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Shutterstock. Dalgona coffee is made by whipping equal proportions of instant coffee powder, sugar, and hot water, then adding it to cold or hot milk.

Coffee talk: Research shows Gen Z craves RTD beverages

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Shutterstock

With people working (and going to school) from home, it’s changing how people consumer coffee: Think less take out and more at-home creations.

New research from Mintel suggests that the at-home coffee market is set to grow by 4.9% this year to reach $15.6 billion (in the United States), compared to a total of 3.9% growth experienced between 2015 – 2019.

Mintel’s consumer research shows that as many as two in five (39%) people are willing to pay more for premium coffee at home and, in turn, finding their inner barista.

Caleb Bryant, associate director, food and drink, Mintel, said that many are buying coffee shop branded coffee to recreate that authentic coffee shop experience: “Despite the fact that many Americans are facing economic uncertainty, premium and foodservice-branded coffees have an opportunity to market themselves as affordable luxuries. The purse strings may need to tighten but a premium home-brewed coffee is still less expensive than drinks from a coffee shop.”

For those without the patience or know-how to satisfy their caffeine cravings at home, ready-to-drink (RTD) coffees are a favoured alternative. Leading the way in this at-home craze is Gen Z, with 46% opting for RTD coffees. Only 45% of Gen Z consumers drink ground coffee compared to 63% of millennials.

Mintel research shows that not only are Gen Zs not brewing their own coffee, they have yet to develop brand loyalty when it comes to coffee: only 33% say they typically stick to the same brand of coffee, compared to 44% of Gen X and 50% of boomers.

“Gen Zs in particular are set to adopt the trend for enjoying specialty coffee at home. Before COVID-19, many Gen Z consumers bought their coffees out, treating themselves to cold coffees from their preferred coffee chain. But with these younger consumers experiencing the sharpest rise in unemployment and already on lower incomes, they are the most price-sensitive to coffee drinks. We’re likely to see Gen Zs reduce their coffee shop purchases, possibly dramatically depending on the severity of the recession, giving retail coffee brands a golden opportunity to connect with this next generation of coffee lovers,” Bryant said in a release.

Shutterstock. Dalgona coffee is made by whipping equal proportions of instant coffee powder, sugar, and hot water, then adding it to cold or hot milk.

Shutterstock. Dalgona coffee is made by whipping equal proportions of instant coffee powder, sugar, and hot water, then adding it to cold or hot milk.

Case in point is the photogenic Dalgona frothy coffee craze so popular on social media. From March 1, 2020 through June 15, 2020, there were more than 440,000 posts mentioning Dalgona coffee on Instagram, Pinterest and Twitter. As a result, sales of instant coffee – the primary ingredient for Dalgona – are poised to experience  a 5% rise in sales growth this year.

“Consumers are discovering it is safer and more cost-effective to have their own coffee at home and this trend is likely to continue even once the virus is under relative control,” said Bryant. “This shift opens up a real opportunity for products, machines and gadgets that will help people create their favourite coffeehouse drinks at home.”

Key takeaway: Coffee brands (both retail and RTD) have the opportunity to build long-lasting loyalty among Gen Z consumers and can use flavoured coffee varieties to appeal to these consumers (42% of them are interested in unique flavours of coffee). C-stores can capitalize on this trend with the right product assortment.


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Research team to study impact of COVID-19 on retail food industry

Screen Shot 2020-06-02 at 9.18.54 AMThe University of Western Ontario’s Human Environments Analysis Lab (HEAL) has launched a study of employees and owners/managers in the grocery and foodservice sectors to determine COVID-19’s impact on their industry.

The new Food Retail Environment Study for Health and Economic Resiliency (FRESHER) study will explore the effects of COVID-19 on the retail food environment, with the study’s principal investigator saying its findings will help policymakers assess the impact of financial support programs on business survival.

“This study is not just about the numbers. We are not coming up with a vaccine,” says the University of Western Ontario’s Dr. Jason Gilliland. “We are addressing the long-term health and economic impacts of the pandemic. We are looking to listen to the voices of those who have been on the frontlines and those managing to keep shelves stocked and stores open.”

Gilliland says they also hope to hear from people who have lost their jobs and identify how multiple stakeholders including government, industry and community can work together to recover from the crisis.

In addition to tracking which businesses have remained open and how they have operated during the crisis, the study will delve into how COVID has impacted the financial circumstances, physical health and mental wellbeing of frontline employees.

Finally, interviews with employers will be used to determine the strategies that have contributed to business survival, as well as gather their perspective on the response to the crisis by all levels of government.

