Strong grocer margins in a price deflationary year

One of the five publications market analyst and consultant Kevin Grier Market offers is an in-depth look at the Canadian grocery trade.

“StatsCan publishes financial data every quarter,” explains Grier in the following interview, “and I get them to peel away the food retail data…and once again the gross retail margins are looking very good — down a bit, mind you, but still generally performing quite well.”

Grier believes good retail margins are impressive in the current environment of food deflation, signalling operational and procurement efficiencies in the retail sector.

Food manufacturers in Canada are also seeing some positive change, according to the report, with investments in capital reaching $1.52 billion in the third quarter.

Strong consumer confidence, as analyzed by the Conference Board of Canada, could bode well for restaurants, who are already looking hopeful for a strong new year.

Hear the full interview with market analyst and consultant Kevin Grier, who talks about everything from retail margins and restaurant potential to capital investment in food manufacturing.

According to a recent report published by Dalhousie University and the University of Guelph (and reported on by the Globe and Mail), the 2018 food bill is likely to increase for Canadians. The report suggests food inflation overall is projected to rise 1 to 3 percent next year, and roughly 59 percent of that hike will come from consumers eating out.

“We have to be careful though,” says Grier, “this is the same group that predicted an up to 5 percent inflation rate in 2017 for food, and in fact food prices in 2017 are probably going to be down about a percent.” “The other point is I guess this year they’re forecasting price increases of anywhere from 1 to 3 percent for 2018, and again that’s somewhat like predicting that the sun comes up in the east, because basically over the last 15 years or so, food prices have gone up 2/2.5 percent.”

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