November / December 2015 Vol 5 | No 6 $9.95
PM # 42211029
OBLAW LMART TINOS LMART CO-OP M BOY TINOS METRO LMART ROCER CO-OP OBLAW
at the top of their game
LOBLAW SOBEY WALMART LON SOBEYS METR METRO WALMA LONGO FORTIN WHOLE FOODS CHOICES MARKET FRESON BROS. COU CALGARY CO-OP FO OVERWAITEA COLEMANS F FORTINOS SO
UGI Awards
Advantage Mirror Report
Grocery Business November | December, 2015 Volume 5, Number 6
contents
Jamie Oliver at the Sobeys' Nova Scotia buy-local event
DEPARTMENTS
25
7
Front End People & News
12
Open Mike Buying and merchandising belong together
23 Perspective
Beer brews competitive imbalance
30 Making It
St. Jean’s Cannery and Smokehouse
35 Independents’ Day A new beginning… maybe
6
November | December 2015
39 Retail Intelligence Here's what’s in store for the
Canadian Grand Prix Awards
43 Be Prepared It’s a meal kit moment 54 Launch It, List It New & now discoveries 56 It Figures Being responsible 58 Perry’s Point of View Grocers for gridlock
ON THE COVER
the Top of their Game 15 At Blue skies ahead for grocery retailers
44 56
PHOTO GALLERIES
FEATURES 21 Advantage Mirror Report Vendors reflect on retailer relationships
25 Festive Merchandising 32 New Store Formats
365 by Whole Foods
36 Who Owns Organic in North America?
30
46 Forecasting the Future
40 Canadian Health Food
48 Trends With Benefits
44 United Grocers Inc.
51 Mondelez International
47 Grocery Innovations
of Food
New & now products
Shopper Futures
Association – East Awards Dinner Canada
53 Produce Marketing
Association Convention & Expo
47 grocerybusiness.ca
November | December 2015
7
Front End
Transitions Gino DiGioacchino was recently appointed chief merchandising officer, Walmart Canada. Previously, he was chief operations officer and executive vice-president, eCommerce. Henry Karamanoukian has been named president of Procter & Gamble Canada. Karamanoukian brings more than 28 years of varied experience in business development, market strategy and organizational leadership, most recently as senior vice-president – sales, P&G North America. Shelley Broader has resigned as president and CEO of Walmart’s EMEA (Europe, the Middle East, SubSaharan Africa and Canada) region to take on the position of president and CEO of women’s apparel retailer Chico's FAS Inc. Previously, Broader was president and CEO of Walmart Canada Brenda Kirk has been promoted to vicepresident, centre of store merchandising, for Overwaitea Food Group (OFG). Previously, Kirk was OFG’s store and regional manager.
grocerybusiness.ca
Shaun McKenna was recently promoted from president of Acosta Canada to executive vicepresident strategic channels for Acosta, with responsibility for Acosta Canada, and in the U.S. market for Acosta’s Costco, Target, Natural Specialty, Military, Small Format and e-commerce businesses. Pierre Chartier has joined the Retail Council of Canada as sales associate for the Canadian Grand Prix New Product Awards program. Chartier’s extensive industry background includes roles at Metro Inc., Ocean Spray International and Melitta Canada. Chartier replaces Ginette Fortin, who recently retired. Sunkist Growers has promoted Jeff Gaston to director of Western sales, headquartered in Valencia, Calif. Gaston joined Sunkist 16 years ago, and previously worked out of Vancouver. Lyle Vanclief was recently named board chair of the Vineland Research and Innovation Centre. The former federal cabinet minister has been a director of Vineland since 2011 and succeeds John F.T. Scott, who will continue to serve Vineland as past chair for the next year.
Bill Dunne named president of C.B. Powell / A.S. May Powell Bill Dunne will assume the combined role of president of C.B. Powell Ltd. and A.S. May Powell Corp., effective December 1, 2015. Dunne, who joined the board of directors of C.B. Powell in October, 2013, was president of Acosta Canada from 2006 to 2012. Tim Powell continues as chair of C.B. Powell, a Canadian packaged goods marketing company. Dave Cardy, former president of food broker A.S. May Powell, takes on the role of chair of that company.
Industry veteran Phil LaVallee retires after 58 years Originally from Western Canada, Phil LaVallee's outstanding career included many years representing key accounts on behalf of A.S. May Powell. Known for his strong work ethic, interpersonal skills and positive attitude, LaVallee is a very popular industry figure. We wish him well as he retires after an amazing 58 years in the food industry.
November | December 2015
9
Front End
Peter Neal (left) and Chris Neal
Neal Brothers’ new cookbook showcases community Goodness
Tim Berman of Kraft Heinz to retire – celebrates an outstanding 36-year career By Mina Fior On Thursday, October 29, 2015, colleagues from Kraft together with retailers, and fellow CPG and industry partners, gathered to pay tribute to Tim Berman's distinguished 36-year career. Berman will retire as acting president of Kraft Heinz Canada on December 31, 2015. He is currently acting in an advisory role as the integration of Kraft Heinz Canada proceeds. During his tenure as vice-president of sales, Berman successfully led the Canadian sales team through numerous acquisitions and divestitures, while continually delivering impressive business results. Berman's leadership style focused on developing clear strategies for his teams, and he always found a way to balance the needs of the business with the needs of the stakeholders. Dan D'Alessandro, former vice-president marketing for Kraft Foods, closed off the evening of celebration with a quote best describing Berman: "I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel. Tim is a leader that made us feel, and he brought out the passion in all of us.” Berman was also recently recognized by United Grocers Inc. at its 2015 Supplier Awards Dinner (see photos on p. 44), for his contributions to the industry over his long and exceptional career.
10
November | December 2015
Peter and Chris Neal, principals of Neal Brothers Foods, have authored a cookbook showcasing 37 Canadians who believe that good, healthy food should be accessible to all. Goodness: Recipes & Stories combines engaging storytelling with great recipes to inspire others to do good in their own communities. Each individual featured in the book explains why good food matters to them and shares two or three personal recipes. Contributors include chefs, entrepreneurs, good food advocates and activists, including chef entrepreneurs Vikram Vij and Jamie Kennedy, Elana Rosenfeld from Kicking Horse Coffee, Mike Fata from Manitoba Hemp Harvest, Miriam Streiman from Mad Maple Country Inn, and musician Sarah Harmer. The Neal brothers are donating 50 per cent of profits from the sale of Goodness to Community Food Centres Canada.
In Memoriam
David Graham Highly respected industry veteran David Graham passed away on October 9, 2015 at the age of 78. Graham retired earlier this year after 23 years with Reynolds Consumer Products (Novelis Inc., Alcan). Prior to joining Reynolds, he had worked for more than 30 years with Kellogg Canada. An avid golfer, Graham was a long-time member at York Downs Golf and Country Club.
Front End
TOM SINGER AND MARC GUAY RECEIVE FCPC AWARD OF DISTINCTION Food & Consumer Products of Canada (FCPC) has awarded its 2015 Award of Distinction to Tom Singer, president, Reinhart Foods Limited, and Marc Guay, retired president, PepsiCo Foods Limited. “Marc Guay and Tom Singer are a testament to the incredible leadership we enjoy in Canadian manufacturing, says Nancy Croitoru, president and CEO, FCPC. “It is an honour for us to celebrate their hard work and many contributions to the consumer packaged goods industry.”
Nancy Croitoru, president and CEO, Food & Consumer Products of Canada, with Tom Singer, president, Reinhart Foods Limited (centre); and Marc Guay, retired president, PepsiCo Foods Limited.
Congrats to CPG's 30 Under 30 award recipients Marketing magazine’s annual list of 30 Under 30 up-and-coming professionals included three bright CPG executives making waves in our industry.
Erin McKeever Digital communication strategist Nestlé Purina PetCare Canada Age 29
Sarah Au Brand manager, Brita The Clorox Company of Canada Age 27
Heena Verma Marketing manager, Delissio Nestlé Canada Age 26
Notable Accomplishment: Increasing online engagement
Notable Accomplishment: Identifying strong strategic partnerships
Notable Accomplishment: Driving social media awareness
grocerybusiness.ca
November | December 2015
11
Front End
ON LOCATION Gary Morris, director, industry relations, GS1 Canada, and his wife Alexandra take a few minutes during their vacation in Marrakesh, Morocco, to read a recent issue of Grocery Business.
Anthony Longo, Nunzio Tumino honoured by The Italian Chamber of Commerce of Ontario
The Italian Chamber of Commerce of Ontario has recognized two grocery industry veterans for excellence in the food and beverage industry. Anthony Longo, president and CEO, Longo Brothers, received the Jan K. Overweel Limited Food and Beverage Industry Award during the Pentola d’Oro Gala, held November 2, 2015. Nunzio Tumino, founder and CEO, Aurora Importing and Distributing Ltd., received the Scotiabank ItalyCanada Award. Also recognized during the event was Cosimo Mammoliti, proprietor, Terroni, who received the Pizza Nova Favourite Hotspot Award. The annual Pentola d’Oro Fundraising and Awards Gala 2015 recognizes industry professionals who represent the best of the Italian brand in Ontario. 12
November | December 2015
Sobeys showcases a Nova Scotia buy-local event with chef Jamie Oliver Celebrity chef Jamie Oliver made a special appearance at an event celebrating local growers in Atlantic Canada. The spokesman for Sobeys supermarkets treated the audience to a cooking demonstration using ingredients from local suppliers. The event, which took place at the Cameron's Farm in Merigomish, Nova Scotia, was attended by local residents and featured displays from a number of local vendors, including: Pure Infused Maple Syrup; Haskapa Haskap Berry Products; Knoydart Farms organic products; Valley Flaxflour; PepperHead hot pepper condiments; Verger Belliveau's Orchard; Red Soil Organics; AC Covert sustainably-sourced haddock and scallops; and Just Us! Coffee Roasters Co-op. "This is my first time visiting Nova Scotia, and having the opportunity to meet some of the people who produce amazing, delicious and fresh food for Canadians has made this trip extra special," Oliver said. Sobeys says it buys more local products than any other grocery retailer in Atlantic Canada. In 2014 alone, Sobeys Atlantic purchased more than $45 million in produce from more than 200 regional growers.
