july/august 2013

WHOLE FOODS MARKET

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Engaging Your Shoppers In-storeC-channel Challenges

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With this issue, Grocery Business begins its third year serving the industry. It’s been an amazing journey and we would like to thank you, our readers and advertisers, for your support. Karen James and Kevin Smith, Co-Publishers

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publishers’MESSAGE

PEOPLE • PRODUCTS • PROMOTION • PASSION

Co-Publisher and Executive Editor Karen James [email protected]

Co-Publisher and Content DirectorKevin Smith [email protected]

Executive Vice-PresidentContent and Market DevelopmentDan Bordun [email protected]

Managing and Online EditorNoelle Stapinsky

Contributing EditorsSally Praskey, Angela Kryhul

ContributersDr. Sylvain Charlebois, Joel Gregoire, Michael Marinangeli

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July/August 2013Volume 3, Number 4www.grocerybusiness.ca

Grocery Business Advisory Council

Phil Donne, Campbell Company of Canada

Tom Barlow, Canadian Federation of Independent Grocers

Perry Caicco, CIBC World Markets

Chris Terrio, CROSSMARK Canada Inc.

Nancy Croitoru, Food and Consumer Products of Canada

Tim Berman, Kraft Canada Inc.

Michael Marinangeli, MIDEB Consulting Inc.

Cheryl Smith, Parmalat Canada

Mark Ayer, Procter & Gamble Inc.

David Wilkes, Retail Council of Canada

Cori Bonina, Stong’s Market

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COVER: WHOLE FOODS OAKVILLE

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BE PURE TO YOUR HEALTH!

1 SERVING OF FRUITS + 1 SERVING OF VEGETABLESIN EVERY 250 ML GLASS

OASIS® Health Break 1.75 L

OASIS®

NUTRISOURCENEW 1.36 L PACKAGING

1st

40 caloriecocktail with

STEVIA

Voted winner "Fruit Juice"category by consumers.

® Registered Trademark of Lassonde Industries inc.

NEW FLAVOURSAVAILABLE NOW!

contentsDEPARTMENTS5 Publishers’ Message 8 Front End People & News

13 Open Mike Ethnic stores offer value

60 Shelf Life: Salad Dressings Produce department’s new best friend

40 It Figures The healthy heart

64 Launch It, List It Notable new products

Grocery BusinessJuly | August, 2013

Volume 3, Number 4

38Introducing smaller stores in urban markets won’t dilute their brand, as long as they do it well and do it wisely

Maureen Atkinson, J.C. Williams Group

ON THE COVER

Organic GrowthWhole Foods Market has a growth spurt29

FEATURES10 Opinion: Calling the ShotsAs major retailers join forces, Walmart still rules

17 Rooftop GreenhousesA new high for local food movement

20 C-Suite - Leaders on LeadershipCoca-Cola’s CEO, John Guarino, talks leadership

23 C-Store Channel 23 A fresh take 26 A Convenient Path to Growth

43 The Power of In-store MarketingPOPAI Shopper Engagement Study

49 20th Annual Grand Prix New Product AwardsCelebrating Canadian innovation

55 Soaking Up SalesSpongeTowel cleans up with Top Chef Canada

56 Takin’ it to the StreetsHome delivery makes a comeback

58 Marketers Go DigitalBrandSpark’s 8th Annual Marketers’ Survey

59 Chipping In79th Annual Food & Allied golf tournament

66 Longo’s 26th store opens in Oakville, Ont.

Whole Health

29 Whole Foods34 Healthy Prospects Natural health products rising36 Food Intolerances: Catering to the Consumer38 Healthy Snacking: Going Nuts

56 66 49

7July | August 2013grocerybusiness.ca

Front End

CFIG honours four with Life Member DesignationsFrank Coleman and Mike Coleman of the Coleman Group of Companies in Corner Brook, Nfld. will both receive the honour. Frank Coleman is president and CEO of the Coleman Group. Mike Coleman is vice-presi-dent of Procurement, Wholesale and Distribu-tion Operations, a board member of the Canadian Federation of Independent Grocers’ Distribution Council and a board member of United Grocers Inc.

Also receiving Life Member Designations are

Bruce Logan, one of the founders of Village Food Markets in Sooke, B.C., and Ed Holik, executive vice-president, operations, Weston Foods North America.

The Colemans and Holik will be officially recognized at CFIG’s Luncheon of Honour on September 30 at Grocery Innovations Canada 2013 in Toronto.

Logan will be recognized at Grocery Showcase West taking place April 6 and 7, 2014, at the Vancouver Convention Centre.

Bruce Logan

Frank Coleman

Ed Holik

Mike Coleman

Thank-you!

YVES POTVIN, PRESIDENT AND FOUNDER

www.gardein.com

Award winning gardein.In your grocer’s freezer, on our founder’s mantle.

™

Canadian Grand Prix New Product Award WinnerA W A R D E D J U N E 2 0 1 3

The Food Industry Association of Canada has chosen Dino Bianco of Kraft Foods and Eric R. La Flèche of Metro Richelieu Inc. as this year’s recipients of the prestigious Golden Pencil Awards.

Dino Bianco has led Kraft’s Beverages Business Unit and Kraft Canada since January 2013. Since joining Kraft in 1990, Bianco has served in a number of leadership positions including president of Kraft’s International & Foodservice business and the Marketing Services and Innovation organizations.

Eric R. La Flèche became president and CEO

of Metro Inc. in 2008. He joined Metro in 1991 as head of real estate and has held several positions including executive vice-president and chief operating officer, president of Loeb Canada Inc., and senior vice-president of the Super C banner. He is a member of the Metro Inc. board of directors and holds an MBA from the Harvard Business School and a law degree from the University of Ottawa.

The Golden Pencil Award recognize individu-als who, through career dedication, have made significant and worthwhile contributions to the Canadian food industry.

Bianco and La Flèche will be honoured at a ceremony on November 25, 2013 at the Royal York Hotel in Toronto. To order tickets, visit GoldenPencilAward.com.

Industry veterans named as2013 Golden Pencil Award recipients

Dino Bianco Executive Vice-President and President, Beverages Canada, Kraft Foods Group

Eric R. La Flèche, President and CEO, Metro Richelieu Inc.

Michele Buck has been promoted to president of Hershey’s, North America, from her previous position as chief growth officer.

CROSSMARK Canada has appointed Peter Ma as vice-president of client services and retail sales. Ma now leads the company’s client service and account executives teams.

Tony Matta recently joined Kraft Canada as chief marketing officer, overseeing marketing for the Beverages, Grocery and Cheese sectors as well as Marketing Insights

& Services and Innovation. Matta joins Kraft from PepsiCo.

Alasdair McKichan, the former president and CEO of Retail Council of Canada (RCC), was inducted into the Canadian Retail Hall of Fame on June 4. McKichan joined RCC as its first CEO in 1963 and served in that capacity until 1971, as well as from 1975 to his retirement in 1994.

Mark Baum has taken on the job of senior vice-president of industry relations and chief collaboration officer for the Food Marketing Institute.

Baum most recently was the managing partner of MARCAT Group LLC.

After a 27-year career with Sun World International, Clay Wittmeyer has joined Naturipe Farms in the newly created position of director of interna-tional sales.

Indigo Natural Products recently added three new members to its team. Walt Snow, formerly of Tetley Tea, joins as eastern sales manager. Bobbi Parama

key account manager, is based in Calgary, calling on Prairie retail accounts. Darren MacRae Munro,

based in Vancouver, is Indigo’s new brand manager who will also manage some retail accounts.

Allan MacDonald is the new chief operating officer for Canadian Tire Retail. He most recently was chief marketing officer.

AppointmentsFront End

July | August 2013 9grocerybusiness.ca

Make no mistake: The deal makes sense for everyone, including Canadian consumers. Loblaw’s $12.4 billion purchase of Shop-pers Drug Mart gives the leading Canadian grocer an edge over its biggest menace, Walmart.

Not only will Loblaw now be able to sell many products with higher margins – like pharmaceutical products – a plethora of branding synergy opportunities will emerge as a result of this acquisition through private-label and loyalty programs, and much more. In terms of real estate, the addition of several downtown stores across small town Canada will give Loblaw a key edge in managing socio-demographic shifts.

Some experts have gone so far as to claim that this deal will be transformational for Canadian food retailing. It is indeed

significant since it is the biggest industry transaction Canada has ever seen. But transformational? Not quite.

The most transformational acquisition Canada has seen in food retailing remains Walmart’s purchase of Woolco back in 1994, full stop. Everything happening in food distribution today continues to be affected by it. Most Canadians didn’t realize it then, but Walmart’s entrance into the Canadian market would change everything: the way we shop, what we buy, and most importantly, how we purchase and value food.

Ever since Walmart entered the Canadian market, it never shied away from its ambition of becoming Canada’s top food retailer. In fact, Walmart added almost $700 million to its food sales this year alone. Loblaw’s latest response suggests it isn’t

IN FOOD RETAILING, WALMART IS STILL CALLING THE SHOTS Both Sobeys and Loblaw have made their moves. Metro could be next. But let’s not kid ourselves: Walmart is still king

By Dr. Sylvain Charlebois

WHAT’S THE BIG DEAL?

SOBEYS BUYS CANADA SAFEWAY

PURCHASE PRICE FACILITIES

SAFEWAY GROCERY STORESOF RETAIL SPACE

DISTRIBUTION CENTRES IN REAL ESTATE

$5.8 billion 12 manufacturing

213 full-service9 million

4 primary $1.8 billion

sq.ft

“Sobeys expects to benefit from increased economies of scale… capturing annual cost synergies of $200 million within three years.” Marc Poulin, president and CEO of Sobeys

July | August 201310 grocerybusiness.ca

Dr. Sylvain Charlebois is Associate Dean at the College of Management and Economics at the University of Guelph in Ontario. (Troy Media)

eager to let go of the top position anytime soon, and that it views Walmart as a serious threat.

Walmart’s purchase of Woolco generated a few copycats, including Target’s recent acquisition of Zellers. As Target’s first venture outside the U.S., with almost 200 stores set to open by 2020, Canada is considered fertile ground for future growth.

Desperate to effectively penetrate the Canadian food market, Sobeys – Loblaw’s closest rival in food retailing – agreed to become Target’s most important food distributor for a limited time. The strategy seems to be paying off as Target is expected to top $300 million in food sales in 2013. Given the very stagnant market, these sales are coming from its competition. But in light of last month’s purchase of Safeway’s Canadian grocery stores for $5.8 billion, Sobeys might not prop up Target’s effort for long as it has other plans for growth in a very condensed, mature marketplace.

Meanwhile, in Quebec, with Loblaw’s purchase of Shoppers, many are speculating that Metro will hunt down Jean Coutu, a very large Quebec-based pharmacy chain. Jean Coutu himself stated that his company was not for sale, but that was before the Loblaw-Shoppers announcement. Equally affected by the acquisition, both Metro and Jean Coutu may be ready to talk.

Whether or not the Loblaw-Shoppers deal will work is difficult

to tell at this point. Loblaw has a poor track record of stream-lining processes quickly. The Shoppers purchase will likely add more pressure and could create opportunities for the competition. The market is evolving quickly, and while convenience and accessibility are imperatives in food retailing, the absolute key to success remains price. And Walmart understood decades ago that logistics are critical in offering competitive prices to consumers. That will be Loblaw’s main challenge.

