November / December 2016 Vol 6 | No 6 $9.95
DISTRIBUTION CANADA INC.
RINA VIRGILIO MARC FORTIN
PM # 42211029
Advantage Mirror Report
Photo + 5Galleries
Grocery Business November | December, 2016 Volume 6, Number 6
contents DEPARTMENTS 6
PHOTO GALLERIES 51
Launch It, List It
10
Open Mike The lure of destination products
54
It Figures
13
56
Front End People & News
Perspective The dangers of deflation
46
Making It
16
nited Grocers Inc. U Annual Awards Dinner
24
Canadian Health Food Association – East
42
rocery Innovations G Canada
48
PMA’s Fresh Summit
New & now discoveries
The main ingredient: health
In Other Words Amazon vs. Walmart
RISE-ing to the top
45
Longo’s Celebrates 60 Years
November / December 2016 Vol 6 | No 6 $9.95
ON THE COVER Era Dawns 18 AForNew Distribution Canada Inc.
DISTRIBUTION CANADA INC.
RINA VIRGILIO MARC FORTIN
PM # 42211029
Advantage Mirror Report
Photo + 5Galleries
41 48 FEATURES 15
Natural Health Products How proposed regulatory changes would impact grocers
22
ielsen Research: N What’s Ahead for 2017
27
Greeting Cards
31
Advantage Mirror Report
The medium is the message
Vendors evaluate retailers
34
eloitte: Seize the D Omnichannel Opportunity
41
Living Lettuce Sumo Salad Green Label
46 C O V E R P H O T O : S TA C E Y N E W M A N
grocerybusiness.ca
5
Front End
Salut!
Wine now available in select Ontario grocery stores
Allan Cosman is FCPC’s 2016 Award of Distinction honouree Allan Cosman, past president and CEO of Ferrero Canada, and past vice-president of Ferrero International, is the recipient of the 2016 Award of Distinction from Food & Consumer Products of Canada (FCPC).
Coppa’s Fresh Market is among 67 grocery stores across Ontario that began selling both domestic and imported wine at the end of October. Under the provincial government’s new rules for selling beer, wine and cider, 450 grocery stores in Ontario will ultimately sell the products as the program rolls out over the coming months. Pictured: Louis Coppa (left) and John Coppa at the Coppa’s Fresh Market store on Dufferin St. in Toronto.
Cosman, who retired in 2015, joined Ferrero Canada as president and CEO in 1993 and continues to work with them in a senior consulting role. Cosman also dedicated more than 14 years of service to FCPC in a number of leadership roles, including as chair of the board of directors, vice-chair and treasurer. Pictured (l-r): Rudy Sequeira, managing director of Ferrero Canada Ltd.; Shelley Martin, chair, FCPC board of directors; Allan Cosman, past president & CEO of Ferrero Canada; and Marc Guay, past president of PepsiCo Foods Limited.
Vote Couture for the Cure Canadians have chosen Damzels in this Dress of Toronto as the winner of Cashmere Bathroom Tissue’s Vote Couture for the Cure 2016, a national fund- and awareness-raiser by Kruger Products for the Canadian Breast Cancer Foundation.
PHOTOS: CAITLIN CRONENBERG (RIGHT); GREIG REEKIE (ABOVE)
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November | December 2016
Part of the annual White Cashmere Collection – featuring 16 top Canadian fashion designers – Vote Couture for the Cure invited Canadians to vote for their favourite Bathroom Tissue Couture outfits on Facebook. Outfits were all crafted in luxuriously soft Cashmere bathroom tissue, including the ones designed by Kelly Freeman and Rory Lindo of Damzels in this Dress. Thousands of Canadians took part in the vote throughout October, which is Breast Cancer month. Kruger Products will donate $10,000 to the Foundation in Damzels in this Dress’ name.
Front End
Transitions W. Galen Weston (pictured left), has stepped down as executive chairman of George Weston Limited, becoming chairman emeritus. He is succeeded by his son, Galen G. Weston (right), who becomes chairman, George Weston Limited, and retains his responsibilities as executive chairman and president, Loblaw Companies Limited.
manager / produce supervisor within the family business. Ken Boychuk has joined Concord National as food service territory manager with responsibility for the Manitoba and Saskatchewan food service trade. Boychuk’s previous industry experience includes a position as territory manager and beverage specialist with Kraft Canada.
FMS Solutions Holdings has appointed Mike Sharpe to lead its sales efforts in Canada. As a member of the Sharpe’s Food Market family in Campbellford, Ont., Sharpe is a third-generation grocer and most recently held the position of marketing
Serge Riendeau has announced that he will retire on February 8, 2017, after a 25-year career on the Agropur board of directors, including nearly 15 years as president of the Cooperative. Riendeau is also co-owner of Riendeau et Gendron Inc., a 700-acre dairy farm in Quebec.
Lauren M. Scott has joined the Produce Marketing Association as chief marketing officer. Scott has 20 years of experience in consumer goods marketing, innovation and brand management, including positions at Diageo and PepsiCo.
For more industry news and to read past issues of Grocery Business, visit grocerybusiness.ca
In Memoriam
David Bloom David Bloom, a former chairman and CEO of Shoppers Drug Mart, died on September 25, 2016 at age 76. Bloom got his start at Shoppers Drug Mart in 1967 as a pharmacist at the Canadian drug chain’s store in Toronto’s Yorkdale Shopping Centre. He became an associate-owner a year later. In 1971, Bloom joined the retailer’s management team as director of operations. He held roles of increasing responsibility before being
appointed president and CEO in 1983. Bloom added the chairman’s title in 1986, and served as chairman and CEO until his retirement in 2001. During his tenure as chief executive, Bloom doubled the chain’s store count, quadrupled its sales and generated a tenfold increase in earnings. In 2000, he oversaw the launch of the Shoppers Optimum Program.
November | December 2016
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Front End
Competition Bureau expands Loblaw pricing probe The Competition Bureau has stepped up its investigation of Loblaw Cos. Ltd. and its pricing practices with its suppliers in a high-stakes grocery industry inquiry. Competition commissioner John Pecman has asked the Federal Court to force four key Loblaw suppliers, including General Mills Canada Corp. and Wrigley Canada, to produce documents and sworn evidence about their dealings with the country’s largest grocer compared with those at key rivals to assess whether Loblaw activities could be anti-competitive, according to news reports. The move comes more than two-and-a-half years after the Bureau approved Loblaw’s $12.4-billion takeover of Shoppers Drug Mart in 2014 and, at the same time, launched its investigation into Loblaw’s pricing practices. More than a year later, the supermarket chain advised the Bureau it would drop some of those policies on January 3, 2016.
But the Bureau suggested Loblaw may be applying some practices aimed at forcing suppliers to meet a predetermined profit margin based on the advertised prices of competing retailers, according to court documents. “Further, I have reason to believe that Loblaw is engaged in additional conduct towards suppliers relevant to the inquiry,” Michael Tobias Packer, a senior competition law officer with the Bureau, said in a filing. Loblaw’s practices raised red flags at the Bureau, which got court orders for pricing information and business strategies from 12 suppliers in December of 2014. Now it is seeking evidence of even more of Loblaw’s conduct from four vendors for an extended period – until October 1, 2016, news reports say.
The Bureau is looking into some programs it hadn’t looked at previously, including cost-of-goods-sold demands, harmonization demands, listing fees and supply chain fines. The Canadian Federation of Independent Grocers has called for a code of conduct to regulate grocer–supplier practices. Loblaw spokesman Kevin Groh has said the company is aware of the Bureau’s decision to look at more recent activities, including new initiatives introduced this year “to simplify our dealings with suppliers, improve our offer to customers, and put money back in the pockets of Canadians,” he noted. “We have been and remain an open book for the Bureau, co-operating with their investigation and voluntarily providing pro-active updates and advance notice on significant supplierrelated initiatives.”
