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Agri-Food Trade Service
2007-08 Canadian Foodservice and Retail Grocery Trade Shows: 10 Key Trends
September 2008
The Government of Canada has prepared this report based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information. This report is intended to provide a concise overview of the events, as well as observations and insights on market conditions and trends reflected in the shows, and is not intended to provide in-depth analysis which may be required by an individual reader. Although every effort has been made to ensure that the information is correct, Agriculture and Agri-Food Canada assumes no responsibility for its accuracy, reliability, or for any decisions arising from the information contained herein.
Please address any comments or suggestions you have on this report to: Ben Berry - berryb@agr.gc.ca
Table of Contents
10 Key Trends at Canadian Trade Shows in 2007-08:
1. Functional Food
2. Better-For-You Food
3. Portion-Controlled Products
4. Green Tea
5. Ready-Made Meals Ready in 10 min. or Less
6. Dietetic Products
7. Organic and Natural Food
8. Ethnic Food
9. Artisan and Specialty Food
10. Premium, Bite-Sized Indulgence Food
Key Terms
Better-for-you food: Premium products that offer better-for-you aspects, such as having actively reduced fat, sugar or salt content, while maintaining taste and texture.
Functional food: Food that is primarily consumed for
its specific health benefits and nutrients (e.g. food fortified with
vitamins, herbs or nutraceuticals).
Natural food: Unprocessed or minimally processed food
that remains very close to its complete, original state.
Nutraceuticals: Any substance added to food to provide medicinal and/or health benefits.
Omega-3 Fatty Acids: Polyunsaturated acids that are found in certain fish, flax and hemp seeds, walnuts, and canola oil, which may provide health benefits.
Organic food: Foodstuff produced without chemical fertilizers, synthetic pesticides, hormones, irradiation, and genetic engineering.
Prebiotics: Food ingredients that feed beneficial bacteria, which are naturally found in the human digestive tract, and therefore contribute to improving one's health.
Probiotics: Supplements containing beneficial bacteria that are added to food to strengthen immunity and improve digestion.
Executive Summary
Trade shows offer a snapshot look at key trends impacting the food and beverage industry, both for new products available in the Canadian market and those set to emerge in the near future. Typically two- to three-day events, ranging from 80 to 700 exhibitors from Canada and around the world, Canadian trade shows highlight a wide range of new and innovative products. Over the past year, Agriculture and Agri-Food Canada (AAFC) representatives attended four trade events in three major Canadian cities to evaluate key trends affecting the national and international food and beverage market. From interviewing companies and gathering a wide variety of product information, AAFC has identified 10 key trends from 2007-08 Canadian trade events.
Trade shows included in this analysis are: the CRFA Show 2008 (formerly The Canadian/International Food & Beverage Show) in Toronto, Ont.; Grocery Showcase West in Vancouver, B.C.; SIAL Montréal 2008 in Montreal, Que.; and the Ethnic and Specialty Food Expo in Toronto.
The CRFA Show 2008, which took place March 2-4, 2008, attracted approximately 700 exhibitors and nearly 12,000 attendees. Products represented at the show were targeted primarily to the retail grocery industry, while the presence of frozen or prepared products for the foodservice sector was noticeably less than in previous years.
Grocery Showcase West took place April 27-28, 2008 and featured 209 exhibitors and saw an estimated 3,800 attendees. Products showcased at the event greatly reflected current consumer demand and trends in the North American retail grocery market with a large presence of better-for-you, healthy, green, convenient and nutraceutical-enhanced food and beverages.
SIAL Montréal took place March 28-30, 2007 and featured exhibitors targeting the retail grocery and foodservice industries. Roughly 520 companies exhibited at this event; 60% of which were Canadian. The show boasted a variety of food and beverages from over 28 countries, and attracted 12,460 visitors from 60 nations. Montreal represents the SIAL network in North America, while other SIAL trade shows are located in Paris, Shanghai, and Buenos Aires.