Ever since the Walmart/Woolco deal in 1994, food retailers have been looking at the Canadian market very differently. More consolidation is expected. Metro may consider Over-waitea Food as its consolation prize, but that’s highly doubtful. Certainly, after the Quebec government’s hostile reaction to the attempt by Lowe’s to acquire Rona last year, it’s highly doubtful anyone would want to touch Metro.

Both Sobeys and Loblaw have made their moves. Metro could be next. But let’s not kid ourselves: Walmart is still calling the shots.

LOBLAW BUYS SHOPPERS DRUG MART

“It’s not just about stripping out costs and banging the businesses together,” Galen G. Weston, executive chairman Loblaw

PURCHASE PRICE OF RETAIL SPACE

LOCATIONS SDM SALES

EMPLOYEES SAVINGS OVER 3 YEARS

$12.4 billion 13.7 million

1,295 SDM $10.8 billion

51,300 SDM $300 million

sq.ft

(2012)

(est.)

Retail Consolidation


A TRADITION OF INNOVATION.

Bizerba has been focused on weighing technology since 1866. We provide state-of-

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Open Mike

The ethnic stores we visited were busier throughout the day. They were well staffed and well stocked, with the main common denominator being outstanding produce at low prices. I conducted price checks on a basket of 10 key produce items in every store, and found the prices to be far cheaper in the ethnic stores – in some cases, up to 50 per cent less on the total basket.

Throughout the 1990s, when we started to roll out discount stores, one of the key drivers and points of difference was to offer cheaper produce than in conventional stores. Until then, produce was a high-margin category and seldom used as a loss leader. When stores were converted from conventional to discount, we dramatically lowered produce prices, and the produce sales ratio improved substantially. We got an additional surprise: Produce shrink decreased because the products turned faster, resulting in less waste. Reduced shrinkage acted as a margin enhancer. Consumer savings were significant and shoppers voted with their wallets as discount penetration grew. This trend continues today.

The traditional wisdom in the grocery

Ethnic StoresHigh-quality, cheaper produce fuels explosive growthBy Michael Marinangeli

Michael Marinangeli is a principal at MIDEB Consulting Inc. and a retailing veteran with more than 40 years of experience. [email protected]

business was to price perishable departments higher than grocery to compensate for increased shrinkage, labour and supply costs. The ethnic stores obviously have a different philosophy, and their loyal and growing clienteles seem to appreciate their approach.

Ironically, the greatest weakness of these stores is their mainline grocery departments. Their ethnic grocery assortment is outstanding and truly caters to their clientele, but they fall short on assortment and pricing on mainline domestic grocery items. However, as ethnic stores develop expertise and gain traction and attention from North American manufacturers, their conven-tional grocery departments will evolve.

The grocery industry is facing many challenges from the ever-changing retail landscape. Stores catering to ethnic communities are growing in leaps and bounds. Produce freshness, quality, presentation and prices are their calling cards, as well as assortment in departments that cater to their local community.

It may be time to rethink our conventional store margin structure in perishable departments to compete with new players that operate in a different paradigm.

Here are a few suggestions:

• Allocate dedicated resources to manage the buying, merchandising and operations of conventional stores in ethnic communities. This is too complex a task to tack onto your existing structure.

• Recruit staff who truly know this business. Larger organizations can consider acquisi-tions similar to those made by Loblaw (T & T) and Metro (Adonis) to participate or gain knowledge.

• Play to your strength – mainline grocery with better pricing, assortment and private brands.

• Make a conscious decision to become more competitive in produce. Otherwise, you will notice a constant erosion of your customer base.

A colleague and I recently spent a day visiting ethnic grocery stores in an effort to determine why they are so successful in many markets across the country. Our destinations included Adonis Markets (Mediterranean/Middle East), Starsky Foods (Eastern European), Oceans Fresh Food Market (multi-ethnic), and T & T Supermarket (Asian), as well as some traditional stores in each trading area.


A TRADITION OF INNOVATION.

Bizerba has been focused on weighing technology since 1866. We provide state-of-

the-art PC Based Scale Hardware and Software solutions for full-service and pre-pack

departments with a primary focus on increasing your sales and pro� ts. Closer to your

business, � exible for your needs, ready for the challenges of a global economy.

www.bizerba.com

Retail Portfolio:High performance with a wide range of different models and equipment variants.

CONVENTIONAL, STYLISH, MODERNApplesque design counter scale with the cutting edge Bizerba K scale App designed to inform your operator so the customer feels like they are talking to a foodie or a chef. Not to mention industry leading application integration and power savings backed by Bizerba workmanship.

KH 100

TYPE TYPE

MODULAR COMPACTFLEXIBLE, ADAPTABLE, UNIQUEWith K-class � ex, screens, load cell, printers, etc.can be freely combined resulting in space-saving integrated solutions for your merchandising cases with all the technology features of the KH100.

K-FLEX

Today’s savvy consumer wants both nutrition

and convenience when dining out. As busy

schedules compete for shoppers’ attention,

grocery stores are becoming a go-to option for

many Canadians to purchase meals-to-go.

It’s no surprise that Canadians appreciate

convenience. So it’s perhaps only natural that

they choose to buy retailer meal solutions (RMS)

while they shop. In fact, according to a recent sur-

vey, 42 per cent of today’s consumers say they

purchase RMS four or more times each month.

Conversely, 67 per cent of Canadians polled

say it’s important to pay attention to nutrition

when dining out.

Yet, there seems to be a missing piece when

it comes to providing Canadians with exactly what

they want. And what they want is food that is

affordable and convenient but that they can also

feel good about consuming. They want to know

that they are not sacrificing nutrition for conve-

nience. In fact, almost half of Canadians polled

say that having better-for-you options available

is important to them. Yet, it is not always easy to

spot what is and what is not healthy. Looks can

be deceiving and a seemingly healthy-looking

salad can pack a surprising amount of calories

and fat. Without the nutrition information readily

available, a well-meaning consumer’s attempt at

purchasing a healthy dish could be thwarted.

Health Check, the Heart and Stroke Founda-

tion’s nutrition information program, has recently

made it mandatory for all participating restaurants

to have the nutrition information readily available

for their diners. British Columbia’s Informed Dining

program (www.healthyfamiliesbc.ca) also encour-

ages restaurants to make nutrition information

available to their consumers.

This helps diners make informed decisions

about what they eat. Shouldn’t they have the

same opportunity when dining at a grocery store?

Health Check engages with Canadians in a variety of ways. Its digital presence is undeniable and makes it easy for Canadians to connect in whichever way they prefer.

Blogs - Healthcheck.org continues to share blogs from the Foundation’s registered dietitians. These blogs range in topics from tips, to personal challenges or recipe sugges-tions. Visit healthcheck.org.

Twitter - @HSFHealthCheck successfully engages with its nearly 700 loyal followers, regularly communicating with them to share the latest tips, recipes and information.

Pinterest - HSF Health Check regularly shares recipes with its Pinterest community.

YouTube - The program’s HSF Health Check channel is filled with a variety of recipes that help Canadians shop, cook and live well.

Health Check

Checking In with

By Carol Dombrow, Registered Dietitian, Heart and Stroke Foundation™

Health CheckTM

SHOP, LEARN AND EAT

Socially speaking

Consider putting nutrition information right by the RMS options to

help your shoppers make a healthy decision. For more information

about how Health Check can help, visit healthcheck.org.

TIP:

Skill-it with a skilletThe desire to eat well and prepare home-cooked meals that are

both good and good for you can often be met with challenges like

lack of time, skill or easy recipe availability. Both Health Check and

Health Canada (www.healthycanadians.gc.ca) have recognized

the need to help Canadians learn more about what to cook, and

how to cook it, encouraging Canadians to improve food preparation

skills. It is time to step back into the kitchen and give home-cooking

a second chance.

HERE ARE A FEW QUICK TIPS: • The ingredient list starts with the ingredient used most in the product.

• The amount of calories and nutrients listed in the Nutrition Facts table is based on the

product’s Serving Size.

• Twice the Serving Size means twice the calories and nutrients.

• % Daily Value Provides a quick overview of the nutrient profile of a food. Look for a higher

% Daily Value for nutrients such as fibre, vitamins A and C, calcium, or iron. Look for a lower

% Daily Value for fat, saturated and trans fats, and sodium.

• Limit the amount of saturated fats and avoid trans fats. Low saturated fat is 2 grams or less.

Health CheckSummer reading: Nutrition Facts Table The Nutrition Facts Table is one great way for your customers to learn more about a product and make a healthy choice. But it is first important to truly understand the table.

• Health Check, a program with a strong focus

on encouraging healthy home cooking, has

been providing Canadians with resources

and recipes for nearly 15 years. Today, it

continues to provide Canadians with free,

healthy recipes on healthcheck.org as well as

on the program’s Pinterest page.

• Cooking can also be a social experience.

Health Check is partnering with Le Cordon

Bleu Ottawa Culinary Arts Institute to

develop weekend classes to start within

the next few months that teach Canadians

hands-on skills in preparing healthy recipes

that meet Health Check’s nutrient criteria.

• The Heart and Stroke Foundation will be

holding its annual back-to-school campaign

that encourages parents to get their kids

off to a healthy start to the school year.

The Time to Start campaign (August 19 to

September 8) provides parents with free

meal plans that make food preparation easy.

For more information about the initiatives, visit healthcheck.org and follow us on Twitter @HSFHealthCheck.

So, what’s going on at Health Check to help Canadians cook well?

Nutrition FactsPer 3/4 cup (175 g)

Amount % Daily ValueCalories 160Fat 2.5 g 4 % Saturated 1.5 g 8 % + Trans 0 g

Cholesterol 10 mgSodium 75 mg 3 %Carbohydrate 25 g 8 % Fibre 0 g 0 % Sugars 24 g

Protein 8 g

Vitamin A 2 % Vitamin C 0 %Calcium 20 % Iron 0 %

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Rooftop greenhouses present ultra-local produce and eco- energy opportunities for grocery retailers

Consumers are hungry for local food. And now, more than ever, savvy Canadian shoppers want to know where their food is coming from. What if a grocer could tell them that the produce was harvested that morning from the store’s own rooftop greenhouse?

While the concept of rooftop greenhouses is not new, the challenge has always been the actual process of building one on a roof. There are a number of structural considerations, not to mention zoning and building-code issues.

But rooftop greenhouse technology has come a long way in recent years. Progressive urban farming companies such as New York-based Gotham Greens and Montreal-based Lufa Farms have led the charge, developing successful business models and innovative technology to grow impressive amounts of produce in urban settings.

Gotham Greens’ first greenhouse facility was

built on top of a warehouse in an industrial section of Brooklyn. The 15,000-sq.ft. facility started harvesting in 2011, producing more than 80 tons of hydroponic produce annually that is sold to select grocery retailers and restaurants across New York City.

Recently, Whole Foods – one of Gotham Greens’ retail clients – formed a partnership with the urban farming company to incorpo-rate a rooftop greenhouse into a new retail location in Brooklyn.

“As far as we know, this is the first of its kind to be integrated into a supermarket [in the U.S.],” says Viraj Puri, co-founder of Gotham Greens. “Whole Foods wanted to incorporate environ-mentally sustainable features into the store, and onsite food production is a part of that.”

The 20,000-sq.ft. facility, which is being installed directly above the supermarket’s produce section, will produce 200 tons of food

Getting on top of

local food

By Noelle Stapinsky

18 July | August 2013 grocerybusiness.ca

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per year, as well as reduce the store’s overall ecological footprint in terms of water and energy use.