Buy-Low Foods announces executive appointments Buy-Low Foods and Associated Grocers have made a number of changes to their senior leadership structure. Sam Corea has been promoted to vicepresident, retail, with executive management responsibility Sam Corea for all matters relating to corporate store operations, merchandising and banner positioning. Albert Albert Lum Lum was promoted to vice-president, supply chain and procurement.
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November | December 2016
A number of additional executive appointments were also made: Dereck Hein to director, retail operations; Troy Dewinetz to director, merchandising and corporate marketing; Aaron Bregg to director, produce operations; Larry Chmielewski to vice-president, wholesale; Brody Powell to general manager, independent wholesale marketing; Rick Geirnaert to general manager, independent business development; Ian Dickson to vice-president, strategic growth initiatives; Atanu Dalal to vice-president, finance and corporate services; Clark Wong to managing director, information technology; and Sandra Stelting to director, human resources.
Front End
Canadian Federation of Independent Grocers 2016 Recognition Awards The Canadian Federation of Independent Grocers (CFIG) officially recognized four industry veterans with Recognition Awards during a gala event on October 18, 2016 in Toronto. The awards ceremony was part of CFIG’s annual Grocery Innovations Canada conference.
Cori Bonina Owner, Stong’s Market Life Member Designation
Darryl Rowe President, Weston Bakeries Life Member Designation
“A fourth-generation grocer, Cori Bonina and her team have just opened a new state-of-the-art store in North Vancouver, and will be opening a second new store across the street from her longtime Dunbar Street location in December,” said Thomas A. Barlow, CFIG president and CEO. “Cori is a tireless advocate for independent grocers in Canada.”
“Darryl is respected throughout the industry as an innovator and thought leader,” said Barlow. “Having worked directly with Darryl at Coca-Cola, I always admired his passion for the customer and consumer.”
Pete Luckett Founder, Pete’s Fine Foods and Luckett Vineyards Life Member Designation “Pete Luckett is recognized as a leader in the Eastern Canadian grocery business,” said Barlow. “Pete and his team at Pete’s Fine Foods created a loyal following by staying ahead of their competition, and bringing new and unique offerings to their customers.”
Michael McCain President and CEO, Maple Leaf Foods 2016 Spirit of the Independent Award “This award is reserved for individuals who personify what the award stands for,” Barlow said. “Michael and his company have provided inspiration to Canada’s independent grocers, but what makes Michael a worthy recipient of this award is his commitment to ensuring that Canada has a strong and healthy grocery business.”
Carmen Fortino, executive vice-president and head of Metro Inc.’s Ontario Division, has been honoured by the Italian Chamber of Commerce of Ontario (ICCO) with the prestigious Pentola d’Oro award. The award recognizes individuals who best represent the quality of the Italian food and beverage industry in Ontario. Past recipients include Anthony Longo of Longo Brothers Fruit Markets, and Mary Dalimonte of Sobeys.
grocerybusiness.ca
November | December 2016
9
Open Mike
Develop destination products to boost sales and margins By Michael Marinangeli
Looking through this week’s grocery flyers, I was amazed at the retailers’ ramped-up price messaging. Since the last round of industry consolidation a couple of years ago, things have been relatively calm in the marketplace, with most grocers experiencing positive comparable same-store sales and rising profits. Higher inflation also played a role in spurring these improved results. But the times they are a-changin’; both conventional and discount stores are starting to play the lower-price card as Walmart and Costco continue to gain market share. Here are just a few of the lower-price messages in this week’s flyers:
Yet despite all the price noise in the marketplace, one retailer that consistently outpaces the market on sales growth is Costco. I recently read an article saying that the retailer had experienced a five- to nine-per-cent same-store sales increase for the last few years in Canada. Costco recently announced that it is adding seven new stores to the 91 it currently has in this country. This can’t be good news for traditional grocery retailers.
• New Lower Prices • Hot Price • Over 1,000 Items Even Cheaper • Buy More and Save • Locked Down Everyday Prices • New Everyday Low Prices
1. Costco and Walmart now represent over 20 per cent of the grocery business in Canada, and are continuing to open new stores and gain market share.
In addition, there appears to be a higher incidence of staple items being featured in the flyers each week. These items are highly effective in drawing customer traffic when featured. Recently, one conventional retailer advertised bread, milk, eggs, butter, sugar, bananas and potatoes on the back page of its flyer – usually a clear sign that sales are sluggish.
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November | December 2016
When you look at three of the biggest challenges facing traditional grocers in Canada, it’s not surprising that lower prices are becoming more prevalent.
2. Discount stores continue to increase market share at the expense of conventional stores. Therefore, it’s not surprising that Sobeys, with most of its assets comprising conventional stores, has started to lower prices across the country. 3. O ver 250,000 people immigrate to Canada each year, with the majority coming from Asian countries. Traditional grocers are not sufficiently capturing this segment of the market, and so are losing growth opportunities to ethnic stores.
Open Mike Because of these and many more challenges facing the grocery industry, price has become a focal point for retailers to draw and maintain customer traffic. But one strategy that will help you stand out from the crowd, enhance your image and build customer loyalty is to have an array of destination products in your store. Private brands are supposed to fill that role. However, all major grocers today have quality private-brand programs that are similar in size and scope, which makes it less of a point of difference. I am talking about proprietary products or services that offer tremendous everyday value that turn your store into a destination. I believe traditional grocers need to take a leaf out of Costco’s playbook. When I talk to people about Costco, they always rhyme off their own laundry list of destination products that bring them back to the store on a regular basis, despite the fact that it doesn’t have weekly-advertised specials like traditional grocers do. In my household, these are just some of the destination products that keep us going back: • Barbecue chicken • Whole beef tenderloin • Light bulbs • Fresh chicken wings • Eggs, milk, cream • Vitamins • Pumpkin and apple pies (Holidays) • Parmigiano cheese • Mixed nuts • Romaine lettuce
No matter what price noise there is in the marketplace, customers will continue to shop at Costco to get the products that they can’t buy anywhere else or at the same everyday price. I strongly believe that retailers should spend more time developing destination products that cater to the needs of their customers at compelling everyday low prices. Every key category in the store should have at least one or two of these types of products. They will enhance your image, increase your sales and margins, and build sustainable customer loyalty. You will rely less on trying to buy sales each week with your weekly flyer. Sure, I will visit your store and buy my turkey there if you want to sell it to me below cost. However, I will still drive to Costco to buy my mammoth pumpkin pie at $6.99, while trying to avoid the urge to fill up my cart with more compelling offers while I am there.
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 2016 Volume 6, 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 Dave Lank, Helen Long, Mike Ljubicic, Michael Marinangeli, John F.T. Scott
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 2016
grocerybusiness.ca Darrell Jones, Overwaitea Food Group Cheryl Smith, Parmalat Canada David Wilkes, Retail Council of Canada
Shaun McKenna, Acosta Sales & Marketing
Mary Dalimonte, Sobeys
Thomas A. Barlow, Canadian Federation of Independent Grocers
Cori Bonina, Stong’s Markets
Perry Caicco (retired, CIBC) Jim Slomka, Clorox Canada Tim Berman (retired, Kraft Heinz Co.) Mike Longo, Longo Brothers Fruit Markets Michael Marinangeli, MIDEB Consulting Inc.
Bill Ivany, Tree of Life Canada Denis Gendron, United Grocers Inc.
