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CANADA

Overseas Market Introduction Service

Sea Fish Industry Authority

Produced by: Valerie Strand, Toronto

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CONTENTS

Page I. Executive Summary 3

The Enquiry

Methodology Summary

II. Market Research 4

III. Follow Up Action 24

IV. Contributors 24

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I. EXECUTIVE SUMMARY

The Enquiry

Seafish commissioned UKTI Canada to update an existing report on the Canadian Seafood industry. A copy of the 2006 report was provided and

this formed the guideline for the current research.

Methodology

UK Trade & Investment have prepared this report using information obtained on a selective basis from the following sources:

Fisheries and Oceans, Canada Canadian Restaurant and Foodservice Association

‘Canadian Grocer’ Magazine Statistics, Canada1

Agriculture and AgriFood, Canada And other non-specific commercial and customised databases.

For ease of reference this OMIS report is presented using the Index and Table of Content numbers used in the original report. The statistical

charts and tables are presented in Word and Excel formats. We have included footnotes to indicate the information source.

Summary

Section 2 Doing Business Profile: much of the original information was still relevant and has been repeated with minor updates and adjustments.

We were unable to find updated statistics to revise Table 8, Table 9, and Chart 2 and have therefore eliminated these tables.

NB The statistics shown in this report are drawn from various government

sources, at the time UKTI assembled this report the figures were accurate. However, as the authorities constantly review and update their data, so the statistics are modified. There may be variances between

figures shown here and data provided latterly. This report was researched and assembled during the months of November, December, 2012 and

January 2013.

1 Statistics used in this report that originate with Statistics Canada, Fisheries and Oceans, Canada and

other government departments are considered Preliminary. Final figures are usually verified 2-3 years

after Preliminary numbers are issued. There may be variables, but the degree of change is usually

minimal.

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II. MARKET RESEARCH

We used the existing Table of Content and Section Numbers, from the

original report, as the basis for the order in which we have presented the updated information, as follows:

Table of content:

1. Matching Profile 1.1 The Trade Environment

1.2 The Seafood Sector 1.3 Consumer Trends 1.4 UK Share and Export Opportunities

2 Doing Business Profile

2.1 The Supply Structure 2.2 The Retail Channel 2.3 The Foodservice Channel

2.4 Key Regulations and Tariffs 2.5 Tips and Useful Lines

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TABLE OF CONTENT

SECTION 1 MATCHING PROFILE

1.1 THE TRADE ENVIRONMENT Fast Facts2

Population: (2012) 34,880 (2012)

Land Area: 9,093,507 sq km Inhabitants per sq km: (2010) 3.75 Capital: Ottawa

Main Cities3 Toronto, Montreal, Vancouver, Calgary Languages: Bilingual Country: English and French

(59.1% English, 22.9% French, 18% Other) Religion: RC 43%, Protestant 29%, No Religion

16%, Other Christian 2.6%, Muslim 2%, Other 8%

Currency: Canadian Dollar Exchange Rate: (2013) C$/£ = 1.589

Total GDP: (2011) C$1.74 trillion Real GDP growth rate (2011) 2.5% 2 Statistics Canada, World Bank, Bank of Canada

3 Based on population, in millions: Toronto 5.8, Montreal 3.9, Vancouver 2.4, Calgary 1.2, Ottawa 1.2

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GDP per capita: (2011) C$40,500 Inflation: (Nov 2012) 0.80%

Unemployment: (Jan 2013) 7.1% International Status: G-7, G-20, APEC, OSCE, OAS, NATO,

NAFTA and British Commonwealth of Nations Government Type4: Constitutional Monarchy and Federal State

Top 3 export countries (2011) USA 73.7%, UK 4.2% and China 3.75% Top 3 import countries (2011) USA 49.52%, China 10.8%, Mexico 5.5%.

UK 2.32% (ranked 6th) Canada is the world’s 2nd largest country by land mass, with a

relatively small population just shy of 35 million. It is the 10th largest economy in the world and considered one of the wealthiest nations.

Canada’s competitive advantage no longer lies in its manufactured goods, but in natural resources (oil, gas, and minerals) and the financial sector.

A combination of the European debt crisis and cuts to government spending at the federal and provincial levels will slow economic growth

in Canada to 1% in 2012 from 2.4% in 2011. Canada, however, will remain among the fastest-growing economies of the G-7 nations.

The country’s current economy is linked very closely with that of the USA, and will remain so, as original partners in the North American Free Trade Agreement (NAFTA). Both countries are each other’s no. 1

trading partner and party to the largest trading relationship globally. On average over C$1.7 billion of goods cross the Canada/US border on

a daily basis. However, despite the two countries close political, economic and military ties the recent downturn in the American economy, a dip in the automotive, machinery and equipment sectors

has forced Canada to expand it’s horizons and develop new and revive old trade agreements with established economies (EU) and emerging

markets like Brazil and China. Canada and the EU will sign a new trade agreement in 2013.

