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Food and beverage to Canada
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(Last updated: 30 Oct 2008)
Trends and opportunities
The market
Canada is a mature and sophisticated food and beverage market. Canada's food and beverage industry is recognised internationally as being among the best in the world, both in terms of ensuring food safety and quality, and in providing a trade-friendly environment.
The categories showing significant growth have been those that meet the consumers’ need for convenience and portability. This demand has contributed to the growth of refrigerated/frozen/shelf-stable ready-to-eat meals and meal makers, including 'healthy for you' products.
The organic and natural foods category in Canada is growing at 15-20 per cent annually, making it the fastest growing category in mainstream grocery stores. Many large retailers who have strong private label programs have added certified organic lines.
Opportunities
Given its proximity to the USA, Canada's consumer preferences are very similar to those of Americans. However, there are differences - most notably a continuing British influence. Australia has a long history of supplying the Canadian market and the ‘Australian’ brand is a marketing advantage in Canada.
There are good opportunities for Australian companies to supply the Canadian market, particularly for exporters in the following sectors:
- Private label/control label products
- Specialty and gourmet packaged foods (all categories)
- Ethnic, certified organic and all-natural grocery products
- Grocery lines that provide a point of differentiation or unique packaging
- Value added meats and seafood
- Fresh produce that provides counter seasonal solutions (tropical, stone fruits, pears, citrus)
- Ingredients for use in further manufacturing (particularly in organic).
- Ready-to-serve and value added products suitable for the food service and hospitality sectors (institutional and restaurants).
Competitive environment
The market is becoming increasingly competitive as the grocery chains respond to changing population demographics and competition from box stores/warehouse retailers, who are expanding their product range to include grocery items including food. |
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Tariffs, regulations and customs
With the exception of dairy products most Australian food products are not subject to quotas. Dairy products exported without quota can face import duties of up to 262.2 per cent because Canada is considered to be self-sufficient in fluid milk production. Import duties for such products are determined by their composition.
Industry standards
Canada is officially a bilingual country. As such, both French and English must appear on the labels, even for products intended solely for sale in Western Canada. The regulations regarding bilingual labelling are most stringent for products intended for retail sale to consumers.
For items intended for sale at the food service or industrial levels, language requirements are less restrictive.
Canadian labelling law requires that all ingredients be listed, in descending order, by their common name. The use of European ingredient numbers is not permitted. For example, ‘Food Acid (330)’ must be declared as ‘Citric Acid’, with the USA also having the same requirement for ingredient declaration.
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Marketing your products and services
Market entry
However attractive Canada and the USA may seem, there are some pitfalls. Australian firms must not only choose a market partner, they must also select the appropriate region, distribution system and sales channel.
- Each product will have its own unique ‘to market’ strategy.
- Australian firms need to be able to determine the amount of risk that they want to share with the Canadian or American market partner.
- The greater the amount of risk absorbed by the North American firms, the higher the mark-up to the retailer and ultimately the consumer.
- A distributor’s core function is to be the domestic logistics arm of the food manufacturer, most do not import and take title to the goods. They are dependent upon a sales force to exploit opportunities and deliver each accounts’ volume.
- While the Canadian and American ‘to market’ systems are similar, both require that there be an importer of record. It is more common for Canadian market partners to adopt the ‘import/distribute/sell’ approach than their American counterparts.
As both the USA and Canada have mature food and beverage industries, potential exporters are expected to develop sophisticated marketing approaches. Market partners and retailers are open to new ideas and products, however, they expect that firms will show continuous support for their brands as well. The Canadian market is divided into four main sales regions, each of which requires a slightly different marketing campaign.
Regional buying patterns are affected by a combination of factors, with ethnic concentrations in various geographic sales regions requiring tailored marketing approaches. For example, the differences between eastern and western Canada are quite pronounced.
Distribution channels
Food and beverage items can be sold in Canada and the USA through one or a combination of the following distribution channels:
- Grocery
- Drug store (chemist)
- Mass merchandiser
- Warehouse and club stores
- Food service
- Vending
- Convenience/gas bar
- Specialty/gourmet
- Gift basket
- Direct mail/mail order
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Contact details
The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.
Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.
Austrade:
- Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
- Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
- Administers the Export Market Development Grants scheme.
- Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
- Provides advice to the Australian Government on its trade and investment development activities.
- Delivers consular, passport and other government services in designated overseas locations.
A list of Austrade offices (in alphabetical order of country) is available.
More information
For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au |
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