Front End
Grocery Innovations Canada Top 10 Most Innovative Products One of the most anticipated events at Grocery Innovations Canada is the Top 10 Most Innovative Products contest. This year, judges from the food and grocery trade media chose a wide array of innovative and interesting products covering a range of categories:
Global Gardens Group Veggemo
Popping Pops
Bottle Green Tonic Water
Nordica Smooth Cottage Cheese
Natural Delights Date Rolls
ChewSome Soft Candy
Coupgon App
Tandoori Lasagna
Prema Chai Spiced Tea
Flow Water
Centre Stage with Paul McCartney When Dennis and Julie Hines decided to attend the Paul McCartney concert in Toronto on October 17 – their 35th wedding anniversary – they likely didn’t expect to be invited up on stage by the man himself. Dennis is the grocery manager at the Appleby Line Metro store in Burlington, Ont.
grocerybusiness.ca
November | December 2015
13
Open Mike
Buying and merchandising belong together By Michael Marinangeli
Higher sales and profits start with great buying and selling practices. Buying and merchandising are an integral part of your retail strategy. I believe these roles work best when they are combined. After all, if you are paying more for goods than your competitors are, and yet selling them at the same prices, you will have a difficult time competing; and if you pay less for an item, but don’t price and merchandise it effectively, you are no better off. Those retailers that buy well and sell well are the ones that are growing today. Two classic examples are Costco and Dollarama. Their buying practices support their retail pricing strategy. Great buyers and merchandisers always start with the price at which they want to sell an item, and then source that product with the desired cost and quality to support this price point. It’s simple. It’s effective. It works. Throughout most of my career, I worked in a retail environment that combined the buying and merchandising functions on one desk. In fact, we were called Buyer/Merchandisers. Suppliers were allowed to talk to us about new items, deals, and planograms, and share market data. We focused on driving category sales and margins. We also managed inventory replenishment, and were held accountable for inventory turns, service levels and dollar amounts. Inventory overages were our responsibility to remedy, so we were very diligent on what and how much we bought. I still believe that the buyer/merchandiser model is the most effective structure to operate a retail organization, along with the adoption of technology and the efficiencies it can bring to enhance this role.
14
November | December 2015
So what precipitated this change in roles? I believe it was the industry supply-chain renaissance of the 1990s, whereby an army of consultants, armed with the ECR (Efficient Consumer Response) handbook, told us that buying and merchandising were two separate functions, and should be split. Retail consolidation also accelerated this change in philosophy as retailers centralized their buying. This made sense, as it removed duplication, lowered overhead and leveraged the overall size of the business to reduce costs. You ended up with a dedicated buying team that adhered to best practices, and sourced product and costs to support the banner and regions of the organization. A dedicated merchandising team could then focus on consumer needs, pricing, assortment, and promotion and retail execution. Sounds great! Has it worked? You be the judge. From my perspective: 1. Out-of-stocks continue to be a major concern, despite two decades and billions of dollars spent on systems. I believe the main reason for out-of-stocks is too many listings. We carry double the number of items today, and have complicated the consumer shop. 2. Collaboration between retailers and suppliers continues to be a hot topic, with some suppliers calling for a “code of conduct.”
Open Mike
3. Traditional grocers have lost share to alternative formats that effectively buy groceries low and sell them at strategic low everyday price points. 4. Meaningful discussion between the manufacturer and the retailer can be constrained once the overall trade spend percentage has been negotiated, leaving little flexibility to adapt or change tactics as the marketplace warrants. 5. We have a greater reliance on loyalty programs that target individual consumers and selling programs to suppliers, while the main aspects of merchandising at store level are not getting the attention they deserve. Selling the right items at the right price in the right quantities is a better way to build customer loyalty. 6. The centre of the store is under siege. In my opinion, it has been unduly maligned. It isn’t in retreat. Your customers are merely buying these products in other retail formats that offer better perceived value. Some may say I am old school. But I believe a great deal goes sour when the sell side of the business doesn’t seize the opportunity to drive volume at a profit. Some alternative formats and ethnic stores still play by the old rules. Perhaps, when new discount formats arrive, with their penchant to buy low and sell well, retailers adversely affected may take a look at how we did things in the past for answers on how to defend their turf in the future.
Six reasons why buyer/ merchandisers are effective
1 They are accountable for what they buy. They have the tools and authority to effectively move the inventory through the system.
2 Since they manage regular and promotional pricing,
they can source product costs to support their pricing strategies.
3 They manage the pricing strategy for their category, and balance promotional and non-promotional volume to optimize sales and margin dollars.
4 By controlling the listing base, inventory and
planograms, they can influence sales and margins through efficient assortment and shelf placement.
5 They can better manage private-label pricing, shelf placement and promotional frequency and depth versus national brands.
6 They can collaborate better with suppliers, since they
are able to make commitments and negotiate costs to support merchandising activities and performance.
Michael Marinangeli is a principal at MIDEB Consulting Inc. and a retailing veteran with more than 40 years of experience. Contact: mjmarinangeli@gmail.com Michael is a founding member of the Grocery Business Advisory Board.
November | December 2015 Volume 5, Number 6
Co-Publisher and Executive Editor Karen James 416-561-4744 KarenJames@grocerybusiness.ca
Executive Vice-President Content and Market Development Dan Bordun 416-817-5278 DanBordun@grocerybusiness.ca Contributing Editors Angela Kryhul, Sally Praskey Contributors Thomas A. Barlow, Birgit Blain, Perry Caicco, Rodney Daw, Mary Del Ciancio, Mina Fior, Michael Marinangeli, Rich Rotzang, John F.T. Scott, David Wilkes
Co-Publisher and Content Director Kevin Smith 416-569-5005 KevinSmith@grocerybusiness.ca
Creative Agency Boomerang Art & Design Inc. boomart.net Subscription changes & updates or general inquiries: info@grocerybusiness.ca Grocery Business Advisory Council Shaun McKenna, Acosta Sales & Marketing Thomas A. Barlow, Canadian Federation of Independent Grocers
grocerybusiness.ca
@grocerybusiness
Tim Berman, Kraft Heinz Co.
© Copyright 2015. All rights reserved. No part of this magazine may be reproduced without written permission Bill Ivany, Marsham International of the publisher. Michael Marinangeli, MIDEB Consulting Inc. GST Registration No. 83032 6807 RT0001 Darrell Jones, Overwaitea Food Group Publications Mail Agreement No. PM42211029 Cheryl Smith, Parmalat Canada ISSN 1927-243X David Wilkes, Retail Council of Canada Mailing Address Cori Bonina, Stong’s Market Grocery Business Media 390 Queen’s Quay W., PO Box 40085 Toronto, ON M5V 3A6 Mike Longo, Longo Brothers Fruit Market
Perry Caicco, CIBC World Markets Nancy Croitoru, Food & Consumer Products of Canada
Sign up for our weekly digital edition at
grocerybusiness.ca
LOBL Van Houtte® offers WALM a broad range of variety FORTIN and formats WALM CALGARY CO FARM FORTIN ME WALM COUNTRY GRO CALGARY CO LOBL
Van Houtte® is one of the best-selling coffee brands in Canada* Specialty Coffees • Classic Blends • Flavoured Coffees • Origin Coffees
Available in traditional coffee formats and in K-Cup® pods * Nielsen Market Track, National Grocery+Drug+Mass Merch+Gen Merch+Warehouse Club, Dollars, 52 weeks ending August 22 2015, exclude controlled labels, total brand including traditional and single serve coffee.
BLAW MART NOS MART O-OP BOY NOS ETRO MART OCER O-OP LAW
at the top of their game
LOBLAW SOBEYS METRO WALMART LONGO FORTIN SOBEYS METRO OVERWA METRO WALMART SOBEYS LONGO FORTINO WALMA WHOLE FOODS FARM BOY CHOICES MARKET SOBEYS FRESON BROS. COUNTRY GRO CALGARY CO-OP FORTINOS OVERWAITEA SOBEYS COLEMANS FORTINOS FORTINOS SOBEYS MET
CIBC’s Perry Caicco says turbulent times are behind us, at least for the near term. After a relatively benign 2015, it seems that more fair weather is in store for grocery retailers going forward. That comes as welcome news following several stormy years of heavy competition, squarefootage expansion, and a flurry of mergers and acquisitions. According to the recent report Glory Days, from CIBC World Markets Inc., a more steady-state environment will extend into 2016, and possibly beyond. “Given the calm conditions of the market and the post-consolidation pricing stability, there could be outsized earnings expansion for the next 18 to 24 months,” the report predicts. Chalk it up in large part to a slowdown in squarefootage growth, consumers’ willingness to pay for better-quality, healthier food, and a recovering
Ontario. “As a result, grocers should be able to continue to engineer strong inflation, and more than cover their increased costs,” says the report. While the market could experience a black swan event at any point – the 2009 housing market meltdown comes to mind – any potential threats to profitability are likely to materialize only in the distant future. For example, foreign hard discount competitors, such as Aldi or Lidl, will eventually reach Canada, but their impact is years away. “In the meantime, 2015, 2016, and probably 2017 might one day be remembered as the glory days of Canadian supermarkets.” Highlights of the report follow.
November | December 2015
17
AT THE TOP
OF THEIR GAME
CHANGING CONSUMERS:
KEY DRIVERS KEY DRIVER
GROWING ETHNICITY
4
KEY DRIVER
• Visible minorities (primarily Asian and South Asian) now comprise approximately 20 per cent of the population. • All grocers have “ethnic” strategies or banners, but mainstream stores still need to figure out how to serve these populations.
GROWING INTEREST IN HEALTHY EATING
• Bellwether products such as organics are growing at an annual rate of 10 to 15 per cent. • Organic products represent about four per cent of Canadian food sales. • Interest in produce, local foods, specialty products, etc., is growing as the population ages.
FOUR BIG SHIFTS 1.
2.
FROM CENTRE STORE TO FRESH
FROM DISCOUNT TO CONVENTIONAL
• Results in increased initial revenues through higher-valueadded products, some boost to margins, offset by shrink and labour costs. • In the long term, shrinking grocery departments and tonnage will depress the vital flow of funds from CPG suppliers.
• The price gap between conventional and discount has shrunk over the past five years. • Conventional stores that have relied on great locations and promotional programs have begun heavily renovating, resulting in a boost to same-store sales. Gross margins will improve due to a shift to specialty products. • These factors are offset by higher labour investments, and, over time, it’s possible that the ROI metrics will begin to stagnate or decline.
3.
FROM WEST TO ONTARIO
• Over the past decade, the western market has been the most robust. However, the drop in the oil market, the lower dollar and removal of square footage from the marketplace has seen productivity growth shift to Ontario. • While the West is ramping up promotional programs to stay relevant, Ontario no longer requires heavy promotional programs to drive business, resulting in improving gross margins and massive renovation investments.
18
November | December 2015
4.
FROM LARGER TO SMALLER STORES
• New suburban stores tend to be mid-sized, and urban stores very small. • Because rents are high, urban stores can be very “hitor-miss” – for every three that open, one will probably never be profitable and could close.
3
THREE
MAIN VARIABLES 1
SQUARE FOOTAGE – THE BIGGEST DRIVER
THE BENEFITS OF
CONSOLIDATION • Despite the headwinds Sobeys has encountered with the Safeway integration, there are benefits being realized in promotional pricing and advertising coordination, and private-label distribution. • The reduction in the number of competitors in both drug and food eliminates a pricing wild card, making for a calmer marketplace.