The Ethnic & Specialty Food Expo, Canada's focused event for ethnic, organic and specialty food and beverages, took place September 30 to October 1, 2007. The show featured approximately 82 exhibitors and 1,395 attendees, and provided Canadian industry with an excellent platform from which to showcase their new, high-quality and innovative products, as well as take note of key industry developments.
Each of the top 10 trends identified at these Canadian trade events revolve around demand for healthier food and beverage options, convenience products, exotic flavours, or premium specialty goods, reflecting major trends currently impacting the North American food and beverage industry.
10 Key Trends at Canadian Trade Shows in 2007-08
1. Functional Food
Perhaps the largest trend in the North American food and beverage industry is demand for functional food. Such foodstuff is widely popular in the Canadian marketplace and this trend was reflected directly at each trade show. In fact, demand for functional food has become so paramount that such products are now visible in virtually every product category, and has driven the segment mainstream. Such products include yogurt, frozen yogurt, juice, tea, ready-to-drink (RTD) tea, soy milk, bottled water, energy drinks, breakfast cereal, bread, eggs, condiments, chicken and pork products all enriched with nutraceuticals ranging from vitamins, fibre and calcium, to omega-3, probiotics and antioxidants.
As consumers increasingly become more health conscious, demand for products with added health benefits and nutrients is rising greatly. Large multinationals down to small manufacturers are responding by developing new functional food offerings to capitalize on the growing $6.6 billion Canadian market. Coca-Cola North America launched Diet Coke Plus in 2007, a carbonated soft drink with added vitamins and minerals, which demonstrates that the trend has had a far reach into almost all product categories. The functional food trend has become so popular that food and beverage manufacturers are responding with a plethora of marketing claims that typically promote already and/or naturally existing health attributes to capitalize on current sector trends. AAFC data reveal that Canadians annually spend over $2.7 billion on functional food or more than $212.32 per capita, highlighting that the sector remains a burgeoning industry estimated to reach $15 billion by 2010.
Superfruit
An increasing number of food and beverage products that contain superfruit (e.g. exotic varieties such as açai, gogi berries, mangosteen, noni, and pomegranates, as well as cranberries and blueberries) are appearing on store shelves. Manufacturers have introduced many of these foreign fruit to consumers through flavour extensions for yogurt, snack, vinaigrette, jam, tea and juice products. The blending of mainstream fruit flavours (e.g. strawberry, raspberry) with less familiar superfruit varieties in food products has also helped boost the popularity of these healthy fruit. Food and beverage products containing superfruit are seeing tremendous growth due to their high antioxidant content and nutritional benefits. Based on current demand, industry experts suggest superfruit pulp, extracts, juice and flavourings will continue to appear in a wider variety of products.
Antioxidants and Immune Support Products
With the current trend toward healthier living, consumers are increasingly seeking products that offer extra health benefits, such as immune support. A vast number of products now contain antioxidants, probiotics or prebiotics to strengthen immunity and improve overall health. Such products include juice, add-to-water flavouring crystals, yogurt, frozen yogurt, breakfast cereal, ready-made meals, bread and more - all of which were widespread at 2007-08 Canadian trade shows. The segment is expected to continue to grow as consumers look for more of the friendly bacteria and antioxidants in their food products, and as manufacturers market products to the rapidly-growing ageing baby boomer population in North America.
2. Better-For-You Food
Better-for-you food, the largest of four key trends currently driving the global health and wellness movement, generated US$44.8 billion in sales in the United States in 2006 (Euromonitor International, 2007). Fuelled by North American product and technology trends, as well as consumer obesity fears, a variety of products with healthier attributes have entered the American better-for-you food market targeting different consumer needs. Better-for-you choices include low- and/or no-calorie, -fat, -sugar and -salt; whole grain; and high-fibre and -calcium alternatives in response to consumer demand for lighter, diet options. All of these formulations have become particularly popular in staple food categories such as dairy, baked goods, oils, and fats, as well as in the convenience segment (e.g. frozen and chilled ready-meals), which was reflected directly in products promoted at Canadian trade shows.
