What are the Canadian Household Income Quintiles

THE WINE, BEER AND OTHER DRINKS MARKET IN CANADA

Transcript

1 THE MARKET FOR WINE, BEER AND OTHER BEVERAGES IN CANADA TARGET GROUP ANALYSIS AS PART OF THE EXPORT PROMOTION OFFERS FOR THE AGRICULTURAL AND FOOD INDUSTRIES OF THE FEDERAL MINISTRY OF FOOD, AGRICULTURE AND CONSUMERS 2011

2 Executive Summary The Canadian alcoholic beverages market is tightly regulated. The almost monopoly regulation of alcohol sales (import, distribution, distribution) in most provinces by state alcohol control authorities (liquor boards) brings with it a more or less centralized sales and distribution system. This can simplify the sale of alcohol from German producers, as large quantities can be sold relatively quickly if it is included in the product range. The Liquor Control Board of Ontario (LCBO) e.g. is one of the largest buyers of alcohol worldwide. Since the retail prices are usually are set by the liquor boards, the alcohol market is less affected by competition through discounts than, for example, the other beverage market. An increase in imports can be seen especially in the case of wine and beer, which certainly provides opportunities for German products. In 2010, a total of 75% of the red wines sold were imported, while the rate for white wine was 50%. Over the past ten years, the sales volume of wine imports has grown by an average of 9.5% annually. The market share for wine was 18% in 1993 and 29% in 2010. Ontario, the country's most populous province, is in the lead in terms of consumption (137.74 million liters), which can also be explained by the absolute population of the economically strongest province in eastern Canada. Québec has the second highest proportion with liters. In the non-alcoholic beverages segment, there are currently opportunities in the area of ​​so-called functional drinks (drinks with health-promoting properties as well as sports drinks and energy drinks). There is also potential for German providers when it comes to mineral water, coffee and tea. Imports of coffee and tea totaled $ 540 million. The trend here is that imports are increasing. In particular, tea imports (green tea and tea specialties) are leading, but coffee imports are also increasing sharply. The total imports of soft drinks showed a significant increase between 1996 ($ 17.2 million import volume) and 2007 ($ 179.5 million). Bottled water in itself was part of this trend, between 1996 and 2007 the import volume rose from $ 25.6 million to $ 75 million. In the case of mineral water, the segment of high-priced premium water in particular offers opportunities for German imports. The import regulations for food as well as regulations for consumer protection are strictly regulated in Canada. In an international comparison, the bilingual packaging labeling, due to the two official national languages, should be emphasized as a special feature. However, the requirements are not a fundamental obstacle for German companies and should not stand in the way of entering the market.

3 This target group analysis gives an insight into selected segments of the Canadian beverage market. Upon request, we will also prepare a market study for you that goes beyond the present analysis and tailored to your needs and support you in the search for Canadian importers for your products as well as in further preparations for market entry. Interest? We would be happy to prepare an individual offer for you! Contact: AHK Canada, Toronto 480 University Avenue, Suite 1500 Toronto, ON M5G 1V2, Canada Telephone: Fax: This target group analysis was created in preparation for the AHK business trip wine, beer and other beverages to Canada. The AHK business trips as part of the export promotion measures for the agricultural and food industry of the Federal Ministry of Food, Agriculture and Consumer Protection support German companies in finding business partners in foreign target markets. More information: Exemption from liability This target group analysis was carried out to the best of our knowledge and belief. However, no guarantee can be given for any consequences of decisions made on the basis of this study. 3

4

5 6 Goods import regulations Overview of the competent authorities Regulations and legal requirements Goods import requirements Customs classification General labeling regulations Labeling regulations for alcoholic beverages Summary of helpful internet sources Contact lists Authorities representatives Interest groups Liquor Boards and Commissions Alcohol importers Food importers Food retail trade Fairs Trade magazines

6 1 Introduction Canada, the second largest country in the world, offers sales opportunities for German products due to its stable economic situation and the regionally distributed population in manageable conurbations with a significant European character. The import and sale of alcoholic beverages in Canada is not regulated nationwide, as in Germany, but at the provincial level and is subject to strict state regulations. In the majority of the provinces, purchasing and sales have practically monopoly structures. As a result, alcoholic beverages can only be found in approved specialist shops in Canada and not in supermarkets as in Germany. A licensed alcohol importer is required for the import and inclusion of new products in the product range, who presents new products to the responsible authorities and markets them on behalf of the manufacturer. Due to this special process of importing and marketing alcoholic beverages, enough time should be allowed for new products to be added to the core range. As a rule, this is only updated a few times a year through a previous tendering process. As soon as they have been added to the range, however, the products are sold in specialist alcohol shops (also regulated at the provincial level) across the province without any additional effort. The distribution of non-alcoholic beverages and food takes place via the classic distribution channels of the food retail trade. The German exporter needs a permanent distribution partner to sell his products in Canada. Exporting to Canada can initially prove to be complex, especially for smaller companies, as it depends on the country and provincial regulations must be taken into account. Thorough preparation is often the key to success. As part of this target group analysis, the industry segments alcoholic beverages and non-alcoholic beverages are considered separately due to the different sales structures. This target group analysis provides a comprehensive overview of: the current economic situation in Canada the Canadian population the market for alcoholic and non-alcoholic beverages import and distribution of alcoholic beverages distribution structures of non-alcoholic beverages import regulations The analysis focuses on the presentation of the Canadian target groups as well as on the Distribution and marketing of alcoholic beverages. 6th