Grocery has been one of the few industry sectors that has performed well during the pandemic, with Q1 sales up a remarkable 22.1% in March over the same period last year, according to Toronto retail analyst Ed Strapagiel.

However, the Centre for Interpersonal Relationships says frontline workers are being negatively affected by a combination of factors—including possible direct interaction with COVID-19, isolation from family and friends, “chaotic” work environments and long hours and lack of equipment/resources.

The study questions were developed by a multidisciplinary team of researchers from Western, Ivey Business School, Brescia University College, Wilfred Laurier University, University of Waterloo and the University of Guelph possessing expertise across human geography, business, economics, labour, sociology, food and nutritional science.

HEAL is recruiting participants via social media and PR and is also working with organizations associated with the grocery and foodservice industry at the national, provincial and local levels. Limited funding means it is concentrating the bulk of its efforts in Ontario. Early responses have included a number of grocery store employees, says Gilliland.

Gilliland says findings from the “fast response survey” are expected to inform government policies and programs as well as business strategies that will help preserve the livelihood of employees and business owners, sustain food security, support economic recovery in the retail food sector and improve resiliency to future pandemics and emergencies.

Originally published at Canadian Grocer. 


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Ontario and Quebec ordering non-essential businesses to close

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Shutterstock

Ontario Premier Doug Ford is ordering the closure of all non-essential businesses in Ontario to help deal with the spread of COVID-19.

He says the order will be effective Tuesday at 11:59 p.m. and will be in place for at least 14 days.

Ford says the next 36 hours will give non-essential businesses the chance to prepare.

He says he will release the list of businesses Tuesday that will be allowed to stay open, but food will remain on the grocery store shelves and people will still have access to medication.

The premier says it was a tough decision, but now is not the time for half measures.

Ontario reported 78 new COVID-19 cases today, bringing the provincial total to 503.

It’s the largest increase in a day so far. The total includes six deaths and eight cases that have fully resolved.

At least six of the new cases are hospitalized, including a woman in her 30s, a man in his 40s, two people in their 50s and two people in their 70s.

Ford also announced that Ontario is providing a $200-million funding boost for social services, including shelters, food banks, emergency services, charities and non-profits.

Money is set to go to municipalities and social service agencies, and will help those organizations hire additional staff and operate using social distancing.

“Organizations across the province are doing critical work right now to help vulnerable Ontarians and these funds will allow them to directly help those who need it most,” Ford said in a statement.

The funding will also go toward an expanded emergency assistance program for people on welfare to help cover food, rent, informal childcare arrangements and other services.

Ontario has also enhanced its COVID-19 self-assessment tool, making it interactive and allowing the province to gather data from it.

The new tool takes users through a series of questions about their symptoms and will help them determine if they are likely to have COVID-19 and what to do.

Health Minister Christine Elliott said in a statement that the tool will give the province real-time data on the number of people who are told to seek care, self-isolate or monitor for symptoms, as well as where in the province they live.

People calling Telehealth Ontario have reported long waits, but Elliott said the service now has more than 2,000 lines running, up from about 400 before the pandemic.

The government also says Ontario has 58 dedicated COVID-19 assessment centres running, well up from the 38 Ford said were open just a few days ago.

Since Sunday, more than 1,950 people received negative test results, while more than 8,000 people are still awaiting their results.

Elliott reminded Ontarians to practise social distancing, meaning staying at least two metres away from anyone outside your immediate family, and for anyone who has travelled to stay at home and self-isolate.

Quebec Premier Francois Legault also hit the “pause” button on his province’s economy on Monday, ordering all non-essential businesses to close until April 13 as the number of COVID-19 cases more than doubled to 628.

Legault said the businesses will be ordered to close no later than midnight Tuesday, adding that grocery stores and pharmacies will be among those allowed to remain open.

“Effectively, Quebec will be on pause for the next three weeks,” he said.

“It’s important, in order to give us all the chances to reduce the spread of the virus, to take this decision, which is difficult, but in my opinion necessary.”

The number of COVID-19 cases in Quebec jumped by 409 since Sunday, with 45 people hospitalized – 20 of them in intensive care.

Legault noted that the province is now grouping probable and confirmed cases, which accounts in part for the major increase.

Dr. Horacio Arruda, Quebec’s public health director, said the increase in positive cases was expected, given the massive increase in testing in recent days.

The province’s earlier March break and close ties to hard-hit nations such as Italy are also factors, he said.

