A SPECIAL SUPPLEMENT TO CANADIAN GROCER WITH THE SUPPORT OF KRAFT CANADA INC.
CANADIAN
GROCER
2003 EXECUTIVE REPORT 2004 Kraft Canada Inc.
L E A D E R S H I P
CANADIAN G ROC E RY INDUSTRY T H R O U G H
I N N O V A T I O N
A SPECIAL SUPPLEMENT TO CANADIAN GROCER WITH THE SUPPORT OF KRAFT CANADA INC.
CANADIAN
GROCER
2003 EXECUTIVE REPORT 2004 Kraft Canada Inc.
L E A D E R S H I P
CANADIAN G ROC E RY INDUSTRY T H R O U G H
I N N O V A T I O N
Canadian Grocer Executive Report Price $150 per copy Published as a supplement to Canadian Grocer Rogers Media Publishing One Mount Pleasant Rd. Toronto, ON M4Y 2Y5
PUBLISHER Karen A. James EDITORS George H. Condon Shellee Fitzgerald PRODUCTION MANAGER Karen Richards GRAPHIC DESIGN Pino G. Sottile
RESEARCH SOURCES ACNielsen Advantage Group Canadian Council of Grocery Distributors (CCGD) Canadian Grocer
Contents
Chatelaine CIBC World Markets The Financial Post Food and Consumer Products Manufacturers of Canada (FCPMC) Food Marketing Institute (FMI)
3 Introduction 4 National 10 Consumer 20 Retail
HealthCom Ipso-Reid Corporation
30 Manufacturing
Leslie Beck Nutrition Consulting National Institute of Nutrition NPD Group Canada Inc. (NPD Canada) Statistics Canada J.C. Williams Group
Copyright: © 2003, Rogers Media Publishing All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written permission of the publisher. Data contained herein is for the sole use of purchasers of the Canadian Grocer Executive Report. Resale in any way of the data is strictly prohibited. Entering the data onto any system, electronic or otherwise, for use in distributing any kind of periodical or promotional material, is strictly prohibited.
Kraft Canada Inc.
Dear Colleagues: Kraft Canada is pleased to once again sponsor the Canadian Grocer Executive Report. This publication, which has been a critical source of information for the grocery industry during the past decade, highlights the trends and key indicators driving the grocery business within the Canadian marketplace. Over the past few years, we have seen a dramatic shift in the Canadian demographic that has impacted our industry. Family size and eating preferences have been altered as aging baby boomers and a decreasing child population drive new trends in the marketplace. Today’s consumers are increasingly aware of health and wellness issues and are seeking foods that fit within their busy lifestyles. The continued need for convenience has also led to new and emerging distribution channels offering time-starved Canadians the opportunity to purchase groceries, meals and snacks in non-traditional locations. As an industry, our mutual success depends on understanding and addressing these evolving consumer needs and preferences. At Kraft, the consumer has always been the cornerstone of our success. As we celebrate our 100th anniversary this year, we continue to build on our strong tradition of focusing on the consumer. We work hard to create strong demand through consumer relationships, product innovations, unique in-store initiatives and strong integrated marketing programs that drive traffic to retail stores. This report illustrates that our focus needs to remain on satisfying our consumers. I believe that by continuing to anticipate Canadians’ needs and exceeding their expectations, we will continue to grow and succeed together. We look forward to a successful 2003. Yours truly,
Fred Schaeffer Chief Operating Officer Fred Schaeffer
N AT I O N A L • Canada is the second largest country in the world • Canada spans six time zones • Approximately 33% of the total area is developed
Canada
Area Land: 9,093,507 km2 Fresh Water: 891,163 km2 Total:
9,984,670 km2
0.3% 13.2% 9.9% 3.2% 3.7%
23.7% 38.4%
Atlantic 7.6%
Total Population: 31,414.0 (000's)
Total Canadian Market 2002
(+1%) (July 1, 2002—Estimation)* Source: Statistics Canada
* Based on the 1996 Census
Grocery System-wide Sales
Canadian Population Age Composition by Gender As of July 1, 2002 (Estimation) 12.2
11.4
13.9
12.9 0-9
14.0
10-19
13.3
20-29
15.8
15.2 30-39 40-49
16.5
16.2
50-59 60+
12.4
12.3 18.7
15.2
Statistics Canada Supermarket Sales
$58,191
Grocery Products in Other Channels
16,409
22.0%
TOTAL
74,600
100.0%
Loblaw
23,894
32.0%
Sobeys
10,960
14.7%
Safeway
5,492
7.4%
Metro
5,201
7.0%
Overwaitea
2,380
3.2%
4,400
5.9%
C-Store
3,250
4.4%
Costco Food
3,550
4.8%
Drug
2,659
3.6%
Wal-Mart
2,758
3.7%
Co-Op
2,667
3.6%
Other Mass Merchandisers
494
0.7%
Commisso Wholesale
757
1.0%
Hy Louie
595
0.8%
North West Co.
333
0.4%
Commisso's Food Markets
466
0.6%
Thrifty Foods
374
0.5%
T&T Foods
170
0.2%
4,200
5.6%
Females 15,861.3 Source: CIBC World Markets Estimates
Source: Statistics Canada
4
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
78.0%
A&P
Others/Independents
Males 15,552.6
Market Share
N AT I O N A L
Canadian Total Grocery Sales 2002 ($000's) British Columbia 12.8% (+5.8%)
Man./Sask. 7.4% (+3.1%)
Alberta 12.2% (+8.5%)
Ontario 35.4% (+5.8%)
Quebec 24.6% (+7.2%)
Maritimes 7.6% (+6.3%)
Total Canada: $64,447,251 (+6.3% vs 2001)* Source: ACNielsen Measurement Science, MarketTrack Total Grocery
* Excludes Newfoundland & Labrador, Yukon and Northwest Territories
Total Grocery Dollar Sales at Retail ACV ($000's)—Total Canada* 52 Weeks Ending December 28, 2002 1999 National Maritimes
2000
2001
2002
53,838,115 56,545,964 60,616,269 64,447,251 4,122,797
4,256,883
4,582,057
Per cent of Regional Importance to Total Grocery Sales Dollars 52 Weeks Ending December 28, 2002
4,869,848
Quebec
13,711,697 13,992,445 14,761,759 15,827,745
Ontario
18,661,331 19,898,969 21,583,211 22,845,722
Man./Sask.
4,324,887
4,373,205
4,643,827
4,785,600
Alberta
6,210,942
6,748,398
7,241,609
7,858,609
B.C.
6,806,461
7,276,064
7,803,806
8,259,727
* Excludes Newfoundland & Labrador, Yukon and Northwest Territories Source: ACNielsen Measurement Science; MarketTrack Total Grocery
1999
2000
2001
2002
7.7
7.5
7.5
7.6
Quebec
25.5
24.7
24.4
24.6
Ontario
34.7
35.2
35.6
35.4
8.0
7.7
7.7
7.4
Alberta
11.5
11.9
11.9
12.2
B.C.
12.6
12.9
12.9
12.8
Maritimes
Man./Sask.
Excludes Newfoundland & Labrador, Yukon and Northwest Territories
Source: ACNielsen Measurement Science; MarketTrack Total Grocery
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
5
N AT I O N A L
Canadian Food Store Sales, 2002 Canadian Grocer Estimates Based on First Nine-Month Figures for Grocery and Combination Stores, and Canadian Grocer’s 2002 Survey of Chains and Groups ($000s)
CHAINS Supermarkets
INDEPENDENTS Convenience
Voluntary Groups
Unaffiliated
Total Indep.
Total Stores
1,599
165 938,029 16.2%
1,503 425,051 7.4%
1,668 1,363,080 23.6%
3,460 5,774,808 100%
2,241
1,554 8,988,547 59.6%
3,121 693,445 4.6%
4,675 9,681,992 64.2%
7,301 15,074,706 100%
2,116
1,029 5,806,960 30.3%
3,012 1,091,012 5.7%
4,041 6,897,972 36.0%
6,697 19,164,890 100%
492
605 1,105,699 24.4%
1,002 228,605 5.0%
1,607 1,334,304 29.4%
2,265 4,531,525 100%
1,055
320 1,853,990 23.7%
657 281,306 3.6%
977 2,135,296 27.3%
2,213 7,829,915 100%
ATLANTIC PROVINCES No. of Stores Dollar Sales % of Total
193 4,471,728 76.4%
QUEBEC No. of Stores Dollar Sales % of Total
385 5,392,714 35.8%
ONTARIO No. of Stores Dollar Sales % of Total
540 12,266,918 64.0%
MANITOBA AND SASKATCHEWAN No. of Stores Dollar Sales % of Total
166 3,197,221 70.6%
ALBERTA No. of Stores Dollar Sales % of Total
181 5,694,619 72.7%
BRITISH COLUMBIA (includes Yukon, Northwest Territories and Nunavut) No. of Stores Dollar Sales % of Total
326
839
233 2,539,690 27.2%
814 311,500 3.3%
1,047 2,851,190 30.5%
2,212 9,347,482 100%
8,342
3,906 21,232,915 34.4%
10,109 3,030,919 4.9%
14,015 24,263,834 39.3%
24,148 61,723,326 100%
6,496,292 69.5%
CANADA No. of Stores Dollar Sales % of Total
1,791 37,459,492 60.7%
EXPLANATIONS Chain Stores:
Four or more stores under single ownership. Sales figures are from Statistics Canada and include convenience chain stores. Store numbers from Canadian Grocer’s 2002 Who's Who directory, and later information supplied. Voluntary Groups: Independents operating in major or secondary wholesale-sponsored group programs. Store numbers from Canadian Grocer’s 2002 Who's Who directory. Sales and market share data estimated by Canadian Grocer. Not included: Food sales through department stores or specialty stores (bakeries, butchers, etc.).