Economists have recorded a decline in the US/Canada partnership over

the last 10 years and they predict this will be a continuing trend for some time.

Canada’s links with the UK remain strong both culturally and economically, but are not as relevant or visible as 30-40 years ago. The Queen remains as the Head of State, but the country does not look

to the UK as it once did for guidance and economic advice. Exports are pegged at 4.2% currently, but there should be opportunities to

improve two way trade once the new Canada-EU Trade agreement is signed this year.

4 Federal Parliamentary Government. The Crown (British) is the foundation on which judicial,

legislation and executive branches are based. The second tier of government is made up of

independent provincial (10) and territorial (3) legislatures.

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1.2 THE SEAFOOD SECTOR

Production and Aquaculture

Canada’s total commercial catch for all fish and shellfish species was 850,533 (metric tonnes) in 20115, down from 951,529 in 2010. The decline is mainly attributed to a drop in landings of Marine Plants

(43,431 in 2010 to 14,881 2011). There were further declines with Herring (159,411 to 142,052), Salmon 23,568 to 20,670) and Shrimp

(164,784 to 151,262). Crab and Lobster remained relatively even and an increase was seen in Cod (14,909 to 19,276) and Hake (56,739 to 58,655).

Canada exports an estimated 85% (by value) of its fish/seafood production, worth about C$3.9 billion and imports on average C$2.2

billion per annum, a figure that has held steady over the past 5 years. In 2010 out of a total of 951,529 (metric tonnes) of commercial

landings: Shellfish was the most valuable, estimated at C$1.17 billion,

Pelagic Fish was estimated at C$108 million, Anadromous Fish (wild salmon and alewife) was over C$71 million, and Freshwater Fish was

estimated at C$60 million. Aquaculture, in Canada, in 2009, represented 33% of total marine

value, approximately 155,000 (metric tonnes). This was estimated also output value of C$801 million6. Canada ranks 23rd globally amongst aquaculture producers but contributes less than 0.3% of total

global output. Canada is, however, the world’s 4th largest producer of farmed salmon. In market this accounts for 75% of total production

volume. Mussels represent 14%, Oysters 5% and other finfish and shellfish 3%. In 2009 Canada exported 69% of it’s home grown fish/seafood most of which (97%) went to the USA.

Table 1: Fish and Shellfish commercial catch (includes aquaculture)7

---------------------------------------------------------------------------------- Landings in metric tonnes, live weight

Species 2008 2009 2010 2011

Groundfish 226,060 203,865 191,162 178,591 Pelagic and other Fish 243,440 286,213 274,527 230,170 Shellfish 447,297 423,955 439,670 423,846

Sub-Total 916,797 914,033 905,359 832,606 Other8 201,314 46,199 46,170 17,927

Total 937,112 960,231 951,529 850,533

5 Statistics Canada

6 Fisheries and Oceans, Canada (latest confirmed statistics)

7 Fisheries and Oceans, Canada

8 Marine Plants, Roe and Miscellaneous

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Table 2: Commercial Landings (metric tonnes, live weight)9

---------------------------------------------------------------------------------- Rank 2012 (tonnes) Species

1. 151,262 Shrimp 2. 142,052 Herring

3. 84,139 Crab, Queen 4. 66,500 Lobster

5. 59,876 Haddock 6. 56,739 Hake 7. 32,448 Capelin

8. 31,839 Redfish spp. 9. 28,598 Clams/Quahaugs

10. 20,670 Salmon 11. 18,344 Flatfishes 12. 15,201 Scallops

1.3 CONSUMER TRENDS

Canadian consumption of fresh and frozen fish/seafood in 2010 was estimated at 7.32kg per person. A slight increase over the 6.5kg recorded in the 2006 report.

Canadians eat about 100 grams of fish a week, and on average 5 servings of fish over a 1 month period.

Table 3: Canadian per capital consumption of Fish/Seafood10

------------------------------------------------------------------------------ Year Total: All Sea Fish Sea Fish Shellfish Freshwater Products (Fresh/Frozen) (Processed) Fish

2009 7.18 2.83 2.43 1.50 0.51 2010 7.32 2.96 2.38 1.56 0.42

General Consumer Trends

Canadians started and continue on their awareness journey developing interest and influencing suppliers on what they wish to consume. They are influenced by choice that the ever changing immigration patterns

bring into their local stores and restaurants. They are savvy about ingredients and read labels, they want more ‘free from’ or ‘less than’,

sustainability, less waste, assurances of safe processing/ handling and a say in contributing towards a healthy lifestyle.