Grocery square-footage growth
• 2015 has been one of the lowest years ever for square-footage growth due to the exit of Target and store closures by Sobeys and Loblaw. • Target walked away from three million square feet of food-selling space; only about 10 per cent of that should eventually become food-selling space, operated primarily by Walmart.
2007 2008 2009 2010 2011 2012 2013
PRICES INCREASING
grocerybusiness.ca
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Source: CIBC World Markets
Square-footage growth vs. capital expenditure growth Total capital expenditure growth
Weighted sq footage (ex-SY acq)
20% 15% 10% 5% 0% -5%
2015e
Source: CIBC World Markets
-10% 2014
• A low Canadian dollar is seriously inflating the cost of imported produce (a 10-month-a-year consumer purchase). • Also affected are input costs for private-label products and transfer prices to the Canadian division of CPG companies. • On the positive side, grocers have been able to cover much of these costs with inflation because real competition is minimal. • For 2016, CIBC is forecasting the Canadian dollar at US $0.77, which is flat to 2015. That means any price increases for next year will flow directly to the bottom line.
2016e
2013
CANADIAN DOLLAR HEADWINDS
2015e
2012
• Competition has eased, and price inflation has been steady and strong. • Price inflation is being driven by softer promotional programs rather than price increases.
3
2014
2011
2
November | December 2015
19
AT THE TOP
OF THEIR GAME
RETAILERS TO WATCH Ethnic-format operators and fresh-focused independents
GROWING IN GROCERY
THE ROLE OF WALMART
• These stores are well capitalized, modern, origin-focused and well merchandised. • Although they currently represent 15 per cent of the market, over the next five to 10 years they could take serious share. • In the Greater Toronto Area, for example, these stores are taking 50 per cent of the sales growth.
CONTROL 51% OF FOOD SALES FOOD $*
MARKET SHARE %
Loblaw/Shoppers 28,077
29.2
Sobeys/Safeway
20,833
21.7
Metro
10,125
10.5
Costco
9,238
9.6
Walmart
6,577
6.9
Co-ops
3,504
3.6
Overwaitea
2,618
2.7
Dollarama
486
0.5
Jean Coutu
268
0.3
Other
14,267
15.0
Total
$95,993
100%
*$ billions 20
November | December 2015
• Merchandising and produce are much improved, with products such as artisan breads and the introduction of 100 per cent Canadian beef. • But even with the addition of some Target square footage, Walmart’s share will be just 6.1 per cent at the end of 2016.
LOBLAW AND EMPIRE RETAILER
• The company is quickly transforming into a real grocer.
WALMART'S SHARE 2015
5 .8% 7 .7%
FOOD SQUARE FOOTAGE
FOOD MARKET SHARE
OTHER
ISSUES
LOOKING AHEAD... KEY FACTORS • A calm market environment will continue into 2016 and several years beyond. • Square-footage growth has slowed at only +1.7 per cent, about the same as annual square-tonnage growth.
DISAPPEARING TONNAGE There’s an ongoing sales shift from centre-store to fresh departments, which is impacting tonnage growth. On the upside, it is also shifting basket size to high-priced items such as artisanal cheese and organic produce.
NEW HARD DISCOUNTERS
• Low probability that other grocers will repurpose the three million square feet that Target Canada had devoted to grocery space.
Aldi and/or Lidl could enter Canada over the next two to three years, although it could take five to seven years to have a sizeable effect on existing players.
• Ontario market is improving because of larger square-footage reductions.
TRADE SPEND
CONSUMER SPENDING • Growth in disposable income is flat, but food spending is up slightly, as consumers are willing to spend more for better-quality, healthier food.
With the prevalence of zero-based budgeting practices among CPG manufacturers, trade spend will come under scrutiny, putting pressure on retailers’ EBITDA over the next three to four years, with serious implications in 2018 and beyond.
• 36 per cent of purchases are bought on deal, but the discounts aren’t as deep.
INVESTMENTS IN ONLINE
• The Canadian dollar is unlikely to drop lower than it already has.
• Unemployment remains at close to a six-year low, and consumers are benefitting from lower energy and fuel prices. • Lower gas prices added approximately $10 billion to Canadian pockets compared to a year ago. Restaurant sales and food for home consumption have both benefitted.
LONG-TERM ISSUES • Impact of hard discounters, such as Aldi or Lidl, is years away. • Online shift will have a minor impact and shouldn’t affect overall industry volumes. • Over the next two to three years, there will be major restructuring of the CPG industry based on “zero-based” budgeting principles introduced by Kraft Heinz owner 3G Capital. • This could impact trade support levels and have a material impact on retailers’ profitability until 2017 or 2018. grocerybusiness.ca
These investments are popular but won’t generate a return over the next five years. And sizeable online investments could suppress otherwise strong earnings growth.
IN CLOSING… “Canada remains one of the most favourable markets in the world for supermarkets, and grocers are in strong earnings recovery and momentum. We are a few months into what is likely to be a sustained strong operating environment, with remaining headwinds disappearing as we get into 2016.”
Perry Caicco, managing director for CIBC World Markets. November | December 2015
21
CHICKEN FARMERS OF CANADA
ANIMAL CARE & ON-FARM FOOD SAFETY PROGRAMS Chicken Farmers of Canada’s Animal Care and On-Farm Food Safety programs are concrete, accountable means of demonstrating the pride and commitment of farmers in raising the quality chicken Canadians can trust. » OUR PROGRAMS OFFER A NATIONAL SET OF STANDARDS TO ENSURE CONSISTENCY FROM COAST TO COAST.
» OUR PROGRAMS ARE AUDITABLE, ENSURING ACCOUNTABILITY FROM EVERY FARM.
» OUR PROGRAMS ARE MANDATORY, ENSURING PARTICIPATION AND COMPLIANCE FROM ALL FARMERS.
» THE PROGRAMS HAVE STRICT ENFORCEMENT MEASURES TO OFFER ADDITIONAL ASSURANCE.
» WE ENSURE THAT THESE PROGRAMS ARE SUPPORTED BY STAKEHOLDERS, FROM GATE TO PLATE.
» WE ARE COMMITTED TO CONTINUOUS IMPROVEMENT. WE EVOLVE AS WE LEARN.
» WE ENSURE THAT THE WHOLE INDUSTRY IS INFORMED AND INVOLVED.
The “Raised by a Canadian Chicken Farmer” Brand is proud to be part of this program.
brand@chicken.ca
WWW.CHICKENFARMERS.CA
THE
TM
MIRROR REPORT VENDORS REFLECT ON RETAILER RELATIONSHIPS Advantage’s newly released Mirror Report explores how vendors rate retailers in an era of increasing consolidation and improving collaboration. By Sally Praskey
Retailers and vendors are getting along much better these days. According to Toronto-based Advantage’s 2015 Mirror Report, vendors are significantly more positive about their relationship with retailers than they were a year earlier. One of the greatest improvements over the past year is in the area of supply chain, especially in the practice “invests in up-to-date supply-chain
technologies.” That indicates that the major investments retailers have made in supply-chain system upgrades over the past few years are finally paying off. “They are better able to forecast, which has a positive impact on the overall relationship,” says Vincent van der Heijden, director, client service, for Advantage. >
CONTINUED ON PAGE 22
Average Net Favourable Trend
On average, vendor perceptions of major retailers have improved across all performance areas, except within the area of Business Relationship. Perceptions within Supply Chain experienced a significant increase.
30
+2
25
25 20
23
26
25
26
2014
+3
+1 +4
23
+9
30
28
27
22 19
18
15
10
5
Overall Performance
grocerybusiness.ca
-3
2013
Business Relationship
Personnel/ Organization
Category/ Business Development
Retail Execution
Supply Chain Management Personnel/ Processes
November | December 2015
23
TM
>
Supply Chain Investments Taking Hold Net Favourable Score
CONTINUED FROM PAGE 21
All the other performance areas measured in the report also showed slight improvements, with “Retail Execution” receiving the highest Net Favourable score. The lone exception was the category “Business Relationship,” which showed a decline and which also dominated the “Top Priorities” for vendors this year. The biggest contributor to the decline within the “Business Relationship” category was the deterioration in the area of “Trust” as vendors continue to perceive challenges in collaborating with retailers on building plans that are profitable to both parties. In fact, the practice “works productively with us to build profitable business for both parties” was the lowest rated in the entire report. Interestingly, the commentary around retailer consolidation was much more positive this year than last, likely an indication that retailers, at least from the vendors’ perspective, have begun to successfully integrate their acquisitions. Overall, vendors have good relationships with their retailers, as reflected in the “Average Net Favourable Trend” scores, but clearly, financial pressures are causing some trust issues that have yet to be resolved.
Priorities for Account Support 2014 2015
PRACTICE
2
1
Works productively with us to build profitable business for both parties
1
1
Implements agreed-upon business plans
5
3
Creates and sustains a climate of cooperation and trust
6
24
3
Stores maintain a high standard of on-shelf display
November | December 2015
2014
26 2015
36
Improved vendor perceptions of retailers’ investments in supply chain processes and technologies have had the biggest positive impact within the area of supply chain.
+10 Net Favourable improvement from 2014 to 2015 is significant
A MATTER OF TRUST 2014
30 2015
IMPORTANCE RATING
19
82 82 78 78
-11 Net Favourable decline from 2014 to 2015 is significant
Market Pressures are Impacting Relationships The biggest contributor to the decline within "Business Relationship" was caused by a significant deterioration in the area of “Trust” as vendors continue to perceive challenges in collaborating with retailers on building plans that are profitable to both parties.
Perspective
Beer Brews Competitive
Imbalance By John F.T. Scott
I don’t get it. We learned in economics, politics, history and governance courses that the essential purpose of government is to protect and facilitate issues for the common good of society. Not once do I recall an allusion to creating a competitive advantage for one size of business over another. It’s almost incomprehensible that any public-sector body in this country would purposefully set out to engineer the competitive advantage of major corporations over smaller players. Yet that is exactly what the government of Ontario has done with its new program permitting the sale of six packs of beer in grocery outlets. Like most in the grocery retail sector, I applauded the announcement earlier in the year that the government would permit the sale of beer in Ontario in outlets other than the Beer Store and the LCBO. Of course, the devil is always in the details, and the pressure from an unlikely alliance, including major breweries, the LCBO and its unions, quickly placed the entire process in a complicated quagmire. The result of the “liberation” was a document and process that was more about protection of the Beer Store’s monopoly, union jobs, the integrity of the LCBO, and the preservation of and modest increase in government revenues than any true expansion of the sale of the product. There is slight acknowledgement to increasing the presence of craft brewers, but the terms pertaining to the sale in “other” outlets (i.e., grocery) are cumbersome and uneconomic. If you succeed in acquiring one of the initial 150 licences (450 will eventually be granted) for the fee of $7,000, you have the right to sell six packs of beer under strictly controlled conditions (same hours as the LCBO), at a margin of between three and 10 per cent. But if you
grocerybusiness.ca
sell more than 279 packs per day, you will be fined for exceeding your quota. What a deal – in return for your investment in shelf space, refrigeration, general overhead and staff, you have the right to sell beer as a permanent loss leader in your store. One retailer calculated that to break even just on the fee (without overhead), he would need to sell 64 packs per day. It doesn’t take much to extrapolate that the retailers who can best afford to make the capital and operating investment are the major corporate players. The independents, who lobbied hard for inclusion, are subject to the same terms and will find their “success” to be thin gruel indeed. Even taking a long-term view that this is the thin edge of the wedge, one must remember that this new deal will be in place for 10 years. The obvious result is that Ontario has interfered in a marketplace already “over-balanced” and has handed another significant competitive advantage to the major players. The same group is now hard at work developing the rules for wine – one can only hope that they will consider the impact their decisions will have on the reality of competition in the grocery sector.