6
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
N AT I O N A L Gains for Drug and Mass Are Being Driven by an Increase in Basket Size As Opposed to More Households Shopping the Channel Dollars Spent per Trip—National—Average Dollars per Trip $37.73 (+4%) Change vs. YAG—Total Expenditures
$39.17
+2%
$26.40
Grocery
+6%
$46.50
Drug
+8%
$105.03
Mass Merch.
+4%
$12.41
Warehouse
+8%
Convenience
Source: ACNielsen, Homescan Retailer Channel Watch, 52 Weeks to December 14, 2002, National
Slight Gains Are Being Made By Drug and Mass Merchandisers $ Share by Channel
45
Alternative Channels Are Outpacing Traditional Grocery
Total Expenditures (+5%)
45.1 44.8
2001
40 Dollar % Change
2002
35 30
Total Channels
25
Drug
5
8
6.5
6.4
6.3
5
6.5
0
Penetration
8
10.5 10.9
10
Grocery +5% 99.9
100.0
Drug +8% 96.0
96.2
Mass Merch. +10% 93.5
93.0
Drug Composite
6
5 5 5
15
Grocery Composite
5
Grocery
20
$ % Chg.
Total Expenditures
Warehouse +5% 49.4
9
48.0
N.B. % figure represents annual change in actual dollars
10
Mass Merchandise
17 15 5
Warehouse
7 8
Source: Homescan 52 Weeks Ending December 14, 2002, National
Source: ACNielsen Homescan 52 Weeks Ending December 14, 2002, National
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
7
N AT I O N A L
Share of All-Commodity Grocery Spending Regional—Annual to December 28, 2002 National
Maritimes
Quebec
Ontario
Grocery Banners
76.3
76.2
75.9
73.9
72.0
71.2
69.7
69.5
69.4
78.7
78.9
79.1
Remaining Grocery
23.7
23.8
24.1
26.1
28.0
28.8
30.3
30.5
30.6
21.3
21.1
20.9
’00
’01
’02
’00
’01
’02
’00
’01
’02
’00
’01
’02
Man./Sask.
Alberta
British Columbia
Grocery Banners
72.1
71.3
70.6
80.2
80.7
79.7
82.8
82.8
81.8
Remaining Grocery
27.9
28.7
29.4
19.8
19.3
20.3
17.2
17.2
18.2
’00
’01
’02
’00
’01
’02
’00
’01
’02
Excludes Newfoundland & Labrador, Yukon & Northwest Territories Grocery banners are defined as chain stores and banners that have sales of $150M per year per banner. Remaining grocery stores are defined to include grocery shipments from co-operating warehouses not previously defined as grocery banners.
The Bottom Line—Canadians Cross Shop As a Way of Life Annual % of Households Cross-Shopping Across Grocery, Drug, Mass and Club
Source: ACNielsen Measurement Science
Shoppers Taking Advantage of Alternative Channels Share of Total Consumer Spending All UPC-Coded Products (Total ACV)
48%
50
46%
45 40
Mass Rem. Merch. Warehouse Channels
35
Grocery
Drug
Conven.
National
44.8
6.4
1.4
10.9
6.5
30.0
Maritimes
50.8
6.1
1.5
12.4
2.4
26.8
Quebec
45.3
8.2
2.1
9.5
6.5
28.4
Ontario
42.5
6.1
1.6
12.0
5.4
32.4
Man./Sask.
48.3
4.4
0.5
14.2
6.0
26.6
15 10
Alberta
46.2
4.9
0.5
10.9
8.4
29.1
B.C.
45.1
6.4
0.6
8.2
10.3
29.4
30 25 20
6%
5
1%
Source: ACNielsen, Homescan; Retailer Channel Watch, Total ACV; 52 Weeks Ending December 14, 2002
1 Channel Source: ACNielsen
8
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
2 Channels
3 Channels
4 Channels
N AT I O N A L
The Bulk of Canada's Immigration Is from Asia 70
70 60
% of Immigrants by Country of Origin
61.3 62.1 62.1
60.5
60
58.0
97/98
98/99
99/00
00/01
01/02
50
50
40
40
30
30 20.6
20
21.9 19.4 18.1
20
16.8 10.9 10.9 10.3 9.9 10.8
10
9.2 9.4 6.9 8.3 8.2
10 0
0
Asia
Europe
The Americas
Africa
Source: Statistics Canada
Canada's Population is Aging Rapidly Median Age of Canadians 60
60
Impact on the Workforce
16% of population will be over age 65 in 2010
Ratio: Active Workers to Retirees (Canada) 41.0
40
40
37.6 33.5 27.0 22.7
26.3
29.6
3
23.9 12% of Canadians were over the age of 65 in 1994
20
3.5 2.9
20 2
1.6
1
0
1901
1921
1941
1961
1981
1991
2001
2011
0
Median Age of the Total Canadian Population (1901-2011)
1970
2000
2030
Source: Statistics Canada Source: Statistics Canada, 2002
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
9
CONSUMER
Canadian Households Make Fewer Shopping Trips Overall, But Are Going to the Grocery Store Slightly More Often (+0.5) Trips per Household—National—Total Number of Trips = 224.9 (-1.3 Point Change) Total Expenditures
Trip Point Change vs. YAG
Share of Trips
+0.5
43.1
-0.1
9.5
0.0
9.6
+0.2
4.9
97.0%
Grocery
21.4%
Drug
Mass Merchandiser
The Decrease in Trips Is Fuelled By Convenience (-0.8) and By Alternative Channels Not Reported Here.
21.5%
Warehouse Clubs
11.0%
0
10
20
30
40
50
60
70
80
90
Source: ACNielsen Homescan Retailer Channel Watch; 52 Weeks to December 14, 2002, National
Shopper Dynamics—National Shopping Basket Includes All UPC-Coded Products (Total ACV) % HHLD Penetration
# of Trips per HHLD
2002 Pt. Chg.
2002 Pt. Chg.
All Channels
100.0
Grocery Banners
224.9
Avg. Dollars Spent per Trip
Dollars Spent per HHLD 2002 Pt. Chg.
Channel Share Dollar Basis
2002
Pt. Chg.
2002
-1.3
$37.73
4%
$8,483.82
3%
100.0%
Pt. Chg.
100.0
0.1
97.0
0.5
$39.17
2%
$3,801.04
2%
44.8%
-0.3%
Drug Stores
96.2
0.2
21.4
-0.1
$26.40
6%
$563.91
5%
6.4%
0.1%
Mass Merch.
93.0
-0.5
21.5
0.0
$46.50
8%
$999.21
8%
10.9%
0.4%
Convenience Stores
56.5
-1.4
16.8
-0.8
$12.41
8%
$207.81
3%
1.4%
0.0%
Warehouse Clubs
48.0
-1.4
11.0
0.2
$105.03
4%
$1,155.74
6%
6.5%
0.0%
All Other Food
40.1
-1.0
7.0
0.2
$25.86
12%
$180.46
15%
0.8%
0.0%
Remaining Channels
29.2%
Source: ACNielsen Homescan; Retailer Channel Watch, Total ACV; 52 Weeks Ending December 14, 2002
10
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
CONSUMER
Types of Diets Are Changing
Household Expenditures Per Shopping Trip*
% of Individuals—by Diet Type 1999
2000
2001
2002
Grocery Composite/Total Canada—December 2002 2000
2001
52 53 52 53
2002
Low Cholesterol $11.68 $13.88 $14.79
Department Stores
Low Calorie/Fat
$7.13 $7.53 $7.39 $8.06 $8.17 $8.61
Hardware Stores
$14.59 $15.61 $17.06
Pet Stores
U.S. Stores
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
General Merchandiser
$7.10 $8.08 $8.65
* UPC-Coded Products
Source: ACNielsen Retailer Grocery Watch, Grocery Composite
Household Shopping Trips Per Year* 2001
19 18 18 18
Low Sugar
How to Read This Chart: 18% of Diets Are Low Sugar Diets.
