Message from Kim Brooks, Dean, Faculty of Management

July 20, 2021 rbudd Leave a Comment

Kim Brooks
Dean, Faculty of Management
Purdy Crawford Chair in Business Law

Summer has arrived in Nova Scotia. Given the challenges of the past year, I hope that each of you finds some time to recharge over the coming months.

It was a joy to attend our graduation ceremonies through June. We joined virtually and acknowledged the hard work of each of our graduating students. We saw grandparents and children, listened to valedictory speeches, and made toasts to our graduates’ accomplishments.

I am already excited about next year. The Faculty has a new strategic plan, optimism about our ability to bring our community together in person, and confidence that graduates of our programs are making essential contributions in the seemingly ever more complex world.

So, as always, be in touch: Kim.Brooks@dal.ca I love hearing what you’re up to!

Dr. Sylvain Charlebois – The trouble with edibles

August 23, 2018 rbudd Leave a Comment

The trouble with edibles

File 20180717 44103 1wtiscj.jpg?ixlib=rb 1.1 — No one really knows for certain what the market potential is for cannabis, much less for edibles, but growth opportunities are palatable.
(Shutterstock)

Sylvain Charlebois, Dalhousie University

On Oct. 17, smoking cannabis will become legal in Canada. As for cannabis edibles, they will take a bit longer: Cannabis-infused food products will be legal in a little less than a year’s time.

Once edibles are available, things will get complicated in Canada’s food industry. But with the right regulations, this is a profit opportunity that doesn’t come by every day.

Initially, Bill C-45 did not include edibles. That only happened last fall, when the parliamentary health committee decided that edibles would need to be included as well if the country was going to adopt a comprehensive approach to legalized cannabis.

According to a recently published survey from Dalhousie University, 93 per cent of those favourable to the legalization of marijuana are also very likely to try at least one edible product. Recognizing this possibility, the parliamentary committee approved a neat little amendment and, voilà, edibles became part of the package.

The food industry is a $200-billion sector. It is a massive portion of our economy, split into multiple streams. Food retailing, food service, delivery, food trucks, institutional services, arenas, stadiums — there are channels of distribution everywhere, and food can get to wherever you are.

In less than a year, this will include cannabis — except that, unlike the smokeable version, edibles can be consumed by anyone without those around them knowing. It’s discreet, convenient — and potentially dangerous.

Labelling required

Health Canada was caught by surprise by the additional legalization of edibles, and is still trying to come up with an appropriate regulatory framework. Many questions linger about the distinct dangers that edibles pose, particularly for children.

Food companies are notoriously paranoid about food-safety issues, because they are always just one recall, outbreak or tragic incident away from closing their doors. All it takes is one child eating a cannabis-infused product and the damage to that food company would be irreversible.

Consumer sales of cannabis-infused food and drink are on the rise in California and Colorado.
(Shutterstock)

It’s critical that a regulatory framework be put in place that would include proper labelling of edibles, complete with THC content and intoxicant warnings, to assure both the public and industry that edibles and humans can co-exist safely.

With adequate safety measures, edibles present a hugely profitable opportunity for the Canadian food industry. No one really knows for certain what the market potential is for cannabis, much less for edibles, but growth opportunities are palatable.

In California, for example, consumers purchased US$180-million worth of cannabis-infused food and drink last year. This amounts to roughly 10 per cent of the state’s total cannabis sales. Sales are up 18 per cent since January of this year. In Colorado, where cannabis is also legal, sales of edibles rose by about 60 per cent a year over the past two years.

This kind of tremendous growth is what the food industry needs right now. The more consumers are exposed to cannabis, the more they will opt for the edible version. Quite simply, this is a potential phenomenon akin to what the industry saw with sales of gluten-free products.

Industry shake up

Edibles also stand to shake up current players in the food sector. For example, people may choose cannabis more often than a drink or two, and thus disrupt the alcohol industry. We could see some consumers substituting their usual wine, beer or spirits for a cannabis-infused spaghetti sauce, or possibly even cannabis oil. Or perhaps some will be opt for a pot muffin or brownie.

Will cannabis pesto be on your grocer’s shelf soon?
(Shutterstock)

In fact, many wine producers are concerned about what a mature cannabis market will look like. For Ontario, British Columbia and Nova Scotia — where the wine industry is flourishing — this could be a problem.

