A new report from the USDA says organic fresh fruits and vegetables will find growing demand in the Canadian market.
In the 2019 retail sector review of Canada, published by the USDA Foreign Agricultural Service, the agency observes the Canadian retail market is characterized by a “dichotomy” of demand. A substantial sector of the market is looking for low-priced foods, while the other segment hungers for premium and specialty food items.
“The demand for organic, healthy, and natural products market in Canada is growing,” the report said. “There are excellent prospects for products with organic or natural ingredients, consumer-ready processed foods and beverages, and organic fresh fruits and vegetables.”
Breaking into the Canadian market may require success with independent retailers before business is won with a large chain, according to the report.
“U.S. companies selling natural, organic, or specialty foods will create demand and sales among the independents before tackling the larger accounts,” the report said. “Proven sales in Canada is important to help persuade category buyers of the majors to list an unknown product in their stores.”
Large players dominate
The USDA said the population of Canada is about 37 million, and 90 percent of Canadians live within 100 miles of the U.S. border.
Canada’s retail market is mature and largely consolidated; five major stores (Loblaws, Sobeys, Metro, Costco, and Walmart) represent 62 percent of the market, according to the report. Nearly 7,000 independents and convenience stores that represent the remaining 38 percent of the market.
Taking $20.8 billion in U.S. agricultural exports in 2018, Canada was the number one export destination for U.S. farmers.
Canada’s food and alcoholic beverage retail sales in 2018 reached $96 billion, representing an increase of 3% from 2017.
Ontario, Quebec and British Columbia represent 74 percent of Canada’s retail market and are the provinces in which most of the convenience, drug, grocery and mass merchandise stores are located, according to the report.
Canada supermarkets rely on imported foods to fill their shelves, and the report said many U.S. produce brands are available throughout the year.
The report said Canada’s key market trends are:
- Price-conscious consumers create strong demand for private label and promoted priced products;
- Increasing demand for healthy, nutritious and ‘clean’ products is boosting demand for organic and fresh products;
- Some retailers have expanded their private label lines to include a line focused on the higher-end of the market and another focusing on value, according to the report; and
- Expanding ethnic diversity is supporting the expansion of ethnic stores