9 7 8 7
Low Salt/Sodium
29 36
Other Diet Type
27 32
Household Expenditures Per Shopping Trip*
Grocery Composite/Total Canada—December 2002 2000
38 35 34 33
Grocery Composite/Total Canada—December 2002
2002
2000 Department Stores
2.7 2.7 2.7 8.5 8.7 9.1
Pet Stores
U.S. Stores
$13.14 $14.29 $15.96
Mass Merchandiser
2.3 2.4 2.3
$11.14 $11.78 $12.26
Drug 4.7 5.0 4.8
Convenience
4.7 4.3 4.3
2002 $24.07 $24.55 $25.06
Grocery
General Merchandiser
Hardware Stores
2001
$4.36 $4.54 $4.76 $39.51 $40.82 $42.81
Warehouse Clubs
* UPC-Coded Products * UPC-Coded Products Source: ACNielsen Retailer Grocery Watch, Grocery Composite Source: ACNielsen Retailer Grocery Watch, Grocery Composite
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
11
CONSUMER 48% Believe There Should Be Taxes on High Fat Foods
Credibility of the Food Industry
Asked: Should High-Fat Foods Such as Chips, Soft Drinks and Snack Cakes Be Taxed at a Higher Rate Than Nutritious Foods?
Three-quarters of Canadians Say the Food Industry Is Well Regulated for the Protection of Human Health 100
Strongly/Somewhat
35 90
30% 30
28%
74%
80
27
70
24
60
21%
20%
21
48%
50
18
40
15
30
12
19%
20
9
10
7%
26%
6 3
12% Agree Strongly Agree
Somewhat Agree
Somewhat Disagree
Disagree
Strongly Disagree Source: Ipsos-Reid Corporation
Source: Ipsos-Reid Corporation
Who's to Blame for Rising Obesity? Half Say the Food Industry
What People Are Eating More of These Days Asked: Which, If Any, of the Following Foods Are You Personally Trying to Eat More of These Days?
80
Strongly/Somewhat 70
86%
Fresh Vegetables
60
57%
Fish
Dairy Products
37%
Non-Animal Proteins Like Legumes or Soy Protein
36%
51%
50
40%
40 30
26%
20
Carbohydrates Such as Pasta or Potatoes
32%
25%
29%
Organic Foods
22%
10
18% 20%
Red Meat
Agree 0
15
30
45
60
75
90
Source: Ipsos-Reid Corporation
12
CANADIAN
GROCER
Source: Ipsos-Reid Corporation
2003-2004
EXECUTIVE
REPORT
Disagree
CONSUMER Often Buy Private Label/Store Brand Age Groups
What's On Canadians' Minds
30
% Buy Often 27
Top Five Nutrition Concerns
24
"VERY" CONCERNED
26.6%
21
Fat
46%
Saturated Fat
46%
27.2% 25.9%
26.5%
25.7%
25.3% 22.8%
18 15 12 9
44%
Cholesterol
6 3
43%
Vitamins
Age Range
Calcium
12-17 yrs.
41%
18-24 yrs.
25-34 yrs.
35-49 yrs.
50-64 yrs.
65+ yrs.
National
Source: J.C. Williams Group
10
20
30
40
50
Source: National Institute of Nutrition
Consumer Concerns About Food Safety 2001
2002
Since 1998, There Is a Steady Shift from Processing to Outlets 1998 37%
During the Processing of Foods
44% 52%
Amount Spent On Groceries
29%
In Restaurants or Other Foodservice Outlets
19% 19% 12% 12% 10%
At the Retail Level (In Grocery Stores)
12% 19%
At the Farm Level
14% 9% In the Home
5% 4%
Language English French Italian Chinese
Average Spent per Week $118 $114 $115 $126
Regional Atlantic Quebec Ontario Prairies B.C. National
$122 $114 $116 $123 $117 $117
Source: Ipsos-Reid Corporation
Source: J.C. Williams Group
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
13
CONSUMER In the Past Year, Two-thirds Say They've Made Changes to Improve Their Eating Habits
In-Home Lunch Is a Full Meal to Some—2002
Asked: Have You Made Any Changes Over the Past Year to Improve Your Eating Habits? Total
36%
35
34%
Men
% of Meal Occasions Meal Component—In-Home Lunch
If Yes,...
Women
33%
27%
26%
25
73%
No 38%
30
Yes 62%
24%
How to Read This Chart: 73% of In-Home Lunch Meal Occasions include a Main Dish.
20 15
14% 14%
13% 11%
10%
10
9% 9% 9% 8%
7%
8%
7% 7%
6%
6%
5 0 Consume Less Fat
Eat More Veg./Fruit
Reduce Sugar Intake
Eat Less Red Meat
Reduce Restrict Calorie Intake Carbs Intake
Less Snacking
21%
19%
Source: Ipsos-Reid Corporation
For Those Who Eat Poorly, 41% Blame It on That Time Crunch
2% Appetizer
Main Dish
Side Dish
Dessert
19% 16%
Busy Lifestyle
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
23% 12%
I Eat Take-Out/ Fast Food
Importance Ranking for Food Purchases
16% 6% 10% 8% 11%
I Don't Eat Regularly/ Skip Meals
High Importance (ranked 1st or 2nd)
80 Low Importance (ranked 4th or 5th)
9% 9% 9%
Don't Always Watch What I Eat
9% 8% 9%
I Eat What I Want
7% 11%
I Eat Fat
70
Total
50
Men
40
Women
3%
I Eat Junk Food
68%
66%
60
39%
30 20
7% 6%
20%
0
4% Freshness
13%
2% Taste
Price
Low Calorie/ Low Fat
Ease of Preparation
As previously seen, consumers will pay more for convenience and healthier alternatives— but only if taste requirements are first met.
Source: Ipsos-Reid Corporation
Source: Chatelaine Feedback Panel, January 2003
CANADIAN
19%
10 9%
14
34%
33%
GROCER
2003-2004
EXECUTIVE
REPORT
CONSUMER 35% of Individuals Carry Their Lunch from Home at Least Once Within an Average Week
Food Expenditures Remain Flat While Personal Care Items Grow
Individual Penetration by Lunch Venue In-Home Lunch
89%
25
25
$21.16 Skipped Lunch Carried from Home Lunch
35%
Away from Home Restaurant Lunch
35%
How to Read This Chart: In an Average Week, 35% of Individuals Carry Their Lunch from Home at Least Once.
$19.23
$19.02
20
40%
15
A Breakdown of $100
$13.16
10
32%
10
20
30
$4.15
0
40
50
60
70
80
10
$8.01
es
Tax
0
15
$11.15
5
Away from Home All Other Lunch
20
90
er
rt po
ing ad n Re tio cr. ca Re Edu &
od
Fo
s
n Tra
5
0
on
ati
elt
Sh
$4.12
r
g
al on ers Rx) & P re ( lth Ca
hin
t Clo
the
O All
a
He
Change VYA
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
-2%
+1%
-3%
+- 0%
+5%
-1%
+- 0%
+10%
Source: Statistics Canada, 2001
Annual Canadian and Regional Unemployment Rate 15
15
11.2
11.4 10.4 9.4
10
5
9.6
9.1
8.3
7.6
6.8
7.2
7.7
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
15.0 12.8 10.8 8.9 9.5 10.4
15.5 13.1 10.6 8.6 9.6 9.7
14.9 12.2 9.6 8.1 8.6 9.4
13.6 11.3 8.5 7.5 7.8 9.2
15.4 12.1 9.1 6.7 6.3 8.8
13.3 10.4 7.8 5.6 5.6 8.6
12.9 10.7 6.9 6.1 5.7 8.2
11.7 9.3 6.3 5.8 5.7 8.3
11.2 8.4 5.7 5.1 5.0 7.2
11.7 8.7 6.3 5.4 4.6 7.7
10.2 8.6 7.1 5.4 5.3 8.5
10
5
BY REGION Maritimes Quebec Ontario Man./Sask. Alberta B.C.
Source: Statistics Canada
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
15
CONSUMER 9% of In-Home Dinners Are Actually Cooked by Someone Else
Maximum Price Willing to Pay for Convenience Products
% of Dinner Meal Occasions by Venue In-Home from Restaurant 4%
How to Read This Chart: 70% of All Dinner Meal Occasions Were Prepared and Eaten In-Home.
Prepared & Eaten at Home 70% Skipped 3% Carried All Other from Home Away from Home 2% 6%
In-Home HMR Restaurant 5% 10%
}
84%
9%
Over one-third of respondents (weighed by income) are willing to pay up to 20% more for a product that offers greater convenience.
36%
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
16%
Maximum Price Willing to Pay for Products Considered to Be Healthier
7% 1%
85% 0%
Almost one-half of respondents (weighed by income) are willing to pay up to 20% more for a product that offers a healthier alternative.
Up to 10%
Up to 20%
Up to 30%
More than 30%
Source: Chatelaine Feedback Panel, January 2003, income weighted to Canadian population
Today's Consumer: Time Compression Coping with Everyday Living
45%
➤ Ever-increasing demand for products and services that save time from the more mundane tasks in life.