9 Fisheries and Oceans, Canada

10 Fisheries and Oceans, Canada (latest statistics available)

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Aging Society

The number of Canadians aged 65 and older increased more than 14% between 2006 and 2011 and is now close to 5 million. There are more

people in the age group (9.6 million) where people typically leave the labour force (55-64) than in the group (9.1 million) where people typically enter it (15-24)11. Canada has one of the youngest populations amongst

the G8 countries but is similar to most developed countries in as much as there is enormous growth in the proportion of elderly consumers. This

major factor has and will continue to have an impact on the food industry as this group 1) eats less but 2) spends more of their higher disposable income on better quality/premium purchases that have a perceived

‘healthier’ offering. Both premium and ‘health’ can command higher price points, which may offset the ‘eat less’ factor.

Influences of ethnic diversity Immigration is a constant factor in the make up of Canada’s ever

increasing population, changing the multicultural nature of the whole society. The spin off, in the food/beverage industry, is the interest in

‘ethnic’ foods both in retail and foodservice. Consumers want choice and they want what is familiar to their culture and background; this is

challenging for restaurants and particularly grocery stores. They need their supply chains to be a reliable source of ‘ethnic’ foods and/or ingredients, to enable them to keep up with demand. Also Canadians are

a well travelled society, experiencing first hand tastes and flavours overseas. They are influenced also by international broadcasts (Food

Television) that offers insights into ‘exotic’ lands and the food cultures therein. Back at home they want all of these options at their local store and in their favourite restaurant. Slowly but surely the grocers are

picking up on this demand and are trying to keep abreast of their customers wish lists. It is a constantly changing menu for both domestic

and overseas suppliers, but one that is only going to expand. The industry is looking at Eastern European foods (Euro Chic) to gain popularity, revisiting the Scandinavian smorgasbord, Thai and Malaysian

flavours along with ‘fusion’ of Asian ingredients and flavours with existing ‘ethnic’ offerings.

Naturally healthier is a hit John Scott, President and CEO of Canadian Federation of Independent

Grocers (CFIG), was quoted in an article last September as saying “consumers are demonstrating a far greater interest and knowledge in the

correlation between food and health...they often know more about the ingredients in a product than the grocery store staff. The level of consumer awareness extends beyond ingredients or the contents of a

particular product to encompassing inquiries relating to where items have been sourced and they want to know who is behind the food, where did it

come from, who makes it”. Most supermarkets and grocery stores of any 11

Globe and Mail Newspaper

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significance will have sections that offer anaphylactic products, gluten free, vegetarian and vegan offerings that meet the demands of those with

special dietary needs. This is a major development, as just 5-6 years ago these products were limited in supply and only available in speciality or

health food stores. More and more the major food processors offer alternative lines that address the need for ingredients that offer ‘free from’ low/no sodium, zero trans-facts, no/low sugars or substitutes, high fibre,

fortified items and no artificial flavours and colours. Another trend is towards shopping and eating ‘local’, embracing and promoting local

farmers/ growers as their products appear on restaurant menus and in boutique grocery outlets.

The Canadian Food Guide currently recommends eating two servings of fish a week (150 grams of cooked fish), it further suggests choosing fish

with long chain omega-3 fats, such as char, herring, mackerel, salmon, sardines and trout. The Guide links eating fish and seafood with improved heart health as well as a good source of protein, B-vitamins and minerals.

More could be done by the government and health authorities to expound on the benefits of eating fish/seafood.

Lifestyle changes influence rise in convenience foods

Major social shifts and changes in lifestyle over the past few years result in the increasing pressure on personal time, stemming mostly from families with both adults working. This consumer group as well as single-

person households, are unwilling to spend leisure time cooking, are often looking for a quick meal or meal ‘surrogate’ thereby boosting convenience

foods that offer portability, reduce time spent on meal preparation and are easy to deal with. It is very common to ‘grab and go’ purchasing snack foods and beverages white on the road (back and forth to work or

recreational activities). The most popular source is the ‘coffee shop’ that provides hot beverages, snack foods, mainly sweet doughnuts /cakes and

made to order sandwiches, wraps, salads, soups, yoghurts etc. As most people have access to motor vehicles the coffee shop will have a drive through window to process customer’s orders faster.

The above noted demand for convenience foods is changing in as much as

the consumer while still demanding convenience is now looking for healthier varieties and improved nutritional content.

Search for ‘attainable luxury’ and health defines purchasing patterns

Canada on the whole has an affluent educated population that has enough disposable income to spend on ‘small’ luxury food and beverage items like single malts and brandy, hand made breads/cakes, confectionery, olive

oils and farm raised meats and poultry, without feeling ‘guilty’ or at the expense of paying the bills. This correlates to the aforementioned elderly

portion of the population who fall headlong into this category of spending less but spending more on perceived items of quality and indulgence.

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Do-it-yourself doctoring.