“We will be recirculating all of our irrigation waters for reuse,” says Puri. “We’ll also be incorporating advanced insulation materials to reduce heating costs, and an evaporative cooling system to minimize cooling costs in the summer.”

Gotham Greens will design, finance, build and operate the greenhouse. Once the produce is ready to be harvested, it will be sold to that location and other Whole Foods stores across the city.

Lufa Farms built its first rooftop greenhouse in Montreal on a three-story industrial building in 2010. This 31,000-sq.ft. facility produces enough fruits and vegetables to feed about 2,000 people on an ongoing basis, which Lufa sells directly to consumers through an online ordering system. “We grow everything – tomatoes, cucumbers, bok choy, and even strawberries,” says Mohamed Hage, co-founder and president of Lufa Farms. “I like to think of it as a living grocery store.”

The company has already developed second- and third-generation technologies for greenhouse facilities, and is currently building a second facility in Laval, Que. “Our third-gen-eration greenhouses are incredibly light and will require minimal infrastructure changes for the building owner,” says Hage.

While Lufa is currently scouting major cities in North America to expand its direct-to-consumer produce business, it has also developed a B2B business model that, similar to Gotham Greens, would be designed, financed and operated by the Montreal company.

Hage admits that Lufa has been approached by a number of grocery chains. “What’s interesting, in the case of a grocery store, is that we would take the waste heat generated from their fridges and use it in the green-house to heat the crops,” he says.

Although it’s going to take time to establish best practices, both companies see great potential for grocery retailers in many different regions where the climate often dictates what local foods are available.

For grocery retailers in Canada, offering a daily harvest of fresh produce that’s just steps away, 365 days a year, could be an interesting differentiator in the race to feed consumer demand for local food.

“What’s interesting, in the case of a grocery store, is that we would take the waste heat generated from their fridges and use it in the greenhouse to heat the crops”

Mohamed Hage, co-founder and president of Lufa Farms

grocerybusiness.ca

As part of Grocery Business’s series on leadership, Karen James, executive editor, interviewed John Guarino, president, Coca-Cola Refreshments Canada, on leadership and the challenges of being an ex-pat executive for 26 years.

Karen James: How do you personally define leadership?

John Guarino: Leadership is the art of influencing people to achieve the company’s vision as if it is their own. I like this notion because it shows that enabling individuals is a critical part of being a leader.

It’s also about commitment and working towards a common goal. Looking in my own world here at Coca-Cola, I know the power

ON LEADERSHIPLEADERS

John Guarino, president of Coca-Cola Refreshments Canada

PHOTO: RODNEY DAW

our “2020 Vision” holds within our organiza-tion. Globally, we operate in over 200 countries. Our chairman and CEO Muhtar Kent was tireless in creating and leading the organization to realize the values inherent in this vision. I am happy to say that, three years in, we are well on track to meet our 2020 goals.

When I was thinking about this question, I did a search on the definition of leadership. There were over 100 pages of results, which tells you how difficult it is to define.

I have a quote on my desk attributed to “anonymous” that says, “Leadership is a privilege bestowed on you by people who believe in you.” So while not a technical definition, I love the picture it paints.

KJ: Whose leadership style do you most admire, and why?

JG: That’s a hard question, as I admire many traits of many leaders – a blend, if you will. Clearly, in this day and age, a participative approach will get you further than an authori-tative one. But a leader must have a variety of styles to use based on the situation.

KJ: Can you describe a defining career experience? JG: I was living and working in Switzerland in the Strategic Planning Department, and on a Friday afternoon I was asked if I could move to Sweden for six months to temporarily look after the Public and Government Affairs and Communications department. Oh, and I had to be there Monday morning, which was an interesting discussion that night with my wife!

I couldn’t understand why they had asked me to do this; I wasn’t thrilled, since the role was in a support function as opposed to being in country general management, which was my goal. I felt frustrated since I thought I had been clear about what my career ambitions were. I even considered turning it down. In the end, I accepted it and loved both the role and living in Stockholm. I was then moved into a finance role, yet another functional role that I didn’t really see coming. Once that short-term assignment was over, I got my first job in country general management.

These were defining experiences because they taught me that there is not a single, simple career path. The company was preparing me to be an executive by giving me many varied experiences to challenge and develop me. I learned that, as an executive, rather than expecting a linear path up the career ladder, you must be prepared to take on many roles and challenges in areas outside your comfort zone.


Artwork in Coca-Cola’s new Toronto office

Coke mural constructed entirely with bottle caps

John GuarinoPresident, Coca-Cola Refreshments Canada

Career Path1997-2000: Joined The Coca-Cola Company as senior region manager for the Gulf States after 15 years with the Philip Morris Company, where he ran markets across Europe, Africa and the Middle East.

2000-2002: President of the Middle East and North Africa Division headquartered in Bahrain.

2002-2005: CEO of Coca-Cola Bottling, Germany.

2005: Moved to London, U.K., to become regional director, Bottling Investments Group for Europe, Middle East and Africa. Was responsible for managing wholly-owned or managed bottling businesses, as well as representing Coca-Cola’s interests on boards of directors of bottlers in which the company owned an equity share.

Industry BoardsFulbright Commission in Germany, and the board of Food & Consumer Products of Canada.

Education Has a Bachelor of Science degree in Commerce from Rider University in Lawrenceville, N.J., and a Master of Business Administration from Northeastern University in Boston.

Personal InterestsEnjoys tennis, skiing, running (marathons and half-marathons), travelling.

Family John and his wife Cynthia have two children – William, a consultant in Washington, D.C., and Katherine, a junior at the University of Wisconsin.

KJ: Did you have a coach or mentor who had a strong influence on your career?

JG: When I first moved abroad in my international career, I had an informal mentor who had spent most of his career outside of his native Australia. He not only helped me navigate my corporate career, but more importantly, taught me how to balance the demands of my career with my family life. His advice was to view every posting as a family experience in addition to a career move. So for our family, this meant exploring the countries and regions where we were based, learning the cultural traditions and attempting to learn the language.

We tried to view every weekend as a chance for a family excursion to do things we would never do anywhere else. My kids still haven’t forgiven me for taking them to the Potato Festival in Berlin!

I have been an expatriate living in seven different countries for 26 years, and I think that my mentor’s counsel helped me, and my family, immensely.

KJ: Coca-Cola recently relocated its head office to downtown Toronto; what drove that decision?

JG: We were at our Overlea Blvd. location (in a suburb of Toronto) for nearly 50 years. It was originally built to accommodate our head office as well as a production and distribution facility, but we no longer were using the majority of the space.

We ultimately made the decision to relocate based on the financial viability of moving to the King Street East community. It offered us many benefits; it was central for our associates and easily accessible by

public transit. We were able to design the space ourselves, which allowed us to incorporate feedback from our associates, who told us that the most important thing for them was an environment that fosters innovative thinking and collaboration. I think the new office provides that.

KJ: And can you tell us what you are reading now?JG: I am just finishing Why Nations Fail, by Daron Acemoglu and James Robinson. It’s an overview of various civilizations over the last thousand years, and answers the question of why some countries are rich and successful, while others are poor and a social disaster. The countries that succeed have institutions that ensure people participate directly in the success of the economy, while having a say in political outcomes.

Of course, these successful countries started with visionary leaders who created truly participative economic and political structures. Business isn’t that different really. Successful leaders create an environment and culture where everyone’s voice is heard, ensuring everyone has a share in the success of the company.

C-Suite


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Convenience Channel

There was a time, several decades ago, when my friends and I would hop on our bicycles and, streamers flaring from the handlebars, make a beeline to the local convenience store for our fix of candy and comics. Our parents sometimes stopped at the same store for a jug of milk or a loaf of bread to tide them over between weekly trips to the supermarket.

But those cramped family-owned stores of yesteryear are few and far between now as gas chains move into the convenience channel with larger, more sophisticated outlets offering everything from specialty coffee to home meal replacements.

The c-store channel is, after all, on a quest to reinvent itself in the face of flagging results. From April 2012 to April 2013, sales slid 2.9 per cent, according to Statistics Canada. Other than a slight recovery from 2011 to 2012, c-store sales have been on a steady decline since 2008, while other food and beverage stores have recorded increases.

By Sally Praskey

The gross margin for c-stores, at 21.4 per cent for 2011, was also lower than its food and beverage channel counterparts.

“Traffic has been down for many convenience stores,” says Marc Fortin, an industry consultant and former president of the Montreal-based National Convenience Stores Distributors Associa-tion (NACDA). “And there have been a lot of store closures, especially among the independents.” The trend to gas stations closing their garages and moving into convenience has put a lot of pressure on the independents, he says, while the blurring of the lines among the grocery, drug and convenience channels has posed new challenges.

But at the same time, these obstacles have brought more rigour and structure to the sector, resulting in more attractive stores with better offerings, adds Fortin.

TOP SELLERSAccording to a 2013 report from IRI titled Convenience Stores: Keep the Core; Appeal to More, the strongest growth in the U.S. c-store channel, by far, came from energy drinks. In 2012, this category enjoyed double-digit growth in both unit and dollar sales.

Other top sellers:

“In 2012, only four of the 10 largest convenience store categories grew at a stronger pace versus the industry average – all were beverage or tobacco categories,” says the IRI report.

Chocolate Candy Carbonated BeveragesSports DrinksSalty Snacks

A FRESH TAKEON THE C-STORE CHANNELConvenience stores are facing flagging sales and competitive challenges with fresher offerings that target the needs of core shoppers


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Ingredients

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HOW DO CANADIAN SHOPPERSSERVE TOMATOES AT HOME?

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70%

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3%





cooks. Learn more about why

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field-fresh tomatoes and our

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Convenience Channel

TOBACCO DEBACLEAs the main distribution channel for tobacco, c-stores have been hard hit by the rise in contraband, especially in eastern Canadian provinces. In Ontario, for example, the contraband figure is as high as 30 per cent, says Fortin. Because cigarettes are a key driver of trip missions, that decline also impacts sales of other core items.

C-stores in the U.S., on the other hand, are benefitting from the sale of electronic cigarettes – battery-operated devices with a liquid-filled cartridge that can contain flavouring as well as nicotine. Since bursting on the scene in that country in 2009, e-cigarettes have enjoyed explosive growth and now represent one of the fastest-grow-ing convenience-store categories, according to the IRI report. Health Canada has not authorized stores in this country to sell nicotine-filled cartridges.

WANTED: BEER AND WINE SALES The sale of beer and wine represents a major – yet unrealized – opportunity for c-stores. To date, Quebec is the only province that allows it, along with a few locations outside the province that sell alcoholic beverages under special licence. The Canadian Convenience Stores Association (CCSA) continues to lobby the provincial governments to achieve the necessary legislative changes.

“I think wine in English Canada would be a great opportunity,” says Fortin, noting that wine marketing typically doesn’t target younger people in the same way that beer might. “That’s a low-hanging fruit. Down the road, I think we’ll see if beer is an opportu-nity or not, but I think you need to start with wine to appeal to a more mature consumer.”

FOODSERVICE GETS FRESHMany c-stores are ramping up their foodservice offerings, particularly in the area of healthy choices. “Convenience stores can offer ready-to-eat options that are better for you, and distinguish themselves in that way” from the fast-food giants, says Fortin.

For example, in the U.S., 7-Eleven is introducing more fresh food options and aims to double fresh foods to 20 per cent of sales by 2015. Tedeschi Food Shops, a

chain of convenience stores in the U.S. northeast, is building out its fresh food options with more gluten-free, organics and whole grains, says the IRI report.

