in the east end of St. John’s.

APPOINTMENTS Michael Laliberté is the new executive director at Chicken Farmers of Canada. He replaces Mike Dungate, who held the role for more than 20 years. Laliberté has racked up 26 years’ worth of experience at Chicken Farmers of Canada, most recently in the role of director of operations.

Canadian Grocer’s Thought Leadership CEO Conference plus the Golden Pencil Awards take place on Nov. 20 at Toronto’s Fairmont Royal York Hotel. For more details or to purchase tickets visit Canadiangrocer. com and golden pencilaward.com The Private Label Manufacturers Association’s 2017 Private Label Trade Show takes place in Chicago on Nov. 1214. Visit plma.com for more info.

(Above) At Seafood City’s new location customers can have their fish cleaned and fried for free while they wait (Below, right) Celebrating the grand opening of the Walmart Supercentre in Longueuil, Que.

ANNOUNCEMENTS Farm Boy has announced plans to bring its fresh urban concept to downtown Ottawa. The new 8,000-sq.-ft. store will be located in the CF Rideau Centre and is slated to open in late fall. The company says the smaller footprint store will be brimming with hundreds of Ontario-made goods, artisanal cheeses, premium meats and a mix of natural, organic and local foods.

December 2017 Canadian Grocer

Save-On-Foods is expanding its footprint in the Calgary area. The grocer recently opened a 41,000-sq.-ft. store in Airdrie, a community just north of the city and has announced plans for another store in Calgary’s University District, slated to open in 2020. Longo’s is reaching beyond the Greater Toronto Area with the opening of its newest store, which is located in Guelph, Ont., about 100 km west of Toronto. The new store is the indie grocer’s 32nd location. Walmart Canada opened its new Montérégie Supercentre in Longueuil, Que. in late September. The supercentre is what the retailer calls its first “prototype” store in the province (the fifth in Canada) and features innovations including Scan & Go along with a new grocery pickup service. CHICKEN FARMERS OF CANADA, WALMART CANADA

EVENTS

THE BUZZ

DEALS In a $4.5-billion deal, Metro Inc. has acquired Jean Coutu pharmacies. The combined business will have a network of 1,300 stores. Jean Coutu will operate as a standalone division of Metro, headed by François Coutu. Metro also announced it is selling off most of its stake in Alimentation Couche-Tard to finance the Jean Coutu purchase. Gay Lea Foods Co-operative has grown again, acquiring Calgarybased Alberta Cheese Company, a firm that makes specialty Italian cheeses under the Franco’s and Sorrento brands. Gay Lea says it intends to maintain full operations at the Alberta plant.

JOHN GOLDSTEIN, METRO

Premium Brands Holding Corporation, a specialty foods producer and marketer, has acquired 100% interest in Ontariobased Skilcor Food Products. Skilcor is a maker of cooked back ribs and other protein products. Saputo has reached a $1.29billion agreement to purchase Australian dairy firm Murray Goulburn Cooperative.

AWARDS 1. John Pigott, CEO of Club Coffee and Morrison Lamothe, has received Food and Consumer Products of Canada’s (FCPC) 2017 Award of Distinction. The award recognizes individuals who have made significant contributions to the Canadian food and consumer products manufacturing industry. 2. Metro recently honoured four of its Quebec grocers with its 2017 Customer Devotion award, which recognizes retailers that deliver an excellent customer experience. The four winners were: Yannick Lefebvre, franchisee-owner of Metro Plus Val-Bélair, Quebec City; Patrick Bourget, franchisee-owner of Metro Cabano, Témiscouata-surle-Lac; and two awards went to the members of Groupe Messier—the owners of Metro Plus Messier Mascouche, Mascouche and Metro Messier Fort-St-Louis, Boucherville.

The Messier family (pictured here with Metro execs) won two of Metro’s 2017 Customer Devotion Awards

3. Canadian Grocer’s

sixth annual Star Women Awards were handed out on Sept. 21 in Toronto. The winners (L to R): Shannon Skinner, Metro Ontario; Melinda Zoccoli, UNFI; Cathy Weiss, Save-On-Foods; Natalie Voizard, Metro; Michelle Scott, The Grocery Foundation; Barbara Ann O’Brien, Bonté Foods; Rebecca McKeen, McKeen Metro Glebe; Elaine Lukowski, Loblaw; Renée Hopfner, Sobeys; Natasha Gunn, General Mills; Naniss Gadel-Rab, Unilever; Mary Dalimonte, Sobeys; Alberta Clapp, Conagra Brands; Marie Chevrier, Sampler. Missing: Sarah Davis, Loblaw; Cara Keating, PepsiCo Foods Canada.

2017 CANADIAN INDEPENDENT GROCER OF THE YEAR AWARDS

At CFIG’s annual awards ceremony in October, special Life Member Awards were handed out to François Bouchard (The Country Grocer) and Blair Ruelens (formerly of PepsiCo) for contributions to the industry. December 2017 Canadian Grocer

NEW

Quick,

Downright delicious

®Reg. TM/MD McCormick Canada

WHEN TASTE MATTERS MOST CHOOSE PURE FLAVOUR

VISIT FLAVOUR.CA FOR DELICIOUS HOLIDAY RECIPES ®Reg. TM/MD McCormick Canada

IDEAS

Retailers, suppliers, shoppers, insights

EDIBLE CANNABIS

CREATIVE-FAMILY/GETTY IMAGES

High expectations? Dalhousie study finds nearly half of Canadians are willing to try cannabisinfused foods By Chris Powell

new study from Dalhousie University suggests Canadians might be ready for a groovier grocery experience. The study, called Marijuana-infused Food and Canadian Consumers’ Willingness to Consider Recreational Marijuana as a Food Ingredient, was based on an August survey of 1,087 Canadians aged 18+. It found that nearly half (46%) would be willing to try cannabis-infused food products. “It really speaks to how curious Canadians are [about edibles],” explains the study's lead author, Dr. Sylvain Charlebois, dean of the faculty of management at Dalhousie in Halifax. “I expect that a lot of people will be tempted to try them legally, or even illegally.” The Liberal government amended Bill C-45 (AKA the Cannabis Act) in early October to permit “edibles containing cannabis” to be sold in stores beginning in July 2019, one year after marijuana legalization takes effect. December 2017 Canadian Grocer

December 2017 Canadian Grocer

Cultural connection A new initiative sees indigenous languages appearing on shelf labels at stores in the North By David Brown Northern Canada’s largest grocer has begun a program to introduce indigenous languages on in-store signage and shelf labels. The North West Company, which operates Northern and NorthMart stores in more than 120 communities across the Canadian north, will provide translations in more than 30 indigenous languages on more than 80 items. The company said the program would not only enhance the shopping experience for many of its customers, but is intended to promote the use and learning of the various languages. Shelf labels in the indigenous language will include a QR code, which shoppers can scan with their phone to hear an audio translation and learn the proper pronunciation. “This initiative responds to our customers’ needs and their community priorities, which are closely intertwined at North West, and go to the heart of our community promise to help make a positive, progressive difference in each community we serve,” said Craig Gilpin, executive vice-president, The North West Company, in a release. For the translation initiative, the company worked with professional translators, along with community Elders, language teachers and cultural centres to ensure accurate translations.

BROWNIE: AESKYMAKS/GETTY IMAGES; BREAD: THE NORTH WEST COMPANY

Charlebois says ingesting marijuana is a healthier option than smoking, which likely explains the heightened consumer interest in edibles. “I suspect that a lot of people don’t see themselves smoking marijuana at first,” he says. Nearly half of survey respondents (46.1%) listed bakery products such as brownies and muffins as the pot-infused products they would be most likely to buy at the grocery store, followed by ready-to-eat products such as gummy bears (26.6%), as well as oil (24.2%), spices (18%), drinks (17.2%) and butter (15.6%). Canada already boasts several companies specializing in edibles. They include Vancouver-based Sweet Jane Edibles, whose products include Double Dose Peanut Butter Cups and Milk Chocolate Hazelnut Cups featuring 200 mg of THC (the chemical compound responsible for the marijuana “high”) per cup, and Mota, which offers a gluten-free granola bar, brownie, and a $48 chocolate cube (“great for the experienced patient”), which packs 600 mg of THC. The market seems ill prepared for pot as a raw ingredient, however, with nearly two-thirds (65.6%) of respondents saying they don’t know enough about marijuana to cook with it. Meanwhile, 38.5% of respondents said they would be willing to order a dish containing marijuana at a restaurant, while more than a quarter (26.6%) said that a marijuana-infused drink would replace a typical alcoholic drink. Charlebois says the August study was prompted by conversations with several food manufacturers and grocery retailers who have shown an interest in developing pot-based edibles. “We’re aware of several companies looking very seriously into this space,” says Charlebois, who declined to “narc” on the companies that pushed for the study. “They’re very well-established—most people would know of them,” he says. Research suggests that edibles are poised to become a key part of the cannabis market, which is growing rapidly following its impending legalization in Canada and key U.S. states including California and Colorado (which legalized pot in 2012). According to a January report from the cannabis market research firm Arcview, North American pot sales could top US$20.2 billion by 2021, with a compound annual growth rate of 25%—a rate that Tom Adams, Arcview Market Research’s editor-in-chief, says is matched only by cable TV in the 1990s and broadband Internet in the 2000s. A July report on Forbes.com noted that consumers in California alone spent US$180 million on marijuana-infused food and drinks in 2016, representing approximately 10% of the state’s total marijuana sales. The research fails to address one key question, however: Can you still eat Doritos and/or Twinkies after loading up on pot brownies? Asking for a friend.

Ahsíi ch’aadi yáêt’e kadeæ a

IDEAS

IDEAS WHAT YOU MISSED AT…

Grocery Innovations Canada GIC 2017 was jam-packed with useful insights: POP GO THE GARDEN SALES Adding a seasonal pop-up garden centre can be a smart (and very profitable) move for grocery stores, according to Peter Cantley, president of Cantley Gardens. At a workshop, Cantley told attendees grocery store garden centre sales for just three months in the spring can add up to as much as indoor floral sales for the entire year—and since a pop-up garden centre is only open a few months it makes for lower labour costs, thereby maximizing those sales and profits.

A BOOST FOR BEER AND WINE With Ontario’s introduction of wine and beer into grocery stores well underway, alcohol sales were a hot topic at GIC this year. At a workshop on wine and beer, Heather MacGregor of Drinks Ontario suggested in-store tastings can be a great opportunity to boost sales of wine and

beer in grocery stores. “It’s all about getting liquid on lips,” she said, noting that the more people you can get tasting the products, the more sales will happen.

THAT’S ENTERTAINMENT As digital disruptors like Amazon continue to force retail to evolve in countless ways, brick-and-mortar stores may want to step up their entertainment game. Millennials, in particular, value a shopping “experience,” explained Michael Graydon, CEO of Food & Consumer Products of Canada, in a grocery panel discussion. Large format stores might consider giving some floor space to a restaurant or even a brewpub, he said, as a way to create more entertainment value in the shopping experience.

FLAVOUR ADVENTURISM At a morning session, Mintel’s Joel Gregoire spoke about a changing Canada

(thanks, in part, to immigration) and how Canadians are looking for food to bring them new experiences. According to Mintel’s research: 63% of Canadians like to explore new flavours, 73% like to experience cultures through food and 57% are more open to eating ethnic foods now than they were a few years ago. The conclusion? There’s an opportunity for retailers and food companies to deliver new products, particularly around African, Southeast Asian and Korean flavours.

MAKE THE SHOPPER THE HERO Progressive Grocer magazine’s Joan Driggs talked about how empowered shoppers are driving changes in store. Grocers have an opportunity to rethink their stores and create experiences for the shopper and provide "new levels of convenience" to meet needs related to things like health/ wellness, meals and e-commerce.