Canadians do care about the food they eat and they want to be assured it is safe and comes from reliable sources. The 2012 outbreaks of E-coli and

the largest Canadian recall ever of meat products in 2008 for listeriosis, resulting in 23 deaths, has contributed to the consumer being a smarter more aware shopper. It is estimated that 7 in 10 meals are eaten at

home, featuring more ‘home grown and locally sourced’ vegetables and salad items, and served in smaller portions. Consumers still want

‘enriched’ or ‘added’ in their products but are less likely to be swayed by ‘low calorie’ or ‘low fat’; stale terms that manufacturers overused and were not always completely clear as to their benefit. Given the demand

for vegetarian foods by different ‘ethnic’ groups there is a ready supply in all stores. Organic branding is on the increase and encompasses most

grocery categories. Farm-friendly and fair trade

Nose to Tail eating is growing in popularity as is ‘local’ sourcing which can mean close to home, or from within Canada. [Given Canada’s extreme

climate, it is very reliant on seasonal imports of fresh produce from the USA, Mexico and South America]. A return to ‘heirloom’ vegetables and

fruits, reintroduced from older varieties, are very visible at markets and in some grocery stores. Consumers want less food waste in restaurants and are happier with smaller portions. They want to feel good about buying

sustainable products from socially responsible sources.

Sources: Various magazine and internet site articles, government data and statistics.

1.4 UK SHARE AND EXPORT OPPORTUNITIES

Canadian Import/Export

The USA is the main supplier of fish/seafood into Canada with a 83.74% share in 2011. A far second and third suppliers were,

Argentina with 1.68% and Honduras with 1.14%. The total imports were valued at C$435.1 million, with the USA value equalling C$356.6 million, Argentina with C$7.1 million and Honduras with C$4.8 million.

Broken down by species, the top four were Cod valued at $53.3 million, (11.5 kg) Halibut at C$82.9 million (4.8 kg), Flatfish at C$28.4

million (5.3 kg) and Haddock at C$28.8 million (6.1 kg). The UK was ranked 27th with a 0.19% share equalling C$81,000.

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Table 4: Canada Imports of Fish/Seafood, by Country, by Value, (000’s)12

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Country Imports % Share % Change 2009 2010 2011 2009 2010 2011 2010/2011

1. USA 284.3 343.6 356.6 82.32 84.70 83.74 - 0.03

2. Argentina 3.3 .6 7.1 0.96 0.16 1.68 +10.83

3. Honduras .7 2.3 4.8 0.22 0.58 1.14 + 1.08

4. China 4.3 4.2 4.1 1.25 1.06 0.98 - 0.02

5. Mexico 3.6 4.3 4.0 1.06 1.07 0.95 - 0.06

6. Philippines 4.4 2.6 3.9 1.28 0.66 0.92 + 0.50

7. Korea, South 2.5 5.1 3.5 0.75 1.27 0.82 - 0.31

8. Trinidad/Tobago 3.0 3.7 3.2 0.89 0.93 0.77 - 0.13

9. Greece 2.9 2.3 2.9 0.84 0.57 0.69 + 0.26

10. Japan 3.9 3.2 2.4 1.15 0.79 0.67 - 0.25

11. US Minor Islands 4.3 3.3 2.4 1.25 0.83 0.59 - 0.27

12. India 2.7 2.9 2.3 0.80 0.73 0.55 - 0.20

13. Sri Lanka .9 1.6 2.2 0.28 0.41 0.54 + 0.37

14. Chile 3.9 2.5 1.9 1.14 0.62 0.45 - 0.24

15. Re-Imports (Cda) 1.3 1.4 1.7 0.40 0.35 0.42 + 0.21

TOTAL 355.5 413.2 435.1

Chart 1: Canada Imports of Fish and Seafood, by Country, (% share)13

12

Statistics Canada 13

Statistics Canada

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Table 5: Canada Total Fish/Seafood Exports by Country (metric tonnes) 14 -----------------------------------------------------------------------------------------

Country 2009 2010 2011

1. USA 319,3 343,0 313,2

2. China 51,6 56,6 61,5 3. Russian Federation 29,1 35,9 39,5 4. Japan 31,3 40,6 30,5

5. Ukraine 17,2 17,3 14,9 6. Denmark 15,1 15,8 14,0

7. Korea, South 8,1 10,5 12,6 8. UK 13,8 12,6 11,5

9. Iceland 7,8 11,1 10,0 10. Dominican Republic 7,1 8,8 8,9 11. Taiwan 7,8 8,8 8,3

12. Hong Kong 9,0 10,3 8,0

TOTAL 602,7 656,1 609,1 Table 6: Canada Total Fish/Seafood Imports by Country (metric tonnes)15

------------------------------------------------------------------------------ Country 2009 2010 2011

1. USA 182,3 180,3 192,8 2. China 61,6 67,1 71,9

3. Thailand 64,4 64,9 68,0 4. Peru 30,0 37,7 35,2 5. Chile 23,8 27,6 27,6

6. Viet Nam 19,8 20,3 22,3 7. Mexico 18,4 16,9 4,5

8. Taiwan 8,1 10,4 4,6 9. Norway 6,7 7,2 9,1 10 India 6,5 6,0 7,2

11. Other 36,5 35,7 72,4

TOTAL 488,4 503,9 522,6

The total Canadian imports of fish/seafood during 2011 were 522.6 billion metric tonnes, up 0.03% from the 503.9 metric tonnes imported

during 2010. Canadian imports of US fish/seafood in 2011 rose by a small 0.06% from the previous year. Canadian imports from China and Thailand both rose 0.07% and 0.04% respectively.