As North Americans continue to seek more out of the products they consume, better-for-you food and beverages are increasingly meeting these needs, particularly from morning to mid-day. Market research firm, NPD Group, has found that food and beverage products bearing a better-for-you health claim are most frequently consumed by Americans at breakfast (i.e. 27% of eating or drinking occasions), as a morning snack (26%) or afternoon snack (18%), or at lunch (17%). This demand for nutritious and convenient meal options is driving manufacturers to continue developing new, innovative products that meet consumer needs throughout the day.
3. Portion-Controlled Products
Portion-controlled products have become extremely popular in the United States with the widely accepted consumer perception that "all food can be part of a healthy diet" (Euromonitor International). Many Americans are now more inclined to purchase portion- or calorie- controlled versions of their favourite food and beverages, often less healthy products, rather than drastically modifying their diets (Euromonitor International). These convenient snack and meal solutions remain popular in the United States where many consumers lack the time to maintain healthy diets and exercise regularly, and do not want to give up the taste of indulgence products to live more healthily (Euromonitor International). Manufacturers have responded to such consumer demand by rolling-out a wide assortment of 60-, 90- and 100-calorie snacks. Products include portion-controlled packages of cookies, chips, crackers, popcorn, chocolate, muffins, yogurt, granola snacks, carbonated soft drinks, milk and chocolate milk - many of which were widespread at Canadian trade shows.
4. Green Tea
Green tea and green tea-infused food and beverages represent a strong and diversified trend in the global food and beverage industry. Western European and North American consumers are increasingly showing a preference for higher-value, premium tea and tea-infused products as they are widely perceived as healthier options (Euromonitor International, 2006). Medical research findings of health benefits, matched with widespread consumer concern about healthy living are driving the success of green tea and those goods that are infused with the product. Euromonitor International research suggests that tea consumption alleviates suffering digestive stress, and even reduces the likelihood of contracting serious diseases, such as heart disease and cancer (2006). Based on current success, green tea is expected to become one of the fastest-growing tea varieties in volume terms from 2005 to 2010, and see 21% growth over the period (Euromonitor International, 2006).
Manufacturers are also trying to capitalize on the success of green tea in other product categories by developing products that are infused with green tea and heavily promoting the antioxidant power of such goods. Green tea products spanning several food and beverage categories remained a major trend at all Canadian trade events. Examples included RTD beverages, add-to-water flavouring crystals, energy drinks, juice, ice cream, yogurt and chocolate.
Matcha, a powdered green tea known for its powerful health-boosting properties, was also a popular product at the CRFA Show 2008 and SIAL Montréal 2008 with many exhibitors showcasing a variety of matcha-based beverages. Built from the success of regular green tea in the North American marketplace, matcha has begun to emerge as a popular new ingredient in lattés, iced tea, smoothies, alcoholic cocktails, ice cream, gelato and chocolate. Continued growth for matcha is expected with companies aggressively promoting its health benefits over those of other beverages, e.g. 70 times the antioxidant content of orange juice - one of the highest levels of any food, 10 times the nutrients of regular steeped green tea, and natural caffeine that provides energy for several hours.
5. Ready-Made Meals Ready in 10 min. or Less
The American ready-made meal market (i.e. including frozen, chilled, dried and canned meals) has seen steady growth over the past few years, as consumers increasingly lead busier lifestyles. Fuelled by demand for quick meal solutions, the segment increased roughly 5% from 2001 to total more than $13.5 billion in 2006 (Datamonitor, 2008). Frozen ready meals continue to lead the segment's sales at 49%, followed by chilled and dried ready meals at roughly 25% and 16%, respectively, and canned ready-made meals at 10% (Datamonitor).
As of 2006, supermarkets and hypermarkets accounted for the majority of ready-made meal sales in the United States (roughly 86%), followed by convenience stores (5%), service stations (3%), independent retailers (2.7%), and specialist retailers (2.6%) (Datamonitor). While the ready-made meal market remains flooded with numerous players and product varieties, large national brands, such as ConAgra Foods' Overall brand, Nestlé S.A.'s Stouffer's brand, and Altria Groups' Overall brand, continue to lead in market sales (Datamonitor).