We are already seeing cannabis beer being launched in different places in the country. But it’s not just alcohol that is susceptible, as edibles can take many different forms: candies are the number one food product containing cannabis sold in the United States.

It will be interesting to see how branding strategies will align with cannabis, too. Some people will choose cannabis to get high, but not everyone.

Beyond the psychoactive effects of cannabis, there is also the possibility of pitching it as a superfood. The cannabis plant is full of nutritional value. It contains protein, carbohydrates, insoluble fibre, potassium, magnesium, sulfur, calcium, iron, zinc, vitamins E and C and many other elements considered beneficial for human health.

For food manufacturers looking for a new value-added feature, cannabis could potentially be the next omega-3 or probiotic.

Uncertain stance

The Dalhousie survey questioned businesses about their plans for cannabis edibles. Almost 20 per cent of the food processing companies surveyed are either in the edibles market already, or intend to enter the market within a year.

But, a whopping 50 per cent of food companies in Canada are uncertain about their position regarding cannabis. Respondents cited different reasons, such as concerns over employees being trained properly, or not knowing what products will eventually be allowed into the market.

Many companies are also worried about how cannabis can affect their brands or their supply chain strategy with other partners in the industry.

With legalization, the stigma linked to cannabis will eventually disappear, but it will take a while. The food industry is known to be extremely risk averse, and it won’t be any different toward cannabis. Until the industry knows the consumer is ready, cannabis edibles will stay on the sidelines — but hopefully not for too long.

Sylvain Charlebois, Professor in Food Distribution and Policy, Dalhousie University

This article was originally published on The Conversation. Read the original article.

Dr. Sylvain Charlebois Welcomes Dr. Lori Turnbull, Incoming Director of the School of Public Administration

August 14, 2018 rbudd Leave a Comment

“I am thrilled to announce the appointment of Dr. Lori Turnbull as Director of the School of Public Administration in our Faculty. Her 5-year term will start January 1, 2019. She will also be cross-appointed to the Faculty of Arts and Social Sciences.”

Dr. Sylvain Charlebois

Dr. Lori Turnbull

I am thrilled to announce the appointment of Dr. Lori Turnbull as Director of the School of Public Administration in our Faculty. Her 5-year term will start January 1, 2019. She will also be cross-appointed to the Faculty of Arts and Social Sciences.

Dr. Turnbull comes to the School with an outstanding reputation as a political analysts, and as one of our country’s top experts in the field. Dr. Turnbull was affiliated to the Department of Political Science as an Associate Professor at Dalhousie University, since 2005, and worked and published with the late Dr. Peter Aucoin, one the School’s former Directors. Over the last decade or so, Dr. Turnbull’s contributions have acclaimed recognition from honourable subject experts from around the world. Her book “Democratizing the Constitution: Reforming Responsible Government”, co-authored with Mark Jarvis and Peter Aucoin, won the Donner Prize in 2011 and the Donald Smiley Prize in 2012.

Dr. Turnbull’s work has been published in many highly ranked journals in public administration and political science. She has also worked as a policy researcher for the Commission of Inquiry into Certain Allegations Respecting Business and Financial Dealings Between Karlheinz Schreiber and the Right Honourable Brian Mulroney. More recently, from July 2015 until July 2017, she was on secondment to the Privy Council Office (PCO) in Ottawa, first as a Policy Advisor in the Machinery of Government Secretariat, then as Departmental Liaison to the Office of the Minister of Democratic Institutions, and finally as a Policy Advisor at the Priorities and Planning Secretariat.

Dr. Turnbull’s appointment is the result of a thorough search process, which had great interest from excellent candidates locally and nationally. Her hiring comes with enthusiastic support from the search committee, chaired by Dr. Vivian Howard, and included Faculty, staff and students. Members of the committee were Isabelle Caron, Krista Cullymore, Peter Duinker, Stephane Mechoulan, Markus Sharaput, and Binod Sundararajan. The committee’s decision was unanimous.

Please join me in welcoming Dr. Turnbull to Dalhousie’s Faculty of Management.