7 2 Country Profile Canada Canada stretches for km from east to west and is politically divided into ten provinces and three territories. The huge country spans six time zones. Only a tenth of the total land area is permanently settled, and that with a relatively low population density of 3.4 inhabitants per square kilometer. The official languages ​​are English and French, although French is spoken in eastern Canada and mainly in the province of Québec. Illustration: Map of Canada with the Canadian flag Source: Economic structure Canada has the seventh largest economy in the world and is a member of all important international economic forums such as the G8, OECD, WTO, IMF and the World Bank. The most important economic alliances include the NAFTA (North American Free Trade Agreement) and the APEC (Asia-Pacific Economic Cooperation). A comprehensive economic and trade agreement with the EU and a renewal of the 1976 framework agreement between the EU and Canada are currently being negotiated. The first results are expected in 2011. The country's raw material potential is enormous: Canada is the third largest producer of natural gas in the world after the USA and Russia, the fifth largest producer of electrical energy, is in 9th place in oil production and, including the oil sands in Alberta and Saskatchewan, has the second largest oil reserves in the world to Saudi Arabia. The generation of energy from renewable energies is particularly promoted in Canada and is one of the industries with the greatest growth opportunities in the year. Furthermore, the Canadian mining industry is of global importance. 7th

8 Canada is one of the most important producing and processing countries for ores, metals, precious metals, rare earths and minerals, and ranks second among the producing countries for uranium. Canada is also the third largest diamond producer. The country's forest and water resources are almost inexhaustible and Canada's agricultural production volume (e.g. grain, fish, oilseeds) is also in the higher ranks in a global comparison. Other important sectors are the manufacturing industry, mechanical and plant engineering, metal products, chemicals, automobiles and spare parts, and electrical engineering. Trade and import The USA is Canada's most important trading partner: 75% of Canada's exports are destined for the US market alone. Germany ranks fifth among Canada's main supplier countries and sixth as a buyer country. Images: Canada's main customers and suppliers Source: Germany Trade & Invest In particular, motor vehicles and spare parts are imported into Canada from Germany, followed by machines and systems, chemical products and electrical engineering. Conversely, raw materials and machines from Canada in particular are exported to Germany. In 2009, Germany ranked seventh among all foreign investors with an investment volume of $ 13.9 million. Economic development For 2010, the growth of Canada's gross domestic product (GDP) was estimated at 3.0% and rose to around billion Canadian dollars (see 2009: billion .). In the past decade, GDP only fell by 2.5% in 2009 as a result of the global recession following the collapse in the financial markets. The economy is estimated to grow by 2.0% to 2.5% in 2011. Economic growth is currently being positively influenced primarily by the raw materials sector. The construction industry, mechanical engineering and total exports are growing only moderately. Overall, the Canadian economy can be said to be slower 8

9 is growing than that of the USA, but has proven to be stronger and very stable compared to the other G8 countries. In the meantime, all jobs that were cut during the 2008 recession have now been restored, while in the US this is only the case for one seventh of the 8 million jobs lost. Economic output is back to pre-recession levels and is expected to return to full capacity in about two years. The annual productivity increase averaged 0.5% during the last five years 1. Figure: Key economic data 2009 to 2011 Source: Germany Trade & Invest The inflation rate was 3%, for 2010 1.8% are expected. The increase in consumer spending in 2010 is forecast to be 3.5%. The average unemployment rate in 2010 was 7.6% (for comparison: in 2009 it was 8.5%). It is expected to decrease by a further 0.4 to 0.8% in 2011, but varies greatly from region to region depending on the province / territory. For example, in northern Newfoundland and Labrador, the average unemployment rate in 2010 was 12.9%, compared to just 4.7% in Manitoba. In the economically strong areas such as Ontario, Québec and British Columbia, unemployment hovered around 7% to 8% in 2010 (Statistics Canada 2010). Currency The exchange rate between the Canadian dollar and the euro averaged CAD $ 1.3661 per euro in 2010. The average conversion value against the US dollar was CAD $ 1.03 per US $. The Canadian central bank (Bank of Canada) raised the key interest rate in 2009 from 0.25% again to 1% in 2010, this key interest rate should rise by a further 0.25% to 1.25%. The currently relatively strong dollar makes the Canadian 1 (January 2011) 9

10 economy and preoccupies the media as it slows exports and can potentially have a negative impact on economic growth. Figure: Development of the Canadian dollar against the euro () Source: 10

11 3 Consumers The Federal Statistical Office in Canada (Statistics Canada) conducts a referendum every five years, the so-called Census Canada. This provides in large parts the data basis of the following chapter Demographic structure Canada is the second largest country in the world with a total area of ​​km² (28 times larger than Germany) and has a total population of 34.24 million inhabitants (estimated figures as of October 1st 2010). For 2011 it is projected that the absolute population will reach the mark of 34.5 million 3. The most populous provinces are Ontario with 13 million (38.7% of the total population) and Québec with 7.8 million (23.2%) ) Inhabitants are the most populous provinces. 90% of the population also lives in the southern belt of the country with a distance of up to 100 km from the US border. Three quarters of the population (17 million) live in the 13 metropolitan areas, the so-called Metropolitan Areas. Only a quarter of the population lives in rural areas. Figure: Population density and population distribution in Canada Source: Statistics Canada 2 The Census Canada collects relevant data on demographic development. The implementation of the census has been constitutionally established since 1871 and has been carried out regularly since then; participation in the survey is mandatory. The last census was carried out in 2006; the new data sets will be published in the course of 2011