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Perspective
The dangers of deflation By John F.T. Scott
We haven’t experienced any true deflationary cycles in my years in the food industry. Sure, there have been times of price contraction, but usually these have been spurred by the intensity of competition rather than economic reality. But as 2016 comes to a close, many economists are justifiably pointing to signs suggesting that this dangerous downward spiral is beginning to take hold in North America, similar to the recent experience in Europe. The reasons are multi-faceted: • First is the increased proportion of income that younger generations of consumptive leaders are allocating to housing. • Second is the slow growth of the economy and the absence of any meaningful increase in incomes in the last decade. • Third is the huge debt load that large segments of our population are assuming in the face of prolonged and historically low interest rates.
hard discount as their primary source of supply. Those retailers operating such stores will increasingly pressure their supply chain for lower prices. Second will be a huge obligation on traditional stores to be reasonably competitive with the discount operators, particularly in packaged goods. To achieve that objective, the traditional sector will need to reduce operating costs to the point where much of the service that has been its mantra will be minimized or entirely lost. Again, pressure will be exerted on suppliers, regardless of size or the degree of differentiation they provide. Despite every effort to reduce costs, there will be casualties in this area, as it will be extremely difficult to minimize the large volume of leakage to the discount sector. Third, the only sector that will continue to thrive will be high-quality specialty retailers strategically placed in higher-income areas and catering to a discerning consumer. But even that part of the grocery industry may struggle as all consumers strive for maximum value.
• Finally, and very important for food pricing, bumper crops of food commodities are being produced this year in North America and elsewhere in the world.
The challenge for companies in all components of the supply chain is to assess every cost, and lower or eliminate wherever possible. Since we have no experience with true deflation, it is impossible to forecast where and when it may bottom out. I suspect this will be sustained for the next few years, which suggests that failure to act decisively will be damaging to any business in our sector. Make no mistake – as the Europeans are discovering, deflation is real, dangerous and requires dedication and skill to survive.
All this can be very boring stuff until one considers how it affects the various players in our supply chain, and what adjustments they must contemplate to counteract this deadly phenomenon. First will be an increased propensity by consumers to use soft and
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.
• Fourth is the dramatic effect of disintermediation on purchasing behaviour – why go to a retailer for hard goods when you can purchase them directly, and often cheaper, online?
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November | December 2016
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© 2015 Blue Diamond Growers. All rights reserved.
Whole Health
Health Canada proposed changes could directly impact your business By Helen Long, President, Canadian Health Food Association
When your customers buy a natural health product (NHP) in your store, which could include a vitamin, mineral or herbal product, they can be confident that the Canadian regulations that already exist for these products are among the best in the world.
evidence required for drugs is vastly expensive, which is why the prices for drugs are significantly higher compared to NHPs. Requiring the same level of evidence as a drug will result in price increases and loss of product from the retail level.
However, Health Canada is now proposing a framework that would significantly alter the existing NHP Regulations, by regulating some NHPs using the same rules as drugs, based, it appears, on a single consumer survey and six weeks of consultation.
As you know, all NHPs on your store shelves are now reviewed, licensed and receive a Natural Product Number (NPN). The new proposal suggests that Health Canada will no longer review some of the products, and those will be required to have a disclaimer in line with “Health Canada has not reviewed…” Additionally, claims based on previously accepted evidence may no longer be allowed and would be removed from the label. This will limit the amount of information your consumer receives about the product.
These changes could: • Cause many of the supplements that you sell to disappear forever. • Increase the cost of the products that are left. • Reduce the amount of information available to your customers about the NHPs they rely on. By the time you read this article, the consultation period will have already taken place and ended on October 24. However, at the Canadian Health Food Association (CHFA), we anticipate that more will need to be done to ensure Health Canada understands that this proposal is trying to fix a system that is not broken. Our current regulations take into account the unique properties and low-risk nature of these products, ensuring that you and your customers have access to NHPs that are safe, effective and of high quality, while respecting freedom of choice, and the philosophical and cultural diversity of our country. Changing the way NHPs are regulated will have an impact on the products that will be available on your store shelves. Providing the
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These changes will have a significant impact on our industry and the products that you sell. Even though the consultation has ended, it’s not too late to get involved. Visit chfa.ca to find the latest updates and what you can do to help. Advocacy is an ongoing activity that CHFA provides for all our members, and in times of crisis, it’s critical that we do this work. With a CHFA membership, you will be able to stay up to date with important regulatory changes, industry news and trends that impact your business.
To find out more about what CHFA can do for you, contact Jessica Mason at jmason@chfa.ca or 1.800.661.4510 ext. 221.
November | December 2016
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UNITED GROCERS INC. AWARDS Industry guests gathered in Toronto to recognize the annual United Grocers Inc. supplier award winners and the “Power of Partnerships.”
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Kraft Heinz Foods, Best Grocery Supplier
Hussmann Equipment, Best Equipment Supplier
(l-r): Pat Pessotto, Longo Bros.; Ali Davies, Kraft Heinz; Brenda Kirk, Overwaitea Food Group
(l-r): Dan Bregg, Buy-Low Foods; Craig Taylor and Lianne Tombol of Hussmann; Ken Schley, Quality Foods
Maple Leaf Foods, Best Fresh Supplier
Dare Foods, Best Innovation Supplier Award
(l-r): Andre Gagnon, Metro Inc.; Daisy Samaniego, Maple Leaf Foods; Joyce Young, H.Y. Louie; John Tobin, Maple Leaf Foods
(l-r): Tim Lalach, Federated Co-op; Paul Sinden and Todd Taylor, Dare Foods; David Chatyrbok, Northwest Company
November | December 2016
P H O T O S : D AV I D L E E
DINNER
OCTOBER 20, 2016
SPECIAL RECOGNITION AWARD
A special recognition award was given to Pierre Charron, Metro Inc.’s vice-president of procurement, who is retiring in December, 2016. Pictured (l-r): Denis Gendron, UGI; Pierre Charron, Metro Inc.; Ron Welke, Federated Co-op
Paketo Branding and Packaging Design, Best Private Label Supplier
(l-r): Tess Michelis, Paketo; Marie-France Gibson, Metro Inc.; Bill Michelis, Paketo; Ken Clark, Overwaitea Food Group
To see more photos, visit grocerybusiness.ca
A NEW ERA DAWNS
FOR DISTRIBUTION CANADA INC. By Sally Praskey
Distribution Canada Inc. (DCI) has come a long way since its formation in 1981 as “a buying group for independent Canadian grocers.� Now, 35 years on and with new management in place, the organization is ready to take the next steps towards realizing its vision for the future: to grow its base of members beyond traditional grocery retailing and to become an efficient selling organization by fostering collaborative relationships among its members, manufacturers and other stakeholders in the Canadian grocery industry. Marc Fortin, who has a deep history in food marketing and retailing, took the helm as president and CEO of DCI in July, replacing Brian Parker, who retired after eight years in the position. Working with Rina Virgilio, general manager of Concord Food Centre Inc., who was elected chair of DCI in June, and her board, Fortin is pursuing an ambitious agenda that will take DCI to the next level, expanding its depth and breadth. Fortin and Virgilio spoke with Grocery Business about how they plan to accomplish this goal, and what it will mean to all stakeholders.
ABOUT MARC FORTIN Marc Fortin has 20 years of experience in CPG companies, including Kellogg Canada, Maple Leaf Foods and Molson Coors. He is the former president of the National Convenience Store Distributors Association, and has consulted in a broad range of channels, including convenience, drug and wholesale distributors.
Marc Fortin, president, DCI
WHAT COMPETITIVE ADVANTAGE DO DCI MEMBERS HAVE IN THE MARKETPLACE? Marc Fortin: Our members are independent. They’re more involved with their business and they’re more involved in their communities. They know the needs of their community and can grow as the community grows. Rina Virgilio: I really feel that independents have a different approach to the business. They know what they need to do to have their businesses prosper. They’re into change; they’re into growth. And they’re looking to make their stores as relevant as possible. I think everyone realizes that they can’t do it on their own; they need to work together, and so they’re looking for an organization like DCI to help. WHAT VALUE ADDED DOES DCI BRING TO THE VENDOR COMMUNITY? MF: We offer the vendors a competitive advantage by providing them a way to build volume and to get their new products out more quickly than the chains are able to. The independents can also test-market new products and new merchandising concepts. RV: Also, we provide a marketplace to smaller vendors who can’t afford to list with the majors. Vendors can get exposure that they can’t necessarily get with the larger retailers, and consumers have the opportunity to try unique products.
