Big trade surplus, at-home buys, & online sales: Grier talks groceries

The latest Grocery Trade Report tells the story of more sales to the U.S., Canadians choosing to cook at home, and a (perhaps surprisingly) small shift to online food sales.

Kevin Grier, with KG Market Analysis and Consulting, says that 2017 was a pretty strong year for the grocery industry in Canada. Of note, packaged goods, such as cereal, dairy products, and processed meats, contributed to a big trade surplus of $980 million with the U.S., due in part to the lower Canadian dollar. This is the largest surplus since 2005.

“We’ve swung from big deficits for nearly a decade to a small surplus (with the U.S.),” Grier says, adding that Canada is holding its ground on food processing.

Looking to profit margins, 2017 was a strong year overall, with Loblaws, Sobeys, and Metro, all posting better than expected margins for the year. That said, grocers saw profit margins dip in the fourth quarter.

The report also tells the story of the continued underperformance of Sobeys’ Safeway acquisition, now five years in the works. “A lot of things went wrong at once — they lost a CEO and underestimated the power of the Safeway brand. There were cost overruns and logistical issues. It didn’t go well,” Grier says. “They’re taking a new run at it, and it’s going better this time.”

StatsCan also released its numbers on food-at-home spending, and Grier says Canadians set a record increase for the spending in the 4th quarter. But while it was a pretty good year for Canadians spending at grocery stores, grocers had narrower margins and lost share to Walmart and Costco, he says.

Story continues below Kevin Grier’s discussion with Shaun Haney ….

And what about home delivery and online grocery ordering? What impact is that having on the grocery trade? Grier says that Canadians like to grocery shop vs other countries, as far as our attitudes go, but there certainly is a lot of buzz about online grocery shopping.

The total share of online grocery shopping is only about 2%; projections could push it to 4% — hardly a seismic shift in how Canadians pick and pay for groceries. But the volume of talking about it greatly exceeds the actual use, he says, and every single retailer is trying something, putting their own spin on the concept.

“These are extraordinarily interesting times,” Grier says.

 

RealAgriculture News Team

A team effort of RealAgriculture's videographers and editorial staff to make sure that you have the latest in what is happening in agriculture.

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