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Welcome to the inaugural edition of OurView: Consumer Packaged Goods, where we will provide insight into the latest consumer trends, report on major industry news, and share a feel-good Canadian success story.

Consumer Trends

In its latest market insight, Neilsen Canada reveals that Canadians are going to the supermarket less often with -2% fewer visits in 2018. Nonetheless, their average total spending on CPG (Consumer Packaged Goods) increased by 3%, to $8,650 per household. If we break down the number by province, Quebecers led the nation in household spending at $9,191, which represented the second largest share of CPG dollar sales in the country at 23.8%. Overall, Quebec consumers had one of the lowest average basket sizes ($54); while Albertans had the highest ($66). However,  customers from Quebec made up the difference by going to shop more often with an average of 170 plus trips per year. Interestingly, the two provinces which saw their household spending below the national average were Ontario and British Columbia, at $8,236 and $8,404 respectively. As Canada’s most populated province, Ontario has nearly 40% of Canada’s population, yet the average basket size per trip spent by Ontarians was $56. In other words, with a right mix of promotions and other value-added campaigns to sway consumers’ habits, the potential for businesses to grow in the province is enormous.

Kraft Heinz Struggles to Adapt to Rapidly Changing Consumer Appetites

In major CPG (Consumer Packaged Goods) news, shares of Kraft Heinz Company (KHC-Nasdaq) reached an all-time low in the first quarter of 2019. The market value of KHC dropped 27.5 percent following the huge valuation write-off of  US$15.4 billion to its Kraft cheese, Oscar Mayer cold cuts, as well as their Canadian retail operations.

The company blamed a change to consumer tastes for such drastic brands deterioration; however, many others denounced the company use of zero-based budgeting (ZBB) as the root cause of their problems. Critics claimed that excessive and persistent cost-cutting came at the expense of Kraft Heinz’s ability to reinvest into the business. Only time will tell the outcome of this debate, meanwhile immediately following KHC earnings announcement, Warren Buffett lost US$4.3 billion on its stake in one single day.

A Feel-good Canadian Success Story

On a more positive note, one of Canada’s leading consumer packaged meats companies, Maple Leaf Foods Inc. (MFI-Toronto), continued its aggressive expansions with the acquisition of two poultry plants, along with its latest acquisition of VIAU Foods for CAD$215 million. MFI plans also to build a new 640,000sf fresh poultry facility equipped with state-of-the-art technologies in London, Ontario for $660 million. These moves aligned with the company’s goal of gaining greater market share into premium, antibiotic free and organic poultry products. Concurrently, Maple Leaf Foods Inc. is also increasing its reach into plant-based protein offering with the launch of Greenleaf Foods SPC, as well as Lightlife burger, a new pea protein burger that mimics the taste and texture of real meat to its existing offerings. Nowadays, there seems to be an insatiable appetite for vegetarian meat alternativesin the market place, and Maple Leaf Foods is  positioning itself to be the leader in this new market segment with an expected growth rate of 30%+.

Stewart Soh
Metro Supply Chain Group