ABOUT RINA VIRGILIO Rina Virgilio, DCI’s new chair, and general manager of Concord Food Centre and Oak Ridges Food Market, has been working in the retail grocery sector for 30 years.
specialty grocery, organic and ready-to-cook trends are the mainstay of her current business model, something that she says was “unforeseeable 30 years ago.”
Starting as a cashier, she has watched and adapted as the grocery store evolved into what it is today. The emergence of prepared foods,
Virgilio now oversees two independent grocery stores, in the Toronto area, that specialize in fresh.
P H O T O S : S TA C E Y N E W M A N
Rina Virgilio, chair, DCI
Connect with us to bring Canada’s #1 Medjool date brand to your health-minded shoppers: marketing@bvdg.com
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HOW ARE YOU PLANNING TO EXPAND YOUR MEMBERSHIP BASE? MF: We are approaching it from two aspects. We have some depth and we have a little breadth, but we can do so much more with both. What I mean by depth is broadening our membership within the grocery industry. For instance, we have an opportunity to grow within the independent community, and there is lots of opportunity in Quebec. When I look at the breadth, we have certain convenience chains and health-food stores that are members of DCI, but there are certainly more that can join. Certain drugstores are also potential members. RV: The lines between the channels are getting blurred more and more every day, so growing beyond strictly grocery is definitely an opportunity. HOW INVOLVED IS THE BOARD? MF: We are fortunate to have a very involved board. The DCI board members are all very passionate independent grocers. Not only do they own their own stores, but they make the time to be involved in the industry. RV: Yes, the board is very engaged, and is looking to give Marc the tools he needs to bring DCI to another level. The board members are all actively looking to do their part. WHAT’S NEXT FOR DCI? MF: I was hired when Brian Parker retired this past July. This was the board’s opportunity to ask, “How do we grow DCI from here? How do we move into the next phase?” The industry is changing, so the time was right to look at how we can continue to add value while moving to the place we want to be. For instance, in addition to broadening our membership base, we want to become more of a selling organization. In order to do that, we have to build and move more volume for our partners, so retailers will have to have good pricing in order to move that volume. We are also looking at different technologies that will help us execute on this.
“dci and cfig have a long history
of working together to help canada’s independent grocers compete in the canadian grocery channel.
”
DISTRIBUTION CANADA INC. BOARD OF DIRECTORS Rina Virgilio * Chair Concord Food Centre Inc. Barry Lanteigne * Vice Chair A. Lococo Wholesale Ltd. Mike Williamson * Secretary / Treasurer Central Meat Market Ltd. Francois Bouchard * Past Chair The Country Grocer Inc. Jim Bexis Director Sun Valley Supermarket Inc. Michael Pugliese Director Michael-Angelo’s Market Place Inc. Debra Ramage Director Drayton Food Market (2011) Ltd. Tony Cataldi Director Cataldi Fresh Market Inc. Cori Bonina Director Stong’s Markets Ltd. Dave Powell Director Powell’s Supermarket Ltd. Bay Roberts, N.L. * Executive Committee
— Thomas Barlow, president and CEO, Canadian Federation of Independent Grocers (CFIG)
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November | December 2016
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Nielsen Research
WHAT’S NEXT: 2017 By Mike Ljubicic
Roller-coaster inflation hit a high in 2015, largely driven by perimeter of the store and fresh products. The weakening Canadian dollar had an adverse effect on commodity imports from the U.S., and as prices settled, steady declines have been noted as we entered 2016. Few could have anticipated that, for the first time in several years, deflation has hit the CPG sector. Efficiency in pricing, promotion and assortment will be key focus areas in the CPG industry to ensure success in 2017. Shoppers today are not buying more; they are becoming more frugal. That means grocers must carefully manage the right mix in products and balance in pricing, without simply giving away dollars. The ability to search for offers and make switches is easier as digital tools infiltrate the Canadian marketplace, and shoppers are taking advantage: just look into the wallet of the average Canadian shopper, and you’ll find six loyalty cards. The year 2017 will be interesting, and one to be strategically managed.
Mike Ljubicic is managing director, Nielsen Canada.
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November | December 2016
Nielsen Research
Economic Trends
CANADIAN INFLATION 4.0
As the deflationary trend continues into 2017, pricing will become an increasingly important part of the trade promotion strategy. Retailers and manufacturers must ensure price and promotions are being strategically managed to help drive sales performance and avoid margin erosion. A combined view of granular and broad market pricing across banners and channels should be derived to form an accurate total market perspective and optimize the price planning process.
3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5
Jan 09
Feb 06 Mar 05
Apr 02
Apr 30 May 28 Jun 25
Jul 23
Aug 20 Sep 17
2016
Private Label Management
PRIVATE LABEL DOLLAR SHARE 18.6
Private label brands held a relatively stable market share in Canada throughout 2016, but mirrored the fluctuating deflation trends. This year, private label has benefited from the expansion of large grocery retailers and the trend towards more sophisticated lines that command higher prices and margins. However, in an increasingly competitive grocery landscape, private label pricing must be carefully managed alongside national brands. Price gaps may need to be tightened, so sales margins aren’t compromised within shared categories.
18.4 18.2 18.0 17.8 17.6 17.4 Jan 09
Feb 06
Mar 05
Apr 02
Apr 30
May 28 Jun 25
Jul 23
Aug 20
Sep 17 2016 YTD
2016
DOLLAR STORES MARKET SHARE 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2011 2012 2013 2014 2015 2016
grocerybusiness.ca
Dollar Stores: Growth Opportunity Dollar stores continue be a small part of today’s grocery market, capturing just 1.5 per cent. However, with more than three-quarters of Canadian shoppers reporting that they purchase items within dollar store channels, it is a growth opportunity for manufacturers in 2017. As dollar stores move to higher price points, new categories are emerging on their shelves. Discount retailers must be laser-focused on their assortment. Looking at the categories that are appearing on dollar stores’ shelves, strategic assortment should reflect items that will generate the most incremental sales, by SKU, by store, and by week for the category.
November | December 2016
23
CANADIAN HEALTH FOOD ASSOCIATION EAST CONFERENCE AND TRADE SHOW SEPTEMBER 17-18, 2016 TORONTO
With more than 800 exhibitors and thousands of visitors, CHFA East was a showcase for the health food industry’s most exciting trends and new products.
Kathy Boyce, Boyce Strategic Marketing; and Heidi Kim, Argyle Communications
Robert Assaf, Kardish Food Centres, at the Grocery Business booth
Ida Pusateri, Angus McOuat, Brenda Fontes, John Mastroianni, Pusateri’s Fine Foods
Maria Proulx, Grocery Business
Noah Bernett with new Light High Protein Ice Cream from CoolWhey Inc.
Martin, Martina and Blanka Ondrasek, Smartbite Snacks Inc.
24
November | December 2016
Bob Moore from Bob’s Red Mill; and Alex Fossella, Marco Blouin and Ken Kwong, New Age Marketing & Brand Management Inc.
Maria Cernak and Doug Robertson, TFB & Associates
Kyle Marancos with new Daily Squeeze Fresh Fruit & Veg Juices from Happy Planet
Chantal Seguin, Tree of Life
Dave Pullar with CheeCha Puffs from CadCan Marketing & Sales Inc.
Chris Powell and Bill Ivany, Tree of Life
Amber Pozojevic with Churn 84 Creamy Butter from Stirling Creamery
Taco Yasumaru with Kameda Crisps from Kameda USA Inc.
Jon Cohn, Natural Specialty Sales Canada; Michael Lines and Lindsay Wells, Flow Water; and Brian Jackson, Acosta
Sharon and Ashley Lao, Sun Tropics
James Boettcher, Fiasco Gelato
Jamie Somers and Paul Howell, Howell Data Systems
Dan Ziegler with the all Natural Marshmallow from Chicago Vegan Foods
Doug Ridge, Equilibrium Foods Kevin and Matthew Smith, Grocery Business Josh Child with new Vitamin C Pure Honey Lozenges from Honibe
grocerybusiness.ca
November | December 2016
25
Introducing! New CADBURY
Egg 34g
Continue
the easter momentum in 2017 with our lineup of CADBURY singles, pieces, novelty and gifting products!