Dr. Sylvain Charlebois
Dean, Faculty of Management
Dalhousie University
August 2018

Dr. Sylvain Charlebois: Shrinkflation – When less is not more at the grocery store

July 12, 2018 rbudd Leave a Comment

Shrinkflation: When less is not more at the grocery store

File 20180528 80620 7z29yi.jpg?ixlib=rb 1.1 — You’re not imagining things. The quantities of packaged foods really are shrinking as food manufacturers try to avoid hiking prices. Shrinkflation however is beginning to irritate consumers who feel they’re being cheated.
(Shutterstock)

Sylvain Charlebois, Dalhousie University

Most consumers are concerned about the cost of food. We constantly look for bargains and the food industry knows it.

According to a recent survey by Dalhousie University, more than 60 per cent of all Canadian consumers consider price as one of the top three decision criteria when grocery shopping. Price is key, no matter what. Grocers play around with prices to keep all of us on our toes.

Pricing in the food processing sector is intricate. Ingredients, energy costs and wages are among the factors that weigh heavily on food manufacturers as they try to cultivate relationships with grocers and retain market shares.

Chocoholics take note: Chocolate bars are among the foods that are shrinking.
(Shutterstock)

For decades, to keep price points low, the shrinking package strategy has been employed by the food industry — known as shrinkflation, it’s the process of items shrinking in size or quantity while their prices remain the same or increase.

Everything is getting smaller, whether it’s cartons of ice cream, bags of chips, cookies, chocolate bars or boxes of pasta. There have been several media stories on this issue in recent years.

Thousands of products have shrunk

All over the world, food packages are shrinking. A recent U.K. study suggests there are almost 3,000 food products that can be found in a typical grocery store that have shrunk since 2012. This came at a period of time when annual food inflation hit a whopping six per cent. And so people were paying more for less and the food industry was accused of gouging consumers.

Similar numbers are coming out of the U.S. market. Many American food manufacturers have also admitted to shrinking packages to maintain prices at a competitive level. Many of these products enter the Canadian market. Based on what’s going on in the U.S. and Europe, we could estimate that anywhere between 15 to 20 per cent of all packaged food products have shrunk in the last five years, if not more.

Food companies have found a way to defend margins, largely without upsetting anyone.

Shrinkflation is almost the norm these days, but consumers are beginning to find it irritating. Yet food companies are not really misleading the public. Weight and volume information can easily be found on any labelled package. Habits make us believe we are purchasing the same thing as we zoom in on the one constant that motivates our behaviour when shopping: Price.

When costs rise in food manufacturing, a company has basically three options: Raise the price, make smaller packages or change the ingredients. Given our competitive food industry, hiking prices can be challenging. Since early 2018, prices in food stores have dropped because of higher competition.

Reformulating is dangerous

Yet changing ingredients can be risky. For 30 years, before the 2008 bump in commodity prices when food was considered an afterthought compared to today, companies were egregiously reformulating food products. This was at a time when taste and the quality of ingredients were not on the radar.

The New Coke debacle of the 1980s shows the risks of a company reformulating a beloved product.
(Creative Commons)

Some food manufacturers have paid the ultimate price for changing the taste of certain products just to save a few pennies. The so-called New Coke is a classic example of a misfire. And today, with social media, companies are one poor decision away from seeing an entire product line vanish.

The only viable option, really, is to downsize. With the arrival of many non-food investment firms and conglomerates that value food as much as bolts, tires or buildings, recalibrating ingredients and changing a package is almost second nature.

3G Capital, the Brazilian giant which gobbled up Heinz-Kraft, Burger King and Tim Horton’s in recent years under its holding company, Restaurant Brands International, is one good example. Most of these new players in the food space are not astute about the nuances of food products. They just look at the numbers knowing consumers are out there looking for the best price.

Whether or not we want to admit it, as food consumers, we value quantities for the lowest price. It’s challenging to get out of this way of thinking.

But there could be an opportunity for manufacturers looking at increased costs. Instead of downsizing products and hoping no one notices, emphasizing its superior taste and original package size could become a selling point.

Studies show that consumers who remember how good a product tastes are willing to pay more for less if given no other choice. Food manufacturers should try selling flavour over quantity.

Showing a more transparent approach to packaging, or emphasizing quality could let consumers appreciate that things do get complicated out there and some adjustments are required. But we all know that won’t happen.