12 figures: population distribution by provinces, graphic representation; Overview of the population distribution per province / territory in percent Province / territory Ontario 38.73% Québec 23.19% British Columbia 13.23% Alberta 10.93% Manitoba 3.62% Saskatchewan 3.06% Nova Scotia 2.78% New Brunswick 2.22% Newfoundland and Labrador 1.51% Prince Edward Island 0.42% Northwest Territories 0.13% Yukon 0.10% Nunavut 0.10% Canada 100% Source: Statistics Canada, own presentation With an average age of 39.5 years, the Canadian population is younger than the German (43 years) and relatively young compared to other OECD countries. But Canada is also an aging society overall. While the average age in 1956 was 27.2 years, an increase to 46.9 years is expected in 2056. This means that the average age will increase by 20 years within a century, and the number of pensioners will for the first time exceed the number of children. For 2036, a share of 25% retirees in the total population is forecast. Exceptions are the northern territories of Nunavut with an average age of 23.1 years and the Northwest Territories with an average age of 31.2 years. At the same time, the Canadian population is growing continuously in absolute terms. With the exception of the Northwest Territories, the trend towards continuous growth is unbroken and amounts to just under 1.2% annually. This is made up of natural growth with a proportion of 0.4% and growth through immigration of 0.61%. An average of 1,137 people immigrate to Canada each day. Above-average immigration rates can be recorded in Alberta in particular due to the oil boom there. Canada thus showed the greatest absolute population growth of the G8 countries between 2001 and 2006. It is assumed that immigration rates will continue to rise in the future. One reason for this is that the now aging baby boomer generation will ensure a higher death rate in the coming years and the need for labor will continue to grow. If you look at the distribution of the 12

13 Population along the age groups and differentiated by gender, the following distribution results 4: Figure: Canadian population by gender and age, 2005 Population Total Men Women Total Men Women Number% of total population All age groups, 0 100.0 100,, 2 32 , 3 30,, 6 38.1 37,, 7 21.6 21,, 8 7.7 10.1 90 and older, 5 0.3 0.8 Last status: May 29, 2006 Source: Statistics Canada 2006 Die average birth rate is 1.6 children per woman, with the overall average being raised by the very high rate in Nunavut. Overall, it can be observed that the birth rate among younger women is falling, while it is tending to increase in the group of women over 30 years of age. In the USA the average is 2.1 children per woman, in France it is 2 children per woman 5 and in Germany it is 1.36 children 6. Canada is thus overall in the lower mid-range of the G8 countries. Family structures are also changing. Couples with children, once the dominant family type, no longer make up the majority of families; their share was still 56.3% in a comparison of all households, in 2006 it was only 46.2%. In contrast to this, the proportion of couples without children was only 30.3% in 1981; in 2006 it was already 37%.The number of single women exceeded the million mark in 2006 and reached the level of women. In contrast, families with single men were counted, which is more than doubling compared to 1981.7 The following graph illustrates the development of population growth in Canada as a whole and differentiated according to the proportions of natural growth and growth through immigration: 4 The gender distribution can be considered in Look at the beverage consumption, as it can be differentiated according to gender and age 5 (Die WELT,) 6 (Die ZEIT,) 7 eng.cfm # fam_earnings 13

14 Figure: Population growth in Canada Source: Canada Year Book 2010 Chapter Canada as a country of immigration The Canadian population is markedly multicultural. The ethno-cultural composition and development of society as a whole was and is shaped by the various waves of immigration and the descendants of these immigrants. This can be clearly seen both in the absolute numbers of immigration and the share of immigration in population growth as well as in the population structure. Over 13.4 million people immigrated to Canada in the last century, with the largest wave arriving in the 1990s. According to the 2001 census, 18.4% of the people living in Canada were born outside the country, the highest proportion in 70 years 9. More than 200 ethnic origins (10) were recorded in the 2006 census, including the indigenous peoples of Canada counted just 20. The countries of origin of the immigrants have shifted in the last few decades towards a larger number of immigrants from non-eu countries, especially from (Southeast) Asia and China. These so-called Visible Minorities 11 change the ethno-cultural appearance of Canada and contribute to Canada being one of the countries with the greatest ethnic diversity in the world. This is how they described themselves in 2006 in a cf. Statistics Canada: Ethnic Diversity Survey, Portrait of a Multicultural Society 10 Ethnic origin refers to the ethnic or cultural origins of the respondent's ancestors. An ancestor is someone from whom a person is descended and is usually more distant than a grandparent, from: Statistics Canada: Ethnic Diversity Survey, Portrait of a Multicultural Society 11 The Employment Equity Act defines visible minorities as: "Persons, other than Aboriginal peoples, who are non-caucasian in race or non-white in color ". The population group of the visible minorities is composed in particular of: Chinese, South Asians, coloreds, Arabs, West Asians, Filipinos, Southeast Asians, Latin Americans, Japanese and Koreans, cf. () 14

15 Survey 16.2% of the Canadian population themselves belong to this group of Visible Minorities, with British Columbia with 24.8% and Ontario with 22.8% having the highest concentration of non-European immigrants 12. About 75% of immigrants belonged to this group of Visible Minorities in 2006. A total of 20-22% immigrants in the total population is forecast for 2017. By this time, one in five Canadians will probably have immigrated. When asked about the individual origins, ie the ethnic roots within the Canadian population, the following were named most frequently in the 2006 Canadian census (single or multiple answers): British, French, Scottish, Irish, German, Italian, Chinese, indigenous North American, Indian and Ukrainian. 41.1% of the population reported more than one race, an overall rising trend that reflects the mix of society. The following graphic gives an overview of the distribution of immigrants by region of origin: Figure: Canadian immigrants by region of origin Source: Canada at a Glance 2010 If one differentiates the immigrants according to the first, second and third generation, the proportion of the population that is in at least the third generation lives in Canada, estimated at 60.5% in 2006. Of these, 46.6% stated Canada, 42.2% Great Britain and 23.8% other Europe as their origin. 15.6% of the total population lived in Canada in 2006 in the second generation, i.e. at least one parent was not born in Canada. Most of the second generation living in Canada are of European descent. The following graphic gives a detailed overview of the ethnic roots in the first, second and third generation. 12 Statistics Canada: Canadas Ethnocultural Mosaic, Census