MORE
delicious
Easter
companions!
Contact your Mondelez Canada representative at 1-855-219-6672 or your wholesale representative for further information.
Merchandising
GETTING
Personal When it comes to the greeting card category, the medium is definitely the message. In a transactional and digitally dominated world, consumers are increasingly craving ways to tangibly connect with friends and family that go beyond a mundane Facebook post. It’s not surprising that, despite the exponential growth of online communication platforms such as Twitter, Pinterest, Instagram and Snapchat, to name just a few, acknowledging a birthday or expressing a heartfelt thank-you through greeting cards is becoming popular among Millennials and the group coming up behind them, Generation Z.
These groups are digital natives but view the giving and receiving of a personally-selected card as showing more effort and a much higher level of care than digital communications can provide. Retailers take note: your card selection represents a unique opportunity for younger consumers to feel authentic and expressive while in your store, so it’s important to ensure that the card department is designed as a destination category.
GOOD-TO-KNOW MERCHANDISING TIPS
The card department should be
1/3
BECAUSE CARDS ARE OFTEN AN IMPULSE PURCHASE, CROSS-MERCHANDISE THEM IN HIGH-TRAFFIC AREAS AND AROUND SEASONAL DISPLAYS
of the way through the shopping experience
Position the card department away from the freezers and not too close to an exit door grocerybusiness.ca
Have staff invest
15 minutes daily to keep the area orderly
Birthdays, weddings, baby and get-well cards represent
70% of greeting card sales
Source: Carlton Cards
November | December 2016
27
© AGC, LLC
Innovation that’s amazing cool The latest introduction from the industry’s innovation leader, Remote Control Wishes™ features funny photo animals who are ready to dance! Just pop the attached character off the card, set it down, press the button on the remote and watch it shake, shake, shake as it sings along to a fun song. Bold and bright with lighthearted, funny messages, these birthday cards are wired for sales! It’s one more way Carlton Cards is working to make the world a more thoughtful and caring place.
Greeting Cards Today Rod Sturtridge, President, Carlton Cards Canada shares insights on the evolution of the industry and how a strong service organization is a key to retail success
How is Carlton Cards evolving to maintain its leadership role in the greeting card category?
How does Carlton Cards strong service organization support their retail partners?
What are the advantages of a multi-brand strategy in the greeting card category?
As communication styles, relationships and consumer needs change over the years, we evolve our products to meet these changes. At Carlton Cards we bring fresh and exciting new products to market in order to keep our consumers engaged in the greeting card category. We are a leader in innovation and we have introduced more than 150 new-to-the world card formats to create experiences between the card sender and recipient that will surprise and delight.
Carlton Cards prides itself on having the largest and best service organization in the greeting card industry, providing unparalleled service to our retail partners. We do not outsource any of our retail store service, and we employ more than 1,100 Merchandisers across Canada.
Carlton Cards offers a broad spectrum of brands for Canadians, for every generation, taste and lifestyle. Our core brands, Carlton Cards, and for our Frenchspeaking customers, Cartes Carlton, offer thousands of fresh and amazing cards that provide Canadians the perfect way to connect and celebrate meaningful relationships, life’s milestones and special occasions. Our Papyrus brand appeals to the discerning consumer with a sophisticated sense of style and an appreciation for the remarkable quality and artistry. Rooted in humour, sometimes edgy and always surprising, our Recycled Paper Greetings brand rounds out an exceptional portfolio of brands.
Millennials are more digitally engaged than previous generations. Through extensive research, we understand how this key consumer group communicates, and we have created brands and products that speak directly to Millennials. From our industry-first justWink brand, offering playful, bold, unexpected ways to connect to our premium Papyrus brand, that draws inspiration from fashion, art and lifestyle trends, Millennials are finding the perfect card for any occasion.
As, Canada’s #1 greeting card company, Carlton Cards understands that consumers are looking for authentic ways to connect with family, friends and all the important people in their lives. We have always focused on the need of Canadian consumers to create meaningful connections, and our research shows that paper cards are valued as one of the most meaningful ways to express oneself.
We offer our Merchandisers comprehensive training and mentoring to provide the skills and specialized knowledge that allows them to flawlessly execute our programs in our retail partners’ card departments. Carlton Cards Merchandisers care and take pride in their work and create strong working relationships with store management. Carlton Cards has made a significant investment in technology to support our field sales team. It is not just an investment in equipment but also an investment in our people to ensure they have the best tools to be successful. Our Merchandisers utilize hand-held devices that provide easy access to information in real time, efficient product scanning and inventory transactions. This allows our associates to dedicate more of their time to optimizing the card departments to encourage sales.
To ensure the success of planning a multi-brand strategy in a greeting card department, we carefully analyze the demographics and sales trends, looking at each store individually for ways to optimize the mix. We have seen sales successes when adding premium cards to the existing department. Customers enjoy the refreshed selection, and love the choices and options they now have. A core consumer may trade up to a higher priced card and a new segment of shopper, the premium card consumer, will be drawn into the greeting card department. At the end of the day our goal is to help make the world a more thoughtful and caring place. Every. Single. Day. It’s very exciting to work everyday with an incredible team of people who are devoted to providing the industry’s best product to the top retail partners in Canada.
2016 CANADIAN INDEPENDENT GROCERS FINANCIAL SURVEY
THE
TM
MIRROR REPORT VENDORS EVALUATE RETAILERS While overall performance remains relatively stable, Advantage’s latest Mirror Report shows a significant decline in some aspects of the vendor-retailer relationship. By Sally Praskey After last year’s dramatic improvement in vendorretailer relationships, the 2016 Mirror Report, by Toronto-based Advantage, reveals some noticeable cracks in the partnership. The sharpest deterioration is in the performance area of business relationships, which has declined in each of the past three years (see chart below). In fact, the score for the statement “works productively with us to build profitable business for both parties” plummeted to nine this year from 16 in 2014. Similarly, the score for “strengthens business relationship through strategic business planning” plunged to 16 from 24 for the same period. That doesn’t necessarily mean, however, that relationships are strained because vendors and retailers aren’t getting along. Rather, the poor results may be attributed largely to continued market consolidation and the decline in the Canadian dollar, surmises Vincent van der Heijden, senior director, country manager, Canada, for Advantage.
Business Relationship & Support
grocerybusiness.ca
AVERAGE NET FAVOURABLE SCORE
2014
16
“There’s uncertainty in the marketplace, and both sides are struggling to find profitability on the vendor and the retailer sides,” he says. “I think that’s having an effect on the business relationship area.” But the news isn’t all bad; asked if they expect retailermanufacturer collaboration to improve, stay the same, or worsen in the year ahead, only 13 per cent thought it would worsen. That’s a substantial improvement from 2014, when 30 per cent expected relationships to worsen. After all, it is in vendors’ best interests to maintain positive relationships with retailers. “Vendors see that the market is becoming more competitive,” says van der Heijden. “There are fewer customers to work with, less diversification of their portfolios. So it’s really important for them to maintain strong relationships with the major customers in Canada, if they want to find some profitability.” w CONTINUED ON PAGE 32
“Works productively with us to build profitable business for both parties”
2015
11
2016
9
Vendors continue to express concerns about the challenges as they pertain to building a mutually profitable business. Continued market consolidation and the decline in the Canadian dollar are key contributing factors.
November | December 2016
31
TM
OVERALL PERFORMANCE AVERAGE NET FAVOURABLE RATING
w CONTINUED FROM PAGE 31
Perceptions are on the decline
2015
2016
30
Best-in-class retailers “clearly communicate their vision to us and we work on a common goal together because we need to be profitable and they need to grow.”