According to that report and research from Mintel, 31 per cent of consumers would like to see c-stores offer more fast-food sandwich restaurant concepts, as well as more coffee house/doughnut shop options. Burgers, pizza and chicken fast-food concepts are also looked at favourably.

3

1 2

FORTIN IDENTIFIES THE FOLLOWING HOT BUTTON AREAS FOR C-STORES:


Convenience Channel

CATER TO THE COMMUNITYFortin says c-stores must invest in renovations to ensure the stores are attracting customers, and that their offerings are right for the neighbour-hood. “If you have older people, you don’t want to have slushies and fast food. You have to make sure you adjust your offerings to your customers.”

On a recent U.S. trip I had the opportunity to check out RaceTrac, a chain of more

than 300 retail gasoline convenience stores in the southeast U.S. RaceTrac stores

are typically 5,000 sq.ft., and offer more than 4,000 retail and grocery items

including salads, wraps and fresh fruit, as well as free wireless Internet and indoor

and outdoor seating.

Located on a high traffic corner in Orlando, Fla., the store I visited was part of a

12-bay gas-bar installation which had gone the extra mile to provide its customers

with a great shopping experience. Spacious, clean, attractively designed and

offering well-defined self-serve sections, including a 24-hour frozen yogurt bar,

palatable hot meal offerings and (close to a Canadian’s heart) a very large walk-in

beer fridge, a traveller could fully replenish without having to make another stop.

Overall, a five-star convenience store experience.

– Karen James, Executive Editor, Grocery Business

Besides maintaining their core value offerings across key categories, the IRI report recommends that c-store retailers:

Develop a comprehensive health and wellness strategy targeted to the needs and wants of core shoppers;

Identify CPG synergies (e.g. packaged beverage with combo) as enhanced convenience foodservice offer-ings are made available;

Identify opportunities to develop new offerings that solve key needs and wants (e.g. ready-to- drink pro-tein drinks) of high-potential consumer segments.

CREATE CURB APPEAL

ON THERIGHT TRAC

RaceTrac provides a spacious, clean shopping environment with well-defined self-serve sections, including a 24-hour frozen yogurt bar

4


A CONVENIENTPATH TO GROWTH

In order to grow their business in the competitive Canadian retail environment, companies sometimes need to step outside of their comfort zones, explore new opportu-nities and extend into new markets. For grocers, this may mean going bigger into the mass format or, in other cases, going smaller into the convenience space. Either way, it’s important to understand how consumer behaviour in the different segments varies, so as to capitalize on the different occasions that they address.

When consumers get food or beverages from a convenience store, some core differences stand out. One such disparity is the fact that, since 2007, home meal replacement (HMR) traffic at grocery stores has grown by just over two per cent per year on average, whereas convenience stores saw a three per cent average annual decline over the same time period. So why expand into convenience stores? The simple answer: Expanding into the convenience channel can allow grocery retailers to better reach

A M N O O N P M

NOTE: NPD Group’s CREST study measures traffic and servings related to food and beverage items purchased at retail that are pre-prepared and eaten within six hours after purchase. (It does not represent all traffic at convenience or grocery stores)

12-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 11-12 12-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 11-12

16

14

12

10

8

6

4

2

0

16

14

12

10

8

6

4

2

0PERC

ENT

SHAR

E OF

TRA

FFIC

Source: The NPD Group/CREST - Canada; Year Ending February 2013

CONVENIENCE STORES GROCERY STORES

C O N V E N I E N C E S T O R E S

G R O C E R Y S T O R E S

278,897,000

380,485,000

$997,675,000

$1,835,496,000

$3.58

$4.82

15 .8%

21.5%

1.83

2 .37

STORE VISITS DOLLARS SPENT AVERAGE $ SPEND(PER PERSON)

% OF ITEMS ON DEAL # OF ITEMS PURCHASED(PER PERSON)


FAST FACTS:

24 HOUR TRAFFIC PATTERNS BY CHANNEL


different demographics at different occasions.Convenience stores are the bastion for teens

and Millennials. Kids under 18 and adults 18 to 34 account for just under 60 per cent of visits where food and/or beverages were purchased and consumed shortly afterwards. That number drops to 46 per cent for grocery HMR. Moms will always be a core demographic for grocery retailers, but Millennials represent an additional avenue for growth.

It’s not just the who that differentiates the two channels, but also the when. Eighty per cent

of the food and beverages purchased (pre-prepared and consumed within six hours) at convenience stores are for a snack, which is almost double that of grocery HMR at 44 per cent. Obviously, the convenience factor influences this, but it’s also a fit for the on-the-go Millennial lifestyle.

So what now? The top items ordered at convenience stores are soft drinks, salty snacks such as chips, coffee, slushed soft drinks, and candy such as chocolate bars. While those are fun and tasty, the lack of more substantive

food options for traditional or snacking mealtimes is apparent.

HMR is becoming a more important facet of the grocery store experience. Bringing more of the HMR experience into conve-nience stores in a manner that appeals to Millennials may represent an additional opportunity for growth, and another avenue for brand exposure among this younger demographic.

In the hyper-competitive Canadian retail space, going small can yield big dividends.

CONVENIENCE STORES

% DISTRIBUTION OF TRAFFIC BY AGE GROUP

GROCERY STORES

Joel Gregoire is a foodservice industryanalyst for The NPD Group, a leading provider of compre-hensive consumer and retail information.

AGE 65+

55-64

45-54

35-44

18-34

<18

47 10

14 11

1616

35

17

24 19

27

CONVENIENCE STORES GROCERY STORES

26 CARBONATED SOFT DRINKS

18 CHIPS/PRETZEL/CRACKERS/CURLS

15 HOT COFFEE

13 FROZEN/SLUSHED SOFT DRINKS

11 CANDY/CANDY BAR

8 BOTTLED WATER

18 CHICKEN/POULTRY ENTREES

18 CARBONATED SOFT DRINKS

14 SALADS

13 CHIPS/PRETZEL/CRACKER/CURLS

12 S IDE DISH/APPETIZER SALADS

11 BOTTLED WATER26%

18%18% 18%

14%

15%

TOP ITEMS PURCHASED


CONVENIENCE STORES

3

2

1

0

-1

-2

-3

HOME MEAL REPLACEMENT PURCHASES

+2%

-3%

GROCERY STORES

450

400

350

300

250

200

YEAR ENDING

2007 2008 2009 2010 2011 2012 2013

CONVENIENCE STORES

GROCERY STORES

ANNUAL TRAFFIC BY CHANNEL (IN MILLIONS)


e -mai l : sa lesorders@galax yfoods.com* Spinscan Conventional, Natural, and Specialty Gourmet Channel Powered By Nielsen Scantrack, 52 weeks ending 6/8/13.

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ORGANIC GROWTH Whole Foods Market is enjoying a growth spurt fuelled by a faithful following of health-conscious baby

boomers and a new generation of shoppers – the Millennials.

WHOLE HEALTH

uring the second quarter of this year, the natural foods retailer opened six stores ranging in size from 16,000 to 50,000 sq.ft. en route to its stated goal of 1,000

stores. For the last eight quarters, Whole Foods Market (WFM) has opened 25 stores averaging 37,000 sq.ft., and is on track to open 32 to 34 outlets in fiscal year 2013. “The demand for fresh, healthy foods continues to

grow, and we see tremendous new store opportuni-ties in all types of markets, from urban to suburban, as well as new and existing,” said co-founder and co-CEO John Mackey in discussing the chain’s latest quarterly results. “We have opened a record 32 new stores over the last four quarters, demonstrating our ability to internally fund and execute our accelerated growth plans. With 89 signed leases representing over three

D


Several of these new stores are expected to be in Canada, a mar-ket Whole Foods entered in 2002. So far, the company has eight stores in this country – all in Vancouver or the Greater Toronto Area – with four more planned in Toronto, Ottawa and North Burnaby, B.C. However, Mackey has been quoted as saying the company could open as many as 40 more stores in Canada, and eventually record annual sales of $1 billion here.

Analysts believe this is a distinct possibility, particularly for a differentiated retailer like WFM. “They’re doing well, so they’re looking to grow specifically in Canada,” says Maureen Atkin-son, senior partner at J.C. Williams Group, Toronto. “They have a lot of operations in the U.S., but their Canadian operations are relatively small in relationship. So I think, like a lot of Ameri-can retailers, they see Canada as kind of a next logical step for them, and so it does make sense that they would expand here.”

Whole Foods Market was founded in Austin, Texas, when four local businesspeople – John Mackey (now co-CEO) and Renee Lawson Hardy, owners of Safer Way Natural Foods; and Craig Weller and Mark Skiles, owners of Clarksville Natural Grocery – decided the natural foods industry was ready for a supermarket format. The original WFM opened in 1980 with a staff of 19, and was an immediate success.

In 1984, WFM expanded into Houston and Dallas, and then beyond Texas to New Orleans in 1988. The company continued to grow, acquiring 20 natural food chains. In 2002, WFM entered Canada, and in 2004, the United Kingdom.

feet in our development pipeline, we are well positioned to accelerate our square-footage growth through 2014 and hopefully beyond.”

The goal is realistic and attainable, according to Alida Destrempe, grocery analyst at Kantar Retail global consultancy. “There is room for growth among niche/specialty retailers,” she says. “Whole Foods entered the market by filling in a gap for niche, natural/organic grocery retailers. Today, the natural and organic industry continues to grow [estimated to be worth US$61 billion by 2015]. As consumer demand for these products increases, Whole Foods is expanding its footprint.”

Mackey has been quoted as saying the company could open as many as 40 more stores in Canada, and eventually record annual sales of $1 billion here.

“The numbers indicate that specialty food stores are growing significantly faster than mainstream supermarkets,” notes Ed Strapagiel, a Toronto-based independent retail consultant. “Over the three years from 2009 to 2012, retail sales at Canadian multi-line supermarkets and grocery stores grew at 1.3 per cent, per annum (compound average), while specialty food stores’ sales increased at 5.1 per cent, per annum. These numbers imply there’s room in Canadian specialty food retail for more players.”

CANADIANEXPANSION

IN THE BEGINNING

Left to Right: Craig Weller, Renee Lawson Hardy, John Mackey, circa 1980

WHOLE HEALTH

PH

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OS

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OF

WH

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The Goods on Whole Foods, DetroitGrocery Business: Tom, thanks for visiting the new Whole Foods Market store in Detroit on our behalf. What impressed you most about the store?

Tom Quinn: Although it’s a relatively small store at only 21,000 sq.ft. with a limited selection compared with other WFMs, it’s more a “city store” type and fits with the neighbourhood.

Their main advantage is that they are located on the edge of the Wayne State University campus as well as a large hospital complex, so they attract a lot of students and hospital workers. I was there around lunchtime so their prepared foods area was very busy.

The store just opened on June 5th (2013) so it’s early days, but I’d say this store offers a good shopping experience and is a welcome addition to a neighbourhood that hasn’t enjoyed much grocery store selection.

Tom Quinn was formerly the trade commissioner at the Consulate General of Canada in Detroit, from 1996 to 2012. He is now a principal at TQ Consulting.

Financial highlights Q2 2013(all figures in U.S. $)

+13% +21%

16.7%

Sales Net income

to $3 billion to $142 million

Earnings before interest, taxes, depreciation and amortization (EBITDA)

up 18%

$725,000$991Average weekly sales per storeSales per gross square foot

Gross margin: 36.4%

Return on invested capital

Sell the highest-quality natural and organic products available.