14

Statistics Canada 15

Statistics Canada

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China has maintained its 2nd ranking after the USA for 3 years in a row supplying Canada with fish fillets, fishmeat, crustaceans and frozen

fish. Its market share (metric tonnes) has increased 0.16% between 2009-2011.

Fish/Seafood is Canada’s second largest single food export commodity, with lobster, Atlantic salmon, snow/queen crab, shrimp and herring being the most valuable species. Approximately two-thirds of Canada

exports are destined annually for the USA, which continues to out pace all other export destinations. However, the slight decrease of 0.08% in

2011, over 2010 figures, appears to come as exports into China, Russia and South Korea show slight increases.

The UK is ranked 8th (metric tonnes) as a recipient of Canadian

fish/seafood, with frozen shrimp/prawns, frozen/dried scallops, salmon, frozen lobster and fish fillets being the main species of export.

SECTION 2 DOING BUSINESS PROFILE

2.1 THE SUPPLY STRUCTURE The import model is the most common system of selling imported and

speciality food in Canada.

MANUFACTURER

Brand ownership, product development, product manufacturing,

FOB Delivery.

In value terms, frozen salmon (sockeye) and scallops are the leading

categories of US seafood, exported to Canada; the USA being the largest supplier to this country. During the past 3 years significant increases were noted for both of these categories, increasing by 56%

and 52% respectively. Frozen Halibut is ranked third with a 18% increase.

MANUFACTURER

Brand ownership, product development, product manufacturing,

FOB delivery

IMPORTER/DISTRIBUTOR Offers goods from Manufacturer, co-manages logistics, clears

customs, imports, takes title to goods, warehouses, distributes, offers category management, in-store merchandising, acts as

sales force.

RETAILER

Offers product to customers, provides feedback to broker,

distributor and importer

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Table 7: Leading US fish/seafood exports to Canada, by value in C$ (000’s)16

------------------------------------------------------------------------------

Commodity Code

2009 2010 2011

0306 Crustaceans live, fresh etc, cooked etc

HS030622 Lobster, not frozen 129,613 185,608 208,220

HS030614 Crabs, frozen 14,835 16,083 27,081

HS030624 Crabs, not frozen 28,509 35,210 48,776

HS030613 Shrimps and Prawns, frozen 6,379 5,005 4,956

Other in HS0306 182,818 250,902 299,403

0302 Fish, fresh or chilled

HS030212 Salmon, fresh or chilled, excl. Fillets 58,587 85,789 50,917

HS030221 Halibut, fresh or chilled, excl. Fillets 48,755 53,484 34,651

HS030269 Fish NES 32,660 28,903 32,260

Other in HS0302 156,052 184,192 134,519

1604 Prepared or preserved fish, caviar

HS160411 Salmon, prepared or preserved, not minced 95,435 79,019 86,196

HS160420 Fish, prepared or preserved 30,777 29,828 30,919

Other in HS1604 657,057 861,773 327,711

0307 Molluscs and aquatic invertebrates

HS030719 Oysters, Other 0 0 0 HS030721 Scallops, live, fresh or chilled 24,323,031 23,424,412 35,693,423

HS030729 Scallops, frozen, salted 8,410,887 9,043,156 9,777,030

Other in HS0307 71,729 69,829 79,507

0303 Fish, frozen not fillets

HS030331 Halibut, frozen, excl. Fish fillets 18,107,601 20,208,470 23,849,755

HS030360 Cod, frozen, excl. Fish fillets 0 0 0

HS030319 Salmonidae, frozen, excl. Fish fillets 8,913,903 9,432,211 12,611,469

HS030311 Salmonidae, Sockeye (red) frozen, excl. Fish fillets

19,236,652 11,748,704 18,378,515

Other in HS0303 74,826 67,871 84,893

0304 Fish fillets and other fish meat

NB The codes in this category have been deleted and/or split into other codes.

TOTAL 80,580,106 74,948,676 101,432,490

16

National Trade Data, Canada

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2.2 THE RETAIL CHANNEL.

Store formats

Supermarkets, smaller grocery stores and independent speciality food stores account for the majority of food sales, yet a growing share of the food market is shifting to ‘non-traditional’ retailers such as

convenience stores, gas station stores, club and warehouse stores, drug stores and mass merchandisers.