30 25
26
25 22
20
23
30
28 26
24 22
20 15
16
10
5
– Vendor comment Overall Performance
Business Relationship and Support
Personnel
Category Development
Retail Execution
CATEGORY DEVELOPMENT Customer marketing programs continue to be a key factor in driving demand. Vendors are finding it increasingly challenging to collaborate with retailers on these programs as the landscape changes.
AVERAGE NET FAVOURABLE SCORE
“Drives demand for products through effective customer-/consumer-focused marketing programs”
32
2015
21
November | December 2016
2016
16
Best-in-class retailers “have their finger on the pulse of the categories they are representing and are willing to share information on such things as which of their stores have the most successful promotions of our products.” – Vendor comment
Supply Chain Management
AVERAGE NET FAVOURABLE SCORE
Business Relationship & Support
“Strengthens business relationships through strategic business planning”
TOP 3 Priorities for Vendors
21
16
2015
2016
Constant changes to the retail landscape, and the challenges presented by consumers who are well-informed about products and pricing, are impacting manufacturers’ ability to implement long-term strategic plans.
1
1
Implements agreed upon business plans
81
Business Relationship
5
2
Stores execute promotional and retail marketing plans in accordance with commitments
79
Retail Execution
1
3
Works productively with us to build profitable business for both parties
78
Business Relationship
PRIORITIES
IMPORTANCE RATING
PERFORMANCE AREA
2015 2016
AVERAGE NET FAVOURABLE SCORE
RANKINGS
How do vendors rate retailer performance by category?
30
OPPORTUNITIES FOR IMPROVEMENT
10
23
34
23
19
15
25
HEALTH & BEAUTY/OTC
HOUSEHOLD
FROZEN FOOD & BEVERAGES
SNACKS, CANDY & CARBONATED BEVERAGES
FRESH
SHELF STABLE
grocerybusiness.ca
November | December 2016
33
Business Planning
Seize the
omnichannel
opportunity
By Jennifer Lee, Partner and National Retail and Omnichannel Leader, Deloitte
Retailers have long been at the vanguard of the omnichannel revolution. They’ve been among the first to feel the impact of advances in digital and mobile technology, as well as changing customer behaviours and expectations. Some retailer categories have responded to the challenge more effectively than others: a recent Deloitte study suggests grocery retailers have some catching up to do. The Deloitte Omnichannel Customer Experience Index 2016 explores the omnichannel offerings of leading retailers in all major categories across Canada and the U.S. In both countries, home improvement, department stores and mass merchandisers lead the way when it comes to omnichannel sophistication. Grocery retailers’ omnichannel efforts aren’t yet as developed because Canadian consumers haven’t really embraced buying groceries online.
Untapped opportunity for grocers Omnichannel offers grocers an opportunity to differentiate themselves in a highly competitive market. As Ontario grocers begin to offer beer and wine, for example, they find themselves competing with the LCBO, which now provides online purchases and home delivery or in-store pickup. With busy consumers always looking for ways to make shopping faster and easier, grocers who can up their omnichannel game could realize a powerful advantage. But that doesn’t mean they should charge into omnichannel blindly. It’s essential that grocers pursue omnichannel investments that reflect customers’ actual behaviour and meet their needs and expectations.
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November | December 2016
Learn from the leaders As they accelerate their omnichannel journey, grocery retailers should capitalize on the experience and best practices of today’s omnichannel leaders: home-improvement chains. These retailers have integration across all platforms. They’re strong in pre- and post-purchase, providing support to customers starting new projects and allowing them to ensure items are in stock before they set foot in-store. Online shopping, mobile apps, home delivery and click-and-collect options enhance the shopping experience.
Start the journey The first step on the omnichannel journey doesn’t have to be a huge investment, if you: • Start small • Review your competitors’ offerings • Create an integrated team • Identify the right business model Grocers in Canada have much room to grow when it comes to omnichannel. Those who move fast and invest in new omnichannel capabilities – from mobile to online shopping to new delivery options – can gain a significant advantage.
To access the Deloitte study, visit: deloitte.ca/omnichannelindex2016
®
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LEADERSHIP CHEESE 2016 •
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Canadians love their cheese, and the numbers prove it: • Cheese is a staple in Canadian households, with
97.4% penetration*
• We’re ranked among the world’s top 25 countries in terms of per-capita consumption (12.85 kgs/year)** • Few other food categories post the same level of consistent year-over-year growth, both in tonnage and dollars†
TOTAL CHEESE VALUE
But it doesn’t end there. Segments like shred, natural cheese slices and snack are experiencing fast growth as more and more consumers are choosing the convenience that these formats offer.
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STRATEGIC LEADERSHIP • 2016
1,557
1,648
1,689
Latest 52 Weeks 2YA
Latest 52 Weeks YA
Latest 52 Weeks
TOTAL CHEESE BY SEGMENT - $ SHARE 3.4%
TL Natural Cheese Slices (+23%)
11.5%
TL Snack Prepared Cheese (+2%)
54.9%
TL Natural Cheese (+1%)
11.4%
TL Processed Cheese Slices (-6%)
18.8% TL Shred (+5%)
The snack cheese market has expanded to $209
million in annual sales†,
driven primarily by kids cheese snacks, which make up half of the annual sales. However, the adult snack cheese segment is expected to edge ahead, with more consumers embracing snacking for many different reasons (e.g., meal replacement, portion control and other lifestyle choices).
TOTAL KIDS SNACK CHEESE BY BRAND - $ SHARE 16.3%
Private Label
0.3% Brand C
12.8% Brand B
70.6%
Leading Brand
Shred cheese products make it easier for consumers to prepare meals at home, and that is important to them. Their demand is driving shred cheese annual sales growth at +5% vs. YA.† The natural cheese slices market represents more than
$60 million in annual sales, and it’s growing at +23% vs. YA.† For recipe ideas, visit www.blackdiamond.ca/recipes
With this much happening within total cheese, retailers should continue to support the category to capitalize on the demand-driven opportunities of natural cheese sticks and natural cheese slices.”
Canada’s Favourite Cheese Flavours† • When it comes to flavours, traditional options like Marble Cheddar and Mozzarella still rank at the very top in terms of demand. However, these are not the fastest-growing flavours among “everyday” cheeses. • Farmer’s Cheese has become one of the most popular cheese flavours in Canada, posting triple-digit growth. Well ahead of the pack. • Premium varieties like Monterey Jack and Swiss are also outpacing the category, showing that many consumers are looking for more premium options in this segment, and buying these types of cheese more often than ever before. STRATEGIC LEADERSHIP • 2016
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* Nielsen, Homescan, National L52W period ending March 5, 2016 ** Canadian Dairy Information Centre, 2014 Global cheese consumption (Kg per capita) † Nielsen, TL Cheese, National xNFLD GB+DR+MM, L52-week period ending July 23, 2016
FROM
A
International Innovation
Sydney, Australia
SUMO SALAD GREEN LABEL
The convergence of major trends such as local, seasonal, sustainable and ready-to-eat convenience come to life in Sydney, Australia’s Sumo Salad Green Label shops. The store’s styling and merchandising, along with on-site farming, communicate a fresh, transparent and sustainable brand positioning. The company is taking its concept of “Sumo-sized” fast-food salads around the world, with shops springing up in, among other locations, South America and the U.S.
Source: Retail Innovations, 11th Edition Courtesy of the Ebeltoft Group and J.C. Williams Group
grocerybusiness.ca
November | December 2016
41
GROCERY INNOVATIONS CANADA Canadian Federation of Independent Grocers 2016 Conference and Trade Show October 17-18, 2016, Toronto
Blair Ruelens, PepsiCo Foods Canada; and Darryl Rowe, Weston Bakeries
Michelle Schmidt and Maurice Bianchi, Organic Meadow
Domenic Calce and Domenic Duronio, Metro Inc., with Maria Proulx, Grocery Business (centre)
Steve Turner at the Kruger booth
Carson Bonina and Brandon Todd, Stong’s Market
Mark Ehleben, Luis Matos, Michael Sharpe and Martin Huang, FMS Solutions
Vince Mendes de Franca and Marc Lynch, ConAgra Foods
Chris Powell, Tree of Life
Giancarlo Trimarchi, Vince’s Market
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November | December 2016
Mike Lovsin, Freson Markets; and Francois Bouchard, The Country Grocer
Fresh sweetness with Baci chocolates at the Aurora Importing booth
Carrie Gervais, Jenny Brine and Patricia Ridge, Constellation Brands
Alex Bazhanov, Parmalat Canada
Kim Allison and Dan Lafrance, Kraft Heinz
Tony Morello, Aurora Importing; and Cheryl Smith, Parmalat Canada
Bill Dunne, C.B. Powell Ltd.