The leading edge While there was no shortage of innovation on display at Grocery Innovations Canada 2017, judges were tasked with picking out the Top 10 Most Innovative Products. Here are a few of our favourites among the winners:

Wild Keta Bacon Style Salmon by Simply West Coast

PrOATein Premium Nutritional Bar by PrOATein

Ready-To-Eat Fresh Fruits & Vegetables by Nature Knows

Simply Simple KEFIR+ Overnight Oats by A&M Gourmet Foods

A vegan cheese that mixes the bold flavours of sundried tomatoes, garlic and fresh basil.

A healthy alternative to traditional bacon with a sweet and smoky flavour.

A gluten-free, nut-free bar made of sustainable ingredients.

These fruits and veggies stay fresh up to two weeks and are sold in compostable packages.

Made with gluten-free rolled oats mixed with fruit and/or spices and soaked in kefir overnight.

CFIG

Sundried Tomato & Basil by Fauxmagerie Zengarry

December 2017 Canadian Grocer

IDEAS

Best in show From energy bars featuring crickets to seaweed and coconut in all kinds of formats—these products and many more were on display at the recent CHFA East show in Toronto, staged by the Canadian Health Food Association. We were certainly impressed by the innovation and sheer tastiness on display, but we thought we’d ask a few retailers to chime in on what caught their attention. By Shellee Fitzgerald

Category manager, Longo’s MOST INTERESTING PRODUCT? Frozen Cauliflower Pizza. Gluten-free options continue to grow in importance among our consumer base. This product offers consumers a gluten-free option that tastes great and is nutrient-packed. This will be a must for our frozen pizza assortment.

TRENDS THAT STOOD OUT MOST? Digestive health options. In addition to this trend, the concept of “real food” appeared to be a common theme throughout the show, from beverages to snacking to centre of plate. “No artificial anything” could have been a slogan for the show, as there were many brands emphasizing this.

PRODUCTS THAT WILL RESONATE MOST WITH YOUR CUSTOMERS? As consumer eating habits change (cleaner eating, on the go, etc.) we want to ensure that we offer them solutions to meet these needs. Evive Smoothie Cubes is an item I believe will resonate with our customers. They simplify the task of blending a smoothie, and are a solution for the timestrapped consumer. They’re also jam-packed with nutrients.

December 2017 Canadian Grocer

Kim Bédard

Director, central procurement, grocery and health products, Metro MOST INTERESTING PRODUCT? The coconut jerky from Hungry Buddha was my favourite from the show.

TRENDS THAT STOOD OUT MOST?

•Coconut products are still very trendy. Coconut jerky is an alternative option to meat jerky. •Cha’s Jackfruit in a can—a nice, plantbased alternative. •Beets, including beet chips from Rhythm Superfoods. PRODUCTS THAT WILL RESONATE MOST WITH YOUR CUSTOMERS?

•Wholly Veggie! is easy to cook, has a very good taste and is healthy. •Nice Cream: ice cream made with fruits only. A very healthy dessert option with just two to three ingredients. ANY SURPRISES? The cricket bars and powder from Crickstart. I’ve seen these types of products [before] at shows, but was surprised and interested to see they're now available in the Canadian market. It’s a trend to follow, as it’s a sustainable source of protein.

Matt Lurie

CEO, Organic Garage MOST INTERESTING PRODUCTS? Field Day products, which UNFI is trying to offer independents. It will be interesting to see how well it is executed and what the pricing will be like, but in theory hopefully it will help address some of the ongoing concerns of smaller stores and how they compete on name brand items with the big chains.

TRENDS THAT STOOD OUT MOST?

•Vegan and vegetarian options. Snacks like Vegan Robs. There were also a lot of cashew nut cheese companies (almost too many now!). Also, frozen entrees (burgers). •Fermented options expanding into things like vitamins, snacks and drinks. •The increased interest in private label and companies willing to do private label. •Cold-brewed coffee. PRODUCTS THAT WILL RESONATE MOST WITH YOUR CUSTOMERS? Anything following the trends mentioned above will continue to hit on consumers’ interest.

ANY SURPRISES? The volume of manufacturers interested in doing private label or willing to sell direct.

LONGO'S; METRO; JAIME HOGGE

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2018 Visit chfa.ca for complete details.

IDEAS POLL RESULTS

The sweet smell of success

WHERE WILL YOU INVEST YOUR TECH DOLLARS? Pressure is mounting on grocers to up their tech game to keep up with competitors (many of which have deep pockets) and also meet consumers’ demand for a personalized and enhanced shopping experience. But technology is expensive and differentiating the “nice to have” from the “need to have” can be a tricky business. Are smart shelves the best bet? Artificial intelligence? Or mobile apps?

Syrian refugee family strikes a big deal with Sobeys By Donalee Moulton

We asked readers on CanadianGrocer.com: from other confectionery products, will transform Peace by Chocolate from primarily an online retailer to a mass market supplier. The company’s milk, dark and white chocolate products will initially be carried in Sobeys stores throughout Atlantic Canada, and later they will be available in Foodland and Co-op stores in the region. Once production can ramp up, distribution will be expanded to all the chain’s stores nationally. “We have committed to purchasing everything they can produce,” says Selig. While the agreement with Peace by Chocolate supports Sobeys’ buy-local philosophy, it’s also smart business. The Hadhads’ journey from Damascus, where their original chocolate factory was bombed, to rural Nova Scotia made headlines and has helped generate interest in their products throughout North America. Even Prime Minister Justin Trudeau is a fan: he shared the family’s success story in a speech he gave at the United Nations last year. Now, thanks to this delicious new deal with Sobeys, Peace by Chocolate has ramped up operations and is hiring upwards of 25 people to meet the rapidly growing demand. CG

“THEY REACHED OUT TO US AND THEY ASKED HOW THEY COULD HELP” 16

December 2017 Canadian Grocer

Which technology are you most likely to invest in over the next two years?

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ARTIFICIAL INTELLIGENCE

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CHOCOLATES: PEACE BY CHOCOLATE; PHONE: NATHAN ELSON

PEACE BY CHOCOLATE, an Antigonish, N.S.based confectionery company owned by Syrian refugees, has inked a deal with Sobeys that will see its products on store shelves throughout Atlantic Canada by the end of November. Plans for national expansion are also in the works. “This agreement with Sobeys opens doors to expand the company,” says Tareq Hadhad, co-owner of the chocolate company. “We want to deliver our product to everyone. This is a huge opportunity.” For the Stellarton, N.S.-based grocery chain, this agreement reflects a long tradition of supporting local companies. “That is a differentiator for us as a grocery retailer,” says Sobeys spokesperson Shauna Selig. “We buy local first.” This isn’t the first helping hand Sobeys has extended to Peace by Chocolate. The chocolate company, founded by the Hadhad family shortly after they came to Canada as refugees from Syria two years ago, was initially being operated out of small barn near the family’s home. But after about a year, the space was too small. Sobeys stepped forward to offer the use of half a plant it had leased for its Big 8 Beverages subsidiary. “They reached out to us and they asked how they could help,” says Hadhad. And when the new chocolate factory— which is about 15 times the size of the original barn—opened its doors this September, hundreds of local residents and visitors waited in line to celebrate. The new Sobeys deal, which includes merchandising the products separately

GLOBAL GROCERY Stewart Samuel

RETAIL REINVENTION How grocers are upping their game to keep shoppers coming back to the store AGAINST A BACKDROP of a fast-changing grocery market, shoppers are looking to retailers to help them save money and time. Let’s look at five ways grocery stores are evolving to remain relevant.

1. DESTINATION RETAIL Winning retailers of the future will not only deliver on the attributes of value, time, quality and health, but will also provide an experience along the way. Experience covers the whole shopping trip including the look/feel of the store, the ability to interact with products at the shelf edge and services offered. Feature store: Main & Vine, Gig Harbor, Wash. • Contemporary design with a natural look • Weekly farmers’ markets in store • Centre-of-store cooking demo area to bring meal solutions to life.

2. FRESH SERVICE Investment in fresh food counters continues to grow. Retailers are building strategies around the centre of the plate

and are focusing on produce, meat and seafood. Food counters also provide an opportunity to add value; this year has seen the rise of the vegetable butcher as retailers look to differentiate. Feature store: Woolworths, Warringah Mall, Sydney, Australia • New generation format featuring market-style fresh food offer • Enhanced layout with more space dedicated to fresh foods • Cheese counter and chilled room, with specialists on hand to provide advice.

tion of the hypermarket • Professional kitchen anchors the store, producing about 240 dishes • Also features coffee roasting and micro-brewery.

4. THE HEALTH CARE CENTRE Grocery stores are playing a bigger role in supporting shoppers’ health goals. With an eye on demographic trends, many are expanding offers. Wellness zones, new formats and dedicated private brands are being developed. Feature store: Kesko, Helsinki, Finland • Kesko is partnering with pharmaceutical wholesaler Oriola-KD to introduce “a comprehensive health, beauty and well-being” chain of stores • It has recruited professionals including pharmacists and personal trainers.

Grocers are also developing their stores for different shopping missions. Investment in prepared foods and food-to-go continues to grow. The offer is becoming more sophisticated and the setup, food and staff in many stores resemble a fast-casual restaurant. Meal kits have become a key area of focus, with retailers partnering with specialist companies. Feature store: Carrefour, Mons, Belgium • The retailer’s most ambitious reinven-

5. MAKING SHOPPING EASY AND CONVENIENT 3. THE NEW RESTAURANT IN TOWN

Many retailers are aiming to enhance the physical shopping experience by merging some of online’s capabilities. Strategies are focused on making it easier to find products in store, providing more product information, and simplifying the checkout. Technology is playing a key role with connected shopping carts, self-scanning, beacons and Bluetooth. Feature store: Walmart, Tomball, Tex. • Mobile Scan and Go creates an almost checkout-free experience • Over 90 “extended aisle” digital kiosks provide shoppers with more products online.

CMY

Main & Vine, Washington

December 2017 Canadian Grocer

Walmart, Texas

Stewart Samuel is program director at IGD in Vancouver. IGD is a leading source of insight and best practice in the food and consumer goods industry. VIsit igd.com.

IGD

Grocery is changing, and the pace of change is accelerating. While we will see a shift of sales to online, stores will account for the bulk of shopper spend in Canada. But stores will need to remain relevant, so understanding how shoppers use your stores is vital in ensuring you focus investment in the right areas. CG

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INDUSTRY PARTNERS

AT THE STAR WOMEN IN GROCERY AWARDS BREAKFAST, HOSTED by Canadian Grocer, the sold-out crowd at the International Centre in Mississauga, Ont., heard insights from five of the 16 outstanding winners of this year’s awards. Moderated by Tony Chapman, the panel including Marie Chevrier of Sampler, Mary Dalimonte of Sobeys, Natasha Gunn of General Mills Canada, Michelle Scott of The Grocery Foundation and Shannon Skinner of Metro Ontario, had an animated discussion about the challenges and opportunities for women in the grocery industry. The Star Women Awards recognizes women who have demonstrated leadership, innovation, collaboration and dedication in the grocery industry. Awarded to both retailers and suppliers, these are the women who are making a real impact in the grocery industry. “We are thrilled at the way our industry has responded so enthusiastically to this important award,” says Jennifer Litterick, Group Publisher EnsembleIQ. “In its sixth year and with a record-breaking amount of nominations, the Star Women Awards continues to grow and recognize talented women in the grocery industry.”

Keynote Lisa Orpen, Vice-President, National And Multi-Market Sales, Metroland Media Group highlighted significant shifts in consumer shopping behaviour and provided insight into the changes that lie ahead for the grocery category.