John F.T. Scott speaks, writes and consults on the food distribution sector. He is the author of “Perspectives on the Retail Food Industry,” an itinerant publication that explores various aspects of the industry.
November | December 2015
25
FESTIVE
MERCHANDISING Consumers enjoy food preparation during the Festive season more than at any other time because the holidays represent an opportunity to expand their culinary range when entertaining family and friends. Retailers can also get into the seasonal spirit by showcasing deliciously enticing and unique products. Result? A higher basket ring and a more engaged consumer.
The Art of Merchandising Italian Cheese TV audiences know him best as a charming judge on The Food Network’s popular Iron Chef America. But Mario Rizzotti’s extensive culinary background, combined with a passion for Italian food, make him an excellent resource on Italian cuisine. Grocery Business had a chance to speak with Rizzotti about the delicious tradition of Italian cheese at this year’s Food Marketing Institute show in Chicago. WHAT MAKES ITALIAN CHEESE UNIQUE? Italy has been producing cheese for over a thousand years and it has always been produced with two key ingredients: tradition and passion. Look at Parmigiano-Reggiano or fresh mozzarella. They are very versatile cheeses that can be used in many dishes, but the cool thing about all the Italian cheeses is that they taste amazing on their own. Retailers can sample these authentic products, and their customers will immediately know why everything tastes better when they visit Italy.
grocerybusiness.ca
Iron Chef America judge Mario Rizzotti
November | December 2015
27
Festive Merchandising Italian Cheese Continued WHAT DOES D.O.P. STAND FOR? The great thing about Italian cheeses is that they are non-GMO. Many of them are government certified and have earned the prestigous D.O.P. designation. The abbreviation D.O.P., or P.D.O. in English, stands for Protected Designation of Origin, and applies to many Italian food products, not only cheese. If your cheese is D.O.P., it means the tradition, the area where the milk is sourced and the territory are considered important to the great taste of the final product. Asiago, Fontina, Gorgonzola, Grana Padano, and Parmigiano-Reggiano are some of the D.O.P. cheeses. AND THE BEST MERCHANDISING OPPORTUNITIES ARE?
Pasquale Bova, Italian Trade Commissioner Italy is a top supplier of specialty cheese to Canada: 22 per cent of all the cheese that Canada imports originates in Italy. Canadians already enjoy a variety of Italian cheeses, from the prized Parmigiano-Reggiano of the North to the rich Mozzarella di Bufala of the South.
The most important aspect is to educate the consumer, but also it’s important to: • Demo the cheese near the deli where customers are waiting to place their order. Be sure to identify the cheese and explain what they are tasting. • Have someone knowledgeable about cheese walking around the store with samples. This also creates a generous, festive environment customers enjoy. • Display the cheese with organic fruit; customers who will spend money for organic can also afford a good cheese.
The implementation of the Free Trade Agreement between Canada and the European Union will bring a long-awaited expansion of the cheese quota assigned to the EU. We look forward to introducing more varieties, and to amazing Canadian consumers with the many delicious cheeses Italy has to offer.
• Sample Italian pre-cut cheeses by your grab-and-go area. • Create excitement by showcasing one special variety as the “Cheese of the Week.”
Specialty cheese buyers are affluent consumers
100K+
$
INCOME
+ 2
HOUSEHOLDS
Members
AGE
54
Under
Source: International Dairy-Deli-Bakery Association
grocerybusiness.ca
November | December 2015
29
“ Our first ad in Grocery Business magazine had our phone ringing.” Reza Bekhtiari, Vice President, Sales & Marketing, Millenium Pacific Greenhouses
“ Our ad looked great and we were thrilled to receive calls regarding our fresh, healthy and tasty tomatoes.” Millennium Pacific is a family-run 30 acre modern hydroponic greenhouse located in Delta, BC. They also offer a variety of other products, including fermented foods, nuts, meats and spices. For more information regarding Millennium Pacific, please call 604-940-4440 or visit millenniumpacific.com Grocery Business is Canada’s premier national grocery publication dedicated to producing results for advertisers. For more information, please call 416-817-5278 and visit grocerybusiness.ca
Festive Merchandising
“ Italians love their cheese and actually have more varieties than number of days in a year.” – Mario Rizzotti BASKET SIZE SIZZLES
123
$
in basket value when specialty cheese and fresh products are purchased together
Source: International Dairy-Deli-Bakery Association
The Art of Merchandising Medjool Dates Medjool dates are the perfect product to promote during the holiday season. Erin Hanagan-Muths, director of marketing, Bard Valley Date Growers, shares her insights on how to maximize sales with strategic placement and merchandising. BEST SHELF LOCATION Dates are best merchandised in a fairly regular on-shelf spot in fresh produce, which gives customers an opportunity to try something different as they’re shopping that section of the store. Dates stand out and are inviting from a visual standpoint because they are something new and different in the produce area. BEST ADJACENCIES Retailers have seen great success in merchandising our products adjacent to bananas, which are also a high potassium, grab-andgo healthy snack. BEST SEASONAL MERCHANDISING OPPORTUNITY Pop-up freestanding displayers. It’s something that can come in and out for the holiday season. BEST CROSS-MERCHANDISING OPPORTUNITY Our recipes feature pairings for entertaining, such as Medjool dates with mascarpone or blue cheese, displayed on a cheese board. So cross-promotion with dairy or deli products is a really smart idea.
Versatile and authentic – that’s Italian! In Italy, food is meant to be savoured and meals are meant to be shared. With the holiday entertaining season fast approaching, this is the best time to encourage your customers to experience fresh mozzarella from Italy. Because of its versatility, fresh mozzarella can be used as an appetizer, hors d’oeuvre, or as the star of the cheese tray.
BEST SNACKING OPPORTUNITY Snacking on fresh items is becoming a larger part of daily food consumption, and, in many cases, is replacing meals, particularly among younger demographics. The new Medjool date rolls are a simple combination of the date with a coating of coconut, almond or dark chocolate. They are a fresh, nutritious snack experience, and consumers don’t have to sacrifice delicious.
Nota Bene: Cross-promote fresh mozzarella with other fine Italian ingredients such as olive oil, tomatoes, pesto, fresh artisanal breads, tapenades and olives. grocerybusiness.ca
November | December 2015
31
Making It
HOOKED ON
St. Jean's Cannery and Smokehouse facility, Nanaimo, B.C.
SUSTAINABLE SEAFOOD By Mary Del Ciancio
Raincoast Trading is trying to save the world, one can of seafood at a time. The Vancouver-based company is taking steps to ensure that its business – producing gourmet canned seafood – supports the long-term health and stability of the world’s marine ecosystems. “We’re committed to 100 per cent sustainability,” says Kim Stockburn, sales and brand manager with Raincoast Trading. This commitment sets Raincoast Trading apart, and leading conservation groups are taking note. The company’s canned products – wild albacore tuna, wild sockeye salmon and wild pink salmon caught off the coasts of Washington, Oregon and British Columbia – were the first Canadian packaged retail products to bear the Ocean Wise sustainability logo, identifying them as an environmentally
32
November | December 2015
friendly seafood choice. As well, Greenpeace Canada has named Raincoast Trading the number one sustainable canned tuna in the country. Another differentiator for Raincoast Trading is the fact that its products are “clean label,” with only two ingredients in its salted varieties (i.e., the fish and sea salt), while the unsalted products contain only the fish itself. St. Jean’s Cannery and Smokehouse, which owns Raincoast Trading, also uses special techniques in the cooking process to preserve the quality of the fish. The tuna, for example, is filleted off the bone and hand-packed raw into a BPA-free can, where it is cooked only once. This unique single-cook method preserves the tuna’s natural omega-3 oils, significantly enhancing the health profile of the product and producing a flavour that is delicately delicious.
Making It
CAUGHT HOOK, LINE AND SINKER Because global consumption of seafood continues to grow at a faster rate than various species can reproduce, Raincoast Trading supports efforts to minimize overfishing – the greatest threat to the oceans today, according to Ocean Wise. By working with conservation groups, the company ensures it’s not sourcing a species that is endangered, or fishing in an area where stocks are low. “You’re talking about something that will run out,” explains Stockburn. Raincoast Trading sources Pacific Northwest tuna from local, sustainably managed fisheries that use the hook-and-line method, a technique that targets the tuna and catches them one at a time, minimizing unnecessary bycatch (unintended catch that is discarded). The company can back up all its sustainability claims because its products are 100 per cent traceable, from boat to can. There is a production code on the bottom of each can that identifies the exact source – the vessel, captain, harvest method, area of capture and trip dates.
WHY THE PRICE IS RIGHT Sustainably caught and all natural come with a higher price tag. To justify the higher price to consumers and retailers, the company must educate them about the merits of buying sustainable canned seafood. Raincoast Trading recently rebranded, launching a new look for its products to enhance their shelf appeal. The new branding highlights that it’s “not your typical can of seafood,” and prompts customers to visit the company’s website to learn why. “I always believe that people will do the right thing, as long as they know what the information is,” says Stockburn. “We hope that catching someone’s eye with our new branding could make them go to the website [and] maybe we’ll get one more person to understand the difference between sustainably caught tuna and conventional tuna.” The company is also launching a canned tuna product in early 2016 under a new brand – Raincoast Global. It will be sourcing skipjack, certified by the Marine Stewardship Council, out of the Maldives from a small
pole-and-line fishery. Skipjack is a less expensive tuna, which will allow Raincoast Trading to offer consumers a lower price point while still adhering to the same high sustainability standards. Raincoast intends to find more sustainable species and fisheries, and add more affordable canned seafood options to its lineup in the near future. This, Stockburn says, will be the company’s biggest source of growth. But with every product it sells, and every new product it introduces, preserving the well-being of the oceans will always be the driving force. “Those standards of sustainability will never change,” says Stockburn. “Ever.”