Ramifications for the Food Industry 15%
➤ Meal assembly replacing meal preparation.
11%
➤ Average meal prep time = 15 to 30 minutes vs. 45 minutes 10 years ago
4%
➤ 30% decide on dinner meal after 4:00 p.m. Source: Chatelaine Feedback Panel, February 2003
0%
Up to 10%
Up to 20%
Up to 30%
More than 30%
Source: Chatelaine Feedback Panel, January 2003, income weighted to Canadian population
16
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
CONSUMER The Dinner Meal is Usually Prepared in 15 to 45 Minutes
Canadians Are TimeChallenged and Tired!
"Of the Last 10 Dinner Meals You Prepared and Ate In-Home, What is the Amount of Time Spent Preparing?"
How to Read This Chart: 29% of the Last 10 Dinner Meals Prepared and Eaten In-Home Required 15 to 30 Minutes Preparation.
41.5% Canadians Shop the Same Day for the Evening Meal
35 32
32
33 2000
31
2001
2002
48%
29 29
30
"Frequently" Short of Time
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
25
70% 20
Canadians Plan Dinner the Same Day
18
(10% On Way Home; 17% Last Minute)
16 16 15
14 11
27%
12
10
9
8
10
Do Not Have the Energy to Prepare a Main Meal 0
5
10
20
30
40
50
60
70
Source: Consumerline Survey FCPMC/CCGD
0 Less Than 15 Minutes
15 to 30 Minutes
31 to 45 Minutes
46 to 60 Minutes
More Than 1 Hour
How a Healthy Diet Is Defined High Importance (ranked 1st or 2nd)
90
91%
Low Importance (ranked 4th or 5th)
80 70
71%
60 50
43%
43%
40
35%
30
38% 40%
24%
20 10
9%
4%
0 Variety of Food Groups
Vitamin/Nutrient Content Food Groups
Calorie/Fat Reduction
3 Meals/Day
Organic
Consumers recognized the importance of a balanced diet in the pursuit of better health. A high familiarity and respect for Canada's Food Guide by consumers supports this finding. Source: Chatelaine Feedback Panel, January 2003
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
17
A
t Kraft, we are dedicated to staying
evolving consumer needs. So, when you stock
connected with the consumer. We do this
your stores with Kraft products, your shoppers
in many ways—continuous dialogue, innovative
will thank you for delivering the tradition and
products and exciting promotions that satisfy
excellence they have come to know from Kraft.
At Kraft, we are committed to understanding our consumers and delivering leading product innovations that satisfy their needs and drive our mutual growth. Post Selects creates a unique wholesome great-tasting cereal that consumers will enjoy. Kool-Aid Jammers—an exciting allnew ready-to-drink pouch beverage capitalizing on consumers’ needs for convenience and portability.
A new twist on some traditional favourites—kids and adults will love new Double Delight Oreo Peanut Butter n’Chocolate Cream, Double Delight Oreo Mint n’Cream and Chips Ahoy! Cremewiches cookies.
We develop high-impact, flexible merchandising tools and promotions that create in-store excitement, drive impulse purchases and deliver incremental sales. Leverage the flexibility of the Festive POS to create one-stop snacking solution displays.
Consumers enjoy summertime fun with a Summer Activity Calendar and a chance to win a kitchen makeover. It’s time for one lucky consumer to get out the hockey stick for a chance to score up to $1 million!
We leverage multiple channels to connect with our consumers, listen to their feedback and develop quick and easy food solutions that meet their everyday needs. Our Call Centre offers timely and personal service to over 300,000 consumers annually.
With over 900,000 readers per issue, our what’s cooking magazine offers consumers great food ideas, nutritional information and healthy tips to satisfy their everyday meal and snacking needs.
kraftcanada.com
Our Kraft Kitchens website, www.kraftcanada.com, receives over 1 million page hits per month.
R ETAIL
Data on Canadian Supermarkets
Supermarket, Grocery and C-Store Sales in Canada QUEBEC:
Canadian Independent Stores 2002 Median
$15,074,706,000 Loblaw Metro Sobeys C-Stores Independent
WEST: $21,708,922,000 Loblaw Safeway Sobeys Overwaitea Co-op C-Stores
34% 25% 12% 11% 9% 4%
36% 31% 19% 5% 9%
SALES DATA Per cent Change from Previous Year Average Transaction Size Store Sales per Hour of Operation
3.9% $22.82 $1,712.00
ONTARIO: $19,164,890,000 Loblaw A&P Sobeys C-Stores Metro Commisso
Distribution of Sales:
44% 23% 17% 5% 2.5% 2.5%
Grocery
Total Share of Market for 2002: $61,723,326,000 Source: Canadian Grocer Estimates
Average 53.9%
Meat
14.8%
Produce
11.1%
General Merchandise/HBC
0.9%
Beer/Wine
0.5%
Service Deli
3.3%
Scratch/Bake-Off Bakery
3.5%
ATLANTIC: $5,774,808,000
Frozen Food
0.9%
Dairy
3.7%
Loblaw Sobeys Co-op C-Stores Independent
Pharmacy
0.3%
Other
7.1%
39% 35% 12% 6% 8%
Total
100.0%
INCOME STATEMENT DATA Grocery
Store Brands Share vs. National Brands Rolling 52 Weeks
23.6
18.1%
Produce
11.1%
Total Sales
100.0%
Share of All Measured Categories—Total Grocery Canada
Units 2000
70.9%
Meat
2001
23.8 +4
Dollars 2002
23.8 +3
2000
23.8
2001
24.0 +7
Gross Margins:
2002
24.0 +4
Grocery
22.9%
Meat
26.4%
Produce
30.8%
Total Gross Margin
24.8%
Operating Expenses: Store Labour:
76.4
76.2 +4
76.2 +3
76.2
76.0 +6
76.0 +5
Regular Benefits Total Store Labour Expense Advertising & Promotion
National Brands
Store Brands
1.1% 10.7% 0.9%
Occupancy (Excluding Utilities)
2.6%
Utilities
1.0%
Maintenance
0.8%
Store Supplies
1.0%
Interest
0.4%
Other
N.B. % figure represents annual change in actual units and dollars
9.6%
Total Operating Expenses
3.1% 20.4%
Source: ACNielsen MarketTrack Total Grocery; 52 Weeks Ending December 28, 2002
Profit Before Tax
Source: Food Marketing Institute
20
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
4.4%
R ETAIL Store Brands Share/Growth of Grouping National Total Grocery—Units—52 Weeks to December 28, 2002
Store Brands Share/Growth of Grouping National Total Grocery—Dollars—52 Weeks to December 28, 2002
53.5 50
Units
45
50
Dollars
45
40
45.7
37.8 35
40
30
29.0
30.0
28.9
35
31.1
26.5
25
36.2
30
28.8 21.7
20
21.6
20.8
25
15
24.5 22.3
20
12.6
10 5
10
0
5
18.2
17.7
17.3
15
9.7
9.4
27.0
26.8
25.0
15.2
s
es
ge
uc
ra
s
es
ge ra
uc
.&
ve
Sa
ki Ba
t& er
nd
Be
.
ng
s
od
od
Pr
Fo
ry
ed ep
/D
ar
ai
e
l
e
d.
.
ss De
Co
Store Brand Growth
0
2
1
7
-3
16
7
8
3
6
13
5
-1
Groupings include all categories, including categories without Store Brand entry
Total Grouping Growth
5
1
1
8
5
-4
1
7
4
7
5
5
1
Source: ACNielsen, Food Store Universe
Groupings include all categories, including categories without store brand entry
fri
OT C
/H
Pr
Re
g.
W
&
& er
ks ac Sn
Pa p
fri
/H
od
2
Fo
2
en
5
oz
6
ar
1
Fr
1
ar
0
eC
-6
tC
5
m
4
fa n
-4
Ho
-2
In
4
ro
Total Grouping Growth
tP
4
ea
2
M
8
ica
2
od
2
Pr
6
M
3
Pe t
7
AB
-3
ed
.
5
ra
nf
-5
Co
2
C/
Be
.& Co
-3
OT C
0 p
Sa
ki Ba
t& er
nd
ss De
Store Brand Growth
Pr
Re
g.
ve
.
ng
s
od
od
Pr
Fo
ry
ed
/D
ar
ai
e
od Fo en
oz Fr
ep
e
ar
ar
eC
tC fa n
m
l M
ea
tP
ro
ica
AB
In
Ho
. od
ed C/
M
Pe t
Pr
.
p
nf
ra W
Co &
& er
ks ac
Pa p
Sn
d.
8.8
Source: ACNielsen, Food Store Universe
Store Brands—Regional Growth & Share 52 Weeks Ending December 28, 2002 All Measured Categories—Total Grocery Growth Rates
Dollars
Units
Store Brand Share by Region 24.0 23.8
7
National Maritimes
Store Brand Penetration
4 2
24.4 26.6
-2 7
Quebec
18.1 18.7
5 4 4
Ontario
23.7 22.7
2
Man./Sask.