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EVENT SPONSORS

2017 STAR WOMEN IN GROCERY WINNERS FROM RIGHT TO LEFT: Marie Chevrier, Founder and CEO, Sampler Alberta Clapp, Director, Research and Development, Conagra Brands Mary Dalimonte, Senior VP Merchandising and Commercial Programs, Sobeys Naniss Gadel-Rab, Channel and Customer Development Director, Unilever Canada Natasha Gunn, Director, Consumer and Global Insights, General Mills Canada Renée Hopfner, Director, Community investment, Sobeys Elaine Lukowski, VP, Home and Entertainment Merchandising, Loblaw Companies Rebecca McKeen, Owner/ Executive Director, McKeen Metro Glebe Barbara Ann O’Brien, Executive VP, Bonté Foods Michelle Scott, Executive Director, The Grocery Foundation Natalie Voizard, Senior Director, Customer Experience, Metro Cathy Weiss, Store Manager, Save-on-Foods, Thickwood Alberta Melinda Zoccoli, Associate Director, LCL Companies, UNFI Shannon Skinner, Director, Business and Store Services, Metro Ontario ADDITIONAL WINNERS: Sarah Davis, President, Loblaw Companies Cara Keating, VP, Customer Development, PepsiCo Foods Canada For full details on the awards and more photos of the event, visit canadiangrocer.com

Ken Keelor became Calgary Co-opâ&#x20AC;&#x2122;s CEO in 2014

STORE PROFILE

CO-OP’S calm oasis

Calgary Co-op’s Auburn Bay concept store gets lighter and brighter to appeal to a younger demographic By Christina Reynolds Photography by Nathan Elson

December 2017 Canadian Grocer

“CALM OASIS” IS NOT A DESCRIPTION MOST PEOPLE

The Auburn Bay store doesn’t overwhelm visitors when they enter; instead, a panoramic sightline shows off the grab-and-go station, large cheese island, deli, full produce section, bakery and meat counter

would use to characterize a grocery store. But that is exactly the kind of environment Calgary Co-op’s CEO Ken Keelor is striving to create for shoppers as they enter the co-operative’s newest concept store. Instead of bombarding customers with product displays and special offers as soon as they enter, this newest shopping iteration aims to offer a bit of breathing room: a panoramic sightline that shows off the grab-and-go station (complete with hot curry bar), the large cheese island, the deli, the entire produce section and the bakery—and all the way back to the meat counter (with its 28-day aged beef locker). “We are not trying to sell you something right as you come in,” Keelor says. “Customers can plan their journey across the store; they can see where our team members are, and they can ask for help.” It’s very tempting for retailers to raise shelf heights to fit in more products, says Keelor, but Co-op found it was worth lowering displays to give shoppers the ability to more easily situate themselves in the store. Four skylights, bright LED lighting and coloured floor sections for each department (for example, red for produce, black and white for meats, and blue for pharmacy) also make it easier to shop. Calgary Co-op implemented these design

December 2017 Canadian Grocer

changes after hiring Toronto-based Level5 Strategy Group to conduct market research. “We did 6,000 interviews and 15 focus groups,” says Keelor, who joined Co-op as CEO in November 2014. “I really believe the data speaks. It’s not what we think the customer wants, it’s what the customer says they want. So we ask them.” Co-op then hired another Toronto firm, design agency Shikatani Lacroix, to come up with a new store concept based on the market research findings. Keelor wanted to bring the new ideas to market as soon as possible and since Co-op’s newest store, Auburn Bay, was already under construction, things that could be changed were changed; skylights were added, for example, but existing ceiling heights and the original pharmacy location had to remain. “We didn’t get all the changes we wanted, but we got some,” he says of the store that had its grand opening in November 2016. This May, the Shikatani Lacroix redesign of the Calgary Co-op store was awarded an induction into the Retail Design Institute’s “Class of 2016,” but that doesn’t mean the concept will remain static. Co-op is continuing to tweak the design and incorporate the ideas into its 24 food stores, 28 gas bars, 24 liquor stores and three home health care stores in Calgary, Airdrie, Cochrane and Strathmore. (Calgary Co-op itself is one of 190 independent members of

STORE PROFILE Western Canada’s Federated Co-operatives Limited.) Calgary Co-op’s Monterey store has already been retrofitted with the new design, and two more locations, Deer Valley and MacLeod Trail, are expected to be complete by mid-November. “New stores over the next three years will reflect this design, but in a year or two we will go back to the table and see how we are doing,” says Keelor. “Not all the stores will ever look the same—we’ll keep evolving. We can’t redesign all our stores at once, it just doesn’t pay out. That is not in our DNA.” Still, the market research was used for much more than just design tweaks. A key finding from the research was that Co-op needed to do a better job communicating with its younger customers— especially explaining how a co-operative works and making it easier for them to get a Co-op number. “You used to have to go to the customer service desk at the store to buy your $1 co-op membership,” says Keelor. “Now you can sign up online.” And the organization is making a bigger effort to explain that all profits are invested directly back into maintaining the business and are returned to its 460,000 members. “Last year we handed back $31 million to members who get a rebate every year. The cheque comes in the mail. This covers food, liquor, gas, home health care and pharmacy purchases—members get different levels of rebates on all of those things, depending on how the business does every year,” says Keelor. New in-store signage

Top right: The meat counter features a 28-day aged beef locker; Bottom left: Auburn Bay store manager Doug Scott has been with Calgary Co-op for 42 years

The Facts Location Calgary Number of employees 120 Size 45,000 sq. ft. Specialties In-house bakery and butcher; gas bar; top-notch customer service that includes grocery carry-out

December 2017 Canadian Grocer

STORE PROFILE also clearly shows how and where Co-op invests back into the community—last year’s contribution was $4.1 million. For Auburn Bay Co-op manager Doug Scott, the best part of membership is that shoppers can feel a real ownership. “Customers say, ‘It’s my store,’” he says. He recently got a “Doug, you gotta read this” note from a customer who saw another Auburn Bay customer’s post on Facebook. In the forwarded post, the woman told of how she had asked several other grocery stores to create a birthday cake with an orange dinosaur for her two-year-old son, but she was only able to find places that would decorate with dinosaur toys. In her post, she raved about the “amazing” Auburn Bay cake decorator. “She custom drew an orange dino on a cake to make sure my little guy got exactly what he wanted ... I have never been more impressed with the amazing customer service,” she wrote beside a picture of the cake. “That’s where it starts,” says Scott, who has been with Co-op for 42 years. “Customers think this is their store.” The Auburn Bay location, in particular, has made a special effort to cater to families. The Auburn Bay neighbourhood is a relatively new suburb on the southeastern edge of Calgary. It has its own man-made lake and is popular with young families. Scott noticed the younger demographic right

away and brought in kid-sized grocery carts (Auburn Bay is the only Co-op location to have these). He’s also organized an in-store kids’ Easter egg hunt and a Halloween candy hunt. Calgary Co-op has long had an “All kids get a free cookie” program at its bakeries, but it has recently increased signage for this promotion—and Auburn Bay is also adding a new display unit for a free piece of fresh fruit for kids, giving parents the option to let their kids indulge in a cookie or make a healthier choice, explains Scott. “In this industry you’ve got to be nimble,” says Scott, who used that word several times as we chatted. Being nimble is how Auburn Bay Co-op quickly responded to customer requests and added a gluten-free section. It’s why the store works closely with local producers such as Nanton, Alta.’s Paradise Hill Farm to keep in-demand local tomatoes and basil in stock. It’s also why the new store revamped its signature cut fruit and veggie program numerous times before getting it just right. “We are not a massive company compared to our competitors, so we can’t afford to fail big,” says Keelor. “We have a culture of constantly testing and failing quickly—and continuously improving. We don’t experiment at huge cost. We are very confident in what we are doing.” CG

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Congratulations

TO CANADA’S 2017 INDEPENDENT GROCERS OF THE YEAR

National Winners Large Surface Category Save-On-Foods Heritage - Calgary, Alberta (Gold) Longo’s – Leaside - Toronto, Ontario (Silver) Colemans Garden Market - Corner Brook, Newfoundland and Labrador (Bronze)

Medium Surface Category Stong’s Market – Northwoods - North Vancouver, British Columbia (Gold) Metro Plouffe de Farnham - Farnham, Québec (Silver) Longo’s – Walkers Line - Burlington, Ontario (Bronze)

Small Surface Category Oak Ridges Food Market - Richmond Hill, Ontario (Gold) AG Valley Foods - Invermere, British Columbia (Silver) Freson Bros. - Hanna, Alberta (Bronze)

Specialty Category Galleria Supermarket – York Mills - Toronto, Ontario (Gold) The Market by Longo’s – Imperial Plaza - Toronto, Ontario (Silver) Galleria Supermarket - Oakville, Ontario (Bronze)

Arnold Rands Heritage Award Powell’s Supermarket Ltd. - Bay Roberts, Newfoundland & Labrador

Sponsors:

FEATURE

With a little nudge from Amazon (and others), grocers are stepping up their e-commerce efforts—and the home delivery battle is starting to heat up By Chris Powell

Delivering the GOODS INSTACART

PETER VAN STOLK, CEO of Vancouver-based Sustain-

able Produce Urban Delivery (SPUD.ca) has been hearing for years that online will never be able to compete with traditional brick-and-mortar when it comes to groceries. In his version of the old story, however, the emperor not only has new clothes, he probably bought them on Amazon. According to a 2016 report from the investment banking firm Cowen & Company, the online giant will surpass Macy’s as the leading seller of apparel in the United States this year, with predicted sales of US$28 billion. The company is forecasting that number to rise to a staggering US$62 billion— roughly 16.2% of all apparel sales—by 2021.

But what in the name of Jeff Bezos do blouses and Uggs have to do with butter and eggs? Well, Van Stolk says Amazon’s remarkable growth in apparel, a category once considered immune to the threat of e-commerce, should be a cautionary tale for grocers. “Everybody says ‘Nobody wants to buy food online, because they want to see it and touch it,’” says Van Stolk. “But these are the same people who said 10 years ago that nobody would buy clothing online because [customers] wanted to try it on and see how it looks.” Globally, consumers purchased US$48 billion worth of groceries online in 2016, according to research firm Kantar Worldpanel, which also predicts December 2017 Canadian Grocer

that e-commerce will account for 9% of the grocery market (approximately US$150 billion) by 2025. Grocery e-commerce is well entrenched in markets like South Korea—where it accounted for 16.6% of sales of fast-moving consumer goods (FMCG) last year, according to Kantar—as well as Japan (7.2%) and the United Kingdom (6.9%). North America remains a laggard, with e-commerce representing just 1.4% of the U.S. FMCG market in 2016. But experts believe Amazon’s push into grocery with its US$13.7-billion purchase of Whole Foods enables it to bring its e-commerce expertise and pricing power to a sector ripe for transformation. “It just reinforces that Amazon is incredibly serious about food retailing, and that grocery is a strategic category,” says Toronto-based retail analyst Bruce Winder. “Ultimately, it is a seismic shift.” In the weeks following the Whole Foods deal, there was a spate of announcements about the online grocery space. In Canada, this included Metro’s acquisition of the meal delivery service MissFresh; Walmart’s announcement that it was dropping its $2.97 pick-up fee for online orders; and grocery delivery service InstaBuggy’s introduction of its “in-store pricing” model. The latter saw the Toronto-based company eliminate both the price mark-ups (of up to 25% on certain items) and the $35 minimum order requirement. It also instituted a $19.98 “picking, packing and delivery fee” on every order. InstaBuggy co-founder and CEO Julian Gleizer says the move had an immediate (favourable) impact on business—particularly in terms of basket size—as customers responded to what he called “full transparency” on pricing. Gleizer says the move wasn’t made in response to the Amazon/Whole Foods merger, but was instead designed to help the company build scale. InstaBuggy debuted in Ottawa in September, with plans to launch in Vancouver by the end of the year, followed by Calgary and Edmonton.