16 Figure: The ten most common ancestry among Canadians over 15 years of age Source: Statistics Canada, Census of Population, 2006 A look at the distribution of religious affiliation shows that the roots of many Canadians lie in the Christian tradition of the western culture. However, it is to be expected that this distribution will change in the medium and long term with increasing immigration from Asia. Figure: Religious affiliation Catholic 43.2% No religion 16.2% United Church 9.6% Anglican Church 6.9% Other Christians 2.6% Baptists 2.5% Muslims 2% Buddhists / Hinduists 2% Mennonites 0.6% Source: Statistics Canada

17 3.3 Income structure of households When looking at income, the following categories can be distinguished 13: Income without further specification generally refers to the gross income of wages, salaries and self-employed work per capita. Net income is income from employment or self-employment minus all taxes and duties. Income, on the other hand, refers to all income including pensions, income from investments, government grants, etc. The income level for Canadians in full-time employment has changed little over the past quarter century. In 1980, the average income in the total consideration of all employed persons was $. In 2005 it was $ (measured in constant dollars on the basis of 2005) 14. In relation to the period between 2000 and 2005, there was a moderate increase of 2, 4%. Only in Québec and British Columbia was there a decline during this period (0.3% and 3.4%, respectively). When looking at income by class, an increase was observed in the upper income range, while the middle income remained constant and fell significantly in the lower income segment. In the top fifth of incomes, income increased by 16.4% between 1980 and 2005, while it fell by 20.6% in the bottom fifth. In the middle fifth there was a slight increase of only 0.1% 15. This faster increase in the upper income brackets has doubled the number of top earners with an annual income of more than $ US since 1980 to almost 6.5% . Nunavut, Alberta and the Northwest Territories are leading the trend, with more than 40% of top earners in these three provinces and territories, respectively. At the same time, the situation for low-wage earners improved in 2007, despite the opposite trend. In 2007, compared to 10.5% in 2006, 9.2% of incomes were below the threshold of low income. In English, a distinction is made between earnings to designate income from employed or self-employed work, while income includes income or earnings / profits from all sources, ie also government grants, profits from investments, pensions, etc., see Study: Earnings and Incomes of Canadians over the Past Quarter Century, 2006 Census: Findings 14 These figures refer to the following statistical group of people: Paid workers and selfemployed people who were employed full time, for the full year in That is, they were aged 15 and over and worked 49 to 52 weeks during 2005, for 30 hours or more per week. According to the 2006 Census, 9.3 million persons aged 15 and over were employed full-time, for the full year in 2005, cf. the report of the Federal Statistical Office on Income and Earnings of Canadians according to Census 2006: 16 Definition and determination of the low income level , see: 17

18 In 2005, a total of 11.4% of the population, i.e. around 3.5 million people, belonged to the low-income segment. Children and young people in particular are affected by low incomes. In 2005, 14.5% of children under 5 years of age lived in families with low incomes; in the group of 15 to 17-year-olds it was 11.4% 17. The following table summarizes the development of the income segments according to quintiles: Figure: Development of Income by income class Year Change to to constant dollars percentage Bottom 20% Middle 20% Top 20% Source: Statistics Canada, censuses of population, 1981, 1991, 2001 and For the first time in the 2006 census, the net income was also recorded, which paints a more precise picture of this what is actually available to families and individuals. The average net income in 2005 for families with two or more members was $ in relation to a gross income of $. If one looks at the net income (i.e. the total net earnings) of Canadians and their development over the last two decades depending on the household composition, the following picture emerges: Figure: Average net income by household type Source: Statistics Canada, Canada at a Glance 2010 Income increases fell for families as Economic community as a whole is significantly higher than for single people, which is essentially due to the growing number of double earners, ie to the fact that more and more women are employed and contribute to the family income. The highest 17 cf. () 18

There were 19 corresponding increases in households with two employed persons. When comparing households with two or more people, so-called Economic Families 18, this household type had an average income of $ in 2006 (an increase of 21.6% compared to 1980), while couples without children earned an average of $, which is an increase of 14.6% compared to 1980. For single women, incomes also rose by 10.6% to $ 30,958, while for single men they fell by 8.5% over the same period 19. Overall, there are significant differences in incomes depending on the size and composition of households. The following graphic shows the relationship between household composition and income: Figure: Development of income differentiated by household type Source: Statistics Canada 2007 The development of the number of single-person households compared to multi-person households is also interesting, as illustrated by the following graphic. This shows that the number of people living alone has risen significantly and continuously since the 1940s, while the number of multi-person households (five and more people) has declined sharply. Overall, the trend is towards small families, i.e. couples with or without child (ren), of whom both heads of the family are increasingly employed and contribute to the family income. 18 Economic family refers to a group of two or more persons who live in the same dwelling and are related to each other by blood, marriage, common-law or adoption. A couple may be of opposite or same sex. Foster children are included. By definition, all persons who are members of a census family are also members of an economic family. See also: 19 cf. 19