26.5 28.3
0 6
Alberta
24.2 25.4
2 4
British Columbia
Based on Value Share U.K.
39.0%
Belgium
26.9%
Canada
25.0%
Germany
24.0%
France
20.8%
Netherlands
18.6%
Spain
17.6%
Italy
11.1%
U.S.A.
11.0%
22.9 23.5
1
0%
0
2
4
6
8
10%
20%
30%
40%
Source: ACNielsen, CIBC WM Estimates
Source: ACNielsen MarketTrack Total Grocery
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
21
R ETAIL
Total Market 2002 Ontario Statistics Canada Supermarket Sales
Market Share
$18,044
78.2%
5,030
21.8%
TOTAL
23,074
100.0%
Loblaw
8,560
37.1%
A&P
4,400
19.1%
Sobeys
3,342
14.5%
C-Store
1,030
4.5%
Costco Food
977
4.2%
Drug
881
3.8%
Commisso Wholesale
757
3.3%
Wal-Mart
810
3.5%
Metro
468
2.0%
Other Mass Merchandisers
192
0.8%
46
0.2%
466
2.0%
30
0.1%
1,116
4.8%
Grocery Products in Other Channels
North West Co. Commisso's Food Markets T&T Foods Others
Grocery System-wide Sales Statistics Canada Supermarket Sales
76.7%
4,312
23.3%
TOTAL
18,541
100.0%
Loblaw
5,707
30.8%
Metro
4,733
25.5%
Sobeys
2,982
16.1%
Costco Food
1,002
5.4%
850
4.6%
C-Store Drug
703
3.8%
Wal-Mart
701
3.8%
Other Mass Merchandisers
136
0.7%
North West Co. Others/Independents
50
0.3%
1,676
9.0%
Total Market 2002 West
Source: CIBC World Markets Estimates
Grocery System-wide Sales Statistics Canada Supermarket Sales
Total Market 2002 Maritimes
Grocery Products in Other Channels
Grocery System-wide Sales
$20,464.40
Market Share 77.8%
5,837
22.2%
TOTAL
26,301
100.0%
Loblaw
7,302
27.8%
Market Share
Safeway
5,492
20.9%
2,380
9.0%
Statistics Canada Supermarket Sales
$5,454
81.6%
Overwaitea
Grocery Products in Other Channels
1,231
18.4%
Sobeys
2,547
9.7%
Costco Food
1,498
5.7%
999
3.8%
1,999
7.6%
902
3.4%
TOTAL
6,684
100.0%
Loblaw
2,325
34.8%
C-Store
Sobeys
2,089
31.3%
Co-Op Drug
Co-Op
668
10.0%
C-Store
371
5.6%
Wal-Mart
1,013
3.9%
2.6%
Hy Louie
595
2.3%
234
3.5%
North West Co.
237
0.9%
73
1.1%
Thrifty Foods
374
1.4%
31
0.5%
T&T Foods
140
0.5%
721
10.8%
Drug
173
Wal-Mart Costco Food Other Mass Merchandisers Others/Independents
Other Mass Merchandisers
136
0.5%
Others/Independents
687
2.6%
Source: CIBC World Markets Estimates Source: CIBC World Markets Estimates
22
Market Share
$14,228
Grocery Products in Other Channels
Source: CIBC World Markets Estimates
Grocery System-wide Sales
Total Market 2002 Quebec
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
R ETAIL Productivity of Canadian Supermarkets
World's Top Grocery Retailers
Independent Stores 2002 Country
1
Carrefour
France
8,926
61,398
2
Ahold
The Netherlands
8,062
58,842
$125.79
3
Metro
Germany
2,169
43,758
$29.48
4
Kroger Co.
U.S.A.
2,354
37,900 37,900
Median
Gross Margin per Labour Hour Profit Before Tax per Labour Hour Sales per Labour Dollar Gross Margin per Labour Dollar Transactions per Labour Hour
(in $US Billions)
$4.14
5
Albertson's
U.S.A.
2,533
$17.18
6
Wal-Mart (food sales)
U.S.A.
4,190
36,865
$4.17
7
Safeway
U.S.A.
1,688
34,300
5.3
8
Tesco
United Kingdom
$11.34
9
Rewe Zentrale
Germany
Benefits per Labour Hour
$1.41
10
Aldi
Germany
4,388
26,480
Payroll to Total Expenses
46.4%
11
Edeka/AVA
France
12,000
26,450
6.2%
12
ITM Enterprises
France
8,545
26,140
$182.46
13
J. Sainsbury
United Kingdom
626
26,130
14
It-Yokado
Japan
35,600
25,850
15
Groupe Casino
France
6,650
24,940
Payroll per Labour Hour
Benefits to Total Expenses Payroll per Hour of Operation
SALES PRODUCTIVITY Total Store Area: Average Square Footage Weekly Sales per Square Foot
907
32,380
11,788
31,880
16
Daiei
Japan
7,800
23,740
13,300
17
Tengelmann
Germany
6,689
23,120
$8.61
18
Supervalu
U.S.A.
1,194
21,300
19
Jusco
Japan
1,780
21,020 20,130
Selling Area: Average Square Footage
11,792
20
Auchan
France
243
Weekly Sales per Square Foot
$11.87
21
E. Leclerc
France
555
17,940
22
Fleming Cos
U.S.A.
250
15,600
$138,445
23
Delhaize "Le Lion" Group
Belgium
2,310
15,550
78,269
24
Loblaw
Canada
606
15,100
25
Winn-Dixie Stores
U.S.A.
1,079
13,000
Average Weekly Store Sales Average Number Items Sold/Week
Source: Food Marketing Institute
Sales
Company
PERSONAL PRODUCTIVITY Sales per Labour Hour
Stores Owned
Ranking
OTHER PRODUCTIVITY MEASURES Occupancy Cost (Incl. Utilities)/Square Foot
$16.82
Occupancy Cost to Total Expenses
18.3%
Inventory Dollars/Square Foot Selling Area
$30.33
Overall Inventory Turns
Source: Supermarket News, CIBC World Markets Estimates
Discount Grocery Sales in Canada
16.2X
(in Millions)
Growth and Inflation Selected Category Groupings
Corporation Loblaw
Banners
# Stores
2002 Estimated Total Sales
Extra
88
$1,000
Dollar Growth
Unit Growth
Inflation
Maxi
84
2,120
Beverages
+1
+2
-1
No Frills
103
1,875
Homecare Products
+1
+- 0
+1
4,415
RCSS
54
Price Chopper
57
916
Super-C
43
1,170
Save-On-Foods
44
0
Food Basics
77
1,355
Commisso
10
195
Frozen Foods
+7
+1
+6
Sobeys
Dairy + Refrigerated Products
+7
+6
+1
Metro
Pet Foods
+1
-4
+5
Overwaitea
Confectionery/Snack
+5
+4
+1
A&P
Prepared Foods
+4
+1
+3
Commisso
Paper Products
+1
-2
+3
OTC/HABC/Medical
+8
+4
+4
Total Discount Grocery Sales
13,045
Infant Products
-4
-6
+2
Total Estimated Grocery Sales Through All Formats
74,600
Size of Discount Grocery Channel
17.5%
Source: ACNielsen MarketTrack Total Grocery; 52 Weeks Ending December 28, 2002
Source: CIBC World Markets Estimates, Company Reports
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
23
R ETAIL
Top 20 Categories Total Grocery Dollars (000,000's) Dollar Volume Milk*
1,654.5
Flavoured Soft Drinks
1,477.1
Frozen Dinners/Entrees/Meat Pies/Egg & Spring Rolls
1,094.7
Fastest Growing Categories in Grocery Stores Dollar Sales (000's)** Annual Growth
Annual $ Sales
70%
25,525
Pre-Packaged Bread*
869.3
Energy Bars & Drinks
Shelf Stable Juice/Drinks/Nectars/Iced Tea (excl. Cans)
818.0
Diet Meal Replacements/Dietary Aids
61%
18,959
RTE Cereals
801.9
Anti-Smoking Products
56%
21,894
Snack Foods*
720.4
RTE Gelatin
47%
11,124
Refrigerated Yogurt & Yogurt Type Products
612.1
Refrigerated Entrees
41%
34,056
Cookies/Grahams
560.9
Licorice*
37%
33,193
Chilled Juice/Drinks/Nectars/Iced Tea (excl. Cans)
546.4
Meat Sticks
35%
26,093
Pre-Packaged Cheddar Cheese
521.8
Soya Drinks*
34%
76,953
Pre-Packaged Fresh Baked Desserts
445.5
Electric/Battery Toothbrushes
33%
10,967
Eggs*
445.0
Baking & Cooking Sauces
26%
37,405
Ice Cream & Related Products
443.5
Rice/Corn Potato Snacks
25%
68,112
Pre-Packaged Specialty Cheese
440.5
Pre-Packaged Broad Leaf Vegetables
24%
43,301
Bathroom Tissue
434.3
Medical Nutritional Supplements
24%
20,425
Canned Soup
419.8
Pre-Packaged Bagged Salads
23%
179,161
Pre-Packaged Rolls*
378.8
Disposable Plates/Bowls/Cups
22%
63,179
Laundry Detergents
371.5
Frozen Seafood (incl. Shellfish)
368.1
* Excludes Direct-to-Store Shipments
* Excludes Direct to Store Shipments ** Based on Categories with > 10 million in dollar sales Source: ACNielsen MarketTrack Marketplace Performance Report 52 Weeks Ending December 28, 2002; Total Grocery
Source: ACNielsen MarketTrack Marketplace Performance Report; 52 Weeks Ending December 28, 2002
Importance Ranking for Choice of Recipe
Declining Categories in Grocery Stores Annual Dollar Sales Decline* Candles
-12%
Apple Sauce
-10%
Very Important/Somewhat Important
Ingredients On Hand
92%
Low-Fat
80%
Can Be Frozen
72%
Pre-Tested
68% 57%
-10%
Easy to Re-Size Measurements
Canned Salmon
-9%
Prepared in < 10 minutes
49%
Toaster Pastries
-9%
Instant Coffee
-7%
< 5 ingredients
40%
Roast & Ground Coffee
-6%
Kid-Friendly
34%
Infant Feeding Products
-6%
Toothbrushes
-6%
Disposable Diapers/Training Pants
-5%
Processed Cheese Loaf
Not Very Important/Not at All Important
8% 20% 28% 32% 43% 51% 60% 66%
Meal preparers are willing to spend more time in the kitchen to batch cook, but the convenience of having the ingredients on hand is paramount in selecting a recipe.