But while many or most cases remain linked to travel, he noted the province is also beginning to see community transmission.

“When we told you no weddings, no funerals, it’s not because we don’t find them important,” he said. “It’s because there are situations where people who don’t know they’re sick, but are sick, can contaminate others.”

He called on Quebecers to stay home and avoid all travel, including within the province.

There have been four deaths in the province, all linked to the same seniors residence.

Legault announced that from now on, seniors home residents are asked to not to leave without supervision, citing the potentially “disastrous” consequences of the virus running rampant within a group that is statistically the most at risk of complications.

However, he stressed that Quebecers of all ages are to consider themselves essentially locked down.

“What we’re saying is confinement, except for essential services,” he said. “We’re at that point.”

He said the measures do not apply to police, firefighters, health-care workers, grocery store employees, journalists or anyone who can do their jobs completely from home.

The full list of businesses and services that are allowed to remain open was published late Monday. It includes teachers working online, infrastructure maintenance, sanitation, manufacturers of food and medical supplies, hotels, movers, restaurants offering takeout only, banking and public transportation.

The provincially run alcohol and cannabis stores can also stay open.

But constructions sites and aluminum smelters will have to close, he said.

Most people diagnosed with COVID-19 experience mild or moderate symptoms, such as fever and cough, and the majority of those who contract the virus recover. Some may have few, if any symptoms, or may not know they’re infected because symptoms of the novel coronavirus are similar to a cold or flu.

However, for some, including Canadians aged 65 and over, those with compromised immune systems and those with pre-existing conditions, the illness can be much more severe. Among the Canadians diagnosed with the illness so far, 10 per cent have required hospitalization, with fewer than five per cent of cases requiring admission to the ICU.


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Statistics Canada says retail sales rose 0.9% in November

Screen Shot 2019-11-26 at 9.54.04 AMCanadian retail sales bounced back in November, boosted by gains in the auto sector.

Statistics Canada said Friday retail sales rose 0.9% for the month, largely offsetting a revised 1.1% decline in October. The initial report for October had been a drop of 1.2%.

Economists on average had expected an increase of 0.4% for November, according to financial markets data firm Refinitiv.

TD Bank economist Omar Abdelrahman said the report came after a recent string of disappointing Canadian economic data and a lacklustre year for Canadian retail sales.

“However, one month of data doesn’t make a trend, and it is important to note that the headline print was disproportionately driven by a bounce back in auto sales,” Abdelrahman wrote in a brief report.

Excluding motor vehicle and parts dealers, retail sales were up 0.2% for the month. Economists on average had expected an increase of 0.4%, excluding autos, according to Refinitiv.

“We still expect a tepid performance for the Canadian economy in the fourth quarter,” Abdelrahman wrote.

The Bank of Canada kept its key interest rate on hold earlier this week, but left the door open to future rate cuts amid concerns about economic growth this year.

The central bank estimated the economy slowed to an annual growth rate of 0.3% in the fourth quarter, but predicted a rebound to about 1.3% annual rate in the first quarter of 2020.

Governor Stephen Poloz said the central bank will be paying particular attention to developments in consumer spending, the housing market and business investment.

Statistics Canada said Friday that retail sales were up in six of 11 subsectors tracked by Statistics Canada, representing 70% of retail trade.

The motor vehicle and parts dealers subsector gained 3.0%, led primarily by sales at new car dealers.

Food and beverage stores saw sales rise 0.9%, while building material and garden equipment and supplies dealers reported an increase of 2.1%.

However, furniture and home furnishing stores saw a drop of 0.8%, while clothing and clothing accessories stores fell 1.7%. General merchandise stores lost 0.8%.

Overall retail sales in volume terms increased 0.7% in November.


June retail sales flat as Raptors effect offsets auto and gas slump: StatCan

Canadian retail sales edged expectations in June with merchandise and sporting goods sales climbing as the Toronto Raptors made their NBA championship winning run, according to the latest numbers from Statistics Canada.

Clothing and clothing accessories stores saw a 4.2% uptick in sales, while sporting goods, hobby, book and music stores recorded a 3.7% increase, the federal agency said.

“These gains also followed inclement weather in May and coincided with the Toronto Raptors playing in and winning the NBA championship in June,” Statistics Canada said in a release last week.

Most of the other subsectors saw stronger sales, but these were offset by lower sales at motor vehicle and parts dealers and gasoline stations.

Overall, sales in the retail trade sector were essentially unchanged in June from May at $51.3 billion, the agency said.