Satisfy, delight and nourish customers.

Support team member happiness and excellence.

Create wealth through profits and growth.

Serve and support local and global communities.

Practice and advance environmental stewardship.

Create ongoing win–win partnerships with suppliers.

Promote the health of stakeholders through healthy eating education.

Whole Foods Market was founded on several core values that underpin its company culture:

David Matthis (left), John Mackey at the Houston, Texas store opening, 1984

The first Whole Foods Market, Austin, Texas

» »

» »

» »

» »

WHOLE HEALTH


WHOLE HEALTH

Big plans, smaller storesBesides a planned expansion in Canada, Whole Foods Market is opening smaller stores in some U.S. urban centres with more private-label offerings and pre-packaged products to keep prices down and to appeal to more mainstream customers. We asked three retail experts how they thought this strategy would play out.

Alida Destrempe, Kantar Retail

Many retailers are revamping their price narratives or adapt-ing their pricing

strategies. In a highly competitive pricing market, retailers need to demonstrate value to shoppers that stretches beyond price. Whole Foods will be able to win in these new, urban markets if it can balance mul-tiple forms of value, for instance, heightened customer service, without sacrificing its core, brand message. The company under-stands how to operate in both urban and suburban environments, and has the ability to adapt and change its merchandising as required.

COMMUNITY CARE

Ed Strapagiel, independent retail consultant

Whole Foods has focused on the health dimension

and has gone after that market aggres-sively. Conventional supermarkets can’t go too far down this path lest they affect their mainstream business, and independents simply can’t afford a high level of advertis-ing and promotion.

Whole Foods has been quite successful in the U.S., and there’s no particular reason why it shouldn’t be in Canada.

Whole Foods is pursuing an additional customer base as it embarks on a strategy to target lower-income, food-insecure neighbourhoods – the so-called “food deserts.” WFM recent-ly opened a 21,000-sq.ft. store in economically challenged inner-city Detroit (see “The Goods on Whole Foods, Detroit), with plans for similar stores in New Orleans and Chicago’s South Side.

Prior to the Detroit store’s June opening, WFM held a ven-dor fair to source locally-produced products, identifying as many as 50 to start. A community commercial kitchen will allow other food entrepreneurs to rent space to kick-start their businesses. The company also retained a community health and wellness educator to hold classes across the city to teach consumers about healthy food choices.

“What we’re trying to do in Detroit is stretch the cul-ture, stretch the mission a little bit,” said co-CEO Walter Robb in a Huffington Post article.”

The company intends to address the issue of access to fresh, healthy food by opening smaller, more efficient stores. “What sets Whole Foods apart from other grocers is its ability to tailor its stores and assortment to a select group.

Maureen Atkinson, J.C. Williams Group

Whole Foods will certainly challenge mainstream grocers on their premium

business, but I think the people who will probably get hurt the most are the smaller operators in that niche.

I think if Whole Foods was just another grocery store, you’d probably not give them much of a shot at this. But they are experienced operators and know what it takes to be suc-cessful in Canada.

I don’t think introducing smaller stores in urban markets will dilute their brand, as long as they do it well and do it wisely.


WHOLE HEALTH

As Destrempe points out, shoppers see WFM as a trusted source to shop for top-quality natural and organic products. But it’s not only the products that attract customers. “Whole Foods also entered the grocery scene with strong views on social and economic matters which have manifested in their stores,” says Destrem-pe. “The retailer’s go-to-market strategy is focused around its core values, and in turn, Whole Foods has built a social and emotional connection with its shoppers that sets it apart from other retailers.”

“They are very specific in what they do,” notes Atkinson. “They’re very good operators and they do have a kind of following – people who love the product, who love what the store stands for.”

And most of those people are more affluent than the average Jane or Joe. “I’m sure [WFM] would like to appeal to all customers, but the reality is, the people who want to pay for this kind of product, who want to really invest in this lifestyle, are different from the average grocery shopper,” says Atkinson.

Loblaw is piloting a new health and wellness/natural foods franchised concept called NUTSHELL live life well.

The test store will open this fall on King Street West in downtown Toronto, says Julija Hunter, vice-president, public relations, Loblaw Cos. Ltd. She describes it as “a new version of a health store.”

According to Hunter, the small-format store will feature the following:

» A community-based interactive orientation.

» A variety of fresh, natural and healthy food and living ideas, all at great value.

» Wholesome, convenient ready-to-eat foods.

» A grocery offering with integrated natural options, and a broad vitamin and supplement assortment.

» Professional in-store health and wellness service and solutions.

» A pharmacy that balances traditional services, prescriptions and OTC, with prevention and support, and health and beauty products (core assortment with focus on natural skin care).

Hunter didn’t disclose the date of the official opening, but the store already has a Facebook page and a Twitter account (@nutshellonking).

FAST FACTS

LOBLAW FIGHTS BACK: IN A NUTSHELL

THE WHOLE FOODS DIFFERENCE

349

2,4008

191980First store opened in

with a staff of

Number of stores in 40 states and three countries (as of May 2013)

John Mackey Walter Robb

$11.7 BILLIONSales for fiscal 2012

73,000Total employees: Natural and organic products

under Whole Foods Market; 365 Everyday Value and Whole Catch brands

20ACQUISITIONS

THE CO-CEOs

th largest food and drug store in the U.S.


HEALTHY PROSPECTSHELEN SHERRARD president,

Canadian Health Food Association

As Canadians’ interest in healthy living continues to grow, Helen Sherrard, president of the Canadian Health Food Association (CHFA), provides insights into this dynamic category.

Grocery Business: The natural health products (NHP) category has grown quickly. What are the key drivers?

Helen Sherrard: It’s difficult to pinpoint one key factor for the increase in the NHP category. We know that 70 per cent of Canadians use these products on a regular basis, and the industry contributes over $3 billion annually to the Canadian economy. As Canadians become more health conscious, it seems that NHPs are being used for a number of reasons, such as the prevention, treatment or reduction of an illness, or the maintenance of good health.

GB: How does Health Canada define a natural health product?

HS: Health Canada defines NHPs as “naturally occurring substances that are used to restore or maintain good health.” They can be made from plants, animals, micro-organisms and marine sources, and can include vitamins and minerals, herbal remedies, homeopathic

medicines, traditional medicines, probiotics, and others, like amino acids.

GB: What is a Natural Product Number?

HS: What many Canadians may not know is that once an NHP has been assessed by Health Canada, it receives an eight-digit Natu-ral Product Number (NPN) or a Homeopathic Medicine Number (DIN-HM). By looking for one of these numbers on the label, consumers can be confident that the product has not only been reviewed by Health Canada, but that it is safe, effective, and of high quality.

GB: Are there any restrictions on how a retailer can merchandise and promote products with an NPN number in-store?

HS: The Natural Health Product Regulations (NHPR) define detailed requirements for label-ling, merchandising and promoting NHPs. Information on labels may be printed only as per the terms of the product licence. What this means is that, to help consumers make appropriate and informed choices about a particular product, all advertising of NHPs must clearly communicate the intended use of the product, corresponding to the licence issued by Health Canada.

WHOLE HEALTH

BOOTHS

OF FLOOR SPACE

2,900

65075,000net

sq.ft*

ATTENDEES

* In 2014, CHFA East moves to the roomier South Building at the Metro Toronto Convention Centre, which will open up space for more exhibitors

CHFA EAST 2012 FAST FACTS


HEALTHY PROSPECTS

WHOLE HEALTH

GB: From a Health Canada perspective, are organic products treated differently from natural health products?

HS: Organic products and natural health products each have separate regulatory acts under Health Canada: the Organic Products Regulations and the Natural Health Product Regulations, respectively. Certifying a product as organic does not make it a natural health product, and vice-versa. However, both of these types of products are thoroughly and strictly regulated to provide the Canadian consumer with the confidence that purchasing a product with an NPN or an Organic Certification means that it’s of the highest quality.

About CHFAThe Canadian Health Food As-sociation is Canada’s largest trade association dedicated to natural health and organic products. Formed in 1964 from a grassroots community of health food pioneers, CHFA now represents more than 1,000 member businesses across Canada, including manufacturers, retailers, wholesalers, distributors, and importers of natural and organic products.

GB: CHFA holds two conferences a year, both of which have grown rapidly. What do you think is driving that growth?

HS: Our trade shows are a reflection of the industry as a whole, and they will continue to grow as it does. Canadians’ interest in a naturally healthy lifestyle is growing, and as a result, manufacturers and retailers continue to evolve in order to provide the highest-quality products and the latest innovation.

10,650 estimated number of establishments directly involved with the sale of natural and organic health products

$2.5 BILLION

organic food sales to

Canadian consumers

annually

79% of NHP users believe that natural health products are safe

of Canadians use NHPs on a regular basis

of Canadians use an NHP on a daily basis

70% 45%

$3 BILLIONestimated contribution to the Canadian economy directly from the NHP industry

34,000 estimated number of individuals directly employed by the industry

85%of NHP users use these products because they want to help maintain and improve their health

70%of Canadian NHP users support developing a new act for NHPs in Canada

80%of NHP users indicate that these products were “very or somewhat important” to their families

Go East in OctoberThe CHFA East conference will be held at the Metro Toronto Convention Centre October 3-4, 2013 with the trade show portion taking place October 5 and 6 at the same venue. For more information, visit chfa.ca.


WHOLE HEALTH

Catering to Food IntolerancesWith more consumers complaining about food intolerances, there’s an opportunity for retailers to offer naturopathic wellness services

say food allergy and sensitivity is a consideration

By 2017, the global market for all food allergy and food intolerance products will surpass $26.5. billion.

A 2007 USFDA report estimated 28% of Americans have a food intolerance.

According to 2012 Statistics Canada figures, 52.5% of Canadian adults, and 21.8% of youth (12-17), are estimated to be overweight or obese; food intolerance has been linked to obesity.

A recent survey of health-care consumers confirms that, while Canadians prefer conventional medicine, one in four use alternative methods at times.

How widespread are food intolerances thought to be? Estimates vary widely from 2 per cent to more than 20 per cent of the population. The two most common causes of food intolerance are lactose and gluten (wheat). Food intolerances may be due to several things such as genetics, overcon-sumption of particular foods, environmental factors, stress, etc. As we age and our health concerns and stress increase, the body has more difficulty managing the inflammation caused by food intolerances.

What is the difference between a food allergy and food intolerance? A food allergy is typically an immediate reaction that an individual has on ingestion, inhalation or contact of a substance. It can result in severe symptoms such as difficulty breathing, swelling of the lips and throat and may be life-threatening.

Food intolerances, on the other hand, tend to manifest from a few hours or up to several days after ingesting a food. Symptoms may vary but eczema, joint pain, low energy, migraines, indigestion, bloating, and other digestive concerns are common.

Is there an opportunity for food retailers to tap in to this growing opportunity? Food intolerance management is one of a growing number of naturopathic wellness services that can be offered outside of a medical office. Many retailers and pharmacies see a considerable opportunity for incorporating these services into an expanded suite of health and wellness offerings within the store.

