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Category Research: CPG Trends
Some current trends in the Canadian CPG industry include the growth of responsible consumerism, preference for private label products, personalized shopping experience, and the rise of on-demand and microshopping. It is noted that consumers are demanding organic and sustainable products, better pickup and delivery services, higher discounts, and ethnic product selections, among others.
Top CPG Industry Trends in Canada
Growth of Responsible Consumerism
- Modern consumers are seeking brands that help them make more responsible and better choices that have a positive impact.
- Increasing demand from higher-income consumers for organic and fresh products is driving the growth of specialty food retail.
- Canadian CPG brands need to focus on a more heterogeneous and diverse set of consumers with broader needs.
- Products with health and wellness claims will score better in gaining consumer attention. Further, about 33% of Canadian customers are willing to pay a premium for more sustainable or ethically produced products.
- The trend is cross-referenced with reports and publications from Grocery Business Magazine, USDA, Infiniti Research, PwC, CTV News, and Canadian Grocer,
Industry Impact
- Specialty and organic products have become a ‘center aisle’ feature in products in large grocery outlets.
- Independent retailers are currently outperforming standard food retailers. Further, a number of ethnic stores are opening up to cater demands of increasing immigrant communities in Canada.
- CPG companies are testing alternative crops to offer clean-label and organic products.
Leading Companies
- Healthy Crunch is available across tens of thousands of stores across North America. The snack brand focused on products that are healthy, hand-crafted in small batches, and allergen-free.
- TruLocal is a Toronto-based startup that enables consumers to order the delivery for clean, healthy, and locally-sourced meat products at doorstep.
Consumers Driving the Trend
- Canada's ethnic customers are projected to reach over 15 million by 2025. The preference of ethnic customers is inclined towards buying better-for-you products.
- A new survey by PwC reports that among young consumers (18–24-year-old), about 74% prefer locally produced, 70% prefer organic, and 49% prefer sustainably packaged products.
- Gen-Z consumers are poised to grow over millenials in terms of buying power and will pay higher prices for more sustainable and eco-friendly products.
Preference for Small and Private-Label Brand
- Growth is projected for small and private-label brands as consumers demand better ingredients and high-quality products.
- According to Nielsen, smaller brands accounted for 25.8% of the Canadian FMCG market and comprised over 33.8% of the total industry growth.
- The trend is cross-referenced with reports and publications from Grocery Business Magazine, USDA, Nielsen, and Canadian Grocer.
Industry Impact
- Many retailers have started creating private-label brands focusing on either higher-quality or better value.
- Larger companies are partnering with incubators and startups for contract manufacturing of trending products outside their categories.
Leading Companies
- Eataly is a Toronto-based company that exemplifies the celebration of food products and experiences with 'social shopping.'
- Coppa’s Fresh Market and Organic Garage are launching small urban stores of 20,000 sq. ft to cater to millennials in the downtown core who are seeking different experiences.
Consumers Driving the Trend
- Price-conscious consumers from lower and middle-income households demand promotionally-priced products, leading to increased reliance on private label brands.
Personalized Shopping Experience
- Personalized consumer experience is one of the significant trends that is driving modern customers in Canada.
- Retailers need to continuously reinvent offerings to grab consumer attention by providing a better experience to retain their brand loyalty.
- According to PwC's Consumer Insights Survey, consumer product companies should focus on offering personalized services like click and collect, repeat purchase incentives, contactless payments, among others,
- The trend is cross-referenced with reports and publications from Infiniti Research, PwC, CTV News, and Retail Council.
Industry Impact
- Increasing the use of customer data for analyzing consumer behavior to offer better-personalized shopping experience.
- Increasing consumer demands have led many brick-and-mortar stores to create a sense of community and belonging for customers.
- To attract more customers, stores are adding amenities like chef-prepared ready-to-eat meals, ATMs, juice bars, dietitian services, gourmet bakery items, cooking classes, and beauty products.
Leading Companies
- Sobeys is a Nova Scotia-based supermarket chain that is investing in building a $95-million e-commerce program called Voilà.
- Metro Stores plan to install electronic shelf displays to allow faster updates for notifying product price change.
Consumers Driving the Trend
- Personalized services like same-day delivery are one of the most popular trends among young shoppers in Canada.
On-demand and Microshopping
- According to the 2019 Canadian Consumer Insights Survey by PwC, about 52% of Canadian consumers want to go through the store more quickly and conveniently. Followed by, nearly 32% of consumers seeking efficient and simple payments like contactless and mobile payments.
- Retail Council of Canada reports that convenience and good value are cited as a top reason for retailer selection by 27% and 44% of respondents, respectively.
- It is noted that nearly 26% of Canadians make 2-3 microshopping trips (taking five minutes or fewer) per week. It is followed by 23% of consumers making microshopping trips every week, and 10% of consumers making a microshopping trip daily.
- The trend is cross-referenced with reports and publications from Grocery Business Magazine, USDA, PWC, and CTV News.
Industry Impact
- E-commerce, club stores, and dollar stores will make about 25% of Canada's FMCG sales in 2020.
- Several Canadian retailers are focusing on offering integrated shopping experiences to consumers.
Leading Companies
- Amazon is providing vast catalogs to consumers for ordering small items like soap, cleaning (supplies), toothpaste, and others that can be quickly delivered at the doorstep.
- Loblaws has launched a new PC Express app that will feature “automated-picking technology” at their Dufferin and Steeles superstores in Toronto.
Consumers Driving the Trend
- Millennials prefer fewer shopping trips, as about 43% of fewer trips were made by millennials than average Canadian households in 2019.
- The increasing number of Canadians living alone (over four million) is driving the sales of quick meal options such as single-serve and ready-to-eat offerings.