Market Information
United States

Grocery products, fine foods & wines, and livestock

July 2002

Canada's exports for the wide range of agricultural and fisheries commodities, food and beverages, livestock, genetics, equipment and services, have increased to 665m in 1999. Within this diverse sector, two major sub-sectors offer the most promising opportunities for Canadian exporters and reflect our TTCS priorities for US market development.

With Canadian processed food and beverage exports having reached $497 million in 1999, Southwestern supermarkets are beginning to stock a greater variety of Canadian grocery products, ranging from various store brands, cookies, cheddar, sea foods to mixed salads in bulk. However, with exports growing only 7% during the first ten months of 2000 over the same period of 1999, Canadians have barely penetrated regional markets, as recognized in the new strategy of the Department of Agriculture and Agrifood (AAFC). This aims at working more closely with Consulates to (1) identify untapped and new market opportunities in southern and western states, and then to (2) encourage and facilitate exporters pursuit of that business. The inclusion of the Dallas, Los Angeles and Seattle Agrifood officers in the new Western Market Segment Team, should expedite our identification of Canadian exporters which having concentrated on establishing market share in L.A. and northern markets, may be poised to springboard into the Southwest. Growth in this sector is expected to continue due to a combination of at least three factors: the ongoing shift in US economic and population growth to the Southwest, giving Texas the 2nd highest state level of per capita income, competitive pricing by Canadian producers, and increasing consumer appetites for imported specialty foods.

While grocery products will continue to be among our top priorities for new market prospecting, a smaller yet very promising niche market is the unrealized potential for fine foods and wines (FF&W), as demonstrated by the highly favorable demographics of an increasingly affluent, well-educated consumer base in the Southwest. Consequently, we intend to significantly increase our efforts in this sub-sector and build on the foundations we laid in the previous fiscal year. It is our belief that the highly value-added products within the FF&W sub-sector overcome many of the challenges inherent in Canadian export activities to the SW US, namely:

a) the distance factor - reflected in key disadvantages for Canadians - e.g. time and expense of travelling to the area & shipping costs;

b) the awareness factor - local buyers and consumers lack knowledge about Canadian capabilities while Canadian producers lack knowledge about local tastes;

c) the trade show factor -food shows in the region provide little space or profile for find foods and wines; rather they concentrate on general grocery lines or foodservice and are dominated by multinational food companies or large regional companies, with the result that Canadian SMEs are often overlooked.

While these challenges are present in other regions, the Southwest may well offer greater untapped export opportunities, due to the large number of urban centers with populations greater than 1 million; Texas having the 4th highest rate of US wine consumption; Houston sporting the highest rate of dining out and expenditures. Consequently, our strategy is designed to maximize FF&W exposure and exports while minimizing exporters' costs and risks associated with breaking into a new market. To do that, we propose seeking out promising new venues for showcasing Canadian FF&W to the trade, media and select consumers, while continuing to be involved in traditional trade shows. By that, we mean events providing a richer setting for sampling Canadian FF&W, so as to increase quality branding awareness among the trade, media and select consumers. In addition, we will devote considerable energy in obtaining MI/I across all of our priority sub-sectors on an ongoing, year-round basis.

Within the broader agricultural sector, opportunities are most attractive in the burgeoning livestock industry and particularly in the swine sector. Large scale hog farming has entered the Southwestern states in a major way, as evidenced by the population of hogs in the Texas having nearly doubled in 2 years to 1.2 million. Industry observers expect a similar growth trend over the next 2-3 years. Moreover, strong expansion in sales opportunities is reflected in livestock exports increasing by 12.5% in the first 11 months of 2000, compared with 11 months in 1999. At the same time, dairy farming is undergoing major expansion in New Mexico. As industry observers attribute this livestock industry growth to environmental factors and climate conditions, strong growth should continue for the next 2-5 years.