December 2017 Canadian Grocer

“To be honest I don’t believe [Amazon/Whole Foods] is a threat at the moment,” says Gleizer. “[The deal] just validates that there’s a lot of interest in the space. There’s going to be market share for everybody, so we’re focusing on our plan. We’re comfortable with where we’re at.” That might not be the case for all grocery companies. In September, it was reported that U.S. online delivery giant Instacart is gearing up to enter the Canadian market via a partnership with Loblaw. According to reports, it was the Amazon deal that accelerated talks between the parties. Established in 2012, Instacart operates in 39 U.S. states and includes Whole Foods, Food Lion, Target, Costco and Publix among its retail partners. Nilam Ganenthiran, Instacart’s Toronto-based chief business officer, directed Canadian Grocer’s interview requests to a U.S. spokesperson. He declined to address the rumoured partnership with Loblaw, instead issuing an e-mail statement: “With increasing demand for same-day grocery delivery, and continued expansion to millions of additional households, we’re seeing more and more grocers partnering with Instacart to implement an e-commerce strategy.” Loblaw has invested heavily in click-and-collect, with spokesperson Kevin Groh stating publicly that the service will soon be available at 200 stores. However, Winder says home delivery will be the key to success. “Deep down they know it’s coming, but it’s coming a little quicker than they hoped,” he says. “It’s going to start getting to a tipping point where if they’re not careful, they could end up behind companies like Amazon.” Despite the shift by traditional grocers to embrace digital, Van Stolk believes online startups like SPUD, fuelled by data analytics and largely unshackled from legacy systems, are better equipped to compete in the future marketplace than their brick-andmortar counterparts. “It’s not a question,” he says. Launched in 1997 as a subscription-box service

WOODEN CRATE: PEOPLEIMAGES/GETTY IMAGES, IPAD & HANDS: WEEDEZIGN/GETTY IMAGES

FEATURE

INSTACART, SPUD.CA; GREEN BAGS: SHUTTERSTOCK

that delivered fresh produce to customers’ doors, SPUD has evolved into an online grocery store specializing in local and organic food. It currently serves key Western Canadian markets including Vancouver, Victoria, Calgary and Edmonton, racking up nearly 500,000 deliveries in 2016. Research indicates consumers increasingly want everything now, and are willing to pay a premium for the privilege. According to a 2016 report by McKinsey & Company entitled Parcel Delivery. The Future of Last Mile, the market for same-day and instant delivery will grow to a combined 20% to 25% share of standard parcel revenue by 2025, up from less than 1% currently. The report notes that a quarter of consumers are willing to pay “significant premiums” for same-day or instant delivery. While delivering groceries adds a layer of complexity for conventional grocers, the industry is increasingly catering to customer demand. The McKinsey & Company report notes U.K. grocers such as Tesco, ASDA and Sainsbury’s are building up their delivery fleets to handle increased e-grocery orders as they also move to same-day delivery. Perhaps the best answer to the question of why traditional grocery retailers are suddenly embracing this potentially disruptive new model can be found not in how consumers are behaving, but on Wall Street and Bay Street. On the day Amazon’s purchase of Whole Foods was announced, the stock prices of major U.S. grocery retailers including Walmart, Target and Costco plummeted, with about US$22 billion in market value wiped out in a single day. In response, grocers have been introducing new and innovative ways of meeting the changing customer demands. In September, Walmart in the U.S. announced its partnership with smart lock startup August Home on a test that enables it to deliver groceries not just to the customer’s door, but right to their refrigerator. If the customer isn’t home, the delivery person gains access to their house via a one-time passcode,

while customers can watch the whole transaction via surveillance camera. Not to be outdone, Amazon is launching a new service (for its Amazon Prime members in 37 cities) that also allows for delivery of packages when customers aren’t home. The Amazon Key service works with a camera and Wi-Fi-connected lock, and in-home delivery is enabled via the Amazon app. Daryl Porter, vice-president of omnichannel and online grocery for Walmart Canada, says the Walmart test is one of many being conducted by the retail giant as it looks to address growing consumer demand for convenience. “It doesn’t mean we’re going to scale some kind of operation to deliver to fridges,” says Porter. “Maybe, maybe not. What we’ll do is learn from some of these projects that are happening in the U.S. and, understanding that Canadian customers are completely different, make decisions that make sense for Canada.” In light of its U.S. counterpart’s fridge delivery program, Walmart Canada’s recent efforts in the online grocery space seem far more prosaic—and, for some, a lot less creepy. In April, the company debuted a new service that enables customers to order groceries online and have them delivered via crowdsource delivery services such as JoeyCo (slogan: “We deliver. You relax”). The retail giant has also partnered with SmartCentres’ Penguin Pick-Up program, which enables customers to shop online and pick up their order at one of the company’s refrigerated storage lockers. “It’s a strategic partnership that allows us to scale delivery without having to invest in infrastructure around home delivery,” says Porter. “We don’t see this as all of our customers will just buy online … we see this as getting to a place where, based on the need at the time and what they’re shopping for, they’re going to use our services in different ways. The future is unknown in terms of how much adoption we’re looking at, but we’re focused on delivering propositions they’re telling us they like.” CG December 2017 Canadian Grocer

Congratulations Darrell Jones

Darrell, your family of 18,000 team members at Save-On-Foods would like to congratulate you for winning the 2017 Golden Pencil Award. Over 41 years, youâ&#x20AC;&#x2122;ve done it all, from packing groceries to rocking with some Canadian music icons, driving tractors and fishing for the best deals in town. Thank you for consistently going the extra mile for your team members, customers, community and supplier partners, and thank you for helping shape the future of the retail food industry.

GOLDEN PENCIL WINNERS

On Nov. 20 in Toronto, the Food Industry Association of Canada will honour three greats of the grocery business with the Golden Pencil Award, the industry’s highest accolade. First handed out in 1957, the Golden Pencil recognizes individuals who have made significant contributions to improving the Canadian food industry as well as their communities. Read on to learn more about this year’s recipients: DIANE J. BRISEBOIS,, Retail Council of Canada; DARRELL JONES, Save-On-Foods; and SHELLEY MARTIN of Nestlé Canada.

gold STARS By David Brown Photography by Jaime Hogge and Colin Way

For tickets visit goldenpencilaward.com

December 2017 Canadian Grocer

Diane J. Brisebois President & CEO Retail Council of Canada

JAIME HOGGE

IANE BRISEBOIS says her friends are reluctant to go shopping with her, lest she burst into another emotional speech about how great the retail industry is and how much it contributes to the economy. She’s joking about her friends (we think) but her love and commitment to the industry is undeniable. “It’s a passion,” she says. “I just get a real high when we win an issue for our members, or we can provide assistance or support or some information that makes a difference.” That passion burns bright even after 22 strong and successful years as president and CEO of the Retail Council of Canada (RCC). Brisebois credits the teams she’s worked with as the “best and brightest” of the industry. “They inspire you to look ahead … to understand where the association needs to go to be effective and relevant. My most important job is just to make sure that bloody happens.” And that’s what she has done over and over again—no small accomplishment with such a large and diverse association dealing with often-conflicting interests on complicated matters, from food safety regulations and healthy eating initiatives to evolving environmental policies. “The most difficult work for an association when it represents a wide constituency, including very large players, is the ability to bring them all to the table to agree on an issue, and to come to a consensus,” she says. “I’m proud that we have been able to bring all of the key players together to set aside their differences—because they are in a very competitive environment—to discuss and agree on what is good for the industry.” Aside from being the honest broker that pulls the industry together and pushes it forward, she’s also been its biggest champion. Most retailers instinctively avoid bragging about what they do or taking strong positions on political issues, so Brisebois and her team do it for them. “A lot of people don’t understand the amazing contributions that retailers and specifically grocery retailers make,” she said. “They don’t realize that for every job created in retail, four more jobs are created in other sectors.” She gets especially frustrated when politicians or the media show more interest in new players or disruptors entering the market and ignore important Canadian stories and innovations. “It drives me bananas,” she says. Brisebois wants the RCC to do more and better in this regard and considers it a top priority for the association going forward. “I want us to take that to another level so the public gets a much better sense of the role of retail in the community, so that message resonates with regular folks when they are shopping.”

GOLDEN PENCIL WINNERS

Darrell Jones President Save-On-Foods

COLIN WAY

ODAY, HE’S AT the very top of Overwaitea’s Save-On-Foods, but Darrell Jones started at the very bottom: bagging groceries at the Overwaitea store in Cranbrook, B.C., more than 40 years ago while he was still in high school. After graduation in 1978, Jones was considering attending the University of British Columbia to become a teacher when he was offered a full-time job at the Port Coquitlam store. He decided to give the grocery business a try for a year or two. “And I never looked back,” he says. Jones excelled within Overwaitea, taking a series of progressively senior positions and joining the senior management team 17 years ago. He was eventually promoted to president in 2012. There were other opportunities and offers along the way, usually with a larger salary attached. But most of them were in the east and, his deepening loyalty to Overwaitea aside, his roots were on the West Coast and his family was happy there. “I don’t think there’s been a day in the last 40 years that I haven’t looked forward to coming to work,” he says. “Not every day was perfect … but there was never a day I thought about leaving

the grocery business. I never considered leaving the company.” Jones credits good luck for his successes, but says the core values that have guided him throughout his career enabled him to take advantage of the lucky breaks when they came. Personal integrity, hard work, a passion for the business, and a plan to succeed were all important, he says, as was a willingness to give back. “You have to make sure that whatever good happens to you, that you give that much good in return.” In many ways, the grocery business looks very different today from when Jones was bagging groceries in Cranbrook. The pace of change in recent years, in particular, is incomparable and customers are certainly more interested in their food and its nutritional value—organics, hormone free and grass fed, for example—which makes the job more complex. “When I started, beef was just beef,” he says. But at its essence, the relationship between consumer and grocer is the same. “The customers that come through your door are not much different than they were when they came through the door in 1976,” he says. “They are looking for people to give them good food, healthy food at good value. And they want to feel good about the place they purchase that food.” December 2017 Canadian Grocer

Shelley Martin President & CEO Nestlé Canada

December 2017 Canadian Grocer

FTER FINISHING her business degree at Wilfrid Laurier University in 1985, Shelley Martin knew she wanted a job in marketing and wasn’t too particular about the industry. She landed at General Mills and soon realized she’d found a home in the food industry. “I quickly learned it was the place to be,” she says. Martin loved the dynamic nature of the business, a fast-paced combination of consumer trends and food science and the continual driving of new product launches and innovations. “It’s a fun business to be in,” she says. “I get to work with great people and learn every day.” After nearly five years with General Mills, Martin joined the marketing department at Nestlé in 1990 and embarked on an upward career path. She was named vice-president of coffee and beverages in 2002, president of Nestlé ice cream in 2008, president of the frozen division in 2012 and finally president and CEO in 2013. Under Martin’s leadership, the company has become more efficient and focused on innovation. “We’ve been continuously improving how we do things by using a lean approach as the operating system for the company,” she says. “[We’re] working to take waste out of the organization—the processes and the way we do things—to make sure we become more efficient.” And one of the ways you become more efficient is through innovation, she says. Innovation not just in product, but throughout the organization; embracing technology and working in cross-functioning teams to identify new solutions to old problems. Away from Nestlé, Martin is chair of the board of directors for Food and Consumer Products of Canada, serves on the board of The Grocery Foundation and was twice named a Top 100 Award Winner for Canada’s Most Powerful Women by the Women’s Executive Network. But on top of all that, Martin still describes raising her daughters as a single mom for 17 years as her “No. 1” job. She did daycare pick-up and drop-off, and made doctor’s appointments, school events and soccer practices a priority. It sent an important message to the organization about work-life balance but also helps explain her emphasis on efficiency. “I work to be as efficient in my time at the office so I can get out to join my daughters and other parts of life.” CG

CMY

JAIME HOGGE

GOLDEN PENCIL WINNERS

REWARDING CONSUMERS WITH

authentic,

quality foods Made in Italy campaign brings true Italian flavours to grocery stores coast-to-coast

ore than ever before, Canadians are looking for high-quality foods that pack flavour and are simple enough to prepare during a busy workweek. Whether it’s hearty pasta and sauce, or a plate of fine proscuitto and cheese, Italian fare fits the bill nicely. And given that Italy is the fourth-largest supplier of food and beverages to Canada (after the US, Mexico and China)—and the #1 supplier of cheese—it’s no wonder that Italian cuisine has already become a staple in many Canadian households. In fact, growth in Italian imports has increased 9.5% between 2015 and 2016 alone. When it comes to specific categories, that growth is even more impressive: Italian meat imports to Canada, for example, have grown almost 20% during the same time period. Yet as Canadians’ demand for Italian foods and beverages gains fervor, so does the supply of “Italian-sounding” products, falsely advertising themselves as authentic. Not only do many of these products lack the quality control of their Italian-made counterparts, they lack the superior flavour. “People travel today and recognize that real Italian foods have a specific flavour profile,” says Italian Trade Commissioner for Canada, Matteo Picariello. “When I moved here from the U.S., I was surprised by the high-quality of Italian restaurants here. So there is market potential to bring that same high-quality flavour into consumers’ homes as well.” To help Canadians recognize true Italian products from the pretenders, the Italian Trade Commission has launched a ‘Made In Italy’ partnership with retailers in North America. Supported by the Italian government and originally rolled out in the U.S.