A WEST COAST STAPLE Raincoast Trading was launched 20 years ago in Vancouver, and was acquired in 2013 by St. Jean’s Cannery and Smokehouse – the very same company that had been smoking, hand-packing and canning Raincoast Trading’s products from day one. Based in Nanaimo, B.C., St. Jean’s Cannery and Smokehouse is a family business that has been packing Pacific seafood for more than 50 years. In addition to its commercial fishery business, St. Jean’s is B.C.’s largest sport fishing cannery and the only one in Canada that processes tuna.
grocerybusiness.ca
November | December 2015
33
New Store Formats
A HIPSTER HAVEN Whole Foods announced in June 2015 plans to launch a new value-focused format called “365 by Whole Foods Market.” With this bold move, the chain served notice it would go head to head with lower-priced competitors that have invaded its natural/organic turf. Sally Praskey examines the implications.
Why? As organic foods have gone mainstream, Whole Foods has been beaten at its own game by lower-priced competitors such as Walmart, which recently launched a line of organic products under its private-label brand Great Value. The new 365 format will allow Whole Foods to better compete with the upstarts, and shed the “Whole Paycheck” stigma that has plagued it over the years. Recently, the company announced it was laying off 1,500 employees “as part of its ongoing commitment to lower prices for its customers and invest in technology upgrades while improving its cost structure.” The 365 format plays into this strategy. The name refers to the retailer’s 365 private-label brand, whose products will anchor the new stores, allowing it to exert more control over price points. “We see a whole generation of young people coming up who are quite interested in natural and organic foods,” said co-CEO John Mackey 34
November | December 2015
in a Q2 conference call with analysts.* “The Millennial generation, they’re idealistic, they’re values-oriented, they’re mission-driven. These all play to Whole Foods Market’s strength. They’re also very value conscious. So we think a streamlined, hip, cool, technology-oriented store unlike any store anybody has ever seen before, but has lower capital, lower cost, perhaps lower labour cost and lower prices, is going to be very, very attractive to that particular generation.” With competitors eating into its domain of organic and fresh foods, co-CEO Walter Robb told analysts the company wanted to be “the hunter,” rather than “the hunted.”
What? The smaller-footprint 365 stores will offer everyday low prices on natural and organic products. Geared towards Millennials, the stores will emphasize technology and social-media tools.
PHOTOS: WHOLE FOODS
TOPS IN TECHNOLOGY Although Whole Foods has not divulged details about 365’s technology, the company has always been a tech leader. It was the first national chain to partner with Instacart for one-hour home delivery, and was one of the first major retailers to sign on with Apple Pay. Speculation for 365 includes smartphone apps and digital shelf labels. Chief information officer Jason Buechel has stated that the company is investing in three technology platforms: • the first, for team members, will help with tasks like labour scheduling; • the second, for customers, will include the company’s new loyalty program and more transparency into what’s on the shelves; • the third “will change how we look at the entire supply chain,” said Buechel.
“We are excited to introduce 365 by Whole Foods Market, bringing healthy foods to even more communities with a fresh, qualitymeets-value shopping experience that’s fun and convenient,” said newly appointed president Jeff Turnas when the new format was announced. “A modern streamlined design with innovative technology and a carefully curated product mix will offer an efficient and rewarding way to grocery shop.”
When? The first five stores are scheduled to open in 2016, with double the number of openings planned through 2017. The first store will be a conversion of a Whole Foods Market in Los Angeles, followed by new locations in: Bellevue, Wash.; Houston, Texas; Portland, Ore.; and Santa Monica, Calif. The stores will be opening in “hipster” neighbourhoods with ethnically diverse populations. “With opportunities in new and existing, as well as urban and suburban, markets, most of our first stores are expected to be in existing markets to best leverage our existing team member base and infrastructure,” Robb said during a conference call.
grocerybusiness.ca
Where? Although Whole Foods executives maintain the new format is designed to complement existing stores, when asked during a Q3 conference call with analysts whether there is a risk the 365 format could cannibalize existing Whole Foods stores, Mackey replied: “Probably, but we don’t know exactly how much until we do it. It’ll probably be less than when we open up an actual branded Whole Foods Market store, because it’s going to appeal to a little bit different customer, we think. So it is an experiment.” Bill Bishop, chief architect of consulting firm Brick Meets Click, believes cannibalization is inevitable. “The challenge is that there are Whole Foods stores already located throughout many affluent markets, including where a lot of Millennials and younger shoppers live,” he says. “This means that the store location strategy they follow in building out their store network will determine how much cannibalization they experience.” He echoes Mackey when he adds that, if the company’s goal is to profitably grow the company, “some degree of cannibalization
will be necessary and even beneficial as they pull in new customers, as well as hold onto existing customers.” To create a new store format that competes with the same retailer’s existing stores is “notoriously difficult,” notes Bishop. “To make this work, they have to compete even-handedly with themselves. Not easy to do.” Not easy, but not impossible. “All the important points – i.e., value pricing, smaller formats and more use of technology – are on trend, so a lot of the necessary building blocks are there to appeal, not only to Millennials, but also to a broader crosssection of customers,” says Bishop. The key, he adds, will be how effectively the retailer is able to tailor the assortment of each store to the target market. *For the full transcript, visit: thestreet.com
November | December 2015
35
Nobody Knows Easter Like CADBURY! Introducing New CADBURY OREO Egg
NEW! • OREO is the number one brand of Cookie, with 36% Household Penetration1 • This unique CADBURY OREO offer will help drive incremental sales of singles
New Displays supporting CADBURY OREO Egg
PPD Easter SGL Var Ctr, 192 ct. No 612000133100
PPD Easter SGL Var Flr, 288 ct. No 612000132600
Easter SGL Var Half DRP, 2688 ct. No 612000133200
* PPD Easter SGL Var Flr QC, 288 ct. No 612000133000 * Available in Quebec only
PPD Easter SGL Var Half DRP, 2688 ct. No 612000133200 * Easter SGL Var Half DRP QC, 2736 ct. No 612000133300 * Available in Quebec only
Contact your Mondelez Canada representative at 1-855-219-6672 or your wholesale representative for further information. 1
Nielsen Home Scan Report, Household Penetration, March 2015
Graphics are subject to change.
Independents’ Day
A new beginning...
maybe
The recent moves toward more competitive and fair vendor pricing and practices should be good for the entire industry. By Thomas A. Barlow
Over the course of the last two years, our association has been very vocal about our concerns with the distortions in industry practices and policies that we believe are largely attributable to the consolidation in the grocery channel. Trade practices that were imposed by some large retailers created friction within the industry and, from our perspective, had a significant impact on many supplier strategies with our members. Our mandate is to help grow and protect our members’ interests. As such, our role is to stand up and speak out on behalf of our members, and we make no apologies for that. According to Loblaw spokesperson Kevin Groh, the company is making changes to the way it deals with suppliers as part of its push to eliminate complex, costly and adversarial practices. From our point of view, and the view of many others, these practices have indeed caused disruption and acrimony in the industry. The changes announced are a positive move in the right direction, but as we have consistently maintained, the current challenges our industry faces are not those of one company. We require industry-wide solutions that everyone is party to, so we can ensure lasting change.
grocerybusiness.ca
Trade spend, fair pricing and transparent vendor practices are all critical components to ensuring a healthy and vibrant Canadian grocery business. Independent grocers play a big role in this industry, accounting for almost $12 billion in sales and $9.6 billion in purchases. Let’s not lose sight of the fact that the continued viability of a competitive, independent retail channel is good for the entire industry, particularly for the vendor community. Sometimes that reality seems to get lost in the short-sighted sales strategies of some vendors. That is why the Canadian Federation of Independent Grocers (CFIG) is hoping that the move announced in October by Loblaw will have a positive impact on supplier practices toward independents. I have been on the receiving end of a myriad of complaints from my members relating to supplier pricing, billing and service practices that border on being anti-competitive and, at the very least, are not helpful to the long-term competitive position of independent retailers. In many cases, in response to pushback from CFIG and its independent customers, these suppliers have thrown their hands up, claiming their approach was a reaction to pressure from the major chains.
Fair enough. But we now call on the supplier community to reciprocate the move by Loblaw, and end some of the ill-advised and unsustainable practices that some vendors have imposed on many smaller retailers. Changes in pricing strategies, the diminution of vendor service and support, unilateral changes in delivery times and, of course, trade spend distribution, all need to be changed to reflect the beginning of what could be a lasting and very positive rejuvenation for our industry. Retail consolidation has caused issues for our industry, but in fairness, so, too, has supplier consolidation. The vendor community must be able to challenge itself as much as it challenges the retail community to ensure that we return this great industry back to a position of growth. Our customers deserve that!
Thomas A. Barlow is president and CEO of the Canadian Federation of Independent Grocers, which represents more than 4,000 independent grocery retailers across Canada. Email: tbarlow@cfig.ca
November | December 2015
37
TAKEOVER
TARGETS Who Owns Organic in North America? Over the past few decades, the food industry has seen a flurry of acquisitions, with large CPG companies swallowing up their smaller counterparts in a “buy not build” strategy. This trend is likely to continue because, according to global investment banking firm Jefferies LLC, smaller brands have been stealing market share from their larger competitors for several years now. In a recent report, Jefferies noted that the major brands lost market share in a whopping 42 of 54 categories over the past five years. As health-conscious consumers shift their food preferences to “natural” and “free-from” products, the smaller companies’ ethos of innovation, sustainability and Millennial appeal is in the marketplace’s sweet spot, making them very attractive takeover targets for larger, more mature food companies. Last year, Dr. Phil Howard, an associate professor at Michigan State University, developed an infographic to show the acquisitions and alliances of the top 100 food processors in North America.
