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Canada Food and Drink Report Q2 2008Published by: Business Monitor International Published: Apr. 18, 2008 - 37 Pages Table of Contents
AbstractOne notable trend in Canada’s food and drink and is the move towards premium and value-added products asdiscussed in BMI's newly published Q208 Canada Food & Drink Report. Premiumisation is generally good news for the food and drink industry with firms able to generate greater revenues and higher margins, however, the trend towards higher priced products has also meant that several firms pitched at the lower-end of the market have struggled. This trend has also led to some firms being forced to radically rethink their strategy to capitalise on changing Canadian demands. Two firms that have not been helped by the trend towards premium products are soft drink producer Cott and brewery firm Brick Brewing. Cott specialises in private-label carbonated soft drinks, with interests in both Canada and the US. In both countries consumers have been trading up from carbonated soft drinks to fruit juices, smoothies and flavoured waters. This trend meant that in 2007 the firm’s sales were stagnant compared to 2006 while the firm’s net losses soared to US$73.1mn. Meanwhile In the nine months to October 31 2007, Brick Brewing lost around US$1.5mn as consumers spurned the firm’s economy beer brands. The firm announced it was conducting a strategic review - a signal that it was up for sale - however, none of the multinational brewers was attracted by the firm’s economy portfolio at a time when consumers are increasing opting for premium brands. Both these firms may need to radically rethink their strategies to stand any change of growing sales in the coming years. One firm that already recognised the need for change is Canada’s largest food processor Maple Leaf. One year ago Maple Leaf unveiled a comprehensive three-year restructuring program designed to move the firm away from selling fresh pork towards selling value-added prepared food. For the whole of 2007, earnings from continuing operations were up by 15.6%, reaching CAD199.1mn (US$196.5mn) suggesting that the firm's restructuring strategy may be paying off. However, the cost of the restructuring process is now estimated to be between CAD275mn (US$272mn) and CAD325mn (US$321mn) - figures which highlight the short term impact of such a large scale change in strategy. One notable exception to this trend is in the area of grocery retailing where a mainstream ‘premium’ grocery retailer, along the lines of the UK’s Waitrose or the US’s newly rebranded Safeway, has not emerged. With the country’s long-established retailers struggling to adapt to the new levels of price competition from Wal- Mart’s newly launched hypermarkets and the demand for premium products already proven this is perhaps a strategy worth pursuing for one of the country’s struggling supermarket chains. Get Full Details About This Report >> |
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