with great success, the campaign is now targeting grocers across Canada. “We want to raise awareness among consumers when it comes to buying authentic Made in Italy products, and help grocers understand that stocking these items can raise sales, just as they did in the U.S.,” says Picariello. Major grocers like Loblaws and Longos are already on board and seeing results. “Overall, it was a very well received campaign that drew sales and built excitement within our stores, both with our teams and our customers,” says Jenny Longo, Director, Private Brands. “It really fit well with our internal marketing initiatives as we launched several new private label Italian SKUs during 2016.” The Italian Trade Commission will team-up with interested retailers to provide a 360-degree partnership in rolling out the ‘Made In Italy’ campaign at the store level. This includes everything from promotional signs and in-store magazines, to training of back- and front-end staff. Retailers will also be supported to visit Italy to attend a major trade show, meet vendors and experience authentic Italian food products first-hand. “There is a lot that can be done to sell more and get better margins with authentic Made in Italy products,” says Picariello. “Plus, your customers will grow to appreciate that the Italian products you carry are testament to the traditional techniques handed down through generations of artisanal producers.” For more information on the opportunities available with the Made In Italy campaign, contact the Italian Trade Commission at 416.598-1566; toronto@ice.it (Toronto) and 514.2840265; montreal@ice.it (Montreal) Follow @ITAToronto for additional information and content.

SPECIAL PROMOTIONAL FEATURE IN CANADIAN GROCER–DECEMBER 2017

GAS

ConvenienceU.ca | CARWACS.com

WASH

CONVENIENCE

WHERE BUSINESS HAPPENS!

TORONTO MARCH 6-7, 2018 CONGRESS CENTRE

AISLES

Products, store ops, customers, trends

PLANT-BASED FOODS

YULKA3ICE/GETTY IMAGES

Plant power With health concerns top of mind, consumers are digging into plant-based foods By Rebecca Harris

ove over, meat: interest in plant-based foods is growing. According to Nielsen, 43% of Canadian consumers are actively trying to incorporate more plant-based foods into their diets. In addition, 6% and 2% of Canadian consumers are vegetarian or vegan, respectively. And that’s not all—nearly half of consumers (46%) agree that plant-based proteins are associated with positive health effects. “All this interest and diet preferences have resulted in increased consumption of plant proteins, which is reflected in the dollar growth of categories like meat alternatives (15%), tofu (12%), dry beans (8%) and nuts and seeds (3%),” notes Isabel Morales, consumer insights manager at Nielsen Canada. While animal protein—including meat, seafood, dairy and eggs—still dominates the protein category with 93% volume and $22.3 billion in sales, plant-based protein (meat and dairy alternatives, legumes, grains and nuts/seeds) is driving December 2017 Canadian Grocer

AISLES growth, with sales up 3% to $1.6 billion, according to Nielsen MarketTrack (for the 52 weeks ending April 29, 2017). “Even though we’ve viewed protein from animals as a primary source for centuries, consumers are now learning plant protein is not hard to come by and can be found in many different sources, including grains, pulses, and nuts and seeds,” says Morales. A number of factors are driving consumer demand for plant-based foods, including health, allergies or intolerances (in the case of dairy foods), and concern for animal welfare. “Tied into that is concern for the environment,” says Sara Harrel, director of marketing and culinary at Global Gardens Group. With the category growing exponentially, Harrel believes the rise of plantbased foods is a long-term trend, not a fad. “The opportunity in plant-based foods is like a gold rush. And as companies like ours come out with products that are great-tasting, easy alternatives, it makes it very simple for people to incorporate them into their daily lives.” Global Gardens Group manufactures a line of non-dairy beverages called Veggemo, made with pea protein, potato and cassava. Potato and cassava help with the creaminess, texture and whiteness of the product, says Harrel, while yellow peas provide protein and nutrition. Veggemo comes in three flavours: original, unsweetened and vanilla, and is Non-GMO Project Verified, cholesterolfree, soy-free, nut-free and gluten-free. “A few things set us apart, but No. 1 is the taste,” says Harrel. “We put an extensive amount of time and resources into researching and developing a taste that consumers would like.” Toronto-based YoFiit is also shaking up the non-dairy beverage aisle with its new

milk alternative, Miylk10. The product is made with chickpeas and flaxseed oil, has no sugar or carrageenan, and boasts 10 grams of protein per cup. By comparison, almond milk typically has one gram of protein per cup. “We wanted to create something that would be highly functional in terms of the protein content and the good fat content, and on top of that, it’s a very clean blend,” says YoFiit co-founder and CEO Marie Amazan. “We have developed a way to create an emulsion without using any of the gum that our competitors have used.” The company launched Miylk10 in September, and is initially targeting millennials “because they get it right away,” says Amazan. “A lot them are ‘flexitarian,’ they don’t consume as much meat as their parents, and they’re more environmentally conscious. So, there is faster penetration in that space for us.” However, as time goes on, the brand will target older and younger consumers, and the company is currently developing a formulation targeted at kids. On the meat-alternative side—long dominated by soy burgers and tofu dogs— manufacturers are developing new ways to get plants on plates. Toronto-based Sol Cuisine, which was founded in 1980, will have six new products on the market in 2018, including a soy-based salmon burger, veggie chicken tenders, a beet burger, crispy tempura “fish” and a port obello quinoa mushroom burger. The company’s current lineup includes the Original Burger, Chickpea Sweet Potato Burger, Veggie Breakfast Sausages and Falafel with Tahini Sauce, plus a range of meatless chicken and beef items, among other products. “We’re spending a lot of time and effort on innovation right now, trying

FAST FACTS

Plant-based foods are gaining steam: • Thirty per cent of Canadians said they plan to buy more vegetarian or plant- based food products in the next year. This was highest among women between the ages of 18 to 34 (40%). (MINTEL’S “ATTITUDES TOWARD HEALTHY EATING” REPORT, JANUARY 2017)

• Canadians aged 18 to 24 are more likely to use non-dairy milk (52%) than other age groups, and 37% of Canadian adults claimed to drink dairy alternatives in the past three months. Almond milk is the top option (24%), followed by soy (17%) and coconut (17%). (MINTEL’S “DAIRY AND NON-DAIRY MILK” REPORT, MARCH 2017)

December 2017 Canadian Grocer

to develop taste profiles that will allow people to transition away from animal protein to vegetable protein,” says Dror Balshine, president of Sol Cuisine. “It’s got to taste great … and in order to get people to continue to transition, we have to deliver on the quality.” Vancouver-based Big Mountain Foods is another vegetarian company that’s been around since the 1980s. President Kimberly Chamberland agrees that many consumers are buying vegetarian products for health reasons, and social media has played a huge role in driving awareness about the benefits of a plant-based diet. “It’s really made our life a lot easier, because we were doing this 25 years ago when people just didn’t really give us the time of day,” she says. Big Mountain Foods has a portfolio that includes the Original Veggie Patty and the Caulicrumble Veggie Grounds. The company is currently rolling out a new Superfood Breakfast Sausage and a meatball alternative called Mighty Mushroom Balls. All Big Mountain Foods’ products are made with Canadian-grown peas, fresh vegetables, and other naturally sourced ingredients. “People are not wanting just the option of a meat substitute. They actually want something that is whole food, and they’re paying attention to what the ingredients are,” says Chamberland. Summerhill Market in Toronto recently started carrying Beyond Meat, an L.A.based brand of plant-based veggie burgers that contain no soy or gluten. “It has sold out twice already,” says Brad McMullen, Summerhill Market’s owner and general manager. “We know there’s a trend towards [plant-based foods] and a lot of people seem to know that [brand].” That said, McMullen isn’t seeing plant- based products take a big bite out of meat sales. “I think there’s a little experimentation, but I believe most people are still eating the way that they’re accustomed to, even though the attitudes are changing,” he says. Nielsen’s Morales stresses that whether foods are plant or animal based, there’s no doubt consumers are returning to basics. “More natural ingredients and less processed food options are some of the attributes consumers are gravitating towards,” she says. “Both manufacturers and retailers need to embrace consumer preferences and not be afraid to innovate to meet demands.”

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AISLES

Bringing the heat It can set tongues ablaze, clear your sinuses and, of course, elevate otherwise humdrum meals—hot sauce can do it all. And this fun, fiery category is heating up, with market researcher IBISWorld predicting hot sauce is on its way to becoming a $1.65-billion market in the U.S. alone over the next five years. Players big and small are coming up with new concoctions to woo the heatseeking consumer:

SMOKE HALL FOODS

TABASCO

McIlhenny Co. has been making sauce on Avery Island, Louisiana since 1868. Although an old-timer in the hot sauce business (and bestknown for its iconic Tabasco Original Red Pepper Sauce), the company isn’t afraid to experiment, much to the delight of its legion of fans. This past summer McIlhenny released a limited-edition Tabasco Scorpion Sauce touted as being 20 times hotter than the original recipe; it quickly sold out. Tabasco Sweet & Spicy, a fusion of southern heat and Asian spices, recently hit store shelves in Canada.

PEPPER NORTH Ana and Drew Stevens started out turning their garden peppers into spicy sauces for friends and family. In 2013, the Oshawa, Ont. couple turned their passion for peppers into a serious business. Today, Pepper North boasts about half a dozen hot sauces (as well as other condiments) including its award-winning Blueberry Plague, which its makers say is tasty on everything from scrambled eggs to ice cream. December 2017 Canadian Grocer

Influenced by its maker’s Trinidadian roots, Damien’s two hot sauce flavours aim to save any meal from the “treachery of blandness.” Hotel Oscar Tango is the Toronto company’s original hot sauce made with a blend of habaneros, fruit and garlic; while the unusual Lime Zulu hot sauce serves up a hit of citrus (each bottle contains the juice of three limes) and heat.

The Classic

How do you grab attention in a category with so many players? Maybe you put your hot sauce in a grenade-shaped bottle like Smoke Hall Foods does with its The General’s Hot Sauce. Founded by a group of military veterans, the Louisiana-based company took almost three years getting the flavour of its hot sauce—which is made up of 86% peppers—“exactly right.” Comes in flavours like Dead Red and Shock & Awe.

DAMIEN’S

BLUE TOP BRAND New Blue Top Brand stands out from the crowd with its pale blue packaging and oldschool graphics. The Austin, Tex.-based company has also made its sauces conveniently squeezable and creamy. Touted as a “new kind of condiment,” Blue Top Brand hot sauces come in seven flavours (“six hot, one not”) including Lime Jalapeno and Curry Habanero.