Innovative ready-made entrées showcased at Canadian trade shows included premium dishes with high-quality ingredients, ethnic meals (e.g. Chinese, Indian, and Thai dishes), and a number of functional and better-for-you options. Many products were packaged in convenient heat-in-the-microwave pouches or oven-safe dishes that are ready to serve within 60 seconds to 10 minutes of heating. Other innovations targeting time-constrained consumers include "complete skillet meals" ready to serve within 10 minutes of heating, and resealable packaging for multiple-serving entrées.
Further development of healthy, portable, premium, organic and ethnic options will continue to drive segment growth. The American ready-made meal category is projected to reach over $14.2 billion by 2011, a 6% increase over 2006 totals (Datamonitor).
6. Dietetic Products
Growing awareness of food allergies and intolerances has contributed to growth in the number of dietetic products available in the North American marketplace. Demand for lactose-, glucose-, and allergen-free food and beverages, as well as diabetic products is rising, driven by shoppers with food allergies and intolerances, as well as health-conscious consumers. According to Nielsen data, it was estimated that 63% of American families had at least one member suffering from one of 15 chronic health conditions in 2004. Furthermore, a growing number of consumers are choosing dietetic products over traditional groceries, as they want to purchase healthier alternatives or simply reduce the risk of developing food sensitivities (Euromonitor International, 2007). As a result, food manufacturers are increasingly developing food intolerance products; allergen- and gluten-free baked goods were particularly noted at 2007-08 Canadian trade events.
The United States remains the largest market for dietetic food, with sales having reached US$2.3 billion in 2006, 45% of the global market (Euromonitor International, 2007). Lactose-free products, led by milk formula, comprised the majority of American dietetic food sales at US$2 billion, while gluten-free food and beverages saw the most growth in 2006, i.e. a 22% rise over 2005 sales (Euromonitor International, 2007). Combined sales of gluten-free bakery goods and pasta totalled US$297 million in 2006 (Euromonitor International, 2007).
With great demand for dietetic products in Western Europe from health-conscious consumers, retailers have started to cater to this growing market by introducing dietetic food lines. In the United Kingdom, for example, Tesco and Morrison's have both launched "free from" product lines that target consumers with specific dietary requirements or those looking to eat healthier. The portfolios mainly include dietetic snacks, bread and pasta products. With the global dietetic sector expected to reach US$6.1 billion by 2011, nearly a 20% increase over its 2006 value, more manufacturers and retail grocers are expected to follow suit.
7. Organic and Natural Food
Fuelled largely by consumer demand for more natural, minimally-processed and pesticide-free food in North America, the Canadian organic sector has seen dramatic growth in recent years with demand currently outpacing domestic production. Consumer awareness and demand for organic food and beverages has greatly increased since the USDA Organic standards logo and certification program was introduced in 2002. Mandatory Canadian organic regulations and certification, set for December 2008, are also expected to further drive sector growth.
Organic food remained extremely prevalent at all Canadian trade shows and were represented across all food and beverage categories. Showcased products ranged from organic fruit and vegetables, to RTD beverages, coffee, tea, juice, and ready-made meals. According to AAFC data, Canada's organic industry is valued at over $1 billion with annual retail sales growth of 20%. Supermarket chains are the top choice for consumers looking to purchase organic products and account for 40% of all organic food sales. This represents 28% growth between 2005 and 2006.
Growth in the United States organic market is also impressive. The USDA forecasts sales of organic food to reach US$18 billion by 2008, while the Organic Trade Association is predicting 11% annual growth for fresh food between 2007 and 2010. Produce, and meat, poultry and seafood are projected to see 7% and 31% growth respectively over the period. This industry growth is being driven by the entry of many large organic retail grocery chains, such as Whole Foods Market and Wild Oats, throughout the United States, as well as greater availability of organic products in traditional retail grocery formats.