2007
Coleman Natural
Dagoba
2011
2006
2003
Perdue Farms
Hans 2007
Hershey Foods
Draper Valley Farms
2002
Petaluma/ Rosie Boca Foods 2000
Tea Forte
WHITEWAVE FOODS acquired Earthbound Farm and So Delicious
HORMEL acquired Applegate Farms
HILLSHIRE BRANDS acquired Van’s Natural Foods
BIMBO BAKERIES (Mexico) acquired Canada Bread from Maple Leaf Foods
POST acquired MOM Brands/ Malt-O-Meal/Better Oats and Michael Foods
TREEHOUSE FOODS acquired Protenergy Natural Foods
CAMPBELL SOUP acquired Garden Fresh Gourmet
GENERAL MILLS acquired Annie’s Homegrown TYSON FOODS acquired Hillshire Brands
HAIN CELESTIAL acquired Rudi’s Organic Bakery CONAGRA acquires Blake’s All Natural Foods
Mondelez
Back to Nature
2012
2003 100% Equity; 2012 majority stake sold to Brynwood Partners
JAB/D.E. Master Blenders
(spinoff from Kraft)
2010
Green & Black's
(formerly Sara Lee)
Earthbound Farm 2013
2012
Peet's Coffee & Tea
Silk
2002
WhiteWave
1999
Alta Dena
(spinoff of Dean)
1998 13% Equity; 2004 100% Equity
Hillshire Brands
SINCE THIS INFOGRAPHIC WAS DEVELOPED, SEVERAL MORE NOTABLE ACQUISITIONS HAVE OCCURRED
Snyder'sLance
Late July
Horizon 1999
(formerly Sara Lee)
The Organic Cow of Vermont
Nestlé
2011
Aidell's Sausage 2011
Sweet Leaf Tea
MillerCoors
2012
2008
Tribe Mediterranean Foods
Crispin 2010
Fox Barrel
Diamond Foods Kettle 2010
38
November | December 2015
Source: Michigan State University, Phil Howard, Associate Professor
Bloomfield Bakers
Plum Organics
Lovin Oven
Ralcorp
2007
Wolfgang Puck
John B. Sanfilippo & Son
(private label organic foods)
Bolthouse Farms
2013
2012
Seeds of Change
2008
Campbell Soup Co.
Lightlife
2012
1997
Frutti di Bosco
Millina's Finest
1999
2001
Mountain Sun MaraNatha
1998
ShariAnn's
Sturm Foods
2006 (discontinued organic October 2013)
Erewhon PowerBar Pria
Rich Products Corp.
2008
Hain Celestial
2007
2014
Garden of Eatin' Arrowhead Mills
1998
Westbrae
Cargill Golden Temple
Health Valley
Breadshop 2000
Westsoy
2010; joint marketing agreement
Casbah
2002
Celestial Seasonings
Little Bear
Dakota Growers Pasta
1999
1997
2012
Golden Boy
D eB o le's
TofuTown
New Morning
2013
2005
SunSpire
Bearitos
French Meadow
Spectrum Organics
2009
Muir Glen
Nile Spice
2012
2003
2001
Immaculate Baking
BluePrint
TreeHouse Foods 1998
1999
2013
Walnut Acres
2013
Naturally Fresh
2012
Cascadian Farm
Earth's Best
2009
Food Should Taste Good
2012
2007
Ella's Kitchen
Foster Farms
2008
General Mills Alexia Foods
Humboldt Creamery
2010
LaraBar
2000 2013 sold to Brynwood Partners
ConAgra
M&M Mars
Orchard Valley Harvest
Imagine/Rice Dream/Soy Dream
Post Foods 2013
Peace Cereal Willamette Valley Granola
(spinoff from Ralcorp)
2013
2010
Hearthside Foods (cereal division)
Meyer Natural Foods
2010
Dakota Beef
Kellogg Bear Naked
Pepsi Coca-Cola
2001 40% Equity 2004 85% Equity
Wholesome & Hearty 2000
2006 2008 40% Equity 2011 100% Equity
Honest Tea
Kashi
Naked Juice
2013
Green Mountain Coffee
1999 2003
Morningstar Farms/Natural Touch
2001
Brown Cow
2013
Canada Bread Co.
2002
Olafson's Baking Co. 2014
grocerybusiness.ca
2011
Happy Family
Millstone
J&J Snack Foods
J.M. Smucker 1984
R.W. Knudsen
2013
2008
Enray
Goose Island
CROPP (Organic Valley)
Danone (Dannon)
Odwalla
AB InBev
Bimbo Bakeries
2009 Stonyfield brand licensed to CROPP for fluid milk
Stonyfield
2007
1989 2012
Santa Cruz Organic
Kim & Scott's
November | December 2015
39
! W NE
Fisherman’s Friend is outpacing total Cough Drop Market Growth!* 15%
+12%
+11%
10% 5% 0%
Fisherman's Friend Cough Drop Market
+4% $ Value
± 0% Packages
Now in Honey-Lemon!
One of the top selling flavours in the Canadian throat lozenge market with a 17.7% dollar share.** Introductory Consumer Advertising Starting November 2015
Distributed by TFB & Associates Limited, Markham ON L3R 9Z6 ® Registered trademark of Loft house of Fleetwood Ltd. * ACN Cough Drop plus Fisherman’s Friend & Excel market, All Channels - 52 weeks to April 4, 2015 ** ACN Th roat Lozenge market in Grocery, Drug & Mass Merch outlets - 52 weeks to April 4, 2015
Retail Intelligence
What’s in store for Canadian Grand Prix Awards By David Wilkes
There are some exciting improvements afoot for the venerable Canadian Grand Prix New Product Awards, now in its 23rd year. Since the Awards’ inception back in 1993, the grocery industry has changed dramatically. The Retail Council of Canada (RCC), sponsor of the Awards, wanted to ensure that the 2015 competition reflected those changes. We established an industry advisory group – the Canadian Grand Prix Advisory Council (CGPAC) – to make recommendations for enhancement. One of the overarching drivers was to ensure that, in every category, “like for like” products were being judged against one another, to prevent confusion, increase relevance and make the process as fair as possible. The CGPAC, comprising food retailing merchants and representatives from the supplier and service provider communities, reviewed the listing strategy and product categories, fine-tuning the evaluation criteria and creating new or updated categories to better represent how merchants and their vendors merchandise and market products.
grocerybusiness.ca
For example, fresh and frozen pies no longer compete against one another as they did in our previous categories. After all, they are very different products; retailers think of them and market them differently. We also wanted to make a distinction between the pre-prepared, pre-cooked products that have proliferated on the shelves today, and cook-at-home products. Other key changes: • Integrated private-label categories: These categories now correspond with the listings in the consumer packaged goods (CPG) food and non-food categories. In total, we have expanded the number of categories from 32 to 46. • More extensive consumer marketing: Whereas the RCC supported the Award finalists last year with a flyer drop to 500,000 households in Ontario and Quebec, it will increase the total this year to one million. • All categories now include updated Nielsen category details.
What will not change is the uniformity in the judging process for the food categories; as always, a chef will cook or prepare each product to its exact instructions for the judges to sample. We believe that kind of rigour adds tremendous credibility to the Awards. Ultimately, our objective was to ensure that, when companies were looking to enter a product in the competition, they would understand where it belonged and what it would be compared against, in the context of their food retail merchandising strategy. With the expert guidance of the CGPAC, we are confident that the improvements we have made will elevate the value, prestige and visibility of the Awards for years to come. For more information, visit RCCGrandPrix.ca.
David Wilkes is senior vice-president, Government Relations & Grocery Division, Retail Council of Canada. Email: dwilkes@retailcouncil.org
November | December 2015
41
Canadian Health Food Association – East Conference and Trade Show September 17 – 20, 2015 Toronto
1 Jon Cohn and Patrick Higgins, Natural Specialty Sales 2 Bill Ivany and Paul Marsham, Marsham International 3 Jamie Moody, Chantal Sequin, Chris Powell, Tree of Life
1
2
4 Rachel, Rob and Ally Mortensen, Glutino 5 Ontario Natural Food Co-op booth 6 Linda Moss, Unique Foods Canada 7
Tim Barklage, Better Life
8 David Kirchner, Gold Mine Natural Food Company 9 Randy Alsip and Linda Eliahoo, Marsham International 10 Morgan Wyatt, The Greenlid 11 Helen Midwood, Pacific Natural Foods
3
4
12 Mystica Linforth, Essential Oxygen 13 Randal Ius, Happy Planet Foods 14 Aron Bjornson and Lisa Pratt, Salt Spring Coffee 15 Gary Morris and Danielle Booth, GS1 Canada 16 Roman L'Herault and Eric Thibault, Les Enterprise Serplus 17 Carole Lalonde and Mike Fata, Manitoba Harvest 18 Doreen Lindsey, California Olive Ranch
5
19 Emmanuel Castiel and Chantal Bekhor, Vegetarian Gourmet 20 Dr. Anne Roland Lee and Carmine Luongo, Dr. Schar USA, Inc. 21
Sherisse Fast, Gorp
6 42
November | December 2015
7
8
9
12
10 11
13
16
14 15
19
17
18
20 grocerybusiness.ca
21 November | December 2015
43
Jan uary 3 0 , 2 0 1 6
Metro Toronto Convention Centre Register Now: www.groceryfoundation.com Hotel Accommodations: Intercontinental Hotel
Reserve at 1-800-235-4670 or (416) 597-1400 under Grocery Foundation *$189.00 Early Bird Rate until January 5, 2016 • https://resweb.passkey.com/go/groceryfoundation2016 Tickets Required For Entry
Be Prepared
It’s a meal kit moment By Rich Rotzang
Grocers have an opportunity to be solution providers as consumers look for eat-at-home meal ideas. The food industry is in the midst of a renaissance. For many generations, much of what we ate was made from scratch. We took pride in the ingredients we used, and sitting down to a meal was an event. However, as a new generation of professionals went to work full-time in the 1950s, the expectation to make dinner the “old-fashioned” way was lost, and an industry dedicated to instant readymade products was born. The focus shifted from quality to convenience. Today, we are witnessing a resurgence of “real” food. Chefs are the new celebrities, and food trucks the new start-ups. Pop culture cannot get enough of foodie-themed reality shows. Most importantly, people are taking ownership over what they eat. And while we still don’t have time to cook, we do have the desire to do so. To address this new market opportunity, a number of food delivery services have launched recently. They range from delivering basic groceries, to pre-portioned kits that are ready to cook, and even private chefcooked meals. All of these variations have the same common denominator – eating great fresh food and saving time when dining at home, while still giving consumers control over their meals.
grocerybusiness.ca
So how can grocery stores take advantage of this movement? Understanding your audience is the first step. Many people may want to cook at home, but have no idea where to start in terms of ingredients, recipes or food pairings. For these customers, the best approach is a complete cook-at-home kit. Not only does this give them everything they need to cook a meal, but it’s also an opportunity to cross-merchandise between your meat or fish department and your fresh produce. For example, try pairing a fresh piece of salmon with some pre-cooked rice, a vegetable medley and a marinade. For more adventurous customers, create a selection of recipes using available ingredients and let them mix and match their own components. Perfect for the refrigerated section of your produce department, consumers can pick from a range of pre-cooked starches, cut veggies or other toppers, along with a marinade or glaze paired with a fresh protein. Whichever direction your customer goes, both options give people the satisfaction of preparing a meal at home without all the prep and heavy lifting of cooking from scratch. With so many consumers now coming full circle back to cooking and eating at home,
there is no doubt that this trend will continue. And while it’s unclear at this point whether meal kits will become a hit, supermarkets have always been, and will remain, the first choice for consumers looking for fresh food. The only question is what role the grocery store will play in delivering these home meal solutions.