Harry Watson, Triple 4 Advertising; and Marc Fortin, DCI
Team Mondelez
Shannon Forner, Valu-Plus Foods Patrick Higgins and Jon Cohn, Natural Specialty Sales Kevin and Matthew Smith of Grocery Business Media
grocerybusiness.ca
November | December 2016
43
Let’s celebrate
c a n a d a’s bi r t h d a y t o g e t h e r w i t h
BLUE RODEO & HEDLEY 150 years
CANADA
February 4, 2017
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 *$192.00 Early Bird Rate until January 6, 2017 • https://resweb.passkey.com/go/GroceryFoundation2017 Tickets Required for Entry
LONGO’S 60TH ANNIVERSARY
WASN’T THAT A PARTY? This past year was filled with fun and festivities as Longo’s celebrated its 60th anniversary with customers, vendors and team members. The retailer marked the milestone in a number of ways: specialedition Longo’s anniversary private-label products; individual store celebrations, including recognition of specific stores and community partners through social media and other outlets; Thank You Rewards loyalty contests; commemorative reusable grocery bags; CPG vendor partner anniversary specials; and limited-edition co-branded anniversary products.
grocerybusiness.ca
The year-long celebration capped off six decades of service that began when brothers Tommy, Joe and Gus Longo founded Longo Brothers Fruit Markets Inc. in 1956 as a 1,500-square-foot fruit market in central Toronto. Although the company has evolved and innovated over the years, it always remained true to its roots. Quality, value and service – those are the values on which the founders built their business. It’s the family’s fierce determination to follow their example that will drive Longo’s for generations – and many more celebrations – to come.
November | December 2016
45
Making It
RISING
TO THE TOP
RISE Kombucha rides the fermented beverage wave. By Dave Lank
Kombucha, a tangy, slightly bittersweet fermented beverage, has been around for centuries (some even say millennia). But only in the last few years has its popularity bubbled over. Once the go-to thirst quencher for freethinking and health-conscious flower children of the 1960s, bottles of it are as likely to be found today in the hands of young tech workers or the fitness set hydrating post-Pilates. And in Canada, there’s a good chance the name on that bottle of kombucha says “RISE.” We all start with a mother, and RISE’s journey to becoming Canada’s leading kombucha brand was no different. In the kombucha world, a mother actually refers to a “symbiotic culture of bacteria and yeast.” Kombucha is the liquid end result of fermentation between the mother culture and a tea, and is considered a “living” beverage because of the healthy, probiotic bacteria in it. In 2007, two of the company’s original founders, Mathieu Gallant and David Côté, both intrepid world travellers, were introduced to
kombucha in Hawaii while they were exploring the island’s raw-food and beverage scene. They were instantly hooked on the curious and sparkling drink. They returned to their native Montreal with a business plan and a piece of a mother in hand, and set to work brewing. Their kombucha was originally named Crudessence, after the raw-food catering and restaurant company the two also started. “At the beginning, we were making kombucha in small batches on the eighth floor of a former textile building in Montreal’s old garment district,” recalls Julian Giacomelli, an engineer with an MBA who partnered with Gallant and Côté, and is now RISE’s president. As consumers’ taste for more tart, less sweet, and healthier beverages grew, so too did sales of the company’s kombucha, especially in the health-food channels. To make their product more appealing to a broader audience, the partners decided to rebrand as RISE in 2014.
“The way we presented RISE was much more about education,” explains Giacomelli. “We wanted to demystify the drink, make it sound simple and separate it a bit from the hippy-dippy stuff that was out there. Our goal was to bring an authentic, organic kombucha, made with ingredients sourced from fair-trade suppliers, to the mainstream. We ended up with a kombucha that we think is, and obviously has proven to be, more popular than most to the average person.” Kombucha’s appeal continues to flow beyond the health channels and into major retail grocers. Giacomelli says the category has been growing by 25 to 30 per cent over the last five years, and RISE has been doubling its production every year since inception. The company’s goal to be in every major grocery chain in Canada may happen soon. “I think it’s a combination of right time and right place, but also the right product,” reflects Giacomelli on the surging demand for RISE’s kombucha. “It ties into the massive shift in consumer taste going towards less-processed, more-real food, and I think a kombucha is the star category of the beverage world for that.” RISE moved into a 14,000-sq.-ft. production facility nearly two years ago. Already, the company is planning to expand to almost double that size in 2017, significantly increasing and speeding up capacity to allow it to further satiate demand. While making good things happen in its bottles, RISE wants to do the same in its own community. The partners sponsor projects they feel are socially progressive, environmentally aware and health oriented. They’re also working on becoming a B Corps Certified corporation, which requires companies to adhere to the highest standards of social and environmental performance, accountability and transparency. As RISE continues to push forward with progressive business initiatives, while cementing its leadership position as Canada’s kombucha, expect to see a lot more of this ancient drink that’s proving to be perfect for our modern times.
RISE KOMBUCHA FAST FACTS • Top-selling flavours: Ginger and Hibiscus • N umber of employees: 65+ • C laim to fame: First Canadian kombucha in
the grocery market and the only Canadian brand in the top three.
The kombucha market is growing fast!
+25%
2015
n pou Com
2016
de
2017
th row G d
2018
te Ra
2019
2020
Source: MarketsandMarkets Analysis
grocerybusiness.ca
November | December 2016
47
PMA FRESH SUMMIT 2016 Produce Marketing Association Convention & Expo Orlando, Florida October 14 – 16, 2016
Ron Lemaire, president, and Sam Silvestro, chair, CPMA
Betty Arellano, Kathy Stephenson and Julia Smith, USA Pears
Drew Kwok and Susana Casselman, Air Canada Cargo
Joan Wickham with Sunkist’s Meyer lemon display
48
November | December 2016
Carolyn Willmoth and Roxie Lowther, Litehouse Foods
(l-r) Mike Fronte, Luca DeMarco and Mike Dattoli, Mike & Mike’s Organics
Ed Thompson and Luc Prevost, Vegpro International Inc.
Gina Nucci and Ben Alviano, Mann Packing, with the Impact Award-winning Nourish Bowls
Katy Mae Harrison, 2016 Florida Watermelon Queen
Joe Spano and Emily Murracas, Mucci Farms, winner of two Impact Awards
Robert Najm and Tom Coufal, Lakeside Produce
Rick Burt, Mid-Isle Farms; and Kendra Mills, Prince Edward Island Potato Board
Chris Pollock and Lisa Linton, BC Tree Fruits
Wade Wilson, Maison de la Pomme Inc.
Tom Ewing and Cathy Antinozzi, T. Marzetti
Matt Modena and Ryan Cherry, Windset Farms
Jean-Maurice Daigle and Louis Ouellette, Potatoes New Brunswick
Steve McKee, Wm. Bolthouse Farms, Inc.