With the continued popularity of organic and natural products, as well as consumer demand for food with added nutrients and health benefits, manufacturers are responding by offering organic products with nutraceuticals. In fact, demand for healthy foodstuff has become so paramount, that food and beverage products seem to need to be organic at a minimum. With the "nutraceutical craze" not looking to subside in the short-term, organic products containing nutraceuticals are shaping up to become an industry standard for consumers; manufacturers not yet offering organic alternatives with value-added functional ingredients are likely to lose out on this dual-powered trend.
Driven by the green trend, the "slow food" movement (i.e. a concept that supports local producers and seasonally-inspired cooking, and counters the fast food trend) is beginning to take hold in the Canadian marketplace. Consumers, chefs and even some food manufacturers are becoming more proactive in sourcing their cooking ingredients directly from farmers and local artisan producers. This trend is particularly taking hold in the foodservice markets in British Columbia and Ontario. As a result, restaurants are forming exclusive partnerships with local food producers that will supply the outlets with all of their required ingredients for a true farm-to-fork concept. This trend also seems to be taking root in the American foodservice industry as chefs ranked locally-grown and organic produce as the second- and third-hottest trends in restaurants in 2007 (National Restaurant Association).
8. Ethnic Food
As a direct response to increasing consumer demand for healthy and flavourful international cuisines, ethnic food showed a significant presence at 2007-08 trade shows. Due to increased ethnic diversity and global travel in recent years, the burgeoning North American ethnic food sector has moved out of the specialty food category and into the mainstream food industry. In fact, 75% of ethnic food consumption in the United States is now supported by the mainstream population. The popularity of ethnic food in North America is projected to continue along its current growth pattern; ethnic food products make up more than 12% of all retail food sales and are seeing 5% annual growth.
The North American foodservice industry is catering to consumer demand for more exotic flavour offerings with restaurants sampling cuisines around the world. Chefs are delighting consumer palates by offering "fusion cuisine", i.e. a blending of international flavours and recipes with North American cuisine to create a variety of new and unique dishes. Such food satisfies the palates of both immigrant and mainstream populations who generally demand different levels of authentic spice and flavourings in their dishes.
This trend has also crossed over into the retail grocery market. North American grocery giants, for example, have capitalized on mainstream ethnic food opportunities by developing lines of fusion and authentic ethnic ready-made meals - all of which cater to today's time constrained consumers.
Products featured at Canadian trade shows ranged the entire spectrum of the food industry, with particular emphasis on healthy, natural, organic, ready-to-eat and portable ethnic food products. Major industry trends emerging from the events included food manufacturers focusing on ethnic products with added benefits (e.g. organic or natural, ready-made meals), better-for-you specialty food products (e.g. organic or natural, low-fat, low-sugar, glucose-free), and a significant presence of products that support sustainable agriculture and the "buy local" trend.
Indian, Chinese, Thai, Caribbean, Mexican, Mediterranean, halal and kosher food products were showcased at these events. Cooking and simmer sauces, marinades and chutneys; ready-to-eat frozen meals; snacks; artisan cheese, bread, olive oil and pickled products; spices; jam; and juice and tea were widely featured, many of which were natural, organic, and trans fat- or gluten-free. Rice and pulses, staples of many ethnic cuisines, were also prevalent at the events.
9. Artisan and Specialty Food
The presence of artisan and specialty food products in the North American marketplace is showing impressive growth as consumers continue to demand high-quality, premium food and beverages. Bolstered by the popularity of food television networks, celebrity chef cooking shows, exotic cooking classes, and the introduction of upscale retail grocers (e.g. Whole Foods Market) that sell a variety of premium products, North Americans are becoming more knowledgeable about food preparation and are "trading up", using high-quality ingredients when cooking.
Canadian trade shows reflected this growing demand for premium food and beverages, as the number and range of products showcased were significantly larger than in previous years. Products such as premium jam and preserves; tea; gourmet spices and barbecue rubs, condiments, sauces, oils, spreads and dips; matcha green tea, dark and European chocolate; and bison meat were widespread. A number of these goods also contained organic and natural ingredients, and premium packaging, product displays and promotional materials were used.