Is shrinking packaging obscuring inflation?

It’s unclear how shrinkflation is captured by the StatsCan consumer price index. Certain quantities are taken into account by the index, but there’s no explanation on how data collection is adjusted as quantities change rapidly.

Shrinking package sizes could contribute to food inflation in a subtle way. In some cases, quantities have been reduced by 15 per cent in three years. By compounding real inflation, food prices may have gone up by more than six per cent in many cases, when the reported food inflation rate was anywhere between 1.5 to two per cent.

In the end, consumers can be outraged and condemn the practice of shrinking food products. But when you really think about it, food companies are really delivering what consumers are asking for — low prices.

Sylvain Charlebois, Professor in Food Distribution and Policy, Dalhousie University

This article was originally published on The Conversation. Read the original article.

Dr. Sylvain Charlebois: The increasingly bleak outlook for Canadian grocery stores

July 5, 2018 rbudd Leave a Comment

The increasingly bleak outlook for Canadian grocery stores

File 20180509 34018 1jnkx1x.jpg?ixlib=rb 1.1 — Empty grocery stores could be a sign of the future as grocery stores struggle to make profits and consumer preferences for more choice and services, including online shopping, evolve.
Clark Young/Unsplash

Sylvain Charlebois, Dalhousie University

Retail food prices are not moving much these days. They are barely higher than last year, with a modest increase of 0.5 per cent.

In fact, according to Statistics Canada, prices dropped over all by 0.7 per cent over the winter months. South of the border, U.S. grocers are dealing with the same issue. Since our economy has some momentum, you would expect food retail prices to inch higher. But they are not moving, and for several reasons.

Grocers will always pick the right time to raise prices. Unemployment is near historic lows, consumer confidence is relatively high and inflation is inching upward — normally, these are perfect market conditions. Not so at the moment.

For one thing, both Walmart and Amazon are at war trying to attract customer loyalty through online strategies. Walmart’s online food sales were disappointing in the last quarter, but sales are growing nonetheless.

And generic brands are becoming increasingly popular as consumers trade down. Brands are becoming less important to a growing number of consumers, so trading down has become less embarrassing and more of a statement consumers want to make while shopping.

Loyalty — the most powerful tool a grocer needs to increase sales — is almost non-existent nowadays. The power has now firmly shifted into the hands of consumers, and grocers know it. With interesting tweaks to their strategy, profits are still there, but market shares are not.

Cutting costs

For the past few years, grocers have been cutting costs and passing the savings onto consumers, all the while hoping that the perfect inflationary environment would return so that they could raise prices again. The return of food inflation was exactly what the grocery industry was hoping for, but so far, results have been disappointing.

What they did not expect was to lose the ability to increase retail prices. With higher general inflation, costs are increasing and grocers are now getting hit in more ways than one.

In many markets — Toronto, Guelph, Ont., Halifax, Vancouver, among others — the number of stores is increasing. There are almost 39,000 food and beverage stores in Canada, which is up more than five per cent from about two years ago.

It seems some grocers are remaining in this funk of building new stores just for the sake of it. Bricks-and-mortar stores may remain a sign of business success from the perspective of some executives, but this just isn’t true anymore.

Innovation could lead to growth

Innovation is always seen as a logical path to growth in the grocery business, but how we define innovation in food is also changing.

Many innovative products are becoming known in Canada, like the cricket-protein bars sold by Naak, but most are not sold by major grocers. They are sold online or through independent shops.

This is another major problem that grocers in this country will need to fix and quickly. If grocers’ capacity to increase revenues is hampered by more competition, the consequences of these pressures will be shared with food processors and others in the supply chain. To make matters worse, relationships within the food value chain have not been great in recent years.

Despite the food retailing woes we are seeing in North America, food services is a different story entirely.

Prices have gone up by more than four per cent since the beginning of the year, and the sector is not showing signs of slowing down.

The convergence between retailing and service will be a definite attraction for a food-retailing sector desperate for growth.

The grocery sector, however, is facing swift changes in consumer preferences as customers clamour for different products and services. Consequently, the number of food stores we have in Canada is likely not sustainable. Don’t be surprised to increasingly hear about more grocery stores closing in months to come.