Dr. Mubina Jiwa Director - Essence of Health, Chief Naturopathic Doctor Gemoscan Canada, Inc.; Assistant Professor, Canadian College of Naturopathic Medicine

Diabetes 58%

Overweight 57%

High cholesterol 56%

Digestive disorders 48%

Cancer 46%

Heart or cardiovascular 42%

Food allergy/sensitivity 42%

Source: The Hartman Group, 2010

Consumers who report using food as a preventative tool for the following conditions:

Medically supervised Hemocode System is among the options available for food intolerance testing and management. It is the first and only program to be offered to consumers as a system, supervised by naturopaths, and commercialized for the food, drug and mass retail channels. It’s available at Rexall Drugstores, select IDA and Guardian Drug Stores across Canada, and the Hemocode System has been

successfully tested at grocery as well.

For more information visit Hemocode.com

of consumers say they always or usually purchase grocery products labelled for improving specific health conditions

42%

30%


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WHOLE HEALTH

What does being lactose intolerant mean?Lactose is a type of sugar found in milk products. In order to digest lactose properly, the body produces an enzyme called lactase. In people with lactose intolerance, the body has stopped producing adequate amounts of lactase, causing symptoms such as bloating and nausea.

THE MILKY

WAYJamie Schapiro is Director of Marketing, Galaxy Nutritional Foods, Inc.

Is lactose intolerance growing among children and adults? In recent years, there has been a steady increase of adults with lactose intolerance due to the sudden increase of people diagnosed with celiac disease. Competition and demand have bred quality and innovation in foods for sensitive diets and as a result, sensitive diet products – gluten free, allergen-free and intolerance-friendly – are big business today. The global market for sensitive diet products is estimated to be $26 billion by 2017.

How many people are lactose intolerant? Some studies estimate 75 per cent of the world’s population is lactose intolerant, mean-ing the majority of humans lack the enzymes needed to break down lactose.

What types of products are these consumers looking for? Consumers are looking for non-dairy “milks” and products ranging from cheese to ice cream to yogurt, so mainstream grocers should consider growing their lactose-free offerings.

of consumers in the lactose-free category are looking for a dairy-free alternative

43%

grocerybusiness.ca

WHOLE HEALTH

GOING NUTSCanadians are turning to the nut aisle for healthy snack options

By Noelle Stapinsky

It’s not just about crunchy or smooth anymore; peanut butter is now being infused with sweet and savoury ingredients. Cranberry, cinnamon and honey are among the flavours being added to the traditional breakfast spread to create bold new flavour profiles.

Some companies are even producing indulgent mixes by adding chocolate. “There are also savoury products out there like peanut butter hummus,” says the American Peanut Council’s Patrick Archer.

Peanut butter is also making its way into household dinners as a sauté sauce to create Thai-inspired dishes, and as a dip to encourage children to eat their fruits and vegetables.

Smooth Operators

AS MORE CANADIANS ASPIRE to consume healthier foods, nuts and nut products are on a sharp upswing. Packed with fibre, protein, vita-mins and minerals, nuts have quickly become a snacking favourite across the country.

Patrick Archer, president of the American Peanut Council, says the growth of the peanut category in North America is primarily due to the health and nutrition message that has caught consumer attention. “Some nutritional studies have found that the heart health ben-

efits of consuming nut products are very similar to those of olive oil,” he says.

And for many consumers, nuts are more than just a snack – they’re now a popular item being added to salads, cereal, and some dinner entrees.

“This category has been growing for many years,” says Joseph Milando, vice-president of sales, Eastern Canada, for Trophy Foods Inc. “Al-monds have skyrocketed. Flaxseed has exploded as more people are adding them to yogurt, cereal, and in baking applications – it’s in the double digits. More people are looking at labels, and with nuts they see all the good stuff they’re putting into their bodies.”

This demand is driving innovation in the cat-egory as more companies expand their offerings with bold new flavour profiles, single-serve options and more convenient reseal-able package designs.

Unique seasonings such as sea salt and black pepper, jalapeno, and mesquite BBQ are making waves. “These new flavours are really driving the category,” says Milando.

He notes that Trophy Foods recently launched a line of kettle-cooked peanuts. “It’s a unique pro-cess of how the peanuts are fried, which makes them taste like a potato chip.”

In the in-shell nut category, pistachios have recently gained a lot of exposure across North


WHOLE HEALTH

NUTS ABOUT PEANUTSAccording to Leger Marketing research conducted by the American Peanut Council:

49% of Canadians consume peanuts on a weekly basis

94% of Canadians have peanuts or peanut butter in their household

On a per-capita basis, Canadians consume more peanuts than Americans

Merchandising

ideaMany cuisines use nuts as a cooking ingredient. Consider

merchandising nuts in the ethnic aisle or in the

produce department to build basket size.

GROWTH FOR CASHEWS

+21 ($ VOL%)+27 (KG VOL %)

TOP SELLERS $ Sales $ Cat Share $ Vol % Chg

SNACKING FRUITS NUTS & SEEDS 496,188,320 100.0 9

PEANUTS SHELLED 72,017,514 14.5 6

NUTS IN SHELL 13,076,631 2.6 -3

SNACKING FRUITS NUTS & MIX 75,975,374 15.3 10

MIXED NUTS 44,543,149 9.0 17

CASHEWS 86,130,102 17.4 21

PISTACHIOS 74,298,365 15.0 13

ALMONDS 65,226,645 13.1 8

SUNFLOWER & PUMPKIN SEEDS 29,508,846 5.9 6

OTHER SNACKING FRUITS NUTS 35,411,694 7.1 -14

52 wks to June 1, 2013Powered by:

America – a resurgence that was driven mainly by the entry of Paramount Farms’ Wonderful Pistachios and its robust advertising campaign, Get Crackin’, which featured fun and whimsical commercial spots.

Marc Seguin, vice-president of marketing for Paramount Farms, explains how the company maximized in-store sales. “It’s all about displays, displays, displays. Pistachios are often an impulse purchase, so it’s important to ensure consumers have multiple opportunities to grab a pack as they shop.”

Half-pallet displays allow retailers to utilize less floor space and create more points of inter-ruption throughout the store. “And end-cap displays are another great way to get visuals on a product,” says Milando.

Strategically placing single-serve packages close to checkout areas can also create addition-al opportunities to capture those last-minute impulse snack purchases.

With such an in-demand, versatile product, the sales opportunities for retailers exist throughout the store and in almost every department. And while nut sales used to spike during the holidays, consumers in search of healthy alternatives are driving up sales throughout the year.


it figures>

Takeaway Consumers are demanding and expect healthier products that provide value for their wallets and waistlines.

TheHealthy Heart

Takeaway Consider how you connect your brand to recipes, diet plans, exercise programs or activities as among the ways to help consumers achieve their goal.

of consumers want affordable, healthy options45%

80% of Canadians are trying to minimize future health problems with diet and exercise being the top two causes of behavioural changes

consumers are actively reducing their intake of artificial sweeteners

Takeaway Consider sweetener alternatives – such as honey and raw sugar – to appeal to the consumer shift to more natural alternatives.

1 in 5


Carman Allison is director of consumer insights for The Nielsen Company in Canada and is responsible for creating thought leadership reports and insights for CPG manufacturers and retailers.

ALL STATS COURTESY: NIELSENCarman Allison

Takeaway When you’re promoting health benefits be sure to link to these key motivators.

Takeaway When it comes to innovation, recipes or general product consumption, consider the consumer definition of portion control.

Takeaway Ensure your innovation plans and store layout don’t alienate these consumers.

When it comes to seeking out health benefits from food and snacks, heart health (29%) and weight management (27%) top the list

of Canadians are tackling weight loss with a normal diet of smaller portions

of Canadian households report having a food allergy

29%14% Gluten

38% Dairy

19% Shellfish29%

Top 3 among allergy households:35%


MARKETINGOF IN-STORETHE POWER

“�We�know�our��advertising��in�GROCERY BUSINESS MAGAZINE is�effective”

“ Our ad looked great and we were thrilled to have received calls from retail buyers who had seen our advertisement for our recently launched, Organic Coconut Palm Sugar and Coconut Vinegar products, in Grocery Business”.

Organika�has�evolved�over�20�years�to�a�world�class��manufacturer�and�distributor�of�superior�health�products��selling�to�retail�food�stores�around�the�globe.�For�more��information�regarding�Organika,�go�to�www.organika.com or�call�604-277-3302.

For�more�information�on�Grocery�Business,�go�to��www.grocerybusiness.ca�or�call�416-817-5278.

States,�Sharon�Baingan,��National�Sales�Director,�Organika�Inc.

The path to purchase is considerably different for today’s shoppers than it was only a few years ago. Consumers are better informed about purchasing decisions thanks to smartphones, shopping apps and mobile coupons. Yet the 2012 Shopper En-gagement Study, conducted by POPAI, The Global Association for Marketing at Retail, found it all comes down to in-store marketing. The study found that shoppers are making an overwhelm-ing number of purchasing decisions in-store. In fact, the in-store decision rate climbed to an all-time high of 76 per cent in 2012, from 70 per cent in 1995.

According to POPAI, an important part of the mar-keting mix is the use of materials and devices that stimulate sales at the point of purchase. “Of-ten the decision-making process of shoppers does not occur until they actually see a product in the store. Therefore, the way a product is dis-played and is supported by in-store marketing materials can often be instrumental in leveraging sales,” the study says. POPAI’s in-store decision rate is comprised of three key components: generally planned purchases, brand substitution, and un-planned purchases. Together, these determine the true number of decisions being made at the shelf.

SUPERMARKET BUYING HABITSThe in-store decision rate for today’s shopper

MARKETINGOF IN-STORETHE POWER

POPAI’s 2012 Shopper Engagement Study shows more decisions are being made in-store than ever before

BRAND SWITCH

24%

15%

6%

55%UNPLANNEDPURCHASE

SPECIFICALLY PLANNED

GENERALLY PLANNED

“�We�know�our��advertising��in�GROCERY BUSINESS MAGAZINE is�effective”

“ Our ad looked great and we were thrilled to have received calls from retail buyers who had seen our advertisement for our recently launched, Organic Coconut Palm Sugar and Coconut Vinegar products, in Grocery Business”.

Organika�has�evolved�over�20�years�to�a�world�class��manufacturer�and�distributor�of�superior�health�products��selling�to�retail�food�stores�around�the�globe.�For�more��information�regarding�Organika,�go�to�www.organika.com or�call�604-277-3302.

For�more�information�on�Grocery�Business,�go�to��www.grocerybusiness.ca�or�call�416-817-5278.

States,�Sharon�Baingan,��National�Sales�Director,�Organika�Inc.


22% 26%

29%23%

WHO ARE YOUR SHOPPERS?

BARGAINHUNTERSA consumer who is willing to shop around for the lowest price.

EXPLORERSA shopper who enjoys discovering new products, browsing the store in general and getting inspiration for meals while shopping.

TIME STRESSEDA consumer who is under time pressure, is always in a hurry, and has perceived budgetary constraints. This group is not low income.

TRIP PLANNERSA consumer whose goal is to getthe shopping trip over with andexecuted according to plan.