AISLES

ALGAE

SEA SUPERFOOD Algae’s popularity as a food ingredient is blooming, as consumers flock to it for nutritional and sustainability reasons By Carol Neshevich

SSSIMONE/GETTY IMAGES

WHAT DO YOU THINK OF when you hear the word algae? For many, it’s the pesky stuff you have to clean out of the fish tank, or green slime you might see in a swamp. But for those in the know about health food, their first thought would likely be “hot new food trend.” “The inclusion of algae as the ‘next hot ingredient’ is definitely a growing trend we’re seeing across numerous categories, from dressings and flours to many vegan offerings such as non-dairy creamers, beverages and even vegan eggs,” says Maureen Kirkpatrick, standards coordinator for The Big Carrot, a popular Toronto health food store. Simply, algae is a non-flowering plant that grows in or around water and has no stems, roots or leaves. There are numerous types, but the most popular forms of algae for consumption are chlorella and spirulina. “Both are nutritional superstars,” says Michelle Book, in-house holistic nutritionist with the Canadian Health Food Association (CHFA). “Chlorella contains many important vitamins and minerals but is especially high in protein. It’s also an excellent vegan source of iron and the form of vitamin B12 that can be absorbed well by the body,” says Book. As for spirulina,

“by weight, it’s between 65% to 70% protein, has about 10 times more beta carotene than carrots and, like chlorella, it is one of the few natural plant sources of vitamin B12.” Environmentally-conscious consumers are also impressed with algae’s sustainability. “It grows extremely fast and requires no additional fertilizers or fresh water to flourish,” explains Book. Jess Pirnak, a registered dietitian with Vancouver-based Choices Market, says she’s seeing a lot more algae-based foods on the store’s shelves. “I find it’s often being used in not-so-healthy foods, and they’re trying to make those foods more healthy by putting algae in them. I think chocolate’s probably the first one that pops into my mind.” At Pete’s Fine Foods in Halifax, the health and wellness department’s Emily Timmons says aside from a protein bar they sell featuring spirulina (the Roobar Chia & Spirulina Protein bar), most of the algae-based products on the shelves are either capsules or powders. “But in saying that, we do have a lot of other supplement products like a greens powder or an all-in-one shake that contain spirulina in them,” she says. “And our juice bar here has boosters—which are all superfoods

that you can add into smoothies—and one of them is spirulina.” Many consumers will buy algae powder to add to smoothies or baking, says Chelan Wilkins, national education trainer at Organika Health Products, a B.C.-based company that produces both spirulina and chlorella powder. The bluegreen colour of it can bring some extra fun to baking, adds Organika’s marketing manager Gabriel Heartwood, who recalls a customer telling him she mixed spirulina into pancakes. “Halloween was coming up and they were having bright green pancakes, which her kids got really excited about,” he says. Another brand that’s finding success with its chlorella and spirulina powders is Organic Traditions. According to Alexandra Zeifman, the brand’s director of business strategy, “We have seen a 20% increase in Canadian sales for our algaebased products year over year.” This kind of growth doesn’t seem to be a passing fad, either—as the CHFA’s Book notes, “The demand for algae does not appear to be going down anytime soon.” That said, one thing that might put a bit of a damper on algae’s growth is taste: the flavour of algae on its own isn’t for everyone. “It’s definitely best to mix it with something else,” admits Choices’ Pirnak. Book agrees that algae is an acquired taste, but notes that “as the popularity of algae grows, a wider variety of products will continue to come to market. Products such as chips, pasta, purées, drinks and even jerky give consumers the chance to incorporate this superstar food into their diet in more palatable and creative ways.” CG December 2017 Canadian Grocer

AISLES NEW ON SHELF!

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SNACK TIME

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multiple times throughout the day. We snack for pleasure, to satisfy hunger between meals and even to quell boredom. And as you can see from the Nielsen data below, Canadians spend a whole lot of money on snacks.

Snack sales in Canada - 52 weeks, ending Sept. 16, 2017 $ Vol % Chg

Units (000s)

Units Vol % Chg

55,038,294.0

-2

14,889,709.8

-5

811,651,748.0

299,748,308.1

CRACKERS

602,584,902.0

229,222,137.3

DRY FRUIT

59,791,869.0

11,244,260.9

-1

MARSHMALLOW TREATS

38,452,787.0

11,181,599.4

1. COOKIES

2. MEAT STICKS & BEEF JERKY

225,990,126.0

49,323,169.2

NUTRITIOUS PORTABLE FOODS

688,126,741.0

226,017,064.7

3. POPPING CORN

90,593,368.0

-9

23,359,721.7

-6

74,331,466.0

42,136,750.6

679,236,485.0

112,037,959.9

1,971,752,174.0

978,124,086.7

PUFFED CAKES SNACKING FRUITS, NUTS & SEEDS SNACK FOODS HEALTHY - ALL OTHER TYPES

1,655,913.96

871,230.95

HEALTHY - BETTER FOR YOU

315,838.22

106,893.14

CORN SNACK PRODUCTS

698,030.13

295,091.54

OTHER - SNACK FOODS

159,186.32

83,466.57

OTHER - VARIETY SNACK

91,753.57

29,066.43

POTATO SNACKS

975,923.85

557,125.72

4. PRETZELS

46,858.31

13,373.81

1. Despite our efforts to eat healthier, we’re still taking comfort in cookies. Dollar sales in this sweet category are up 2%, while units have climbed 3%. 2. You can’t beat meat at snack time, it seems. Sales of meat sticks and beef jerky have soared by double-digits

(+18%) in the latest 52 weeks. 3. Popping corn has seen better days. The snack food is seeing declines of -9% in dollar sales and -6% in units. 4. Pretzels persevere. A perennial favourite, dollar sales of this traditional salty snack have grown 10%. SOURCE: NIELSEN, NATIONAL, ALL CHANNELS, ALL SALES, EXCLUDING N.L.

December 2017 Canadian Grocer

LIVEKUNA KUNAPOPS Plant-based superfood snacking Made from quinoa, chia and rice, KunaPops are a puffed “super grain” snack loaded with live and active probiotics. It’s an easy, on-the-go snack consumers can feel good about eating.

OLYMEL’S 100% NITRITE- AND PHOSPHATE-FREE COLD CUTS Naturally delicious deli meats Are your customers concerned about additives in cold cuts? Olymel is launching a new line of sliced deli meats that’s 100% free of nitrites and phosphates.

IGOR DUTINA/SHUTTERSTOCK

CANDIED SNACK FOODS

$ Sales (000s)

WHAT’SNEW NEW PRODUCTS IN GROCERY

Where there is Smoke, there is flavour Smoke, grade A maple syrup and secret vinegar are designed to enhance the natural flavours of any recipe. Providing a robust, sweet and smoky flavour they are best used in marinades, salad dressings and home-made sauces. The perfect compliment to meat and seafood. Available for consumers in 375ml and 200ml retail bottles.

Mixing it up with Club House New Club House Organic Seasoning Mixes are quick, organic & downright delicious! They come in 5 flavours - Chili, Taco, Fajita, Garlic Ginger & Kung Pao – and are made with the perfect blend of organic spices. Club House Organic Seasoning Mixes are a convenient meal solution for consumers, with simple recipe solutions on the back of each package. Each recipe makes at least 4 servings, requires a few pantry staples and cooks in 30 minutes or less! And, they are certified organic, kosher & halal.

Putting the “fast” in breakfast With quality ingredients and craftsmanship, Piller’s introduces delicious and convenient breakfast meats: Piller’s Breakfast Trio – a selection of breakfast sausage, sliced cornmeal back bacon, and sliced maple ham; and Piller’s Breakfast Sausages, in 3 delicious flavours – Original, Apple Cinnamon, and Maple. From pan to plate in under 5 minutes, they are fully cooked, naturally wood-smoked, free of all major food allergens (gluten, milk, peanuts, tree nuts, mustard, sesame, egg, fish, soy, sulphites), and a good source of protein.

SPECIAL PROMOTIONAL FEATURE IN CANADIAN GROCER–DECEMBER 2017

FRESH

Produce

Value-added fruits and veggies are ripe for growth By Danny Kucharsky

December 2017 Canadian Grocer

TIME-STRAPPED CONSUMERS are increasingly finding value in value-added produce as part of a quest to save preparation time and bring healthier eating to their homes. “It’s a huge growth category,” says Noel Brigido, vice-president of Toronto produce processor Freshline Foods. People want to cook, but they’re “timestarved. They want to use their time for other things.” The value-added category, including everything from salad bowls to fruit and veggie-based snack kits for kids, is catching on and the industry is happy to provide an increasing number of pre-cut and pre-washed options. “Whether it’s cut-up wedges of fruit or pre-packaged vegetables or salads, it is growing significantly,” says Julian Gleizer, co-founder and CEO of Toronto-based online grocery delivery service InstaBuggy, who adds that “it’s not just the millennials” who are buying. Sales of value-added produce are growing faster than regular produce—even though it costs more. From 2011 to 2015, the compound annual growth rates for value-added fruits and veggies in the United States were 12% and 15%, respectively, according to a 2016 consumer report by Nielsen Fresh. And the category appears to be ripe for growth. A Nielsen PanelViews Health & Wellness Survey conducted in 2015 found that 47% of Canadian households are consciously trying to increase vegetable consumption. As Anne Byerly, vice-president of marketing at Apio in Guadalupe, Calif., notes, “Canadians eat more fresh produce—about 30% more per capita—than Americans. They’re very interested in healthy eating and healthy living.” Byerly says the company’s Eat Smart salad kits have about a 43% market share in Canada, making them the country’s No. 1 share brand. Such products appeal to retailers because they drive traffic to the store as consumers seek convenient meal solutions, she adds. “People are more and more going

ALLEKO/GETTY IMAGES

Produce with benefits

tasteus.com

for value,” says David Wilson, program lead, produce and floral at Burnaby, B.C.based Choices Markets. Shoppers who buy packaged value-added produce will get “consistency in pricing and quality” as well as a shelf life at least eight to 10 days, often longer, than regular produce. “When you buy a pound of value- added, you’re getting a pound of usable product most of the time,” adds Brigido. “You buy a pound of carrots, maybe you’re only getting 60%.” Also, many people are wary of cutting produce, “especially when it comes to the root vegetables. I think the growth is poised for a big jump.” Brigido notes that although some consumers question the packaging in value-added products, the products have to be protected for food safety and “we try to keep packaging at a minimum.” Snack kits for kids will be one of the biggest growth categories, he forecasts, especially with governments and schools increasingly promoting healthy eating. To get kids to eat their healthy snacks, Freshline has launched naturally flavoured apple slices, with flavours like peach and grape. “We’ve added fun flavours to them so kids don’t get bored with the same thing over and over,” says Brigido. Earlier this year, Freshline also launched Foodles, a line of whole vegetable noodles that Brigido describes as one of the company’s hottest-selling items. They sell for a suggested retail of $3.99. Among the newest items in the line are blends of vegetables like root vegetables, yams, turnips and celery roots. Since the noodles are gluten free, “they have actually become a dietary option for a lot of people,” he says. Not to be outdone, Apio recently launched Eat Smart Salad Shake Ups, a single-serve salad line that Loblaw is testing with a suggested retail price of $4.99. “It’s super convenient if you want just a grab-and-go healthy lunch,” Byerly says. One of Apio’s bestselling salad kits in Canada is Eat Smart Sweet Kale, which also contains chicory, green cabbage,

broccoli stalks and Brussels sprouts. “In two to three minutes you have a delicious, healthy salad that would take you probably at least half an hour if you made it from scratch,” she says. Meanwhile, Mann Packing has added a sixth variety to its Nourish Bowls line of vegetable-based, warm meals with the launch of Spicy Thai with kohlrabi noodles. Launched last year, the single-serve line combines vegetables, grains and sauce, and sells in Canada at a suggested retail of $4.99 to $5.99. The bowls can be eaten as a meal or side dish and are especially appealing to millennials, says Jacob Shafer, senior marketing and communications specialist at Mann Packing in Salinas, Calif. Shafer says there are a number of steps traditional brick-and-mortar grocers can take to increase sales of value-added produce, such as creating “healthy destination categories” by adding healthy snack sections in the produce department. Mann also has a variety of marketing materials available, from how-to videos on its YouTube page to recipe ideas in its new Girlfriends Guide: Beyond the Bowl. Product demos provide the highest rate of success, says Choices Market’s Wilson, and sales can be bolstered when suppliers have ad programs that can be put in-store, in newspapers or in flyers. Brigido notes Canadian grocery stores often lack cross-merchandising and would be wise to take a lesson from the meal kit phenomenon that tells consumers “this is how you’re going to eat this.” He suggests Canadian grocers replicate that concept by doing things like putting value-added produce in the meat department. By saying, “Here are your stir-fried veggies to go with your sliced meat,” consumers are provided with visual cues that will help them come to the realization, “Hey, I can have a whole meal here by taking one of these with one of these,” Brigido says. “We, as an industry, need to help the consumer figure out what they are going to eat. Value-added is there to help the consumer.” CG

