Packaged Food Industry In Canada

Packaged food is the food that is commercially prepared to optimize ease of consumption. It includes all consumable/eatables that are properly packaged with the manufacturer’s name, price, nutrition value and ingredients.

In 2014 Canadian households spent about US $505 annually, or 9.3% of their total budget for food and non-alcoholic beverages. Canadian exports of consumer packaged food goods to the U.S. has increased from 25% to 30% of total sales from 2009 to 2013.

Definition / Scope

Packaged food is the food that is commercially prepared to optimize ease of consumption. It includes all consumable/eatables that are properly packaged with the manufacturer’s name, price, nutrition value and ingredients.
Brand marketers and grocery retailers in Canada emphasize on the freshness and variety of the product among key factors to drive sales and revenue growth.
For shopping online, the click-and-collect model is seen as convenient by many experts in the market as a better and cost-effective option.

Market Overview

Both male and female consumers are part of the workforce in Canada, and many have less time in their hands to cook.
The Canadian packaged food retail marketplace sees a positive but modest rise in value.
In 2014 Canadian households spent about US $505 annually, or 9.3% of their total budget for food and non-alcoholic beverages.
During 2006-2014, 63 new Canadian food plants opened and 67 companies announced major investments
Canadian exports of consumer packaged food goods to the U.S. has increased from 25% to 30% of total sales from 2009 to 2013.
The performance of the packaged food market is forecasted to grow at CAGR of 2.7% for the five-year period 2013 – 2018, which is expected to drive the market to a value of $4,476.4 million by the end of 2018.

Market Risks

The Canadian Food Inspection Agency is conducting an investigation since May 2015, for the presence of Iron Cross Blister beetles in imported leafy vegetables as there were complaints from the consumers about the presence of such beetles in pre-packaged salads.
In Canada, secondary processed food has a deficit $6.8 billion (2013 data).
Consumer ethnic diversity tends to be a challenge for some large scale mass marketing companies in Canada. Even though the consumption of fruits and vegetables had increased from 2009 to 2014, the consumption of canned and packaged fruits and vegetables have declined in these years due to growing concerns regarding nutritional quality of canned foods.
Canada’s trade deficit in secondary processed food has risen to over $6.8 billion in 2013 from $6.5 billion in 2012.

Top Market Opportunities

Product innovation that revolves around health, diversity of formats and flavors and packaging design are the factors that a company can tap and enter into the industry.
Many Canadians seek value and good price, variety of flavors and ingredient composition in a packaged food. To understand and recognize these factors at an early stage is a good opportunity for market players. Because of their affordability and longer shelf-life, most Canadian prefer canned varieties of fruits and vegetables.
Frozen packaged food in Canada showed a growth of 1% reaching US $5 billion in 2014 as compared to 2013.
Packaging and selling gluten-free oats in Canada is a good opportunity for the companies as Health Canada will allow packaged oat products that contain less than 20 parts per million of gluten
The Canadian functional foods and natural health products account for a Revenue of $11.3 billion and export of $1.7 billion in 2013 and the sales have grown about 9% between 2012 and 2013, according to Statistics Canada, 2013.
Canadian functional foods and natural health product’s sales have grown about 9% between 2012 and 2013, according to Statistics Canada, 2013.
Canada has a rich ethnic population and thus, the different ethnic markets in Canada can create niche opportunities for smaller companies.

Market Drivers

The consumption of packaged food in Canada can be determined by age, gender, income, attitude and perception whereas sales is strongly influenced by taste and variety followed by health and quality products.
The most commonly consumed packaged food is cereals, healthy snack food, yogurt and juices.
Canned fruits and vegetables constitute the largest segment of the packaged food industry in Canada accounting for an estimated 29.3% of the total industry revenue in 2014.
In 2014, the Canadian Food Inspection Agency tested 400 samples of packaged fruits, vegetables, beverages and other product for biphenol A. the results showed that BPA did not turn up in 98.5% of the tested foods
During 2006-2014, 63 new Canadian food plants opened and 67 companies announced major investments.
The domestic market absorbs 75% of the packaged food and beverages in Q1 2015 given to the ready access to a plentiful supply of raw materials.
In 2014, Canadian households spent about US$505 annually, or 9.3% of their total budget for food and non-alcoholic beverages.
An estimated 10% of Canadians find gluten-free food when buying food for themselves and their household. From 2006 to 2011, sales of packaged food increased by 17 percent and are forecasted to grow at a constant compound annual growth rate (CAGR) of 2 % through 2011-2016.
Canadian exports of consumer packaged food goods to the U.S. has increased from 25% to 30% of total sales from 2009 to 2013.
Canadian exports of processed food products stood at C$24.3 billion in 2013, up 3 per cent from 2012.
In October 2014, export of processed food to U.S rose by 2.4% to reach 77.4%.

Market Outlook

The number of pack units in the retail food industry is expected to grow at a compound annual growth rate of 2.24% dusting 2013-2018
The performance of the packaged food market is forecasted to grow at CAGR of 2.7% for the five-year period 2013 – 2018, which is expected to drive the market to a value of $4,476.4 million by the end of 2018.
In Canada, spending on household materials such as sauces, desserts and seasonings decreased by 19.5% between 1994 and 2009, and is projected to fall by another 24.4% by 2019.
The global functional foods and natural health products (FFNP) is expected to grow at an annual rate of 8% to 14% and reach approximately US $477 billion in 2015
Global demand for FFNP’s is expected to reach US $477 billion by 2015, as started in Statistics Canada 2013.
The chilled processed food is expected to record a 3% compound annual growth rate at constant 2014 prices over 2019 rising to Canadian $6 billion by end of 2019
The volume of sales of chilled processed food is also expected to increase by 2% till the end of 2019, according to a research done in October 2014
A number of categories on the Canadian packaged food market are expected to see a good growth in future. However, the overall pace of volume and value growth will remain quite modest. Packaged Facts forecast a CAGR of over 11% between 2014 and 2019 for natural and organic foods and beverages in Canada.
Global Food demand, in general, is expected to rise by 35% in 2025 as compared from 2007 levels, with most demand coming from Asia. China and India alone could account for 60% of the global increase.

Distribution Chain Analysis

Major processed food companies in Canada are:

COMPANY	REVENUE(Canadian $Million)
Saputo	7299
McCain Foods	6600
Maple Leaf Foods	4503
PepsiCo(Canada)	3195
Nestle(Canada)	2320

The wants and needs of Canadian customers is constantly changing, which challenge’s this sectors ability to assess market conditions, innovate and develop new products quickly.
Nestle Canada is the leader of frozen foods as seen in 2014. It has 42% value share in terms of frozen pizza and 24% value share in terms of frozen meals.
The Canadian company Maple Leaf Foods Inc. is the leader of chilled processed food in Canada, as seen in 2014. It has a market share of 23%
Campbell Soup is the leader in soup in Canada, with ma market share of 74% in 2014. In the overall canned/ preserved food industry, this company holds a share of 16%
Canada based Nature’s Trust Frozen Food invested Canadian $1.8 million, to establish its first Virginia operation in the Warren Country.
The food and beverage companies of U.S seek to enter the Canadian market because of the reliable shipping methods, similar business practices and similar food tastes between Canadians and Americans.