* Based on Categories with > 10 million in dollar sales Source: Chatelaine Feedback Panel, January 2003
Source: ACNielsen MarketTrack Marketplace Performance Report 52 Weeks Ending December 28, 2002; Total Grocery
24
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
R ETAIL
Data on Supermarket Departments Canadian Independent Stores 2002 Median
Data on Supermarket Departments Canadian Independent Stores 2002 Median
GROCERY DEPARTMENT Total Sales
100.0%
Gross Margin % Total Sales
22.8%
Total Payroll % Total Sales
3.9%
Margin After Net Landed Cost [Sales–(1-GM)–Labour Costs] % Total Sales Inventory Turns
17.6% 13.3X
Gross Margin Return on Inventory (GMROI)
345.0%
Sales per Labour Hour
$142.00
PRODUCE DEPARTMENT Total Sales
100.0%
Gross Margin % Total Sales
28.5%
Total Payroll % Total Sales
6.7%
Margin After Net Landed Cost [Sales–(1-GM)–Labour Costs] % Total Sales Inventory Turns
23.6% 52.4X
Gross Margin Return on Inventory (GMROI)
2348.9%
Gross Margin per Labour Hour
$33.85
Sales per Labour Hour
Average Wage Rate per Labour Hour
$11.12
Gross Margin per Labour Hour
$45.22
Average Wage Rate per Labour Hour
$10.86
Department Sales % of Total Store Sales
58.8%
Department Payroll % of Total Store Payroll
35.5%
Department Sales % of Total Store Sales
11.4%
Department Payroll % of Total Store Payroll
10.5%
$154.27
MEAT DEPARTMENT Total Sales
100.0%
Gross Margin % Total Sales
23.2%
Total Payroll % Total Sales
7.2%
Margin After Net Landed Cost [Sales–(1-GM)–Labour Costs] % Total Sales Inventory Turns Gross Margin Return on Inventory (GMROI)
15.8% 35.6X 1088.7%
SERVICE DELI DEPARTMENT Total Sales
100.0%
Gross Margin % Total Sales
40.2%
Total Payroll % Total Sales
17.1%
Margin After Net Landed Cost [Sales–(1-GM)–Labour Costs] % Total Sales Inventory Turns
32.4X
Gross Margin Return on Inventory (GMROI) Sales per Labour Hour
23.8%
1933.20%
$155.77
Gross Margin per Labour Hour
$38.76
Sales per Labour Hour
$55.87
Average Wage Rate per Labour Hour
$12.55
Gross Margin per Labour Hour
$21.33
Department Sales % of Total Store Sales
15.1%
Department Payroll % of Total Store Payroll
15.7%
Average Wage Rate per Labour Hour
Department Sales % of Total Store Sales Department Payroll % of Total Store Payroll
$9.84
3.9% 11.3%
Source: Food Marketing Institute Source: Food Marketing Institute
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
25
R ETAIL
Grocery Square Footage Square Footage in Millions in Canada
Grocery Supermarket Scanning Penetration by Region—2002
1999
2000
2001
2002e
33.3
33.7
35.9
37.8
3.4
3.8
3.7
4.1
Substractions
(3.0)
(1.6)
(1.8)
(1.5)
End of Year Sq. Ft.
33.7
35.9
37.8
40.4
LOBLAWS
% of All Commodity
Beginning of Year Sq. Ft. Additions
100 97.4%
90
96.9%
99.8%
99.6%
94.6%
91.9%
99.4%
98.8%
80
Net Sq. Ft. Growth (%)
1%
7%
5%
7%
70
Net Sales Growth (%)
50%
8%
6%
7%
Sales/Sq. Ft. Growth Index
41.9
1.2
1.2
1.1
Beginning of Year Sq. Ft.
4.3
14.1
14.5
15.1
Net Additions
9.8
0.4
0.6
0.6
14.1
14.5
15.1
15.7
60 SOBEYS
50 40 30
End of Year Sq. Ft.
20 Net Sq. Ft. Growth (%)
10 0 # of Stores
National
Nfld.
2,840
74
Maritimes Quebec
270
681
Ontario Man./Sask. Alberta
953
236
303
228%
3%
4%
4%
Net Sales Growth (%) (excl. SERCA)
5%
3%
6%
7%
Sales/Sq. Ft. Growth Index
0.0
0.9
1.6
1.8
B.C.
323
Source: ACNielsen Measurement Science
METRO* Beginning of Year Sq. Ft.
7.4
8.7
8.8
9.1
Additions
1.3
0.1
0.3
0.3
End of Year Sq. Ft.