FLOORSTAND ENDCAP POWERWING/SIDEKICK

INLINE/GONDOLA

KING OF THE AISLEDisplay types dominating in-store

ALL EYES ON THE DISPLAYA look at the Fixation Rates of shoppers

51%

35%

3% 2%

END OF AISLE

IN AISLE PERIMETER FRONT END

LOCATION, LOCATION, LOCATIONA look at where displays are popping up in the supermarket

42%

28% 23%

1986 1995 2012

THE RATE OF IN-STORE DECISION MAKING HAS REACHED AN ALL TIME HIGH

66% 70%76%

7%

10%12%

34%

44%END CAPS

FLOOR STANDS

IN LINE

POWER WING

13%EYE FIXATIONS

MADE ON IN-STORE DISPLAYS


Custom Publishing with a fresh take

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OUR TURNKEY SERVICES INCLUDE:• Professionally written and edited content

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WE’RE HONOURED

For more information, contact us at:1 800 666-5979 or burnbraefarms.com

These eggs come from hens raised in small social groups that are free to perch and lay their eggs in a nesting area in an enriched colony house environment, and are fed a diet of whole grains and other wholesome ingredients. And like all of our products, it represents our ongoing commitment to innovation and nutrition to meet the evolving

We’re pleased to announce that our Burnbrae Farms™ Nestlaid™ eggsare a new product finalist in the Canadian Grand Prix Awards.

to be chosen as a Grand Prix Finalist!

lifestyles and dietary requirements # of all Canadians. We are also proud to have been selected as a past winner of 13 Grand Prix Awards! From all of us at Burnbrae Farms, we sincerely thank the Canadian Food Industry Judges for their appreciation.

5194_BBF_Nestlaid_Grand_Prix_Ad-FA copy.pdf 1 2013-05-17 2:11 PM

TO THE RECIPIENTS OF THE 20TH ANNUAL CANADIAN GRAND PRIX NEW PRODUCT AWARDS

CONGRATULATIONS!

The Canadian Grand Prix New Product Awards celebrates innovation in 26 food, non-food and private-label categories. A 32-member panel of industry experts judged entries on five key criteria: uniqueness and innovation, product characteristics, presentation and packaging, overall consumer value, and consumer acceptance. Winners received their awards at the Grand Prix gala evening on June 5, 2013.Founded two decades ago, the Grand Prix program encourages new product development and innovation, which are vital to the continued growth of Canada’s consumer products and grocery retail industries. Presenting, the Canadian Grand Prix New Product Award winners for products launched in 2012


SPECIAL AWARDS 20TH ANNUAL CANADIAN GRAND PRIX NEW PRODUCT AWARDS

Adam Cameron

Gerry Doutre

Irena Khan

Bill Vanderkooi

All Canadian Award

Innovation and OriginalityInnovative Packaging

Canadian Grand Prix Healthy Innovation New Product Award

Weston Bakery Ltd.Country Harvest 100% Whole Grain Bread

Ultima Foods Inc.iögo Nano – Drinkable Yogurt

Procter & Gamble Inc.Tide Pods

Vitala FoodsVita-D Sunshine Eggs

Consumer Acceptance


FOOD

Brian Kerr, Gilles Deschênes

Melodie Farina, Tom Hare

Adam CameronWeston Bakery Ltd.Country Harvest 100% Whole Grain Bread

Kraft Canada Inc.Nabob Bold

Dare Foods LimitedRealFruit Gummies

Richard Vann, Vincent Uy, Kenneth Co

Julie Bullard, Frédérique Delagrave, Martin Valiquette, Simon Brisebois

7000 Foods Pulo Philippine Cuisine

Liberté Liberté Froúto Greek Yogurt

20TH ANNUAL CANADIAN GRAND PRIX NEW PRODUCT AWARDS


FOOD

Bill VanderkooiVitala FoodsVita-D Sunshine Eggs

Peter Joe Randal Lus

Ihab Leheta

Sunrise Soya FoodsSunrise Super Squeezies Dessert Tubes

Happy Planet Foods Inc.Happy Planet Fresh Soup

Garden Protein Internationalgardein

Julie Néron, Andrée Guimont, Lyne Chayer, Pierre Rivard

Best Brands Ltd. St-Hubert Chicken Broths (900mL)

Old Dutch Foods Ltd.Northern Choice Chickpea Tortilla Chips



NON-FOOD

Michael Watt

Baby Gourmet Foods Inc.Squoosh

Corrine Chan, Deanna Fleming

Irena Khan, Jason Adlam

Saba Nabi David Jacobs

Glaxosmithkline Consumer Healthcare Inc.TUMS freshers antacid

Procter & Gamble Inc.Tampax Radiant TamponsTide Pods

S.C. Johnson and Son, LimitedZiploc Brand Perfect Portions OFF! Clip-on

DLM Foods Canada Corp. Milk-Bone Healthy Favorites



PRIVATE LABEL

Dave Pullar Canada Safeway Ltd.Edwards Coffee, 326 g Debi Lilly Savoy CandleSafeway Tuna, 170 g

Seanna Rishor Loblaw Brand Limited PC “Free From” Angus Beef Burgers

Marie-France Gibson, Jason Knights

Metro Richelieu Inc.Fresh 2 Go Toscana FocacciaIrresistibles Dark ChocolateCovered Caramels with Sea Salt Deleo de Leonardis

Sobeys Inc.Sensations by Compliments Extra Virgin Olive Oil 3L



Shopper Marketing

The challenge: How to create consumer interest and drive sales in a low-engagement category.

The solution: A cross promotion that integrated television show sponsorship, consumer contests, social media and a retail point-of-sale program.

For the third consecutive year, Kruger Products’ SpongeTowels was the official paper towels of Food Network Canada’s Top Chef Canada. Chefs used the product on the set so that viewers could see it in action, and television ads ran during the program.

Grocery Business spoke with Wendy Mommer-steeg, category director – paper towels, Kruger Products L.P., to learn how the various aspects of the cross promotion tied together to drive sales at retail.

Grocery Business: What were the components of the promotion?

Wendy Mommersteeg: Besides the television show itself, we reached the audience of consum-ers who were watching Top Chef Canada online. Before each episode ran, viewers would see the SpongeTowels commercials.

There was also a unique aspirational consumer contest. The prize was a cooking demonstration and dinner with the Season 2 winner, Carl Heinrich, in his restaurant in Toronto. During the television show, consum-ers could visit our micro-site and vote for the person they thought would continue to win. There were also weekly prizes.

Then we had our in-store point-of-sale program, which brought the Top Chef property into the retail environment and another touchpoint for consumers.

GB: What comprised the in-store portion and how did that help drive sales?

WM: Because of the popularity of the show, we were able to leverage that property in-store through flyer activity, on- and off-shelf displays, and consumer interaction in the store. SpongeTowels had more than one million packages featuring on-pack communi-cation of its sponsorship. Our POS material encouraged consumers to enter the contest. That got them more involved in the property, and the ultimate outcome was to drive purchases of SpongeTowels.

GB: How can grocers leverage the promotion?

WM: Retailers are looking for programs that add excitement and engagement to low engage-ment categories.

You don’t always have to always offer price reductions. If you have strong properties and sponsorships, the off-shelf display really works well.

Besides in-store POS that is available for all retailers, there is an opportunity for them to customize a program – to create their own Top Chef program in the store environment. For example, buy two SpongeTowels and get entered in an in-store contest. Retailers could leverage that through their loyalty card.

GB: Three years into the sponsorship, how would you summarize the results?

WM: It’s a great partnership for us, and great exposure. Sponsorships have to work for both parties. It has to be a win for Top Chef, and it has to be a win for SpongeTowels, so I think that’s why we’ve been successful. It’s a unique way to get our absorbency message out. Our tagline is: “Nothing absorbs like it.” Consumers love cooking shows. They like to see what the chefs are cooking, and what products they’re using. It’s an ideal association for us.

SALESSOAKING UP

Wendy Mommersteeg,category director – paper towels, Kruger Products L.P.


AS THE 21ST CENTURY DAWNED, home delivery of groceries was booming as both pure-play and bricks-and-clicks retailers jumped on the bandwagon. But in the wake of the spectacular failures of startups like Webvan and Kozmo in the 2001 dot-com bust, home delivery stalled as retailers struggled to find ways to make the last mile – the delivery from the warehouse or store to the customer’s door – profitable.

But now, after a 12-year lull, the delivery of groceries and other online sourced prod-ucts is back on the scene in a major way. Chalk it up to young, tech-savvy consumers who don’t own a vehicle, aging baby boomers who dislike walking large stores, and smart phone apps that make ordering easy. Not to mention there’s a battle brewing for domination among the behemoths – the pure online players like Amazon and now Google, versus the bricks-and-mortar clout of Walmart.

As a result, new – or at least revamped – models for grocery delivery services continue to emerge (see “The Evolution of E-commerce,” Grocery Business, April/May, 2012). Essentially, if you have a modem, grocers have a delivery model for you.

One of the biggest challenges with online shopping is missed deliveries, which are costly and inconvenient. That’s where drop boxes come in.

AMAZON is testing secured “Lockers” in select 7-Eleven, Staples and other retail locations in several U.S. cities for products it sells.

BUFFERBOX is a Canadian-developed, self-serve parcel pick-up box for any online order. Situated in GO Transit stations, 7-Elevens and Sobeys stores in the Greater Toronto Area. Bought by Google in 2012.

SHOPBOX, based in the U.K., places secure containers outside customers’ homes. Perishables: Yes

WALMART is planning to test in-store delivery lockers in a handful of its U.S. stores for customers who elect to use the “ship to store” option.

TAKIN’ IT TO THE STREETS

The last mile: This last leg of the supply chain is often less efficient, comprising up to 28 per cent of the total cost to move goods. This has become known as the “last mile problem.” The last mile problem can also include the challenge of making deliveries in urban areas where retail stores, restau-rants, and other merchants in a central business district, often contribute to congestion and safety problems. – Wikipedia

THINKINGINSIDE THE BOX

By Sally Praskey

Customers use their smartphones to order products

Bricks and Clicks


As retailers seek a competitive edge, several are turning to same-day delivery service.

AMAZONFRESH, through its Seattle Spotlight program, delivers ready-to-eat meals from local restaurants, picking up restaurant orders daily and merging them with each customer’s grocery or general merchandise order. Recently expanded AmazonFresh offering to Los Angeles. Perishables: Yes

GOOGLE, The Internet search leader is a recent entrant in the grocery delivery game. Google Shopping Express provides same-day delivery of food and other products bought online to a test group of shoppers in San Francisco, and even contracts-out deliveries to couriers, who drive Google vans. Participating merchants – including Target Inc. – sell items through a central website and pay a commission to cover delivery costs.

INSTACART inventories products from Trader Joe’s, Safeway, Whole Foods and Costco in San Francisco. Customers order online, and Instacart hires personal shoppers to buy and deliver the groceries in as little as one hour. And, like Amazon’s Prime Service, Instacart offers a yearly subscription service, called Express, that waives individual delivery fees. Perishables: Yes

WALMART’S “Walmart To Go” pilots same-day delivery for selected products in some U.S. markets. Complements the chain’s existing models – “pay with cash” at store (for an online order), and shop online and pick up same day. On a more limited basis, Walmart has been testing the delivery of perishables to certain consumers in the San Jose/San Francisco area.

An increasingly popular option for both grocery retailers and consum-ers, particularly in Europe, Australia, and the U.S., is the “click and collect” drive-through model. Pioneered by French grocery retailer Groupe Auchan SA more than a decade ago, click and collect eliminates the last mile by having customers pick up their online grocery order at either the store or a convenient location.

AMAZON offers Collect+ in the U.K.; customers can arrange to have packages delivered to pickup points, such as convenience stores, news-stands, and gas stations.