Economists on average had expected a decline of 0.1%, according to the financial markets data firm Refinitiv.

“A flat Canadian retail sales reading isn’t usually anything to cheer about. But when it comes against consensus expectations for a decline, not to mention alongside a solid gain in volumes, we’ll certainly take it,” CIBC economist Royce Mendes said in a note to clients.

Sales were down in four of 11 subsectors tracked by Statistics Canada.

Motor vehicle and parts dealers fell 2.5% in June as sales at new car dealers were down 3.2%. Gasoline station sales fell 3.4% as the price of gasoline moved lower.

Excluding sales in these two subsectors, monthly retail sales gained 1.7%. Retail sales in volume terms increased 0.4%.

Sales at building material and garden equipment and supplies dealers rose by six%, while general merchandise stores’ sales rose by three% in June.

Cannabis stores also saw a 6.2% jump in sales in June, on a low base to $91 million unadjusted.

The uptick in sales in clothing and sporting goods during the month were likely fuelled by the Toronto Raptors’ historic win, economists said.

It was the first NBA championship in the Toronto franchise’s history and marked the first for a Canadian team in one of the big four North American professional sports since the Toronto Blue Jays won the 1993 World Series.

After the win in mid-June, fans lined up outside stores to buy special edition NBA championship merchandise and millions filled the streets in downtown Toronto for a parade to celebrate the team.

“The good gains in clothing and sporting goods might be partially driven by the Raptors effect, as their championship run was in high gear in the month,” said BMO Capital Markets’ Canadian rates and macro strategist Benjamin Reitzes in a note to clients.

In addition to the Raptors-fuelled sales bump in clothing and sporting goods, the monthly survey of food services and drinking places showed a one% increase in June.

“Canadian restaurants and bars were big winners during the NBA playoffs,” CIBC’s Mendes said.

 


Statistics Canada reports retail sales fell 0.1% in May to $51.5B

Canadian retail sales fell for the first time in four months as shoppers spent less at grocery and liquor stores in May.

Statistics Canada said retail sales fell 0.1% in May to $51.5 billion.

Economists had expected an increase of 0.3%, according to Thomson Reuters Eikon.

CIBC senior economist Royce Mendes said the weakness was relatively narrowly based, with only four of 11 sectors lower on the month.

“Food and beverage stores curiously represented the largest decline, odd for a series that should usually be quite consistent,” Mendes wrote in a report.

“As a result, some of that softness could turn out to be transitory, but from a longer-term perspective, real sales have still shown little growth since the start of 2017.”

Sales at food and beverage stores decreased 2.0% in May after increasing for three consecutive months as sales at supermarkets and other grocery stores fell 2.0% and sales at beer, wine and liquor stores dropped 2.7%.

Clothing and clothing accessories stores saw sales fall 2.7%, while general merchandise stores dropped 1.1%.

Meanwhile, sales at motor vehicle and parts dealers edged up 0.5% and sales at cannabis stores rose 14.8%.

Excluding sales at motor vehicle and parts dealers and gasoline stations, retail sales fell 1.0%.

In volume terms, retail sales fell 0.5% for the month.

Benjamin Reitzes, Canadian rates and macro strategist at BMO Capital Markets, said there were a couple of factors that likely weighed on the retail sales.

“First, gasoline prices were up sharply in the month, pushing gas station sales up 3.5%. That spending tends to get diverted from other sectors,” he said.

“And, the weather in May was simply awful, generally a negative for retail activity. The sectors hit hardest, clothing, sporting goods, alcohol, general merchandisers are consistent with bad weather.”

However, Reitzes noted that Canadians remain heavily indebted and that will likely restrain spending growth for years to come.

The weaker-than-expected retail sales report came as the Canadian economy has been showing signs of strength as it has bounced back from a weak end to 2018 and start to 2019.

The Bank of Canada kept its key interest rate on hold last week when it also released its updated monetary policy report.

In its forecast, the central bank raised outlook for second-quarter growth to an annual pace of 2.3% compared with its April projection of 1.3%. It predicted growth an annual pace of 1.5% for the third quarter.

The Bank of Canada stands in contrast to the U.S. Federal Reserve, which is expected to cut its key interest rate later this summer.


Retail foodservice is the fastest-growing foodservice segment in Canada

Canadians under 40 are taking the biggest bite out of the country’s restaurant business, while showing an appetite for environmentally sustainable operations and menu options. Plant-based protein, sustainable seafood and locally sourced food are in demand, while plastic straws continue to disappear, according to the 2019 Foodservice Facts report just released by Restaurants Canada.