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CHECKING OUT

BEHOLD, THE NAKED LOBSTER! Canadian companies are winning over Europe and Japan with lobster without a shell. Is Canada next? THIS IS A STORY ABOUT an innovative Canadian product that’s well known in Japan and Europe, but not so well known in Canada. I certainly had never heard of it until last month. Maybe you know it? It’s lobster without a shell. Call it naked lobster. I wouldn’t normally write about a single product, but naked lobster? Without the shell, lobster meat can be easily detached, leaving the raw flesh intact (tail, claws, knuckles and legs) resulting in a higher yield per lobster. According to the companies that offer this product, advanced ultra-high pressure (UHP) technology is used, which makes the meat extremely tender while also maintaining the delicate flavour of the lobster and all of its natural nutrients. Eating lobster without the hassle of removing the shell is a selling point

December 2017 Canadian Grocer

in itself (to both consumers and chefs alike), but the benefits go further than that. With shell-less lobster, there’s less risk of overcooking—a common problem with lobsters in the shell—and you have the ability to select the parts of the lobster you wish to use depending on the dish being prepared. The centre for production and sales of naked lobster is Shediac, N.B., which some consider the lobster capital of the world. It’s also where two companies— Gourmet Chef Packers and Shediac Lobster Shop—have had great success selling the unique shell-less lobster in Japan and Europe, where the product is primarily used in foodservice and by chefs. There is a restaurant in Maine that also sells naked lobster, as well as another company in Kingston, Ont., but neither has

the volume that comes out of Shediac. Gourmet Chef Packers started selling naked lobster to Japan and Europe in 2006, while Shediac Lobster Shop began in 2012. Shipments to those destinations by Gourmet Packers alone have reached 80 containers per year (with each container holding about 30,000 lbs. of product). I spoke with Marie-France Thibodeau, director of Gourmet Chef Packers, who says the company is working on developing Canada as a market for naked lobster. The company is developing retail packs and is refining its retail packaging, but it’s still looking for a national distributor. Gourmet Chef Packers, a Canadian company, was founded in 2004 in Shediac by Hiroshi Kosako of Japan, who had already been distributing Atlantic lobster in Japan for decades. The company turned to the ultra-high pressure technology in 2006, and has developed value-added lobster products ever since. All the lobster used comes from Atlantic Canada and the North Atlantic. Thibodeau describes the UHP process as basically placing live lobsters in a large vat of water under very high pressure. The lobster dies in seconds and is quickly removed from the vat so the meat remains raw. The shells are removed at the factory. The use of UHP technology results in a consistently high-quality product, she says. Over my lifetime, I’ve seen thousands of fresh and cooked lobsters and I’ve eaten perhaps a hundred. I’ve seen blue lobsters, and a 25-lb. lobster, but never until last month had I ever seen or even conceived of a lobster without a shell. I am partial to lobster claws, so it’s encouraging to know that if I want to purchase just the claws, I can do so. But tails and legs are also available. And then there’s the lobster broth Gourmet Chef Packers makes from the shells. I can hardly wait until it’s readily available here. Price be damned! CG

George Condon is Canadian Grocer’s consulting editor. He’s based in Toronto. condug@sympatico.ca

MARK HOFFMANN/I2I ART INC.

George Condon

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Walmart Canada

Save-On-Foods

Kellogg Canada Inc.

McCain Foods Canada

President & CEO

President

President & CEO

Exciting new insights & data from:

David J. Powell

Wehuns Tan

Carman Allison

The Powell Group of Companies

Flipp

Nielsen

President & CEO

CEO & Co-Founder

VP of Consumer Insights

Platinum Sponsor

Gold Sponsors

Sample Sponsors

Industry Partners

CATEGORY CAPTAINS

2017

An Industry Leadership Supplement from Canadian Grocer

From five generations of family brewing heritage, the legend of Sleeman beer was born. It began in 1834 when John H. Sleeman founded his legacy based on the love of great beer. The Sleeman family tradition was passed down from generation to generation. Father to son, again and again.

ORIGINAL DRAUGHT

CLEAR 2.0

RAILSIDE SESSION ALE

Brewed using two-row Canadian barley, our own proprietary Sleeman yeast, and a special hopping process, this particular lager delivers a distinctive floral hop aroma with a refreshing finish. 5.0% alc./vol.

An easy drinking beer with a light straw colour. Clear 2.0’s light body and soft citrus aromas complement its crisp and refreshing finish. 4.0% alc./vol.

This amber ale has a distinct hop flavour, medium body and a white lacy head. The lower alcohol and crisp finish make this a very drinkable, “sessionable” addition to the Sleeman family. 4.2% alc./vol.

With age comes distinction. Japan’s oldest beer brewed since 1876. The distinct malt flavour commands your taste buds, from the first sip to the last drop with a crisp taste, refreshing flavour, and clean finish. 5.0% alc./vol.

MUST BE LEGAL DRINKING AGE. PLEASE DRINK RESPONSIBLY.

BEER The beer category is going through significant changes, especially in Ontario where hectoliter volume is down slightly (-2.1%). Stores are leveraging the category as a traffic driver but not all segments affect the shopper the same. 56% of value beer shoppers state they have a specific retailer in mind when they purchase versus 38% for the average alcohol shopper. Maintaining stock and assortment is key, especially when 49% of Ontario shoppers would walk away without purchasing the category if their preferred item is not available (vs 40% for total alcohol in Ontario). Although growing 19.1% YTD, regional craft breweries account for only 5.7% of sales in Ontario.

BEER IN ONTARIO IS A 7.7MM HECTOLITRE CATEGORY

Premium mainstream and light items still account for over 59% of volume sold. Craft beer ranks highest on its ability to entice the shopper to spend. 67% of shoppers state they are willing to spend more for something unique or different in the segment. Coupled with the fact that 68% of craft beer shoppers are willing to switch to another craft beer if their preferred item wasn’t available, rotating innovation frequently is the key to maximizing this segment. With proper focus on all segments, retailers can leverage the right brands to drive traffic and the right segments to trade the shopper up.

WHAT CATEGORIES DRIVE TRAFFIC AND SPEND?

Share of Segment - YTD

TRAFFIC

Cider 25%

Ontario

SPEND

Value Beer 19%

YTD - Wk 39

$ Share

Vol % Chg

Imported Specialty Beer 16%

Total Beer

100.00

-2.1%

Craft Beer 44%

Premium Mainstream

38.3

-2.5%

Premium Light

21.0

-2.2%

Discount/Value

23.5

-4.2%

Domestic Specialty

8.3

-7.1%

Craft Regional

5.7

19.1%

Craft Beer 41%

Cider 41% Imported Specialty Beer 35% Core Premium Beer 14%

Alberta

Light Premium Beer 11% Value Beer 11%

Craft Macro

3.1

2.7%

Imported Specialty Beer 31%

Cooler/Malt

0.3

-3.7%

Cider 30%

Source: BAC Data – Calendar Year 2016 & YTD Week 39

Source: Shopper Intelligence - 2016

PLANNED VS UNPLANNED PURCHASES

MAINTAIN VALUE BEER ASSORTMENT AND STOCK

Source: Shopper Intelligence - 2016

SPECIAL INFORMATION FEATURE

49%

61%

57%

68%

57%

58%

53%

51%

ee eB

Va lu

lty Lig

Pre m

y Im

rte

pe cia

eci alt Sp

Cra

me stic Do

Source: Shopper Intelligence - 2016

47%

ium

42%

43%

ium

32%

More frequently decided on in-store

43%

Pre m

24%

39%

Cid

30%

WALK AWAY

Co re

15%

SWITCH 70%

rie s

31%

63%

% of shoppers

24%

79%

25%

66%

eer Sp Impo eci alt rted yB eer Cra ft B Co ee re r Pre Do m me ium sti Be cS er pe cia lty Be Lig er ht Pre mi um Be er

15%

73%

UNPLANNED

All Ca te

73%

Val u

All Ca te

rie

25%

84%

71%

Cid

% of shoppers

PLANNED

More likely to walk away if preferred brand is out of stock

CATEGORY CAPTAINS 2017

Canada’s #1 Cheese Manufacturer Proudly Leading Innovation!

#1 Natural Cheese Brand

#1 Natural Cheese Brand (Québec)

#1 Cream Cheese Brand

#1 Process Cheese Brand

Deli-Inspired Feta: New 180g Shaker Tub Available in Regular, Light, and Herb & Garlic.

Natural Slices NEW On-Trend flavours: Herb & Garlic, Habanero Both are also available in a Block Cheese Format.

P’tit Québec Shreds P’tit Québec Shreds Expansion Expansion Shredded for convenience NEW 2x450g value size format. in a 320g bag. Available in Mozzarella & Very Available in Medium & Mild Cheddar. Marble Cheddar.

NEW Philadelphia VIVA Protein Smoothies Contains 8g Protein and 2g of Fibre in a convenient single-serve bottle. Available in Strawberry, Blueberry and Vanilla.

NEW Philadelphia Whipped BOLD Perfect for snacking and dipping in a pre-whipped 227g format. Available in Cracked Pepper & Garlic, Sriracha, and Jalapeño Cheddar.

NEW 360g Natural Slices: Now in a re-sealable value-sized format Available in Medium & Marble Cheddar.

P’tit Québec Block Expansion Bringing Quebec more of the brand they love in Block Format. Available in Medium & Old Cheddar.

NEW Philadelphia Cheesecake Crèmes A perfect mid-day snack made with real fruit and dairy. Available in Strawberry, Cherry and Chocolate.

NEW Kraft Singles BOLD Bringing NEW on-trend flavours and thicker slices to a classic category. Available in Pepper Bacon, Extra Cheddar, Jalapeño, and Sriracha.

CHEESE The retail market for cheese products in Canada is approximately a $2.75 billion business and has grown 1% percent over the last year1. One of the largest factors driving this category growth within the Canadian grocery market is the increased rise of snacking behaviour among consumers in their day-to-day lives2. As consumer preferences have shifted from the typical three meal routine to snacking more frequently throughout the day, the types of food they are choosing as snacks is also changing drastically2. Canadians have been choosing foods that are fresher and less processed, and thus it makes perfect sense that cheese has been ranked by consumers as one of the top 5 snacking foods in North America2. For example, an 18g portion of natural cheese can have up to 5 grams of protein and 15% of your daily value of calcium3. This is right on trend for cheese manufacturers as 51% of

consumers say they have a form of protein with every meal and 1 in 5 also say that they monitor their daily intake of protein4. As the lives of consumers have become busier, demand for snacking foods that are convenient but also fit within dietary restrictions, have also increased5. Manufacturers have started to adapt to consumer’s needs by providing new offerings that are healthier, convenient, and in ready-to-eat formats such as single serve cheese or dairy products, shredded cheese, and cheese slices6,2. 1 Nielsen MarketTrack GB+DR+MM, Total Cheese, L52Wks ending September 30, 2017. 2 Snacking Beyond the Snacking Aisle: How to take a bite out of Canada’s Snacking Demand, Nielsen. 3 KraftHeinz ULC. “Nutrition Label of Cracker Barrel Cheese Portions 168g”. Ingleside, Ontario. 2017. 4 Battle of the Animal & Plant-based proteins: insights on diet preferences, Nielsen. 5 What’s in our food and on our mind: Ingredient and dining-out trends around the world, Nielsen. 6 Shake-up in the snack aisle, Canadian Grocer, 2017.

CHEESE AND YOGURT DRIVING CONSUMPTION WITHIN THE DAIRY CASE

NATURAL INGREDIENTS ARE ON THE RISE!