PEAPOD, a wholly-owned subsidiary of Royal Ahold, provides online service for the retailer’s Stop & Shop and Giant supermarket chains. The Peapod Pickup service allows customers to order groceries through peapod.com and pick them up at a Stop & Shop store. Last fall, it rolled out more than 100 virtual grocery stores at com-muter rail stations in several U.S. cities. This year, virtual store technology features digital billboards of larger-than-life grocery aisles positioned in community recreation centres, on coffee sleeves at local cafes, and on a high-tech Peapod truck travelling through each market through the end of summer. Perishables: Yes

RELAY FOODS sources foods from local stores, restaurants and farms for pickup at drop locations scattered

IN CONCLUSION…While the jury is still out on the financial viability of these various grocery delivery models, the concept is undoubtedly here to stay as retailers pursue new ways to connect with the changing lifestyles and demographics of their marketplaces.

around five U.S. cities – in effect, passing the baton to the consumer for the final leg of the relay. Perishables: Yes, by packing frozen foods in individual freezer bags.

TESCO now offers free Click & Collect Groceries next-day service in more than 150 of its stores in the U.K. Also operates several “dark stores,” used only to fulfill online grocery orders. Perishables: Yes

WHOLE FOODS is said to be planning an online shopping service with store pick-up.

ZIPMENTS is a crowd-sourced delivery network servicing retailers in New York City. Allows anyone over age 18 with a vehicle, a text-enabled phone, and a PayPal account to bid on delivery services.

CLICK & COLLECT

SAME-DAYSERVICE


This year, marketers will focus on digital marketing and launching innovative products, according to the 8th annual BrandSpark Canadian Marketers’ Survey.

“We see that marketers are consistently open to new strategies and tactics, but there is a lag between when channels are considered ‘hot’ and when marketers are able to design and implement a coherent strategy incorporating, the channel,” says Philip Scrutton, director, consumer insights.

BRANDSPARK SURVEYSCANADIAN MARKETERSInnovative products, new industry trends have marketers feeling optimistic

“One in four marketers cited email database marketing as the biggest marketing trend of the year (ahead of other responses), and 69 per cent either will or ‘probably will’ imple-ment a mobile strategy this year, but only 15 per cent already had a strategy in place,” Scrutton says. “However, based on these results we expect mobile marketing growth to live up to industry expectations in the coming year.”

THE SURVEY

The 8th Annual BrandSpark Canadian Marketers’ Survey was conducted online in March and April 2013 in collaboration with lead partner the Canadian Marketing Association and supporting partner the Mobile Marketing Association. BrandSpark.com

26% 10%vs.

SPENDING INTENT RANKED BY % INCREASE FOR UPCOMING YEAR WHAT DELIVERS THE BEST ROI? AS PERCEIVED BY MARKETERS

SOCIAL MARKETING 45%

35%

33%

29%

29%

26%

19%

15%

14%

MOBILE MARKETING

CRM/DATABASE ADVERTISING

ONLINE DISPLAY ADVERTISING

PROMOTIONS /ACTIVATIONS

PAID SEARCH

MARKETING AUTOMATION

IN-STORE /POS

DIRECT MAIL

EMAIL /DATABASEMARKETING

SHOPPER MARKETING

Consumer insight brought to you by:

Marketing


Chipping In The 79th Annual Food & Allied Industries Golf Tournament: June 7, 2013

Over 400 golfers, playing on four different courses, enjoyed a day on the links to raise $10,000 for The Grocery Foundation. Thanks to everyone who participated!

Food and Allied Golf CommitteeLeft to right: Mike Furgiuele, Forge Francella, Michele McMillan, Mike Marinangeli, Ray Ibsen, Peter Davies, Christine Tos, Angelo Raso, Kevin Smith, Jim Hunter, Rory Lesperance

Missing: Grant Campbell, Doug Cussons, Dave Spry

Forge Francella presents the cheque to Michelle Scott of The Grocery Foundation


In today’s market, Canadians are more fresh obsessed than ever. They certainly love their salads, which are the sixth-most-purchased meal item out of home. But as more shoppers embark on a quest to eliminate processed foods from their diets and consume more fresh foods, they’re scouring the produce section for new flavourful ideas.

According to Anne Farragher of Kraft Canada, consumers are evolving to a more holistic approach to health, and the desire to eat more fresh and natural food products is growing. And while health-conscious options are top of mind, Canadian consumers still want bold and zesty flavour profiles.

Kraft recently launched its Fruit and Veg

salad-dressing line, a puree product that boasts natural flavour and colour at only 20 to 30 calories per serving.

But Canadians are moving beyond just drizzling these saucy solutions atop a bed of greens; many are looking to healthy salad-dressing options to pour over cooked vegetables, as a dip when munching on a raw veggie snack, or as a mari-nade option for meat. Dressings are even making their way into sandwiches and wraps.

With flavours such as Berry Balsamic, Garlic and Lime, and Roasted Cauliflower, Farragher says, “We expect the new Fruit and Veg line to reduce the need for homemade dressings. There are alternative ideas on the side panel of the bottle to encourage cross-category purchases.”

DRESSING FOR

SUCCESSSalad dressings are the produce department’s new best friend as Canadians go beyond just topping their greens.

By Noelle Stapinsky

WHAT CONSUMERS WANT

h Fresh and natural ingredients in their salad-dressing choices.

h Calorie and salt reduction with no corresponding loss in flavour.

h Bold, bright and refreshing flavours. h Convenience that also extends to the

packaging, which should cater to the evolution of single-person households.

WHY THE SURGE INSALAD DRESSINGS?

h Health and wellness trend h Convenience h Increase in salad consumption

h Need for meal flavour enhancement

DRESSING UP DEPARTMENTS TO DRIVE SALES

h Creative displays are critical, and the most efficient in-store support vehicle.

h Display bold and colourful signage. h Since salad dressings are often used

as marinades, cross-merchandise them in the meat and seafood department to increase basket size.

It’s the Flavour of the Month Encourage consumer trial by displaying and sampling a unique salad dressing flavour every month.

Shelf Life


FLAVOURED COOKING OILS

+54%

And as Canada’s cultural demographic continues to change, ethnic flavour profiles are also on the rise. To answer such demand, new and exciting salad-dressing flavours have made their way into the retail scene. There are now dressings featuring mango and jalapeno, and Asian-inspired sesame and ginger. Even “superfruits” such as pomegran-ates, acai berries and blueberries are packing a punch in vinaigrettes.

In the produce department, refrigerated dressings are winning the Canadian

POUR ON THE PROFITS

h Create some buzz in the produce section by cross-merchandising veggies with veggie dips or refrigerated dressings, and fruits with fun fruity-flavoured dips and dressings. “That is the secret to success,” says Marzetti’s Cathy Antinozzi. “With every dip or dressing being purchased, a fruit or vegetable is purchased, accounting for two profit margin opportunities.”

h Larger signage and more disruptive displays in the produce area can also encourage consumers to spend more time in the section and buy more ingredients.

h Kraft’s Anne Farragher advises grocers to “consider adding secondary shelving of shelf-stable salad dressing in the produce section to drive basket size.”

consumer’s attention. According to Nielsen’s Total Pourable Salad Dressings data, shelf-stable dressings are declining (-8 per cent), and refrigerated dressings are up by 11 per cent. “This growth is coming from pourable dressings as consumers are becoming more interested in foods with health benefits,” says Cathy Antinozzi, client development director of Advantage Sales and Marketing for Marzetti products.

Following the trends to cleaner labels, the raw food movement and green branding,

$ Sales $ Sales % Chg vs Yr Ago

Unit Volume Unit Vol % Chg vs Yr Ago

SEASONINGS & SALAD TOPPINGS $123,957,680 8 30,194,741 6

SALAD DRESSING - DRY $2,812,078 12 2,010,622 -4

SALAD DRESSING - POURABLE $245,087,594 4 87,110,084 2

SHELF STABLE $183,154,215 2 72,648,511 1

REFRIGERATED $61,933,379 10 14,461,573 3

SALAD DRESSING TYPE - CREAMY $138,923,613 5 46,931,044 2

SALAD DRESSING TYPE - OIL & VINEGAR $63,668,586 0 23,519,686 -1

SALAD DRESSING TYPE - RED & SWEET $25,177,746 3 10,538,788 4

OTHER TYPES SALAD DRESSING $17,317,649 7 6,120,565 5

MAYONNAISE & SPOONABLE SALAD DRESSING $211,860,896 4 50,646,704 2

MAYONNAISE - LIGHT $43,603,452 4 9,825,813 0

MAYONNAISE - REGULAR $91,148,797 10 21,546,285 8

SPOONABLE SALAD DRESSING - LIGHT $24,312,927 -6 6,210,284 -7

SPOONABLE SALAD DRESSING - REGULAR $52,795,720 2 13,064,322 0

COOKING OILS $309,763,568 1 51,536,600 3

SALAD & COOKING OILS $153,092,212 3 27,877,358 0

OLIVE OILS $143,435,722 -3 21,591,790 6

SESAME OILS $4,405,295 11 1,042,843 11

FLAVOURED COOKING OILS $8,830,339 54 1,024,609 38

COOKING SPRAYS $27,677,166 8 6,609,288 9

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52 weeks ending 12/12

According to a recent study by Knowledge Networks-PDI:

Sampling programs drove a 475% sales lift on the day of the event.

Of those who sampled the product 11% were likely to purchase it again during a 20-week period.

Marzetti launched its Simply Dressed dressing line, which features extra virgin olive oil with a selection of classic dressing flavours, light options and vinaigrettes. Antinozzi also suggests merchandising refrigerated dressings with bagged salads to make shopping decisions easy for consumers.

With such growth potential, opportunities abound for savvy produce managers who cross-merchandise salad dressings within the department, and offer fresh meal and snack ideas.

Shelf Life


LIST IT New products you need to know about!

New Indulgent FlavoursThick and deliciously creamy, Astro Original Greek yogourt is now available in three decadent dessert flavours – Banana Cream Pie, Cherry Cheesecake and Vanilla Crème Brûlée. Made with natural ingredients, Astro Original Greek is high in protein and gelatin free. astro.ca

Cashmere Goes UltraLuxeCashmere bathroom tissue, inspired by the luxurious fabric that has defined softness for centuries, is now even softer. Cashmere UltraLuxe is a premium 2-ply bathroom tissue that is hypoallergenic and dermatologist approved.Cashmere.ca


Healthy and FlavourfulSol Cuisine Inc. has added two new burgers to its line of frozen meatless products. The Indian Masala Burger is spiced with turmeric, green chili and ginger, and can be served in a sandwich, as an appetizer with chutney or as a meal with greens or legumes. The sprouted Quinoa Chia Burger features organic and sprouted quinoa, black chia and sweet potato. solcuisine.com

Summer Fun SnacksNeal Brothers Foods has debuted two new flavours of hand-cut, kettle-style chips: Maple Bacon and Pink Himalayan Salt. Package design for the new line of chips features humorous corporate and family anecdotes. Campaign initiatives include traditional and online advertising, consumer events, POP material, and a redesigned website. nealbrothersfoods.com

Raw Food Snack BarTree of Life Canada has introduced an innovative, raw food bar to the portable snacking category. Eat Nãkd bars are made with a whole-food approach: minimal processing; no added sugar, syrups or additives; and no wheat, dairy or gluten. treeoflife.ca


LONGO’S Longo’s third store in Oakville, Ont. is also its 26th in the Greater Toronto Area. With more than 100 varieties of organic produce, this location also features unique offerings such as the first in-house Godiva Chocolatier boutique in Canada.

Perry Caicco’s column will return.

The Longo’s team

Anthony Longo, President and CEO

Rosanne Longo, Chair, Longo’s Family Charitable Foundation

OPENS ITS NEW MARKET FRESH STORE

JUNE 24, 2013 – OAKVILLE, ONTARIO

july/august 2013

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