Canadian Consumers

Spending on Food and Beverages

In 2000, Canadian consumers spent slightly more than $105 billion on food and beverages (including alcohol) in retail stores and foodservice operations. This spending represents the value-added of the food and beverage processing, food distribution and foodservice sectors and the cost of purchased raw agricultural products. Much of the increase can be attributed to population growth, greater service costs and food price inflation.

Canadians spent $55.8 billion in grocery stores, $29.9 billion in various foodservice outlets (mainly restaurants, institutions and hotels), and $19.5 billion for alcoholic beverages in 2000.

Canadian Food Spending Among Lowest in Developed World

Canadians have historically enjoyed an enviable position globally in terms of the share of PDI spent annually on food and non-alcoholic beverages bought in stores.

In 1997 (latest published data for international comparisons), Canadian consumers spent almost 10% of their PDI on food and non-alcoholic beverages. Only the US, and more recently the Netherlands, have recorded lower shares at about 8.1% and 9.7%, respectively. The share of PDI spent on food has been falling for many years in Canada. For example, in 1974 the share was 13.6% and in 1983 it was 10.9%.

Share of Personal Disposable Income Spent
on Food in OECD Countries, 1997

Throughout much of the early-to-mid 90's, a slowdown in PDI growth resulted in some upward pressure on the share spent on food. However, preliminary estimates for 2000 indicate that Canadian consumers allocated 8.95% of PDI to food, a new historical low.

Changing Pressures on Canadian Food
Supply Over the Past 20 Years

Grocery Purchases

In 1996, the average Canadian spent almost $1,625 on groceries. Two-thirds of these grocery dollars are being allocated to red meats (16.3%), cereal and bakery products (14.8%), dairy products (13.3%), fruits and nuts (11.9%) and vegetables (10%). Compared to 1982, Canadians are spending a smaller share of their grocery dollar on red meats, dairy products, fats and oils and eggs, while the largest gain in food basket share has been for prepared foods–from 4.7% in 1982 to 7.1% in 1996, reflecting the ongoing consumer demand for convenience.

Key Drivers

There are several key factors driving consumer spending trends in Canada:

1. Slow Population Growth

The Canadian population presently stands at more than 30 million and is projected to grow at a rate of only 1.2% annually over the next decade. However, Canada's population is growing at a faster rate than that of any of the other seven major industrialized countries (G-7). Average annual growth among developed countries is 0.5%.

Average Annual Rates of Population Growth

2. Changing Composition of Population

By 2016, about 44% of the Canadian population will be 45 years of age or more. The pace of immigration is increasing. Almost as many immigrants arrived in Canada from 1991 to 1996 (approximately 1 million) as over the entire decade of the 1980s. The source of Canada's immigrant population has shifted from primarily European to Asian (57% of immigrants between 1991 and 1996 were from Asia). Central and South America, Africa and the Caribbean are also becoming increasingly significant.

Size of Canadian families continues to fall–it now stands at 2.6 persons. Dual-earner families are as common today (about 62%) as single-earner families were in the 1960s.

3. Consumers Want Affordable Food

Throughout the 1990s, annual food price inflation has averaged less than 4%; for all-items, it has generally been at or below the overall rate of inflation. In fact, the 1992-00 period has been the lowest period of inflation since the early 1960s.

Real Food Spending and PDI's of

Canadians, 1990-2000

Despite the low rate of inflation, growth in the personal disposable income (PDI) of Canadian consumers has not kept pace throughout much of the 90's – the real spending power of consumers dropped by about 5 percentage points between 1990 and 1996, but has been recovering slowly in subsequent years. Preliminary estimates for 2000 show a real PDI 0.5 percentage points above 1990 levels. This means that the growth in the PDI of Canadian consumers has now outpaced inflation, resulting in an increase in their real spending power.

Real spending on food purchased from restaurants fell by more than 11 percentage points in 1991, reflecting both the lower real PDIs of Canadian consumers and the impact of the introduction of the GST. By 1997, real consumer spending on food purchased from restaurants had almost recovered to 1990 levels, and by 2000 stood almost 8 percentage points higher. Real spending on food purchased from stores climbed very slowly throughout the early-to-mid 90s, but by 2000 was almost 7 percentage points higher, perhaph reflecting increased convenience and value-added spending by consumers.

4. New Millennium Consumers–Their Food System Demands and Concerns

Producers and processors are facing a more knowledgable and more demanding consumer. Concerns that must be addressed include:

• Variety


Strong demand for new and innovative foods on store shelves and restaurant menus. Growing popularity of imported exotic fruits and vegetables, ethnic foods and restaurant concepts.


• Quality and freshness


Consumers are willing to pay more for quality, and many won't settle for anything but the best. For many consumers, freshness means quality. Many private-label products offer exceptional quality for the price (value).


• Convenience


Time pressures of dual-earner and lone-parent families increases demand for convenience foods (prepared meals, microwavable foods, sauces and condiments, fresh cilled prepared foods, "home meal replacements") and for foodservice (ie take-out foods).


• Health and nutrition


Health-conscious Canadians, especially ageing baby boomers, are eating more fruits, vegetables and "light" foods (low fat, cholesterol, sodium, etc). Current reviews of nutrition labelling may address heightened demand for more information about nutritional content of foods. Functional foods and nutraceuticals may offer future opportunities.


• Environmental concerns


Especially among the youth market, environmental concerns may have implications for food demand (processing, bulk packaging, organic foods, avoidance of certain food product categories (ie meat).


• Safety of the food supply


Especially given heightened media attention to such issues as mad cow disease, hoof and mouth disease, product recalls, irradiation of ground meats in the US, GMOs, Bst, etc.


• Access to information


More connected, aware and demanding than ever before.

5. Consumer Spending Shift to Foodservice

The long-term trend towards increased consumer spending away from home ended in 1996, when the share of the food dollar spent in restaurants fell to 29.5% (the same level as in 1986), down from nearly 32% in 1992. Several possible reasons for this decrease have been proposed, including: the lingering effects of the 1990-91 recession; continued high unemployment and low wage settlements that put pressure on consumer incomes; and increased competition for the food dollar from retail grocery stores beginning to feature more "home meal replacements" and prepared foods to compete with foodservice. During the 90's, however, increased hospitality spending bouyed foodservice sales. It is expected, however, that with real growth in spending power during the late 1990s, consumer spending away from home has returned to near pre-recession levels. When consumers do eat out, they are more likely to do so in tableservice or fast-food establishments, rather than in cafeterias, and at the evening meal.

Date Modified: 2004-09-10		Important Notices
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