Rich Rotzang is senior director, marketing and communications, Tiffany Gate Foods. Contact Rich at rich@tiffanygate.com
Tiffany Gate Foods designs and manufactures fresh gourmet salads, prepared foods, soups, dressings and other Home Meal Replacement solutions in complete kits or as individual components.
November | December 2015
45
UNITED GROCERS INC. AWARDS With a record attendance, United Grocers Inc. held its annual Supplier Awards dinner in Toronto to recognize vendors for professional excellence. Three industry executives, who recently announced their retirements, were also lauded for contributions to the industry over their long and exceptional careers: Tim Berman, Kraft Heinz Canada; Marc Guay, Pepsico Canada; and Al Hollman, Federated Co-op.
LASSONDE INDUSTRIES, INNOVATION OR BEST PROGRAM AWARD
MAPLE LEAF FOODS, BEST SUPPLIER – FRESH DEPARTMENT 2015
(l-r): Kostas Kapralos, Lassonde Industries; Joyce Young, H.Y. Louie; David Chatyrbok, The Northwest Company; Jean Gattuso, Lassonde Industries; Josianne Légaré, Lassonde Industries; Peter Mattson, Lassonde Industries.
(l-r): Louis-Philippe Rocque, Maple Leaf Foods; John Tobin, Maple Leaf Foods; Blendle Scott (Scotty), Overwaitea Food Group; Albert Lum, Buy-Low Foods; Curtis Frank, Maple Leaf Foods; Daisy Samaniego, Maple Leaf Foods.
COUPGON, BEST NEW SUPPLIER – SERVICES AND EQUIPMENT
CALKINS & BURKE, BEST PRIVATE LABEL SUPPLIER
(l-r): Pat Pessotto, Longo’s; Brad Harris, Sinead Archbold, Craig Dobbin and Frank Sinopoly, Coupgon; Ken Schley, Quality Foods.
(l-r): Ken Clark, Overwaitea Food Group; Richard Honiball, Calkins & Burke; Lyne Jetté, Metro Inc.
46
November | December 2015
P H O T O S : R O D N E Y D AW
DINNER
OCTOBER 22, 2015
HERSHEY CANADA, PARTNERSHIP/MOST VALUABLE PERFORMANCE UGI board of directors (l-r, seated): Serge Boulanger, Metro Inc.; Anthony Longo, Longo’s; Denis Gendron, UGI; Edward Kennedy, The Northwest Company. Second row (l-r): Mike Lovsin, Freson Brothers; Gary Sorenson, H.Y. Louie; Mike Coleman, Colemans; Darrell Jones, Overwaitea Food Group; Daniel Valiquette, Couche-Tard; Brad Bauml, Federated Co-op. Missing from photo: Eric Rolheiser, Coremark Canada; Neil Rossy, Dollarama.
(l-r): Pierre Charron, Metro Inc.; Jean-Francois Gauthier, Hershey Canada; Mark Mussio, Hershey Canada; Ron Welke, Federated Co-op.
SPECIAL RECOGNITION AWARDS
Marc Guay, retired president, PepsiCo Canada (centre), with Serge Boulanger, Metro Inc. (left), and Anthony Longo (right).
Tim Berman, acting president, Kraft Heinz Canada (centre), with Darrell Jones, Overwaitea Food Group (left), and Gary Sorenson, H.Y. Louie (right).
Al Hollman, retired, Federated Co-op (centre), with Mike Coleman, Colemans (left), and Brad Bauml, Federated Co-op (right).
grocerybusiness.ca
November | December 2015
47
Future Focused
Forecasting the
Future of Food The Hartman Group’s recent A.C.T. “Food Culture Forecast 2015” event attracted professionals from across the food and beverage industry. Here are the 10 top trends transforming food culture in North America. Common food rituals are eroding • With single-person households increasing, interest in traditional meal occasions is waning. • Snacking occasions now nearly equal the number of meal-eating occasions. • Over half of family households cooked multiple meals/dishes to cater to individual preferences. We’re redefining food quality • Fresh and less processed are the new symbols of food quality. • Consumers choose foods that contain only ingredients they recognize, and products that are local or have the shortest list of ingredients. High-income consumers heavily influence food culture • The 10 per cent of households with incomes over $100,000 and who are college-educated are elevating the culinary and health awareness of other consumers.
48
November | December 2015
Premium takes root in healthy categories • Consumers appear more willing to pay for health and wellness than for culinary diversity or fresh; however, in combination, all of these factors are a winning mix. • High-protein, fresh and “free-from” foods, including nutrient-dense and easy-to-eat healthy snacks, are among the new demands. • Digestive superfoods and lowersugar-content energy foods are fastemerging trends. Consumers shop multiple channels seeking unique experiences • Shoppers today are achieving “value” through multiple shopping trips and channels. • Specialty/natural stores have the highest satisfaction and customer loyalty, and are most often associated with a fun experience. Digital technology ushers in new ways of interacting with brands • Besides sales alerts and couponing, consumers are checking product ingredients and recipes online, and would trust a food website with good visuals. The rise of socially conscious Millennials • Millennials are focused on community, social issues and humane treatment of animals. They’re more likely to opt for foods made with natural ingredients, non-GMO, organic, allergen-free and that are locally grown or manufactured.
Personalized eating plans • Consumers are experimenting with new approaches to their diet, ranging from vegetable or plant-centric offerings to detox and food combination diets. • There’s growing interest in gut microbes and the soil in which food is grown. Culinary ingredients with therapeutic properties are replacing some drug and dietary supplements. Reprioritizing food-service offerings • On average, consumers dined out 16 occasions a month. They are looking for healthy, global/ethnic foods, and want to try new flavours. Meeting the needs of increasingly sophisticated consumers Over the next five years, mid-market consumers are projected to continue to upgrade their healthy-eating skills. More products will try to convey a health halo through choice of ingredients, label statements, minimal processing and new technologies. Will preventative health trends remain niche or go mainstream? Size matters, but it’s small that really counts today: two-thirds of the growth in the food industry in 2014 came from small food companies.
The Hartman Group is an industry-leading research company working with clients to develop successful marketing strategies. For more information, visit: Hartman-group.com
GROCERY INNOVATIONS CANADA Canadian Federation of Independent Grocers 2015 Conference and Trade Show
1 Matt Sicoly, Unilever Canada; and Maria Proulx, Grocery Business Media
September 28-29, 2015, Toronto
2
Burnbrae Farms Team
3 Dave Iacobelli and Jim Slomka, The Clorox Company of Canada 4 Derek Morrissey and Alex Russell, Mill Street Brewery 5 Galen Shaw and Alex Bazhanov, Parmalat Canada
2
6 Jim Hamilton, Hamilton’s IGA 7 Kevin Smith, Grocery Business Media; and Glen Bonner, Pan Osten
1
8 Lance Vanderlinde, Oberto 9 Margaret Vicente, Brian Parker and Sharon Gill, Distribution Canada 3
10 Mark Swaisland, Tobias Bourdeau, Kelly Kluczkoski and Craig Teeple, General Mills Canada 11 Aurora serves up fresh Baci chocolates 12 Peter Scanlon, Pan-Osten; Alexei Tsvetkov, Yummy Markets
4
13 Steve Sharpe, Sharpe’s Food Market 14 Team Mondelez
5
15 Tom Shurrie and Brian Jackson, Acosta Sales & Marketing 8
6
11 7
15 10 9
14 12
grocerybusiness.ca
13
November | December 2015
49
Trends with Benefits By Birgit Blain
The Canadian Health Food Association show, held in Toronto in September, 2015, showcased a vast array of new and innovative products created to meet the needs of an increasingly health-conscious consumer. We’ve highlighted five that are on-trend and in demand.
TREND:
FREE FROM, CLEAN LABEL
Crafted in small batches, Queen B Kitchen artisan cookies are gluten-, dairy-, nut- and peanut-free. Made with premium ingredients, these cookies have met the requirements of the Gluten-Free Certification Program. queenbkitchen.com
TREND:
CONVENIENT PROTEIN
Smoothies are a sizzling trend, and OatDeal Smoothie mix offers a quick, convenient and healthy blend that can be enjoyed either hot or cold. oatdeal.com
PROTEIN, SNACKING
TREND:
Natursource Salad Toppers add protein, flavour and crunch to salads, or they can be eaten as a snack. Merchandise them with salad greens to grow produce sales. natursource.com
TREND:
FLEXITARIAN, VEGAN
Canadians are eating less meat and are looking for protein substitutes. Made from organic non-GMO soybeans, Noble Bean Tempeh’s firm texture means it can be cooked a multitude of ways. Merchandise Noble Bean Tempeh in the frozen vegetarian set. noblebean.com TREND:
RAW, CONVENIENCE
Cedar Cold Pressed Juice is extracted from one to two pounds of fresh fruits and vegetables. High-pressure processing locks in flavour and nutrients, and extends the shelf life to 55 days without added preservatives. Merchandise in the refrigerated produce and grab-n-go sets. cedarjuice.com
Birgit Blain is president of Birgit Blain & Associates Inc., a packaged foods consultancy specializing in strategy, brand and packaging development. Birgit@BBandAssoc.com grocerybusiness.ca
November | December 2015
51
Illinois is a diverse state, boasting a mix of agricultural and manufacturing industries. It is a huge supplier of agricultural commodities, including corn, pork, and soybeans. And like Toronto, Chicago is one of the key food- and beverage-processing clusters in North America. The state is home to 2,640 food-processing companies, many of which are located in the Chicago metropolitan area. Chicago also hosts three of the best-known food and beverage trade shows in North America: the National Restaurant Association, the Sweet & Snacks Expo and FMI Connect, all held at the city’s legendary McCormick Place. Illinois is the logistics capital of North America, accessible to every world market through a nexus of rail, road and air links: • Chicago is the hub for six of North America’s Class I railroads. • Nine U.S. Interstate highways intersect Illinois. • It is the number one container hub in the western hemisphere, linked to the Atlantic Ocean through the Great Lakes and St. Lawrence Seaway, and the Gulf of Mexico through the Mississippi River. • All major markets in Canada can be reached by commercial airline service from both Chicago O’Hare and Chicago Midway Airports. Illinois is an ideal location for a Canadian company looking to expand to the United States, through a sales office, distribution centre, or manufacturing facility. Its geographical location, world-class educational institutions, access to the huge American market, and skilled labour force are major assets – 217 Canadian companies already have locations here. The State is also active in Canada. Recently, the Illinois Department of Commerce and Economic Opportunity led a large delegation of Illinois food-processing and equipment companies exhibiting at Restaurants Canada, building upon the $3-billion cross-border trade in food and agricultural products.
For more information on the State of Illinois, contact its Toronto office at (416) 695-9888; illinois@iltrade.toronto.on.ca; www.illinois.gov/dceo.