Total Dairy*: $9.1B Dollar growth: +2% Tonnage growth: +0% Inflation: +2

Mintel’s Cheese – Canada, October 2014 report revealed that

DOLLAR % CHANGE TONNAGE % CHANGE

CHEESE* $3.8B

3 Inflation

MILK $2.6B

YOGURT $1.6B

EGGS $1.0B

-1

-2

-5

49%

of respondents cited ‘made with natural ingredients’ as an important factor when buying cheese

Total Eggs: $1.0B Dollar growth: +0% Tonnage growth: +5% Inflation: -5

Promote natural

2011-2012

Source: Nielsen MarketTrack, National All Channels, 52 weeks ending April 29, 2017 *includes random weight

21%

August 2016

MEAT, DAIRY AND EGGS ARE THE PRIMARY SOURCES OF PROTEIN FOR CANADIANS Top 5 protein sources – consumer survey

83%

Meat

ANIMAL PROTEIN

66%

Dairy

Source: Nielsen Panelviews survey, March 2017 - Canada

SPECIAL INFORMATION FEATURE

63%

Eggs

PLANT BASED PROTEIN

31%

Fish/ Seafood

20%

Legumes/ Nuts/Seeds

CATEGORY CAPTAINS 2017

New pods flavours and sizes from Canada’s #1 Coffee Manufacturer MAXWELL HOUSE

NABOB

#1 Coffee Brand in Canada

#2 On Demand Coffee Brand in Canada

Morning Blend 12ct

Coastal Blend 12ct

Original Roast 30ct

Breakfast Blend 30ct

*all innovation now available with vertical panel for additional shelving options

RECYCLABLE

Maxwell House and NABOB Pods are recyclable where #6 plastic is accepted.

TASSIMO is one of Canada’s leading Single Serve brewing systems. With 8 different brands to choose from and a vast assortment of beverage varieties, TASSIMO is perfect for all occasions.

SINGLE SERVE COFFEE The coffee category is worth over $1 billion in annual retail sales1. The single serve category has driven significant growth for coffee over the last few years despite the fact that consumers are not drinking more coffee than they were 15 years ago2. Single serve now represents over 40% of total coffee sales3 with two brewer types continuing to dominate the market: TASSIMO with 27% share and Keurig/Keurig compatible brewers with 71% share4 of single serve sales dollars. Given that coffee drinkers consume approximately 23.1 cups of coffee per week5, the single serve

category continues to see a shift to larger formats such as 30 count offerings which have experienced +81% growth6. Dedicating the proper space in-store to both brewer types as well as large pack formats of single serve coffee will ensure you fulfill your single serve consumer’s coffee drinking needs. 1 Nielsen MarketTrack GB+DR+MM, Total Coffee, 2016 2 Coffee Association of Canada, 2014 Coffee Drinking Trends, Tracking Report, Dig Insights, July 2014 3 Nielsen MarketTrack GB+DR+MM, Total Coffee, 2016 4 Nielsen MarketTrack GB+DR+MM, Total Single Serve Coffee $ Sales, L52W, Sept 2, 2017 5 Coffee Association of Canada, 2014 Coffee Drinking Trends, Tracking Report, Dig Insights, July 2014 6 Nielsen MarketTrack GB+DR+MM, Total Single Serve 21-30 count $ Sales, L52W, Sept 2, 2017

COFFEE DOLLAR SALES

The coffee category is worth over $1 billion and single serve now represents over 40% of the category. 1,200,000,000

TOTAL OTHER

1,000,000,000

TOTAL ROAST & GROUND TOTAL ON DEMAND

800,000,000 600,000,000 400,000,000 200,000,000 2012

2013

2014

2015

2016

Source: Nielsen MarketTrack, GB+DR+MM, Sales $

SALES DOLLARS

Two brewer types continue to dominate the single serve category; TASSIMO with 27% share of coffee sales and Keurig/Keurig compatible brewers with 71% of single serve coffee sales 1%

Consumers are purchasing larger formats of single serve coffee to satisfy their weekly consumption habits Total 21–30 count

100%

81%

80%

K-CUP/POD

60%

TASSIMO OTHER

SALES DOLLAR % CHANGE

27%

Total 30 count & over

40% 20%

0% 71%

-20%

20 count & under

-15% Source: Nielsen MarketTrack, GB+DR+MM, Sales $, L52W ending Sept 2, 2017

Source: Nielsen MarketTrack, GB+DR+MM, $ % Chg, L52W ending Sept 2, 2017

*Works with Keurig® K-Cup® and Keurig 2.0® brewing systems. Keurig®, Keurig 2.0® and K-Cup® are trademarks of Keurig Green Mountain, Inc. and its related companies. Kraft Heinz Canada is not affiliated with Keurig Green Mountain, Inc. and its related companies.

SPECIAL INFORMATION FEATURE

CATEGORY CAPTAINS 2017

TM/MC

OFFER ALL THE TASTE WITH NONE OF THE NITRITES

Discover the latest variety of delicious, healthy chicken and turkey deli products from LilydaleÂŽ, the poultry experts. From our Natural packaged deli meats to our chicken and turkey breast deli roasts, you will be providing your customers with great tasting quality poultry deli meats without the nitrites.

DELI MEAT Deli meat is primarily used for sandwiches. Sandwiches continue to be the cornerstone for lunch. Canadian consumers report eating an average of 3 sandwiches per week and 29% eat at least 4 sandwiches per week.1 Sandwiches provide consumers lots of variety with the various meats, breads and toppings available. Ham, turkey and chicken are the most frequently purchased deli meats. 2

HOW MANY SANDWICHES DO YOU EAT IN A TYPICAL WEEK?

3.0 2016

29%

Retailer Opportunity: While many consumers plan on purchasing deli products when they visit the grocery store, their decision on what to buy generally happens at the counter/shelf. In-store POS and merchandising is a great way to communicate the benefits that consumers find appealing like made with natural ingredients and nitrite free to encourage purchase. 1 Technomic Inc. 2016 Canadian Sandwich Consumer Trend Report 2 Sofina Deli Usage & Attitude Study, October 2016

APPEAL OF CLAIMS (MEAN % ACROSS MEAT TYPES) Made with natural ingredients

No preservatives

78 74

Low in sodium Nitrite free

eat at least 4 sandwiches a week

Low in fat

Made with simple ingredients

Source: Sofina Deli Usage & Attitude Study October 2016

NATURAL POULTRY LUNCHEON MEAT IS GROWING Source: Technomic 2016 Canadian Sandwich Consumer Trend Report

$100,965,627 (-3%)

$100,000,000 $750,000,000

MANY CONSUMERS (55%) PLAN ON PURCHASING DELI MEAT… …but often decide which types to purchase at the counter/fridge. Planned vs. Impulse Purchase (% Selected)

Type of Planned Purchase (% Selected) Makes planned purchases

$56,172,758 (+3%) $44,792,869 (-9%)

$50,000,000 $25,000,000 NATURAL SLICED DELI

NATURAL SLICED POULTRY

NATURAL SLICED NON-POULTRY

Source: Nielsen MarketTrack, National, GB+DR+MM, 52 weeks ending August 19, 2017. Luncheon meat branded items only Proprietary closed group, developed by Sofina Foods Inc. Not endorsed by Nielsen

MOST RESPONDENTS REGULARLY LOOK AT FLYERS

3/4 look at flyers, e-flyers, or email deals at least most of the time they grocery shop Frequency of Reading Flyers when Grocery Shopping (%)

43 Impulse 6 It depends 39 Planned 55

Decide at counter/shelf 32 Looking for specific types 23

Source: Sofina Deli Usage & Attitude Study October 2016

SPECIAL INFORMATION FEATURE

Every time I grocery shop

Most of the time

Occasionally

I never read weekly flyers

Source: Sofina Deli Usage & Attitude Study October 2016

CATEGORY CAPTAINS 2017

HEALTH & WELLNESS GLUTEN. GLUTEN FREE. AUTO IMMUNE. These words continue to reflect a growing health condition in Canada. The struggle is real and retailers have taken notice. So why all the hype? Because customers with celiac disease have only one hope in coping with their condition - a gluten free diet. Diet is the ONLY treatment for the estimated 1 in 133 people affected by the disease – a number positioned to double every 15 years. The demand is not going away, with the gluten free segment now representing more than half of the total sales in the free-from category (followed by lactose-free). Gluten free (GF) customers are diligent shoppers and fastidious researchers who look to retailers for support in carrying innovative gluten free products and brands.

What retailers should know about gluten free: • The GF industry in Canada was worth $334M in 2015, and is estimated to reach $457M by 2020 (a 7% increase!) • GF consumers read labels. Gluten sensitivity & cross contamination is a grave concern. • GF consumers will contact food companies directly; they check ingredient lists, knowing companies can change their ingredients at any time. • GF consumers tend to spend more money at the store, and make more frequent shopping trips. The key to retailer success with the gluten free category is to offer what the medical community cannot - a path to health and wellness for gluten free consumers. Sources: Euromonitor International: Food Intolerance in Canada, September 2016; Canadian Celiac Association, www.celiac.ca

FOOD TOLERANCE IN CANADA

KEY GLUTEN FREE SEGMENTS

Gluten Free 67%, +7%

2015 $ Vol (million)

$ Vol % Chg

Other HW Special Baby Formula 4%, +1%

Total Gluten Free

$333.8

+7.2%

Diabetic Food 0%, +2.4%

GF Baked Goods

$131.8

+12%

Lactose Free 29%, +3%

GF Ready Meals

$82.2

+2%

GF Breakfast Cereals

$70.6

+4.4%

GF Cookies and Crackers

$33.5

+10.8%

GF Pasta

$13.6

+3.6%

GF Baby Food

$2.1

+2.8%

Source: Euromonitor International: Food Intolerance in Canada, September 2016

CONSUMERS OF GLUTEN FREE PRODUCTS Celiac disease 4% 1% of Canadians (350,000) Gluten sensitivity 21% 6% of Canadians (2.1 million) Gluten avoiders 75% (non medical) 22% of Canadians (>7 million)

Source: Euromonitor International: Food Intolerance in Canada, September 2016

In Canada, the Food Intolerance category is expected to grow to

$645M

by 2020

Agriculture and Agri-Food Canada, “Gluten Free” Claims in the Marketplace, April 2014

SPECIAL INFORMATION FEATURE

CATEGORY CAPTAINS 2017

Taste the Jiference

* 1 kg Jif Creamy Peanut Butter based on average production.

PEANUT BUTTER The peanut butter category continues to dominate the spreads aisle, exceeding $266 million in sales. While dollar sales are flat at -1%, tonnage consumption is growing +4%, driven by both regular and natural peanut butter – a sign that while the category may be mature, it is full of opportunity. Peanut butter remains a pantry staple in the majority of Canadian households, with a penetration of 75.6% and growing as the category is on trend in consumers’ minds. While peanut butter is mostly associated with the breakfast occasion, it is also frequently consumed throughout the day as

part of a meal or as a snack. Brands, size and availability are important factors for retailers to win with in the growing peanut butter category. Retailers can further accelerate growth with proven trade-up strategies by carrying all leading brands and allocating eye-level shelf space to more premium brands, especially within regular peanut butter which drives the largest portion of overall category sales. Sources: Nielsen MarketTrack, National All Channels, L52W period ending Sept 16, 2017; JMS DIG peanut butter U&A, May 2015; JMS Syndicated Loyalty Data 2015/16

Tonnage Growth (KG)

PEANUT BUTTER 3–YEAR TREND

$ Volume

$258,175,718

$268,531,701 (+4%)

55,709,512 (+2%)

$266,514,394 (-1%)

58,042,350 (+4%)

54,444,818 L52W 2YA

L52W YA

L52W

Source: Nielsen MarketTrack, National All Channels, L52W period ending Sept 16, 2017

PEANUT BUTTER SEGMENTS: REGULAR VS NATURAL Total Regular Peanut Butter Total Natural Peanut Butter $221,851,972 (-2%) $44,662,422 (+4%)

INTERACTION BETWEEN REGULAR PEANUT BUTTER AND NATURAL PEANUT BUTTER BUYERS Total Peanut Butter Buyers

16.8 83.2

83.7%

7.3%

9.1%

Natural PB Buyers

Regular PB Buyers

Source: Nielsen MarketTrack, National All Channels, L52W period ending Sept 16, 2017

SPECIAL INFORMATION FEATURE

Source: The Nielsen Company, Homescan, National, 24 weeks ending July 22, 2017

CATEGORY CAPTAINS 2017