Retailers are increasingly expanding their gourmet food offerings with artisan cheese, bread, dips, oils, spreads, condiments and confectionary; freshly-prepared meals and desserts; greater ethnic and international food assortments; premium tea and coffee; and larger wine selections to cater to consumer demand. Store redesigns (e.g. at Piggly Wiggly and Safeway outlets) are also being used to create inviting upscale shopping environments for consumers.
According to Specialty Food Magazine's The State of the Specialty Food Industry 2007 report, the American specialty food market was estimated at US$38.5 billion in 2006, and accounted for 10% of all retail grocery sales (2007). Specialty food sales have increased 103% since 2001 and are currently outpacing general food sales by 17%; general food sales increased nearly 5% in 2006, while that of specialty food rose 22% (Specialty Food Magazine). As of 2006, the largest specialty food categories were condiments; cheese; coffee and cocoa; chips, pretzels and snacks; and carbonated, functional and ready-to-drink (RTD) tea and coffee beverages (Specialty Food Magazine). The magazine also identified energy bars and gels as the fastest-growing specialty food category, having seen 269% growth between 2004 and 2006, followed by shelf-stable juices and functional drinks (107%), shelf-stable meat, poultry and seafood (105%), water (90%), and RTD tea and coffee beverages (58%).
10. Premium, Bite-Size Desserts
Every year, high-end desserts, pastries and confectionary products are popular items at Canadian trade shows. These products had a large presence at the CRFA Show 2008 and SIAL Montréal 2008, which have a large foodservice focus. The largest dessert trend at these trade events included smaller-portioned and bite-size rich desserts. For example, mousses, cheesecakes, crème brûlée, crème caramel and chocolate, and tiramisù were displayed in small, bite-size portions for the retail grocery and foodservice sectors. Exhibitors showcased both frozen and fresh ready-to-eat decadent desserts that offer restaurants and consumers flexibility and convenience. The popularity of two-bite and petite deluxe desserts can be attributed to rising health concerns and time-pressed consumers who do not have time to prepare or eat large, and very filling desserts. In fact, chefs ranked bite-size desserts as the hottest item in the United States foodservice market in 2007 (National Restaurant Association). Available to shoppers at retail grocery outlets, these gourmet products particularly appeal to consumers as they can enjoy restaurant-style desserts at reasonable prices for home consumption.
Conclusion
The 10 trends identified at 2007-08 Canadian trade events in major cities across the county provide the Canadian food and beverage industry with an overview of product developments and marketing focuses taking place in both the Canadian and international marketplace. Canadian food and beverage companies, in particular those involved in exporting and importing products, should be aware of trends affecting the industry and consumer demand. Healthier food and beverage options, convenience products, exotic flavours and premium specialty goods currently seem to be enjoying strong growth and gaining consumers' attention in the North American food and beverage industry.
Key Resources
Datamonitor. (2008, June). Ready meals in the US to 2011. Retrieved August 22, 2008 from Datamonitor online databases (Consumer Markets Knowledge Centre, DBCM3011).
Euromonitor International (2007, Dec.). Health and wellness - world. Retrieved August 22, 2008 from Euromontior online databases.
Euromonitor International (2006, Dec.). Tea - world. Retrieved August 22, 2008 from Euromonitor online databases.
National Restaurant Association (2007). What's Hot & What's Not - Chef Survey. Retrieved July 29, 2008 from the World Wide Web: http://www.restaurant.org/pdfs/research/200711chefsurvey.pdf
Tanner, R. (2007, April). The state of the specialty food industry 2007. Specialty Food Magazine, 33-48.
Turock, A. (2008, May). Health consciousness tipping point. Progressive Grocer, 38-40.
(2006). Petite Sweets: Tarts, custards and two-bite desserts take over. Foodservice and Hospitality, 15.