8.7
8.8
9.1
9.4
Net Sq. Ft. Growth (%)
17%
1%
3%
3%
Net Sales Growth (%)
9%
17%
5%
6%
Sales/Sq. Ft. Growth Index
0.5
16.0
1.3
1.7
Includes both corporate and franchise stores Note: Sobeys fiscals 2000-2003 have been categorized as 1999-2002e, respectively * Excludes drug store banners
Source: Company Report and CIBC WM Estimates
Amount Spent On Groceries Age of Children in Household Age Range of Children Up to 5 years 6 to 11 years 12 to 17 years
Average Spent per Week $135 $138 $144
Source: J.C. Williams Group
26
CANADIAN
GROCER
2003-2004
Amount Spent On Groceries Size of Household # of People in Household 1 2 to 3 4 5+
Average Spent per Week $89 $114 $143 $154
EXECUTIVE
REPORT
R ETAIL Canadian Drug Stores Sales 2002 ($000's) British Columbia 13.6% (+9.6%) Man./Sask. 4.8% (+7.0%)
Reaction to Time Challenges
Alberta 9.1% (+10.2%)
Portable Convenience Foods for Busy People On the Go... • • • • • • • •
Ontario 41.1% (+8.7%)
Quebec 24.5% (+7.8%)
Energy Bars Meal Replacement Drinks Yogurt In a Tube Cereal Bars Instant Hot Cereals "Lunchables" and "Lunchmates" Refrigerated/Frozen Entrees Disposable Containers
Maritimes 6.9% (+7.5%)
Total Canada: $15,185,300 (+8.5% vs 2001)* Source: ACNielsen Measurement Science, MarketTrack Drug
Source: Leslie Beck Nutrition Consulting
Fastest Growing Categories in Canadian Drug Stores Energy Bars & Drinks
* Excludes Newfoundland & Labrador, Yukon and Northwest Territories
Dollar Volume +19
Top 20 Selling Categories in Drug Stores
+59
Vitamin B
Depilatory Products excludes Wax
+42
Diet Meal Relacements/Dietary Aids
+16
Anti-Smoking Products
+39
Seasonal & Children's Candy Confections
+15
Anti-Oxidant Vitamins
+32
Men's Colognes & Lotions
+14
Cosmetics (Eye, Lip, Face & Nail)
Facial Scrubbers
+28
Liquid Cold Remedies
+14
Face Care Products
Children's Electrolytes
+27
Insect Repellents
+14
Headache Remedies
227.9
Electric/Battery Toothbrushes
+22
Elastic Bandages
+14
Hair Colouring
135.4
Glucosamine
+20
Insecticides
+14
Sanitary Protection
134.0
Shampoo
113.7
Source: ACNielsen MarketTrack Drug; Marketplace Performance Report; 52 Weeks Ending December 28, 2002
Fastest Growing Categories in Canadian Drug Stores
Unit Volume
Dollar Volume ($ Millions) $338.3 258.8
Chocolate Bars (Expanded Market)
108.7
Blades & Razors
107.2
Women's Fragrances
95.5
Personal Deodorants
93.1
Cold Remedies (Tablets & Powder)
91.2
Disposable Diapers (includes Training Pants)
89.8
Cold Remedies (Tablets & Powders)
+78%
Cover & Tape Products
+17%
Bathroom Tissue
86.8
Male Hair Colouring
+48%
Selected Insoles
+16%
Boxed Chocolates
85.3 83.0
Face Care Products
+40%
Upset Stomach Remedies
+16%
Antihistamines
Menstrual Pain Relief
+34%
Feminine Douches
+16%
Anti-Smoking Products
68.9
Hair Colouring
+32%
Single Use Cameras
+15%
Film
68.6
Repositionable Notes
+29%
Infant Cereals
+15%
Hair Conditioners & Rinses
68.2
Baby Feeding Cups
+21%
Incontinent Products
+14%
Dentifrice (includes Toothpolish & Whiteners)
67.5
Upset Stomach Remedies
66.5
Wart Removers
+18%
Soft Chewable Candy
+14%
Packaged Chocolate Bars >200 grams
+18%
Milk Intolerant Products
+14% Source: ACNielsen MarketTrack Drug; Marketplace Performance Report 52 Weeks Ending December 28, 2002
Source: ACNielsen MarketTrack Drug; Marketplace Performance Report; 52 Weeks Ending December 28, 2002
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
27
R ETAIL Drug Dollar Growth by Segment Source: ACNielsen MarketTrack Drug; 52 Weeks Ending December 28, 2002; Based on sales as tracked in 143 categories in drug stores
2002 Dollar Sales
Drug Store Dollar Sales at Retail ACV—Total Canada*
$ Millions Paper Products
165.4
3
Confectionery
371.6
5
Infant Care
52 Weeks to December 28, 2002 ($000's)
205.0
-8
Oral Care Personal Hygiene
0
Internal OTC
2
Cough/Cold
-1
Skin Care
9
Home Diagnostics
3
External OTC
15
Sundries
2
0%
5%
10%
2002 15,185,300
834,050
1,046,571
Maritimes
67.2
9
Hair Care
National
508.6
2
Diet Products
1997 11,561,974
219.9
14
423.2
Quebec
2,825,456
3,714,165
686.4
Ontario
4,704,603
6,241,318
289.4
Man./Sask.
605,463
726,491
459.0
Alberta
1,072,708
1,384,802
238.5
B.C.
1,519,694
2,071,953
226.2
* Excludes Newfoundland & Labrador, Yukon and Northwest Territories
180.0
Source: ACNielsen Measurement Science; MarketTrack Drug
15%
Drug Store Dollar Sales Trends, Canada* 52 Weeks to December 28, 2002 15,185
$000,000's 13,990
14 12,375
12
12,955
11,934
11,512
11,628
’93
’94
’95
’96
’97
’98
’99
’00
’01
’02
+4
+2
+1
N/A
+3
+3
+4
+5
+8
+9
10,763
11,230
’92 +5
11,562 11,188
10 8 6 4 2 0
% Chg. vs YAG
1992-1995 is sourced from ACNielsen Store Audit Drug Store data. 1996-2002 is sourced from ACNielsen MarketTrack Drug data * Excludes Newfoundland & Labrador, Yukon and Northwest Territories
Source: ACNielsen Measurement Science, MarketTrack Drug
28
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
R ETAIL Organic Foods Have Not Yet Reached the Mainstream
The Importance of Nutrition
% of People Responding to... "I Prefer to Buy Organic Foods When They Are Available"
➤ 24% of respondents indicate that nutritional content is the most important factor when shopping for foods.
70
➤ 19% have households with at least one member that has special dietary needs.
60
➤ 70% read nutritional labels frequently; 24% always. ➤ What they're looking for: (base: read labels) Fat Content Use of Artificial Sweetener Calorie Content Use of Preservatives Sodium Content Interest in Vitamin Content specific nutrients Calcium Content less common Potassium Content
}
63
50 40
25
30
32% 20% 19% 15% 6% 6% 4% 1%
20
12
10 0
Agree Completely/ Mostly
Neutral*
Disagree Completely/ Mostly
% of People Responding to... "It Is Worth Paying a Higher Price for Organic Foods" 70 60
Source: Chatelaine Feedback Panel, February 2003 (444 respondents)
65
50 40
Estimated Sales of Kosher Foods in Canada
24
30 20
1999-2002*
11
10 0
$575 Million
Agree Completely/ Mostly
$617 Million
$458 Million
Disagree Completely/ Mostly
* Agree or Disagree Somewhat + Neither Agree nor Disagree
+7.3% $480 Million
Neutral*
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
+19.7%
Who Buys Kosher Food? % Total Kosher Sales
+4.8%
Population Group:
Jews
Non-Jews
Reason: Religiosity, Food Safety
25%
Think Kosher is Safer/Better
45% Muslim
20% 1999
2000
*May Include Sales of Kosherized Major Brands
2001
2002
Food Allergies, Vegetarian/Vegan, Seventh Day Adventist Jehovah's Witness
10%
}
Various
55%
Source: HealthComm Inc.
Source: HealthComm Inc.
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
29
M ANUFACTURING
What’s Hot and What’s Not CATEGORY
DECLINING -15 to -8% -7 to -4%
STATIC -3 to +3%
+4 to +7%
GROWING +8 to +15%
Canned and Bottled Edibles
Apple Sauce Rem. Canned Meat Baby Food
Wet Packed Carrots Canned Meat Spreads
Canned Pasta Canned Peas Wet Packed Corn Salad and Cooking Oil Canned Seafood Spaghetti Sauce Pizza & Lasagna Sauce Maraschino Cherries Canned Fruit
Canned Soup Canned Milk Vinegar Baked Beans Canned Meat Canned Beans C & B Stews/Meatballs Canned Beets
Canned Salmon Canned Kidney Beans Selected Beans/Peas Vegetable Oil Spray Canned Asparagus
Chili Con Carne Remaining Canned Beans Wet Packed Potatoes Rem. Canned Vegetables Canned Corn on the Cob
Beverages
Cocktail Mixes
Powdered Skim Milk
Coffee Substitutes Malt Beverages Tomato Juice R & G Coffee Carbonated Beverages Tea Bags
Flavoured Soft Drinks S.S Drinks/Juices/Nectars/ Iced Tea (Excl. Cans) Low Alcohol Wine (Coolers and Cider)
Vegetable Juice Iced Tea Mixes Instant Breakfasts Flav. Drink Powders—Cold Chilled Drinks/Juices/Nectars/ Iced Tea (Excl. Cans) Hot Chocolate Cordials/Squash/Syrups
Rice Drinks RTD Iced Tea Cans Powdered Breakfast Fruit Drinks Soya Drinks Flat Water
Maple Syrup Sandwich Spreads Pickling Salt
Sauerkraut Jams/Jelly/Marmalades Molasses Mayo/Sp. Salad Dressing Honey Relish Prepared Mustard Dry Salad Dressing Gravy Makers & Enhancers Ketchup
Chutney Dry Sauce/Gravy Mix Mexican Seasonings Pickles
Table Syrups Seasonings/Liquid Seasonings Chili/Meat/BBQ/Oriental/ Seafood Sauces Pourable Salad Dressing Olives/Peppers Cooking Wine & Sherry Peanut Butter/Sweet Spreads Dry Mustard Remaining Pickled Vegetables
Spices Oriental Fondue and Bouillon Products Sundae Toppings Mexican Salsa, Dips and Garnishes
Frozen Breakfasts Pie Tart/Patty Shells Ice Cream Frozen Vegetables Meat Patties/Steakettes
Pizza Snacks Frozen Baked Desserts Frozen Fruit Beverages Frozen Bread Dough
Frozen Seafood Frozen Dinners & Entrees (Incl. Meat Pies) Remaining Frozen Meat Pizza, French Bread & Subs
Confections
Hot Cereals Dry Soup Mix Prepackaged Bread Instant Potatoes Bouillon Products Croutons
Specialty Rice Oriental Noodles Coconut Wheat Germ Pancake/Waffle Mix Regular Packaged Rice Mexican Dinner Kits & Shells
Seafood Batter Dried Breads Bread Crumbs
Condiments and Sauces
Frozen Foods
Dry Grocery
Fruit Preservatives Boxed Salad MIxes
Dry Packaged Dinners Dry Pizza Mix
RTE Cereals Ice Cream Cones Infant Cereal Prepackaged Rolls Coating Mixes Dry Pasta
Dairy Case
Processed Cheese Loaf
Lard and Shortening Processed Cheese Spreads
Sour Cream Milk Eggs Butter
Prepackaged Cheddar Cream Specialty Cheese Whipping Cream Cream Cheese
Yogurt Vegetable/Chip Dip Refrigerated Pasta Refr. Imitation Seafood Refrigerated Entrees
Margarine Milkshakes/Egg Nog Powdered Toppings Grated Cheese Cottage Cheese
Whipped Toppings
Tofu Refrigerated Dough Refrigerated Pasta Sauce Fresh Tortilla Shells Salad
Refrigerated Products
Source: ACNielsen, MarketTrack, 52 Weeks to December 28, 2002
30
Physical Growth 2002
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
M ANUFACTURING
Top Food Manufacturers in Canada (Sales in '000s) Company
Rank FP 500
Sales
McCain Foods Limited
50
$5,302,979
Maple Leaf Foods Inc.