20 Figure: The development of single and multi-person households in comparison Source: Statistics Canada 2006 A look at the total income of households 20 results in an average of $ for 2005, an increase of 3.7% compared to 1980 this is even an increase of 11.1%, which, however, is significantly influenced by the increase in private pensions. There have been impressive increases in income here. Elderly couples with no children averaged $ 45,674 in 2005, an increase of 55.8% over 1980. There are also significant rates of increase among single seniors, 46.0% for women and as much as 63.5% for men in the same period. One explanation for this is the increase in the share of private pensions in senior income. In 2005 these had a share of 30% of total income, in 1980 it was only 15%. In a comparison of the different family types, the total income for single mothers was the lowest, which does not seem surprising. Looking at people living alone who are not part of an economic family, the average total income for the comparison period is $, an increase of 6.3%. In addition, regional differences can be identified. The highest incomes are found in Alberta ($ 76,526) and Ontario ($ 72,734), while Alberta, Newfoundland and Labrador have the highest rates of increase in total household income (10% and 7.1% over the period). 20 Total income refers to the English term income or here income of families and is defined as income from all sources, including wages and salaries, government transfer payments, investments, retirement pensions and so on, cf. 20

21 3.4 Consumer behavior and purchasing power The average expenditure of a Canadian household in 2009 amounted to a total of $ This indicates an increase of 1.7% compared to 2007, but a decrease of 0.3% compared to 2008, which reflects the slowdown in the economy since autumn 2008 reflects. The inflation rate was 2.5% compared to 2007, but is not included in the expenditure 21. There are also regional differences in expenditure. For example, households in Alberta had the highest average spending of $ in 2009, followed by Ontario with $. Spending decreased year over year in five provinces (Newfoundland and Labrador, Prince Edward Island, Québec, Ontario and Alberta). In Manitoba, spending was up 4.9% 22. Nationally, spending was roughly 21% tax, 20% housing, 14% mobility, and 10% food. These expenses fluctuate drastically depending on the social segment. In the top fifth of the $ 22,860 average income, spending on groceries, housing, and clothing was 28% versus 52% in the bottom fifth, averaging $ 22,860, and 29% on taxes versus 3% in the bottom quintile. The table below shows the consumption behavior and expenditure of households along the income class. Figure: Average expenditures by income level 2009 Average expenditures by income level, 2009 Canada Lowest quintile dollars Second quintile Third quintile Fourth quintile Highest quintile Total expenditure Total current consumption Food Shelter Household operation Household furnishings and equipment Clothing Transportation Health care Personal care Recreation Reading materials and other printed matter education cf.

22 Average expenditures by income level, 2009 Tobacco products and alcoholic beverages Canada Lowest quintile Second quintile Third quintile Fourth quintile Highest quintile Games of chance (net) Miscellaneous expenditures Personal taxes Personal insurance payments and pension contributions Gifts of money and contributions Source: Statistics Canada Die Expenditures for drinks are not charged separately. Non-alcoholic beverages fall under the Food category and alcoholic beverages fall under the Tobacco products and alcoholic beverages category. Nevertheless, trends can be seen in the distribution of expenditure. It turns out that there is an overall moderate increase in expenditure with increased income for food and beverages. In other categories, such as transportation and accommodation, the differences are greater. With regard to expenditure according to the household composition, the following distribution results; here, too, there is a stable level of expenditure on food and beverages in the cross-section of the various household types: Figure: Average expenditure by household type 2009 Average expenditures by household type, 2009 Total expenditure Total current consumption Canada dollars Couples with children Lone parent female One person Senior couples, both 65+ Population Home owners Renters centers households Rural households Food Shelter Household operation The data is based on a survey by Statistics Canada from 2009, the Survey of Household Spending. The introduction to the data sources says: Data were collected by personal interviews conducted from January to March 2010 from a sample of more than 16,700 private households in all provinces and territories. The survey gathered detailed information on spending patterns, dwelling characteristics, and household equipment in 2009 []. The average spending for a category is calculated for all households, including those with and those without expenditures for the category. Average spending also includes sales taxes. See 22

23 Average expenditures by household type, 2009 Household furnishings and equipment Canada Couples with children Lone parent female One person Senior couples, both 65+ Population Home owners Renters centers households Rural households Clothing Transportation Health care Personal care Recreation Reading materials and other printed matter Education Tobacco products and alcoholic beverages Games of chance (net) Miscellaneous expenditures Personal taxes Personal insurance payments and pension contributions Gifts of money and contributions Source: Statistics Canada 2009, 23

24 3.5 Expenditures for groceries and the consumer price index If one takes a closer look at the expenditures in the food sector, some interesting developments can be observed. In 2008, Canadian households spent an average of $ 7,435 on groceries. This corresponds to an increase of 1.8% compared to 2007. As a percentage of total expenditure, food expenditure makes up 10%. In the 1960s, spending on food represented the largest share of total spending in a Canadian household at 18.7%; today it represents the smallest share. There are also regional fluctuations here. In 2008, the province of Québec had the highest expenditure on food (12.2%); Alberta the lowest (8.9%). A further differentiation can be observed along the household composition. In 2008, for example, spending on groceries by couples with children, homeowners and households in cities was above the national average. Total tobacco and alcoholic beverages spend averaged $ 1,495 per household. Overall, households in rural areas spent the most on tobacco products and alcoholic beverages in 2008, followed by couples with children and homeowners. There are also regional differences here. With $ 1,867, Alberta has by far the highest consumption of alcohol and tobacco products, followed by British Columbia, Newfoundland and Labrador as well as Saskatchewan, which were also above average. If you compare the expenditure on food with the price development, it becomes apparent that the increase in expenditure is accompanied by a significant increase in prices. The price increases in the food sector have overtaken the rates of increase in all other components of the shopping basket and have done so for five years in a row. In 2008 alone, food prices rose by 3.5%, in 2009 it was as much as 4.9%. The prices for groceries bought in stores rose by as much as 5.5%. whereas consumption in restaurants experienced a slightly lower price increase of 3.5% (2009). The price increases in the food sector reflect the global situation of supply and demand in agriculture and increased demand in emerging countries and increased energy prices. 24. The overall consumer price index rose by 2.3% in 2008; in 2009 it was only 0.3% annual average. The index is subject to strong fluctuations during the year, which are mainly related to fluctuating energy prices and the situation on the real estate market. The first graphic shows that, on average, almost all components of the shopping basket experienced a price increase in 2010. The second graphic shows the development of the consumer price index over a longer period for the most important goods with the percentage change per decade. 24 Canada Year Book 2010, Chapter 25 and The Daily, December 21,