Figure 1: The retail channels in Canada (estimated figures)

Although supermarket chains and smaller grocers compete with each other in the retail market, there is an upstream link between the two channels. Every major food retailing chain in Canada also has

operations in food wholesaling to supply their franchise network and corporate stores, and the customers of these wholesale operations will

include small independent grocers and small local chains, as well as the company’s franchise stores.

GROCERY SALES

C$87 BILLION (2011)

SUPERMARKETS INDEPENDENTS

CONVENIENCE STORES

C$67 BILLION (77%)

LOBLAWS C$31.5 BILLION (36%)

SOBEYS

C$16.3 BILLION (18.6%)

COUCHE-TARDE C$1.2 BILLION (1.3%)

METRO C$11.4 BILLION (13.1%)

MASS MERCHANDISERS WAREHOUSE CLUBS SPECIALITY STORES

C$20 BILLION (23%)

COSTCO C$7 BILLION (8%)

WALMART C$5.2 BILLION (5.9%)

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Trends in store development include the expansion of the ‘healthy’ aisles or sections to include more natural, vegetarian and organic lines.

Improved signage in fresh produce to indicate countries of origin and again organic selections. Expansion and positioning (close to the door)

of in-store ‘grab and go’ snack and food offerings (meal in a box idea). Larger or superstores expanding to include gas bars, laundry services, florist boutiques and soon in-store liquor store concessions (in Ontario

in 2013). Large stores continue to improve their flow of information via the internet, linking customers to daily specials via Smart phone,

in-store kiosks or shelf and shopping cart electronic ‘talkers’. Loyalty scheme continue to expand as stores link with major credit cards (VISA, MC). There continues to be a fixation with paper flyers, in the

grocery business, with everyone producing a weekly handbill to promote their in-store specials.

Traditional food retailers face constant bombardment from competition

from alternative channels such as ‘non-traditional retail outlets

(hardware stores), warehouse outlets and shopping clubs (Costco). An increasing competitive market has created an environment of low price

growth and is reflected in the decline in real value of sales through food retailing. Strategic responses include:

o Selective price discounting (loss leaders) to increase traffic. o Development of private label products to improve margins and

widen customer loyalty. o Addition of bulk products and ‘dollar store’ aisles to compete with

larger format of alternative (stand alone Dollar Shops) in price and selection.

o New store departments such as photo kiosks, ‘grab and go foods’,

cash counting machines (for store vouchers), laundry services. o Specialised food departments, offering non pre-packed items, such

as deli’s, bakeries, fresh meat and seafood where the customer is served individually.

o Technological innovation used to lower costs, improve operating

efficiency and eliminate stock-outs and the implementation of ECR (efficient consumer response).

There are two major national grocery store chains in Canada: Loblaws

and Sobeys. However, Walmart’s expansion and the soon to arrive US

based chain Target may pose something of a threat. Walmart plan to open a further 39 stores in the near future and Target will enter the

market with 125 stores in 2013. Compared t other USA the Canadian market is simpler to operate in

as: o Handful of major national grocery chains plus manageable number

of regional retailers.

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o Over 21,000 food stores divided between the various store formats (large conventional supermarkets and convenience stores,

independent chains). o The 80/20 rule still applies with most business being done in higher

populated cities. o Geographic spread is made less complex with three basic regions of

the country (West, Central and East)

o Centralized buying for the most part, with larger chains buying direct to their own distribution centres from an importer-distributor.

o Route into market is more direct (retailer’s distribution centre or direct store delivery from importer-distributor).

A strong fresh food offer tends to feature in all of the leading chains in the market and will continue to be a key battleground going forward

especially in natural and organic ranges. Speculation continues regarding buyout out of Safeway from existing

store chains Loblaw’s and Sobeys as well as possible buy-in to the market by an American chain. Tesco are reportedly leaving their

operations in the USA but to date there are no ‘whispers’ regarding any interest in Canada. Other major UK retailers have shown limited

interest in the Canadian market, but to date there are no new banners on the High Street.

Loblaws www.loblaws.ca

Market share 36%

Loblaws are Canada’s largest food distributor and operator of a variety of grocery stores including Loblaws, Loblaws Superstores, No-Frills,

Provigo, Fortinos, Zehrs Your Independent Grocer and Atlantic Superstore: 291 franchised and 155 corporate

The Loblaws Company is recognized for introducing private label into

the market. The company pioneered the generic packaging that first brought bargain ‘No Name’ products to the shelves and at the same

time it developed a premium brand for its own stores under the ‘President’s Choice’ label. The PC brand has reached such high levels of consumer recognition, confident and preference that it has in itself

become a national brand albeit one that has exclusive distribution. Loblaws continue to expand their PC offering by introducing a range of

Blue Menu branded products that encompass a healthier offering. In September 2012 they introduced ‘Oceans for Tomorrow’ an in-store event aimed at educating and engaging customers about the

importance of choosing sustainable seafood and enforcing the company’s commitment to keeping oceans healthy.

