What's Hot and What's Not in the Canadian Food Market 2005

Background

ACNielsen Canada has prepared the Annual Canada Consumer Expenditure Study, Food Grocery Products for 2005 for the Food Value Chain Bureau, Agriculture and Agri-Food Canada. The data estimates the value of food and beverage sales to consumers through retail grocery stores over a 52 week period and provides a snapshot of what's hot and what's not hot in Canadian grocery sales.

Overview

Total grocery food sales grew by 3% in 2005 over the previous year to reach $40.2 billion ¹. Most of this growth can be attributed to increased sales in the perishables category, which increased by 4% in 2005. At 69.4% of total food expenditures, the perishable category accounted for $27.9 billion in sales in 2005. Non-perishables or dry grocery item sales showed a modest increase of 3% in 2005 to reach $12.3 billion, as many categories (except for canned and bottled fruits and desserts) had small increases compared to 2004 sales.

Key findings from the data show there is a large variety of food and beverages available to Canadian consumers to meet ongoing and emerging demands. Health and convenience continue to be the major factors influencing consumer purchases. Healthy alternatives for consumers are driving growth for organic and other foods with perceived health benefits and Canadian consumers continue to be focused on convenient meal preparations.

Perishables

At 69.5% of total food expenditures, the perishable category accounted for $27.9 billion in sales in 2005. Sales for all categories of perishable products have shown growth between 2004 and 2005. At $8.0 billion, dairy product sales accounted for 28.8% of the total sales on perishable foods and 20% of the total grocery food expenditures (Table 1). Fresh and cured meats and poultry accounted for an additional 25.6% of perishable food sales and 17.8% of the total grocery food sales in 2005. Remaining perishable sales include nearly $5.7 billion in fresh produce sales in 2005 (20.4% of perishable sales), over $3.8 billion in frozen food sales (13.8%) and almost $3.2 billion in baked goods sales (11.4%).

Perishable foods accounted for eight of the top ten food product categories in 2005 based on retail sales. They include:  fresh meats ($5.13 billion); fresh fruit ($2.85 billion); fresh vegetables ($2.84 billion); milk including specialty milks ($1.84 billion); cheese ($1.76 billion); frozen dinner & entrees ($1.12 billion); deli meats ($1 billion); and packaged meats ($0.95 billion). The two non-perishable product categories rounding out the top 10 were: soft drinks ($1.41 billion) and ready-to-eat cereal ($0.86 billion).

Dry Grocery/Foods

Overall sales growth for dry grocery/foods has seen a 3% increase in 2005 from $11.9 billion to $12.3 billion and accounts for 30.6% of total grocery sales (Table 2).

Of the twenty-one categories within dry grocery/foods, five accounted for more than one-half of all sales in 2005, namely soft drinks and bottled water (14.4%), snacks (11.0%), total condiments, dressings, spreads, relishes & spaghetti/lasagna sauces (10.9%), shelf stable juices/drinks/nectars and ready-to-serve tea (9.2%) and breakfast foods (8.7%).

Within the dry grocery/foods category, strongest growth in 2005 was recorded for candy and chewing gum (6%), prepared drinks (5%), snacks (5%), and soft drinks and bottled water (4%), while the only declines were observed for desserts (-4%) and canned and bottled fruit (-1%).

What Products are Hot

The Atkin's Diet appears to be losing popularity as baking ingredients, bread products and specialty juices made significant gains in 2005 over the previous year. Convenience is again one of the new buzzwords for 2005. According to the 'What's Hot in 2005' list, frozen foods such as fruits, yogurts and puff pastry have increased dramatically in popularity with consumers (Table 3). Drinks are also gaining in popularity with chilled orange drinks and whole bean coffee included in the top 10. Based on growth rates from the previous year, the most dynamic gains in 2005 were: chilled orange drinks (+200%), frozen fruit (+37%), whole bean coffee (+35%), frozen remaining food (excluding total frozen dinners and entrees including egg/spring rolls, frozen meat pies, and frozen and refrigerated pizza and French bread and sub and frozen pizza snacks) (+30%). Demand for healthier products is also increasing with bottled water (+23%); other chilled fruit juices/drinks (excluding apple, grapefruit, orange juices and orange drinks) (+23%); value added broad leaf produce (+21%); grain bread (+21%); frozen yogurt (+20%); rice drinks (18%), refrigerated bagged salads (12%); and olive oil (11%) seeing significant gains. While these niche categories are not large in terms of retail dollar sales, they showed substantial growth over 2005.

What Products are Not Hot

According to the 'What's Not Hot' list of grocery retail products (Table 4) many forms of juices and nectars (i.e. chilled, frozen and shelf-stable) saw significant declines in 2005. For example, chilled grapefruit juices, frozen juice concentrate and shelf-stable drinks/nectars declined by 24%, 10% and 6%, respectively. Whole-bean coffee is becoming more popular with Canadians, while tea and soluble coffee declined 6% in sales. A second trend evident in this list is that consumers are turning away from canned/bottled products in favour of more fresh or frozen foods. For example canned meat (excluding corned beef, canned luncheon meats, ham and meat spreads, flaked ham, turkey and chicken and cocktail sausage/wieners) saw a 15% decline, while canned and bottled asparagus, corn on the cob, peaches, pineapples and fruit cocktail saw 14%, 11%, 9%, 7% and 5% declines respectively. A third trend is that consumers are buying less processed foods in favour of more unprocessed or fresh foods. Declines in processed food sales included: graham wafers, no bake products, baking mixes of pudding, rice/corn/potato cakes, toaster pastries, powdered toppings, infant feeding wet, dry soup mixes, and ramen oriental noodles.

¹ This analysis is based on estimates of value of consumer sales of food groceries purchased through retail grocery stores in Canada as provided by ACNielsen. Sales of these products moving through retail channels other than 'Total Grocery' or 'Grocery Supermarket Banners', as indicated, are excluded from the calculations. The product categories included in this analysis make up a large portion of grocery food items available for sale through the retail grocery channel. The list consists of these product categories for which ACNielsen receives scanner sales data from cooperating retailers and which is processed and regularly maintained by ACNielsen. These include the majority of prepackaged food items sold in fixed weight format and affixed with a universal product code (UPC). Also included are fresh and frozen meats, cheese, fruits and vegetables sold by the unit or by random weight. Non-food items, fresh fish and se food and random weight in-store bakery items are excluded from the data.

Date Modified: 2006-08-02		Important Notices
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