60
$4,775,358
4
$3,175,000
Saputo Inc.
114
$2,161,671
Kraft Canada Inc.
120
$2,082,000
Molson Inc.
132
$1,857,100
Cott Corporation
151
$1,687,475
Nestlé Canada Inc.
154
$1,645,148
George Weston Ltd. (Excl. Loblaw)
OLYMEL, société en commandite
$1,618,000
Agropur Coopérative
170
$1,542,123
Pepsi-Cola Canada Ltd.
175
$1,465,000
Source: Financial Post 500, 2002
Priorities for Supplier Support As Identified by Inventory/Logistics Management PRIORITIES
PER CENT OF RESPONSE(1)
Meeting Scheduled Delivery Windows More Consistently
89%
Reducing Order Cycle Times to Decrease Inventory Levels
67%
Increasing Shipment Accuracy
63%
Improving Shipment Completeness
60%
Improving Communication Processes About Delivery Status
50%
Having Accessible, Responsive Customer Support
48%
Implementing Improved Supply Chain Practices
43%
Having Capable/Empowered Account Personnel
30%
Using Durable Packaging That Remains Damage-Free
23%
Making Staff Support Resources Available to Us
15%
Resolving Deduction Issues Fairly and Efficiently
5%
0%
20%
40%
60%
80%
100%
(1) Per cent of Inventory/Logistics Management Respondents Identifying Each Action As a Priority for Supplier Support
Source: Advantage Group
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
31
M ANUFACTURING
Weekday Dinners in Canada Include Sandwiches in the Top 10 Top Foods Canada—In-Home Dinner—Weekdays % of Eating Occasions
1999
2000
2001
% of Meal Occasions by Daypart Total Dinner 27%
Total Lunch 26%
17 18 16 17
Vegetables
6 6
Salads 5
Boiled/Mashed Potatoes
5 4 4
Chicken (Excl. Wings/Nuggets)
4 4 4
Rice
4 3
Italian Pasta
3
Casseroles/ One Dish Meal
3 3
Fruit 3
6 6
7 7
How to Read This Chart: Vegetables Are Consumed in 17% of In-Home Dinner Weekday Food Occasions.
5
5
2
Total Snacks 21%
Total Breakfast 26%
How to Read This Chart: 26% of All Meal Occasions Were at Breakfast.
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
Priorities for Supplier Support As Identified by Senior and Category Management
4 PRIORITIES
4 4 4 4
PER CENT OF RESPONSE(1)
Providing Effective Category/Business Plans
70%
Having Capable/Empowered Account Personnel
62%
Providing Sound Market/Consumer Information
4 4
57%
Working Collaboratively to Develop Joint Plans/Initiatives
51%
Tailoring Its Initiatives to Differentiate Our Company
3 3 3 3
Soup
Sandwiches*
2002
Breakfast Represents 26% of All Meal Occasions in Canada
43%
Providing Well Organized Product Introductions
30%
Simplifying Consumer Choices/Efficient Assortment Planning
29%
Managing Promotions Effectively
28%
3 3
Making Staff Support Resources Available to Us
3
Providing Support for Our Consumer Marketing Strategies
24% 24%
Providing Sufficient Store Level Support/Follow Through
21%
Providing Meaningful Product/Package Innovation
20%
Supporting Us with Creative In-Store Mdsg. Programs
19%
* Excludes Burgers, Hot Dogs, Mexican Sandwich Source: NPD Group Eating Patterns in Canada Report, March 2002 Release
Providing Effective Brand Marketing Support
14%
0%
20%
40%
60%
(1) Per cent of Senior and Category Management Respondents Identifying Each Action As a Priority for Supplier Support
Source: Advantage Group
32
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
80%
M ANUFACTURING
Soup Is a Top Lunch Item in Canada
The Frequency of Skipping Breakfast Is Slowly Increasing
Top In-Home Weekday Lunch Foods—% of Eating Occasions 1999
2000
2001
2002 10 10
Soup
7 7 7
Vegetables 4
Salads
3 3
Cookies 3
2
4 4 4
5
2 2 2
2.7
How to Read This Chart: 3% of Food Eatings for Weekday In-Home Lunch in Canada Are Crackers.
2.6
1999
2000
2.9
2.7
2001
2002
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
Top HMR Items Eaten at Dinner Include Salad, Chicken and Potatoes
3 3 3 3 3 3
Bread
Boiled/Mashed Potatoes
12
8
3 3 3 3
Ham Sandwich
Crackers
How to Read This Chart: For Breakfast Meal Skippers, the Average Number of Breakfasts Skipped Is 2.9.
9 9 9 9
Fruit
Cheese/Cream Cheese Sandwich
11
Weekly Frequency of Skipping Breakfasts
4
% of In-Home Dinner HMR Eating Occasions
35
Salads
3
10 11
Chicken
2 2 2 2
(Excl. Wings/Nuggets)
Boiled/Mashed Potatoes
3 3
Ham
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
Beef Steaks
3 3
Pizza (Excl. Novelties)
14 13
1999 2000
4 5
2001
4 4 4 4
2002
5 5
2 2 2 3
40 41 43
How to Read This Chart: 5% of HMR Eatings Are Boiled or Mashed Potatoes. HMR: Main/Side Dish Items with No Preparation Required to Eat, Not from Restaurant or Frozen.
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
33
M ANUFACTURING Almost Half of Carried from Home Lunches Have Three or More Dishes, Whereas Only One-quarter of In-Home Lunches Have Three or More % of Carried from Home Lunch Meal Occasions (# of Dishes—Excl. Beverage)
When You Eat Out of Home, One-third of Breakfasts Are Sit Down Hot Breakfasts Consisting of Pancakes or Eggs
Carried from Home 4 Dishes per Meal 13%
3 Dishes per Meal 27%
% of Breakfast Meals—Away from Home Only Breakfast Sandwich 13%
Hot 34% 2 Dishes per Meal 27%
5+ Dishes 9% How to Read This Chart: In 24% of Carried from Home Lunch Meals, There is Only One Food Item.
Other 9%
1 Dish per Meal 24%
Beverage 17%
4 Dishes per Meal 6%
In-Home 3 Dishes per Meal 16%
Cold 27% 5+ Dishes 3%
All In-Home, Carried or Skipped
How to Read This Chart: Out of Breakfasts Eaten Away from Home, 27% of Breakfast Meals Were Cold.
All Away from Home 5% 2 Dishes per Meal 32%
Cold includes meals with all baked goods, yogurt, toast, bagels and RTE cereal. Hot includes meals with eggs, pancakes, hot cereal and waffles. Beverage includes beverage only meals. Breakfast sandwich includes meals with hot egg/bacon or other sandwiches. Other includes non-traditional breakfast foods.
1 Dish per Meal 44%
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
Source: NPD Group Eating Patterns in Canada Report, October 2002 Release
Significant Declines Seen in Many Categories Greatest Annual Dollars Sales Decline in Drug Stores Shaving Lather
-29%
Denture Brushes & Kits
-12%
Migraine Prevention Products
-26%
Herbal Remedies
-12%
Baby Bibs
-16%
Disposable Diapers/Training Pants
-11%
Baby Utensils, Bowls
-14%
Mini Mints
-11%
Breath Fresheners & Purifiers
-12%
Infant Feeding Products
-10%
Hair Permanents
-12%
Shaker Top Adult Talcum Powder
-9%
Disposable Bottle Liners
-12%
Baby Nursers & Accessories
-9%
Cough & Cold Relief Gum
-12%
Source: ACNielsen MarketTrack Drug; Marketplace Performance Report. 52 Weeks Ending December 28, 2002; Based on 143 Categories
34
CANADIAN
GROCER
2003-2004
EXECUTIVE
REPORT
THEN
NOW
SOON
FOREVER
100 YEARS
OF TRADITION AND EXCELLENCE
Thank you for your continuing support. EXECUTIVE REPORT A SPECIAL SUPPLEMENT TO CANADIAN GROCER ONE MOUNT PLEASANT RD., TORONTO, ONTARIO, CANADA PRINTED IN CANADA
M4Y 2Y5