Dave Casarez, Tara MacNeil and Spero Moukas, PECO Pallet
Chris Cockle, The Wonderful Company, with the firm’s holiday season merchandising display case–Jingle Shells
Bobby Consalo, Dandrea Produce; Al Murray, State of New Jersey
Scott Kress and Mallory Flanders, with the Impact Award-winning Dill-it-Yourself Kit, Sunset Farms
grocerybusiness.ca
Oleen Smethurst, Costco Canada
November | December 2016
49
www.chickenfarmers.ca www.chickenfarmers.ca
r e v i l e r e D v s i l r e e D m s r r a e F ! m n e r e r a k a F c C i ! n l e h e r a C k a m C i l n a Chic onn A m i n o A Chicken Farmers of Canada’s Animal Care Program is a concrete, accountable means Chicken Farmers oftheCanada’s Animal Care Program is a concrete, means of demonstrating pride and commitment of farmers in raising accountable the quality chicken of demonstrating the pride and commitment of farmers in raising the quality chicken Canadians can trust. Canadians can trust. » Our program offers a national set of standards based Code of Practice to ensure » on Ourthe program offers a national set consistency of standardsfrom based coast coast. on thetoCode of Practice to ensure consistency from coastprogram to coast. » Our is audited annually, ensuring every farm. ensuring » accountability Our program isfrom audited annually, accountability every farm. » Our program isfrom mandatory, ensuring participating compliance from all farmers. » and Our program is mandatory, ensuring participating and ensure compliance fromwhole all farmers. » We that the industry is informed involved. » and We ensure that the whole industry is informed
» Our program has strict enforcement measures additional assurance. » to Ouroffer program has strict enforcement measures to offer additional assurance. » We ensure that the program is supported from gate toisplate. » by Westakeholders, ensure that the program supported by stakeholders, from gate to plate. » We are committed to continuous improvement. We evolve as we learn. » We are committed to continuous improvement. We evolve as we learn.
and involved.
The “Raised by a Canadian Chicken Farmer” Brand is proud toChicken be partFarmer” of this program. The “Raised by a Canadian Brand is proud to be part of this program.
brand@chicken.ca brand@chicken.ca
LIST IT
NEW & NOW DISCOVERIES
Simple with a Twist The Veggie Noodle Co. created buzz at the recent Produce Marketing Show in Orlando, Fla., with its Millennial-friendly “simple but twisted” spiralized pre-packaged vegetables. Veggie Noodles can be eaten as is, sautéed or even used to replace pasta noodles. And, at only 12 calories per serving, they’re right on trend with health-conscious consumers.
veggienoodleco.com
New ways to be KIND! Arriving in January, three new flavours join the KIND line-up of tasty and healthy snacks: Almond Mocha & Dark Chocolate; Almond Mint & Dark Chocolate; and Cashew Raspberry & Chia.
kindsnacks.ca
Fuss-free Fish The Saucy Fish Co.’s new cooked and ready-to-eat Saucy Fish line includes three combinations: Sticky Maple Sauce Sensational with Smoked and Roasted Atlantic Salmon fillets; Tomato and Chilli Chutney Tremendous with Roasted Sweet Chilli Atlantic Salmon fillets; and Sicilian Lemon & Dill Mayo Magnificent with Roasted Lemon and Herb Atlantic Salmon.
thesaucyfishco.ca
Delicious and Nutritious Snacking To satisfy the growing demand for healthy snacks, Prana has created Chocolate Bark made from 100 per cent organic, fair trade chocolate and a mix of nuts, seeds and fruit. Chocolate Bark is available in four flavours and is conveniently packaged for shelf display in a re-sealable stand-up bag.
prana.bio grocerybusiness.ca
November | December 2016
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auroraimporting.com
Exciting New Product News
AURORA 750 GR HONEY Out with the old, in with the new. Aurora takes its 750gr Honey and gives it a fresh and innovative look, with its NO DRIP - TOP DOWN BOTTLE. Offered in a shelf-ready tray holding 12 convenient squeeze bottles, this easy-to- measure, no-waste product will bring any shelf in the grocery aisle to life.
BASSO 100% ITALIAN UNFILTERED EXTRA VIRGIN OLIVE OIL 750ML ALLESSIA BREADSTICKS At the first crunch, the Allessia Rustic Grissini Breadsticks burst with flavour. Made in Italy, this brand new Allessia line brings four fresh flavours to the table: Sesame seed, Black Olive, Rosemary and Olive Oil. Allessia Breadsticks are a perfect accompaniment to any meal. They are also terrific as appetizers or for a satisfying and tasty snack any time of the day.
Dressed in a new glass bottle, Basso oil is another example of the company’s reputation of tradition and class. This extra virgin olive oil is obtained from the coratina olive of Puglia. Its fruity taste is intense, strong and full of character. It is enhanced by artichoke notes and bitter vegetable.
ALLESSIA CROCCANTE Hand made in Italy, the Allessia Croccante is your new favourite any time, any day treat, and also makes a delicious and healthy stocking stuffer. Comes in a shelf-ready display and available in Hazelnut, Almond, and Peanut.
FIASCONARO PRESTIGE PANETTONE Panettone fit for the Pope! Fiasconaro panettone is hand-wrapped and made with all-natural ingredients. This cake’s natural leavening process gives it a flavour complexity and makes it easier to digest.
PERUGINA GRIFO CHOCOLATE Grifo is Italian for Griffin, which has been the mythological protector for the city of Perugia, Italy, since 1294. Perugina proudly named its collection of its finest milk, 51% and 70% chocolates after this majestic creature. Experience the wonderful world of Perugina chocolate all at once with the Grifo fine assorted praline bag.
AURORA DEVON CUSTARD & RICE PUDDING Product of Belgium, the Aurora Devon Custard and Rice Pudding are the newest additions to Aurora’s impressive and continually growing innovation food catalogue. Both offer wonderful solutions for entertaining this season.
PRESTIGE NOCCIOLE: Traditional cake with specialty zabibo raisins, topped with icing flakes and Italian hazelnuts.
BACI 70% FONDENTE Perugina outdoes itself again with its new Baci 70% Fondente chocolate. Still made exclusively in Perugia, the Baci recipe remains unchanged. Made with only 8 ingredients, all natural, Gluten Free, and Kosher Certified, the 70% Fondente Chocolate Baci is something you need.
PRESTIGE CIOCCOLATO: Traditional cake with chocolate drops of Modica, Sicily, and topped with icing.
auroraimporting.com
it figures
The Main Ingredient: Health
% 54
of Canadians are willing to pay more for food and drinks that don’t contain undesirable ingredients
Takeaway Brands with a minimal and transparent ingredient list have a competitive advantage over those that don’t.
% 47
follow a diet that limits specific foods and ingredients, including wheat or gluten Takeaway Consider that close to half of your store traffic is potentially looking for a solution to their particular needs. And when they find what they’re looking for, they will roam the aisles for more!
54
November | December 2016
% 46
28%
Carman Allison is vice-president of consumer insights for Nielsen
of Canadians want more all-natural products Takeaway Consumers want to eat more healthfully, but they can’t do it alone. Grocers can be partners in health by offering products with more good-for-you ingredients at attractive price points.
of Canadians say that someone in their household suffers from food allergies or intolerances
32%
in Canada, and is responsible for creating thought leadership insights for CPG manufacturers and retailers.
A L L S TAT S C O U RT E S Y: NIELSEN
69%
of those with food sensitivities say their dietary needs are only partially met
Takeaway Grocers can (and should!) be a partner in healthy living. Consider using shelf tags that describe specific food attributes, and train associates to be more health-savvy.
of Canadians pay close attention to the ingredients they consume Takeaway Don’t focus on a single category or department; health and wellness matters across the entire store. Carry an array of healthful options across categories and departments – sales in one category will potentially drive the sale of related products.
November | December 2016
55
In Other Words “We continue to believe consumables and groceries are a key part of the offer to our customers. We’re finding it a very attractive service.” Brian Olsavsky, CFO, Amazon
How big a threat is Amazon to Walmart? While Amazon’s growth is steady and the gap is narrowing, it still has a long way to go to match Walmart’s dominant position. Where U.S. consumers are buying their groceries and consumables
Amazon
Amazon Prime
Grocery and consumables purchasers as a % of total purchasers (U.S.) Source: Cowen proprietary Consumer Tracking Survey, n=~2500, September 2016
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November | December 2016
Walmart
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