25 figures: price development of the shopping basket / consumer prices; Consumer Price Index Source: Statistics Canada, The Daily, December 21, 2010; Canada at a Glance Trends in Canadian Food Consumption The demand for food in Canada is strongly influenced by the ethnic diversity of the country 25. Nevertheless, some national trends can be observed. In the last 20 years, the eating habits of Canadians have changed so that today more fruits and vegetables, grain products, nuts and beans are consumed, while the consumption of red meat (beef and pork) as well as oils and fats is declining. Per capita daily calorie intake decreased to calories in 2009. This corresponds to a decrease of 155 calories since the peak year. The main reason for the decrease seems to be the above-described change in eating habits towards more health-conscious consumption. The consumption of oils and fats, red meat, but also fruit juices, dairy products and processed fruit and vegetables was down in 2009 compared to the previous year. In contrast, the consumption of fresh fruits, fresh vegetables, coffee, muesli and grain products and fish continued to rise in 2009 compared to the previous year. Fruit and vegetable consumption even reached a record high. These products are in a continuous upward trend. The consumption of sugar (23.8kg) and maple syrup (0.2kg) has been increasing since 25 There are no data available on specific drink preferences or habits of different ethnic groups. It can be stated, however, that there is a growing variety of ethnically oriented restaurants and that there is also a special variety available in shopping. In addition, the health benefits of some traditional kitchens influence consumer behavior, e.g. the use of olive oil (Mediterranean region), the drinking of red wine (France), the consumption of fish instead of meat (Asia) or the consumption of vegetarian dishes (India). For more details on this topic see: Canadian Food Trends to 2020 A long range consumer outlook 25

26 rose slightly to its record low in 2007 for the third year in a row. A record year in maple syrup production ensured an increased supply and consumption reached a record since According to a future study, trends in society as a whole that will influence the consumption habits of Canadians are in particular the following 27: The aging of society This will have an impact on the type and amount of what is in demand Because old people have different preferences and needs than young people. Change in society The shrinking household size, the growing proportion of women in working life and the resulting increase in the number of dual-income households, globalization, environmental awareness and the diversification of the media all contribute to changes in eating and consumption habits. Changes in eating habits Meal preparation will be shorter, less frequent and less long-term planning. Overall, the trend will be even more towards snacks and portable food. Changes in expenditure The trend towards ever lower expenditure on food in relation to total disposable income will continue, so that a significant increase in sales of prepared meals to take away or to be consumed on site can be expected. Gastronomy and food retail will continue to exist, but can only expect moderate growth rates. The conscious consumer Consumers will study the lists of ingredients more and more consciously and pay attention to the composition of the food, e.g. on their salt content, the proportion of trans fats and fiber. In addition to supplying energy, food will have an even stronger function of maintaining health. Trend towards organic products Organically produced food will continue to increase in demand, especially the closer the prices and quality to the conventionally grown product range. Organic agriculture is showing growth rates and is in a steady upward trend. Small Treats The demand for smaller servings, better quality, affordable gourmet food, boutique grocery brands and slow food is expected to increase, slowly replacing the demand for quick, cheap and large servings. This complements the trend towards health-conscious consumption. 26 Statistics Canada, Food Statistics Study on behalf of Agriculture and Agri-Food Canada; Serecon Management Consulting Inc. 26

27 4 The Canadian Beverage Market 4.1 Overview Since the import and sale of alcoholic beverages in Canada are subject to separate legal provisions, all considerations in this report are divided into the industry segments alcoholic beverages and non-alcoholic beverages. Due to the state control of alcohol sales, the data on alcoholic beverages are statistically collected together with tobacco products, while non-alcoholic beverages belong to the category of food and beverages and are collected in separate statistics and on the basis of other data sets. Overall, the Canadian beverage market in the non-alcoholic beverages segment continues its slow but steady growth. Seven out of nine main beverage groups recorded an increase in sales volume during the year. Bottled water has shown the greatest growth rates, while the soft drink industry is confronted with a declining trend in consumption (15% market share in 2006 compared with 16.5% in 2001). Nevertheless, the soft drink industry is the one with the largest overall market share. Overall, there is also a growth trend for alcoholic beverages, measurable both in terms of sales volumes and sales figures. Imports in particular are steadily increasing here, while exports have shown a downward trend in recent years. Between 1981 and 2001, beverage consumption increased in absolute terms, with non-alcoholic beverages showing higher rates of increase than alcoholic beverages. When it comes to alcoholic beverages, wine is the big climber, while beer consumption is tending to decline and spirits have remained relatively stable. Among the non-alcoholic beverages, tea and coffee are becoming increasingly popular, and consumption is increasing here too. The same applies to bottled water and soft drinks with health-promoting or other properties (functional drinks). Some types of juice have fluctuated significantly, which may be explained by trends and fluctuations in production due to seasonal conditions. 28 The most recent statistics for the beverage market for Statistics Canada are currently essentially year-on-year