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Sobey’s www.sobey.com

Market share 18.6%

Sobey’s ‘home province’ is Nova Scotia in Eastern Canada where they

continue to be the dominant grocer in the Maritimes. In the 1980’s the

company expanded into southern Ontario challenging Loblaws and Dominion (as Metro was known then) on their own ‘home turf’.

In 1998 Sobeys became the second largest grocery in the country after purchasing the Oshawa Group, (formerly the owners of the IGA franchise outlets), across Canada along with several regional chains in

Ontario. In 2007 the company announced a C$260 million takeover for the Thrifty Foods chain in British Columbia, giving more depth to their

Canada-wide coverage. Though Sobeys remain the second largest grocery chain it is the third

place chain in most of the provinces outside of the Maritimes. Their

banners include: Sobey’s, IGA, Price Chopper, Thrifty Foods. They have approximately 1,337 stores, some corporate and some franchise.

Sobey’s are well aware their customers want to know the origins of their fish products and are participating in the ‘Thisfish’

(www.thisfish.info) programme since early 2011 as it fitted into their sustainability seafood policy, a project the company has been developing for more than 4 years.

Alimentation Couche-Tard Inc

www.couche-tard.com

Market Share 1.3%

A successful Convenience store operator with 1,993 stores in Canada,

3,802 in the USA and 3,704 based internationally. Their banners include Mac’s Convenience Stores and Circle K.

Metro Inc. www.metro.ca

Market share 13.1%

Metro Inc of Montreal acquired A&P’s stores (Dominion and Food Basics) in Canada in 2005 for C$4.6 billion, renaming the Dominion

stores ‘Metro’, in line with their existing stores in Quebec. This acquisition has given them a significant footprint in Ontario and Quebec, with just under 600 stores. They operate a full range of store

formats under various banners, with 2-3 significant Private Label brands: Selection and Irresistibles. They are the 5th largest chain in

Canada.

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Walmart Canada

www.walmart.ca

Market Share 5.9% Wal-Mart Canada was established in 1994 in Mississauga, Ontario with

the purchase of the former Woolco and Woolworth stores. The company competes (in non-food) with Canadian Tire, Giant Tiger and

Costco and no doubt will double their efforts when US based Target arrive in Canada in 2013. They have rolled out grocery stores within some of their larger format stores, mirroring discounted prices equal to

those of the discount grocery banners. Walmart have had some push back from Canadians in the past few

years who claim they have lower labour standards than other retailers and their discounted prices drive away ‘local’ business from the High Street.

The company operates approximately 328 Walmart stores and 146 Supercentres Canada-wide. In 2011 they announced the acquisition of

39 Zellers locations as part of their expansion plan. (Other Zellers locations were sold to Target).

In 2009 Walmart Canada announced the closure of all 6 of its Sam’s Club locations. In future they would focus on their Superstore expansion.

Costco Canada

www.costco.ca Market share 8%

Costco is the No. 1 warehouse club operator in Canada (outnumbering

Sam’s Club of Walmart ownership). Customers must be members to shop at a Costco store, but membership also gives them access to on-line shopping also. The company operate Canada-wide with 82 stores.

Their HQ is in Ottawa (the capital city) but their buying policy rests with their Canadian regional offices.

Distribution channels

Supermarkets/hypermarkets are the dominant channels for all categories of seafood, whether canned, chilled or frozen.

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2.3 THE FOODSERVICE CHANNEL17

The foodservice industry was worth more than C$63 billion in sales in

2011, and was projected to expand by 3.2% in 2012, accounting for just over two thirds of total retail sales.

Canada's restaurant industry generated approximately $63 billion in

annual sales, which equals almost 4% of Canada's economic activity. With its 1.1 million employees it makes it Canada’s 4th largest employer. Commercial (quick serve and full serve restaurants,

caterers and bars/pubs) accounted for approximate C$52 million and Non-Commercial (accommodation, institutional, retail foodservice)

accounted for C$13 million. Non-commercial foodservice is forecast to outpace commercial foodservice in 2012, due to sales recovery in accommodation foodservice and growth by institutions. By the end of

2011 the average foodservice operator saw a 3.7% increase in food costs, compared to 2010. However as global food prices are currently

high, based on historical statistics, this will impact for foodservice operators in the coming year(s) as higher food prices will have a negative effect to the tune of 82% (table-service restaurants) and 67%

(quick-service restaurants.

Health conscious consumers continue to drive menu changes with consumption slowly shifting towards ‘healthy’ categories. Although burgers, chicken and fries still feature high on the list of menu

selections, foodservice outlets are expanding their choices to include a wider selection of alternatives. Seafood/fish currently rank 5th,

representing a 6.4% of meals/snacks orders, behind the aforementioned selections and right behind salads.