Illinois
A Food, Agricultural and Logistics Powerhouse
Mondelez International’s
Shopper Futures Mondelez International’s Shopper Futures program is an innovative initiative that brings together leading retailers, ambitious entrepreneurs, and its own brands to help transform the consumer retail experience. The goal: to develop scalable shopper learnings and solutions, driven by technology, by the end of 2015 – all while continuing to infuse a spirit of intrapreneurship within Mondelez International.
“The traditional consumer path to purchase has been completely disrupted by technology,” says Kristi Karens, director of media and consumer engagement, Canada. “Through Shopper Futures, we’re looking to scale ideas quickly and to turn the store environment into a media opportunity where we can engage with active audiences.” Here, in detail, are four of the eight projects currently under way.
OBJECTIVE
BENEFIT
OUTCOME
To help grocers increase visit frequency and basket size by sending customers contextual messages and coupons while they are in the store, and to build deeper profiles of customers to create proactive marketing campaigns.
Wi-Fi enabled mobile devices in-store detect patterns in consumer traffic, visit duration and frequency. Once consumers pass the geo-fenced store boundaries, they can sign-in to receive automated, proximity-triggered messages and coupons in real time.
Because of its unique targeting technology, Turnstyle has generated coupon redemptions as high as 15% vs. an industry average of 1-3%.
To provide retailers with marketing and analytics technology similar to that used by online retailers, and that is designed to improve the consumer shopping experience.
Provides in-depth consumer behaviour data to help retailers and brands communicate with users in an intuitive and innovative way.
Transforms enterprise Wi-Fi infrastructure into a valuable CRM digital marketing platform to increase loyalty through a deeper understanding of the shopper.
To help brands and retailers understand and target consumers with a mobile platform that reaches potential shoppers both in and out of the store. Retailers have the option of placing a beacon in a physical store or in proximity of the store to serve consumers the most relevant ad format.
Brands and retailers can directly attribute “door swing” based on a qualified interaction between a consumer and a beacon in the area.
Consumers receive targeted and hyperlocal messaging that can increase traffic to the store.
Sampler is a management and analytics platform that helps brands create fully-branded social sampling applications that can be integrated into social media channels such as Facebook Fan.
Brands can use Sampler to distribute omni-channel promotional offers, such as free samples, which can be redeemed in-store with loyalty cards or coupons (digital or printable).
Retailers and brands are able to drive awareness about key categories or new products while measuring ROI on shopper marketing dollars.
TURNSTYLE Turnstyle Solutions collaborated with Mac’s Convenience Stores (Ontario Division) and the Cadbury brand, Canada
AISLELABS Aislelabs collaborated with Metro and the Triscuit brand, Canada
FRECKLE IoT Freckle IoT collaborated with 7-Eleven and the Oreo and belVita brands, U.S.
SAMPLER Sampler collaborated with Albertsons and the Ritz brand, U.S.
grocerybusiness.ca
November | December 2015
53
CANADA'S PREMIER GROCERY PUBLICATION A BETTER REACH A BETTER READ A BETTER VALUE BETTER RESULTS To reserve your 2016 trade communication program contact: karenjames@grocerybusiness.ca kevinsmith@grocerybusiness.ca danbordun@grocerybusiness.ca
P E O P L E | P R O D U C T S | P R O M OT I O N | PA S S I O N
PMA FRESH SUMMIT 2015: CANADIANS WERE THERE! Produce Marketing Association Convention & Expo Atlanta, Georgia October 23-25, 2015
1
2
3
4
6 5
9 7
1 Mario Testani, Lakeside Produce
8
2 Emily Murracas and Stephen Cowan with the Impact Marketing Award, Mucci Farms 3 Kendra Mills, Prince Edward Island Potato Board 4 Laurel Van Dam, Don Westcott, and Lance McGinn, BC Tree Fruits Cooperative
10
5
Peppe Bonfiglio, Mastronardi Produce Ltd.
6
Alan Asbury, Pure Hot House Foods Inc.
7 Chris Cockle, The Wonderful Company
11
8
Julie McLachlan and David Green, Jealous Fruits
9 Louis Ouellette, Potatoes New Brunswick
13 12
10 Jane Proctor, Ron Lemaire and Sue Lewis, CPMA 11 PECO Pallet team 12 Ray Mastronardi, Del Fresco 13 Joan Wickham, Sunkist Growers
grocerybusiness.ca
November | December 2015
55
LIST IT
NEW & NOW DISCOVERIES
Campbell’s serves up reinvented Healthy Request soups Campbell’s Healthy Request soups start with the basics: high-quality vegetables, legumes and grains. And with only 480mg of sodium per serving and no preservatives, consumers can enjoy healthy taste and convenience. campbellsoup.ca
A healthy choice Martelli Foods introduces an exciting new line of GMO-free dry legumes, grains, corn flour, and soup mixes, including: cannellini, borlotti, green lentils, spelt grain, Tuscan soup, classic minestrone, classic organic cornmeal, and instant organic cornmeal. martellifoods.com
Aurora pairs traditional with “on trend” A delicious northern Italian staple, polenta gets an update with Aurora’s new, on-trend flavours. An ideal meal solution, polenta can be served as a main course or side dish. Aurora Quinoa Polenta, and Chipotle, Cayenne and Chilies Polenta are gluten-free, kosher-certified, and made with non-GMO Canadian corn. auroraimporting.com 56
November | December 2015
Soothing relief from Fisherman’s Friend In time for cough and cold season, Fisherman’s Friend has launched new Honey-Lemon, sucrose-free throat lozenges. Perfect for on-the-go consumers, the new 22-pack comes in a resealable, portable package, and will be supported by consumer advertising starting in November. fishermansfriend.ca
New from Rao’s Rao’s has added a delicious Artichoke Sauce to its outstanding lineup of authentic sauces. Because it is made from only fresh ingredients, consumers will find Rao’s Artichoke Sauce a healthy accompaniment to pasta dishes, or a tasty addition to a wide variety of recipes. raos.com
Seasonal Stars Natural Delights is introducing exciting seasonal SKUs to its 12-oz tub line-up, including Dark Chocolate Orange date rolls available now. Also new this season are 8” date roll trays, perfect for Holiday entertaining. naturaldelights.ca
grocerybusiness.ca
November | December 2015
57
it figures
BEING RESPONSIBLE 43%
22% of consumers purchased a product because of the company’s community commitment
of consumers have purchased a product or service because they trust the company Takeaway
Consumers love brands; make sure your brand is one that shoppers want to be around for the long haul.
58
November | December 2015
Takeaway Consumers value manufacturers’ and retailers’ engagement with social causes, so boost your bottom line by sharing your company’s philanthropic efforts.
Takeaway Consumers are looking beyond an item’s price; they want to know the collective benefit to the community and environment. In an increasingly competitive market, local involvement is important to today’s consumers.
21
%
of consumers have purchased a product because the company is committed to social value
41%
of consumers are willing to pay extra for products and services that come from companies that are committed to making a positive social and environmental impact Takeaway Create a point of differentiation between you and your competition by raising awareness around your social and environmental involvement.
34
%
of consumers cite products made from fresh, natural and/or organic ingredients as a top reason to purchase
Takeaway Health-conscious consumers are shopping for products that are minimally processed and that contain natural, not artificial, flavours and ingredients.
Carman Allison is vice-president of consumer insights for Nielsen in Canada, and is responsible for creating thought leadership insights for CPG manufacturers and retailers. Carman Allison
grocerybusiness.ca
A L L S TAT S C O U RT E S Y: N I E L S E N
November | December 2015
59
Perry’s Point of View
GROCERS FOR
GRIDLOCK My daily commute involves spending a copious amount of time on a crumbling and misnamed piece of infrastructure called the Gardiner Expressway. The core of Toronto is a traffic disaster, as multiple condo buildings and new office complexes have frozen traffic in all directions all day. Add in long-term road repairs, and the urban centre is basically in auto lockdown. This same scenario is playing out in cities across Canada. Navigation company Tom Tom ranks Vancouver and Toronto in the top 50 most congested cities in the world. But traffic has worsened right across the country. Federal, provincial and municipal politicians have finally woken up to the situation, and plans are afoot to pour billions into road and transit infrastructure in many Canadian cities. You would think everyone would be in favour of this, but not so. My new activist group, Grocers for Gridlock, intends to put up active resistance. Frankly, we have no members yet, but every supermarket operator in Canada should sign up. Why? Because traffic congestion is the one of the best things that can happen to the Canadian supermarket industry. Food prices (and thus gross margins) in the supermarket business are high in urban
60
November | December 2015
centres, lower in suburbs, and high again in small towns and remote communities. This is because if customers can drive around to save money, they will. Easy movement between nearby stores means prices have to be sharp, and weekly flyers can move customers into and out of stores. That’s why the suburbs are dominated by discount stores and superstores. Few grocers can charge high prices when customers not only compare prices, but also have the mobility to react. Small towns, by contrast, have high margins because customers are reluctant to drive a great distance to a large store, particularly in winter. But big cities and highly congested areas are pure goldmines. If customers can’t move, they must shop at the nearest location. That means grocers can price almost with impunity, weekly flyers can be light and less frequent, and stores can exist with poor conditions. A lower-priced store may be just three blocks away, but the extra half-hour in traffic is just not worth it. Time is a valuable commodity, and gridlock allows grocers to convert time to cash. Think about it. Why are some of the worst grocery stores in Canada in sophisticated urban centres? Why are zoned urban flyers
generally higher-priced than suburban flyers? Because heavy traffic limits mobility, and poor mobility reduces choice. Urban and gridlocked stores have their challenges – getting delivery trucks in and out; finding affordable staff; high rents; high maintenance costs – but in the end, high prices solve all problems. In the meantime, Grocers for Gridlock will be protesting at every announcement by every politician standing in front of a paving truck or a backhoe. We need to act now for the good of the industry. If we don’t speak up for congestion, who will?
Perry Caicco is the managing director for CIBC World Markets. His experience includes 15 years in the supermarket, general merchandise, and packaged goods industries. Perry is a founding member of the Grocery Business Advisory Board.
Our resources. Your results.
Acosta has expanded our Natural/Specialty Sales Channel into Canada Acosta Natural/Specialty Sales has acquired Higgins Cohn Brand Management, the largest natural foods sales agency in Canada, further expanding our reach in the Natural/Specialty Sales channel. Higgins Cohn’s extensive experience and strong local relationships will enable us to broaden our reach in Canada, expanding our team of dedicated, natural foods professionals and connrming our commitment to deliver channel leadership and the highest level le of service excellence. If you would like to learn how we can take your business to the next level, please call us at 905-856-8252 or stop by and see us at CHFA East in September to say hello and hear about our enhanced service oerings in Canada. www.acosta.ca/naturalspecialtysales
BATCH-ROASTED, WITH RICH PREMIUM BEANS.
CONTACT YOUR LOCAL MELITTA SALES REPRESENTATIVE FOR FURTHER DETAILS. 速
MELITTACANADA