28 The following graphic shows the supply of alcoholic and non-alcoholic beverages on the market per capita in liters for the years 1986 to Figure: Development of the beverage supply on the Canadian market Source: Statistics Canada The analysis of the market shares of alcoholic and non-alcoholic beverages in the Canadian market as a whole shows for 2005 that carbonated soft drinks have the largest market share with 15%, closely followed by coffee with a market share of 14%. Tea, beer, fruit juices and bottled water have an 8-10% market share. 29 Food Available Definition: The quantity of food available for consumption, after all uses other than human consumption are deducted., Cf. 28

29 Figures: Market shares of the beverage groups in the Canadian market by volume, 2005 and in the development of Canada's Commercial Beverage Market, Share of volume Categories Carbonated Soft Drinks 16.5% 15.5% 15.1% Coffee 13.4% 14.3% 14.3% Milk 12.1% 11.5% 11.5% Tea 9.8% 9.6% 8.8% Beer 9.3% 9.4% 9.5% Fruit Beverages 8.3% 8.8% 8.6% Bottled Water 5.0% 8.1% 9.1% Wine 1.1% 1.3% 1.4% Distilled Spirits 0.6% 0.6% 0.6% All Others 23.9% 20.9 % 21.1% Subtotal 76.1% 79.1% 78.9% Total 100.0% 100.0% 100.0% Sources: first figure: Agriculture and Agri-Food Canada; second figure: Beverage Marketing Corporation; Brewers Association of Canada; Statistics Canada 4.2 The Canadian market for alcoholic beverages Introduction The market for alcoholic beverages in Canada moves in a highly regulated framework due to the state control of product standards, labeling, import and especially distribution. The basis for the regulations is the Importation of Intoxicating Liquors Act (IILA), implemented and executed by so-called Liquor Boards, i.e. alcohol control authorities operating at the provincial level. 31 In total, authorized alcoholic beverages retailers generated $ 19.4 billion in alcoholic beverage sales in the 2009/10 trading year, a 3% increase over the previous year. The trend is clearly upwards. The rate of increase in sales also appears to be partly due to the growing proportion of people over the age of 15 in the total population. In addition, they are positively influenced by the annual price increases (in 2010 it was 1% compared to the previous year), which is also reflected in the profit margins. The net profit (net income) on the part of the authorized alcohol dealers cracked the four billion mark for the first time in the trading year 2006/07, an increase of 5.2% compared to the previous year, the net profit even amounted to $ 5.4 billion. 30 See Chapter 5, Distribution of Alcoholic Beverages in Canada 29

30 4.2.2 Development of per capita consumption The per capita consumption of alcoholic beverages in volume was 99.4 liters in 2009 for Canadians over 15 years of age, a slight increase compared to the previous year. Of this, 15.2 liters came from wine, 6.9 liters from spirits and 77.3 liters from beer. For 2010, the Federal Statistical Office of Kandas put the current figures for beer at 83.5 liters per capita (compared to 115.2 liters in the peak year 1976) 32.Beer is by far the most popular alcoholic drink among Canadians, even if consumption is in favor of Wine has declined slightly in recent years. In 2009 Canadians spent an average of $ 318 on beer over 15 years, a fairly stable level compared to 2006, when per capita spending was estimated at $ 316. Wine is the big climber in the current market. A regional analysis shows that Québec has by far the largest share of wine consumption. On average, Québecans spent $ 83 more per capita on wine than the national average. This was $ 204 in 2009, down from $ 173 in 2006. This shows the clear trend in the growing popularity of the wine, even beyond Québec. In 2006/07 Québec accounted for 34% of total wine sales, and 42% for red wine. Prince Edward Island and New Brunswick were the only provinces where white wine sales exceeded red wine. When it comes to spirits, whiskey and whiskey-based products such as scotch and bourbon are particularly popular. They accounted for a total of 30% of sales in 2006, the majority of which were Canadian production (70%). Canadians spent around $ 175 per capita on spirits in 2009, an upward trend compared to 2006, when it averaged $ 161 dollars. After a surge in popularity, the sale of alcoholic soft drinks (spirit-based coolers) is now on a downward trend. Based on the volume of absolute alcohol that was sold per capita, according to current calculations by Statistics Canada, the following figures result: Figure: Sales of absolute alcohol per capita Sales in Canada (in liters per capita 15+) Total alcoholic beverages 7.6 7, 8 8.2 Spirits 2 2.1 2.2 Wine 1.3 1.5 1.8 Beer 4.3 4.2 4.2 Source: Own illustration with data from Statistics Canada The figures refer to absolute alcohol, that means that 100% alcohol is assumed. The actual amount of drinks consumed is determined by the alcohol content of the drink. 30th