According to Canadian Restaurant and Foodservice Association

‘customers want it all’: sustainability and quality, when it comes to fresh fish and seafood. There is a desire to see sustainable fishing practices expand and improve but they don’t want to give up quality

totally for healthier oceans alone. The Association’s Restaurant Outlook Report includes a Seafood/Fish segment and it cites: Locally

caught seafood/fish, Sustainable seafood, non-traditional fish, fresh local oysters, spot prawns (in that order, as the top ‘wants’ in restaurants.

The US National Restaurant Association correlates these views and

adds that non-traditional fish like bronzini, barramundi, arctic char are

17

Canadian Restaurant and Foodservice Association, unless otherwise attributed.

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among the hottest menu items; a change from some of the more traditional fayre and a break for some overfished species.

Locally harvested seafood: Fresh oysters, mussels, clams, salmon

sablefish, halibut, spot prawns and locally caught seafood will be front and centre on many plates as diners insist on the freshest possible regional ingredients.

2.4 KEY REGULATIONS AND TARIFFS

Labelling/Packaging regulations

All foods packaged for consumer use and imported into Canada must comply with basic food labelling requirements specified by the Food and Drugs Act and Regulations and the Consumer Packaging and

Labelling Act and Regulations. Labelling requirements include:

o The common name of the food o A list of ingredients and components

o The name, address or website of the responsible party o A net quantity declaration in metric and a best before date when

required.

o Nutritional labelling. o All mandatory information on food labels must be in both official

languages – French and English.

The Guide to Food Labelling and Advertising is a comprehensive

reference document providing current federal food labelling and advertising policies and regulatory requirements. The Guide is

available on the Canadian Food Inspection Agency website: http://www.inspection.gc.ca/english/fssa/labeti/guide/toce.shtml

Import regulations to Canada All foods sold in Canada are subject to the Food and Drugs Act and

Regulations that contain health and safety requirements, labelling requirements and provisions preventing deception and fraud.

However, many agricultural and fishery products are also subject to other legislation. Consequently, the need for licensing permits and certificates varies depending upon the type of food being imported

and, in some cases, on the country or area from which the food is imported.

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In certain circumstances the importer is required to be licensed with the Canadian Food Inspection Agency. This applies, for example, to

importers of seafood products. In other cases, each shipment of a specific commodity must be accompanies by an official certificate from

the authorities of the exporting country and/or an approval or permit from the appropriate Canadian federal department. For some products, such as dairy items, the importer is required to provide an

Import Declaration to the effect that the product is sound and fit for human consumption.

Canada has one of the world’s most respected seafood inspection and

control system. The Canadian Food Inspection Agency (CFIA)

(www.inspection.gc.ca) sets the policies requirements and inspection standards for fishery products, federally registered seafood processing

establishments, importers, fishing vessels and equipment used for handling, transporting and storing seafood. Establishments that process seafood for export or inter-provincial trade must be federally

registered and must develop and implement as HACCP-based Quality Management Programme (QMP).

Fisheries and Oceans Canada (www.dfo-mpo.gc.ca) is the federal

government department that regulates and manages the Canadian fishery. This Ministry works to secure the future of Canada’s wild fisheries by initiating conservative management practices that focus on

sustainable development and responsible fishing.

Organic Certification in Canada In order to claim ‘organic’ on a product, the Organic Products

Regulations require mandatory certification to the revised National Organic Standard. The following web site provides more information:

http://laws-lois.justice.gc.ca/eng/SOR-2009-176/index.html

2.5 TIPS AND USEFUL LINKS

Short list of useful links:

Agri Food and Agriculture, Canada www.agr.gc.ca

Statistics, Canada www.statscan.ca

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Seafood Canada

www.seafoodcanada.gc.ca

Fisheries Council of Canada www.fisheriescouncil.org

Association of Seafood Producers www.seafoodproducers.org

The International Boston Seafood Show (largest relevant North American Show)

March 1-12,201 at Boston Convention and Exhibition Centre Boston, MA, USA

www.bostonseafood.com

For further information contact:

Valerie Strand, Trade Officer UK Trade & Investment

777 Bay Street, Suite 2800 Toronto ON M5G 2G2, Canada

E: Valerie.strand@fco.gov.uk W: ukti.gov.uk

CONTRIBUTORS

Listed below are the UKTI personnel that contributed to this report:- UK Trade & Investment/British Consulate General Toronto

777 Bay Street, Suite 2800 Toronto, Ontario

T: (001) 416 593 1290 Valerie Strand, Trade Officer

T: 416 593 1290 (9+2229) E: Valerie.strand@fco.gov.uk

Isabell French, Trade Associate T: 416 593 1290 (9 + 2258)

E: isabell.french@fco.gov.uk