This information is also valuable to the convenience sector, which is increasingly diversifying its offerings to include foodservice for busy customers on the go. The report found that retail foodservice (prepared meals in department stores, convenience stores and grocery stores) remains the fastest-growing foodservice segment in Canada, with projected annual sales increasing by 6.2% to $2.9 billion in 2019.

The report credits Millennials (27-42 years old) and generation Z (19-26 years old) for helping to grow overall foodservice sales by 5.1% in 2018, driving sales to nearly $90 billion. This marks five consecutive years of growth exceeding 5%, which, according to Restaurants Canada, makes Canada’s foodservice industry the fastest-growing sector in the country during the past decade.

The report reveals:

  • 79% of Gen-Z consumers and 71% of Millennials order food or beverages from a restaurant at least once a week or more.
  • Consumers under 30 years old spend 44% of their food dollar on food and alcohol from restaurants, compared to 35% for those between the ages of 30 and 39, and just 27% for those 65 and older.

Chris Elliott_Headshot“The days when targeting a baby boomer was a can’t miss strategy is over. Those under 40 are now driving the industry,” Chris Elliott, senior economist at Restaurants Canada, said in a statement. “Whether they are looking for environmentally sustainable alternatives, tech friendly options or more diverse menu offerings, it’s vital for restaurant operators to adapt to their changing customer base in order to appeal to new guests and maintain brand loyalty.”

 A taste for sustainability

Millennials are leading the increasing focus on sustainability in the foodservice industry. According to the report: “Their preference to do business with companies that prioritize environmental stewardship and social responsibility extends to their dining habits — and restaurants are responding to this demand.

Eight out of 10 foodservice business operators across Canada now say environmental sustainability is important to their success and 72% say they have made changes to their business operations to become more sustainable.

Nine out of 10 say they plan to continue or improve on their current level of environmentally sustainable operations over the next three years.

Currently:

  • 98% recycle.
  • 93% use energy or water-saving equipment.
  • 77% track, compost, or donate leftover food.

Shanna Munro_Headshot“Finding ways to operate more sustainably is simply part of doing business in restaurants today,” said Shanna Munro, president and CEO of Restaurants Canada. “Though changes often take some upfront investment, many are seeing the benefits not only for the planet, but for their bottom line.”

According to the 2019 Foodservice Facts report from Restaurants Canada, 70% of restaurant operators say they have made changes to their menu/selection of items. Growing appetites for plant-based dining have been a significant reason for this.

With Canadian consumers indicating shifts in protein consumption (vegan and vegetarian meat alternatives showing the highest growth), plant-based options appear here to stay as more diners make the switch to “do their part” for the environment.

Demand for convenience

With the rise in food delivery skyrocketing in 2018, consumers have no shortage of options when ordering in; everything from their favourite local restaurant to major franchise chains and even fine dining is on the table when it comes to delivery today.

The impact of the demand for delivery is mostly being felt in densely populated cities where foodservice is more economically viable. Foodservice orders made online, through websites and mobile apps, totaled more than $4.3 billion in 2018 (a 44% increase from 2017) and can be broken down into the following key categories:

  • Quick-service restaurant delivery sales increased by 49%.
  • Full-service restaurant delivery sales increased by 54%.

“As Generation Z and Millennials look for convenience, eating out or ordering in is appealing as a time-friendly alternative to cooking,” said Elliott. “We expect to see these generations looking to order food at lower price points, and while health is important, many want to indulge a little too.”

Beyond delivery tech, Millennials and Generation Z customers prefer establishments that offer free Wi-Fi. They also like to use social media platforms, such as Instagram and Snapchat, to interact with establishments, leave reviews, follow activity and tag photos. In order to attract this key customer base, restaurants (and c-stores) should adapt their digital marketing and advertising strategies to keep customers hungry for more.

Foodservice challenges

Despite industry growth, foodservice operators are struggling in some areas:

  • Labour costs, as well as recruiting and retaining employees, are the top two challenges currently facing foodservice operators.
  • Higher minimum wages, food costs and increasing labour shortages have resulted in higher operating costs, contributing to a 4.2% increase in menu prices at restaurants across the country.
  • A slowdown in average annual foodservice sales growth is expected, given rising household debt and slower job creation.
  • Commercial foodservice sales in Canada are predicted to decelerate to an average of 4% growth per year between 2020 and 2023.

Overall, Canada’s foodservice industry is forecast to surpass $100 billion in annual sales in 2021, presenting exciting opportunities.