31 Looking at per capita spending, Canadians (15 years and older) spent $ 698.7 on alcoholic beverages in 2009, compared with $ 667.3 in 2007. The expenditure fluctuates considerably from region to region. The top overall average are the Northern Territories, led by the Yukon Territory with $ 1217.4, followed by the Northwest Territories and Nunavut with $ 943.0 each and Newfoundland and Labrador with $ 865.1 per capita. This can also be explained by the economic and climatic conditions of the northern territories. Since the territories are very sparsely populated, the numbers refer to a relatively small group in relation to the total population. The other provinces are around $ 100 above to $ 100 below the 2009 average, as the following table shows. A look at the individual beverage groups shows that beer and spirits are particularly popular in the northern territories, while Québec leads the per capita expenditure on wine. Ontario is close to the national average for spirits and slightly below it for beer and wine. Figure: Average per capita sales (15 years and older) 2009, in $ Beer Wine Spirits Total Canada 318.3 204.3 176.2 698.7 Newfoundland and Labrador 468.0 110.3 286.7 865.1 Prince Edward Island 335.4 120.4 220.3 676.1 Nova Scotia 366.6 138.3 244.5 749.4 New Brunswick 369.2 115.5 171.7 656.5 Québec 370.3 294.2 92 , 8,757.3 Ontario 277.7 176.0 174.0 627.7 Manitoba 273.8 122.8 230.9 627.5 Saskatchewan 311.8 85.3 252.2 649.3 Alberta 319.2 165, 1,228.5 712.8 British Columbia 315.5 250.3 224.2 790.0 Yukon 597.8 239.0 380.6 1,217.4 Northwest Territories and Nunavut 434.6 128.9 380.2 943.6 Source: Statistics Canada Feb If the sales volume per capita is broken down by provinces and territories in a regional comparison, the following picture emerges for spirits, wine and beer for 2009 (see also graphic below): The Yukon territory is the frontrunner for all alcoholic beverages. Québec is close behind when it comes to consumption of wine, which is due to the regional tradition of French cuisine in the part of the country. British Columbia and Alberta are also significantly above average in their wine consumption. High-proof alcohol is particularly in demand in the northern provinces and territories, while the consumption of spirits is by far the lowest in Québec. Beer consumption is subject to the smallest regional fluctuations, apart from the Yukon Territory, the values ​​are relatively close together. The following graphic illustrates this. 34 Cf. & ResultTemplate = THEMSNA4 & CORCmd = GetWrap & CORId = 1043 # HERE

32 Figure: Per capita sales of spirits, wine and beer by provinces / territories Source: Statistics Canada, March Development of sales volumes Expressed in terms of volume, total sales of alcoholic beverages in the 2009/10 trading year were 226.4 million liters, a slight increase compared to 2006/07 (218.7 million liters). The highest growth rates are recorded here for wine. The following figure illustrates the development of the sales volume for the individual beverage groups since the middle of the last century. Figure: Development of sales volume 1953 to 2007 by beverage group Source: Statistics Canada cf. 32

33 Beer The dominance of beer is slowly declining, its market share is falling (46% in 2010 versus 53% in 1993), and yet it is by far the most popular drink among Canadians. 2.3 billion liters were sold in the 2009/10 financial year, an increase of 0.9% compared to the previous year. The province of Ontario accounted for almost a third (million liters), followed by Québec (million liters). Wine In 2005/2006 a sales volume of 378.7 million liters of wine was achieved on the Canadian market, the trend is rapidly increasing. Red wine dominates the wine market, 192.7 million liters, so almost half of the sales were for the dark wine. 75% of these were imported wines, while white wine accounted for 50% of imports. In the last ten years, the volume of sales of wine imports has grown by an average of 9.5% annually, while sales of national wines have grown by an average of 5.7% in the total sales volume in the same period. This clearly shows: The market share for wine is growing steadily, wine had a market share of 18%, in 2010 it was 29%. In terms of volume, dealers sold a total of 441.4 million liters of wine, an increase of 3.8%. Red and rosé wines are particularly popular, accounting for 64% of sales, followed by white wine. Other types of wine, such as sparkling wine or cider, only play a subordinate role (see figure below). In terms of wine consumption, Ontario is in the lead overall (million liters), which can be explained by the absolute population of the economically strongest province in Eastern Canada. Here too, Québec has the second-highest share with million liters. If you take into account that the population is much smaller, however, this reflects the higher per capita consumption and the special wine culture in Québec. Of the wines consumed in Québec, more than half were imported wines with a total volume of over 80 million liters. Spirits The sales volume in the 2009/2010 trading year was 210.3 million liters and thus remained at a stable level compared to the previous year. The following table shows the sales volume differentiated by beverage groups and provinces for the year 2007 and allows a precise insight into both the regional distribution and the sales volumes of the individual beverages. 33

34 Figure: Sales volume by beverage groups and provinces / territories

35 Source: Statistics Canada

36 4.2.4 Development of sales and profits For all three beverage groups, sales increases have been recorded for more than a decade, partly due to increased sales volumes and partly due to price increases. Looking at the relationship between sales volume and turnover, the overall distribution is as follows: Figure: Sales compared to sales volume compared to 2007 Source: Statistics Canada 2007 The graphic clearly shows the higher profit margins for spirits and wine in relation to beer sales. Statistics Canada has published the following sales figures for the individual beverage groups in a current report: 38. Beer Traders achieved total sales of $ 8.8 billion with beer sales in the 2009/2010 trading year, an increase of 2.2% compared to the previous year Previous year. The highest growth rates were in Saskatchewan, Prince Edward Islands and Nunavut (7.2% and 5.8%, respectively). Canadian beer accounted for $ 7.5 billion and imported beer for $ 1.3 billion. Wine Total sales for wine in 2009/10 were just under $ 5.7 billion, an increase of 4.6% compared to the previous year. Of this, Canadian products accounted for $ 1.8 billion and imported goods accounted for $ 3.86 billion. Sales for red wine have more than doubled over the past decade, an increase of 161%. White wine has seen growth rates of 50% over the same period. Spirits The following current developments can be recorded for spirits: Sales in 2010 totaled $ 4.9 billion, an increase of 2.9% compared to the previous year. The high growth rates for vodka have played a decisive role in this, with an increase of 5.6% in sales. In the spirits segment, Canadian products accounted for $ 2.91 billion, while imported goods achieved sales of just under $ 2 billion