Sylvain Charlebois, Professor in Food Distribution and Policy, Dalhousie University

This article was originally published on The Conversation. Read the original article.

Dr. Sylvain Charlebois: The Battle To Ban Plastic Bags

June 21, 2018 rbudd Leave a Comment

The battle to ban plastic bags

File 20180411 554 neo4o6.jpg?ixlib=rb 1.1 — A plastic bag floats in the ocean in this 2016 photo.
Creative Commons

Sylvain Charlebois, Dalhousie University and Tony Robert Walker, Dalhousie University

There are increasing concerns about the use of plastics in our day-to-day lives.

Single-use plastics of any kind, including grocery bags, cutlery, straws, polystyrene and coffee cups, are significant yet preventable sources of plastic land-based and marine pollution.

In Canada, bans on plastics have so far been left up to municipalities, and some are taking action. Both Montreal and Victoria recently decided to ban plastic bags in stores, with business owners subject to huge fines if caught providing these to customers.

Other municipalities and provinces, such as Halifax and Nova Scotia, are contemplating similar bans in the wake of China’s recent ban on the import of certain recyclable products.

Although regulations are cropping up in some places, increasing public awareness appears to be gaining widespread momentum globally and across Canada.

Polystyrene also a target

National and regional plastic bag bans have been successfully implemented widely internationally in Asia, Europe, Australia and North America.

But plastic bags are not the only single-use plastic items being targeted —polystyrene is on the hit list as well. Food businesses in Washington, D.C. and San Francisco will no longer be able to use containers or other food service products made of polystyrene.

In this 2013 photo, a Dunkin’ Donuts’ polystyrene foam cup is discarded in a trash bin in New York. Dunkin’ Donuts announced in February 2018 it was banning polystyrene foam cups by 2020.
(AP Photo/Mark Lennihan)

In Maine, the Brunswick Town Council voted unanimously to ban polystyrene food containers. All retailers, restaurants and vendors are prohibited from using polystyrene foam packaging, including takeout containers, meat trays and egg cartons.

But even though banning single-use plastic using legislative interventions is significant, not everyone is convinced of its effectiveness.

In Canada, some players are taking their own steps using non-legislative strategies to reduce plastic use, regardless of government policy. In 2009, Loblaws, Canada’s largest grocer, implemented a seemingly insignificant five-cent charge on plastic grocery bags.

Loblaws has claimed this unassuming action has diverted billions of plastic bags from our landfills and oceans over the last nine years. In February 2016, Walmart Canada followed suit and began charging customers a five-cent fee for plastic bags across all Walmart stores in Canada.

Reservations about banning plastic bags

Public sentiment on climate change and environmental stewardship has changed significantly over just the last few years as more Canadians expect industry to act. But some still have reservations.

Some have claimed that plastic bags serve an important food safety function and protect the public from harmful bacteria, outbreaks and food-borne illnesses, although those findings have been questioned by epidemiologists.

A University of Arizona study in microbiology suggested that the combination of reusable grocery bags and food is risky. According to the study, coliform bacteria and Escherichia coli (E. coli) were found in half of the reusable grocery bags sampled because people were neglecting to launder them often enough.

The study was, however, funded by a trade group representing the interests of plastic bag manufacturers.

The Mercatus Center in the United States, a conservative think tank with Charles Koch on its board, has said that discouraging the use of single-use plastic bags is almost pointless given the insignificant variance in carbon footprint between bagging alternatives, including paper bags.

And data from the U.S. Environmental Protection Agency suggest that because plastic bags are ultra-lightweight by design, they likely make negligible contributions to municipal waste.

These groups appear to be suggesting that banning the use of plastic bags is more about appearances and idealism than about protecting the environment.

Toronto rescinded its ban

Clearly banning plastic bags is a divisive issue. The resistance is real, and several cities have been hesitant to move forward on legislation; some plastic bag legislation has even been rescinded.

Toronto once had a five-cent levy for plastic bags, and an outright ban on plastic bags was sought in 2012, but the ban was rescinded by city council in 2013.

Plastic bags are a convenience, and habits are hard to break. What could potentially be an inconvenience to food shoppers can, and in some cases has, become a political hot potato to those in public office.

But the problem will not go away given the planet is currently drowning in plastic pollution. A study led by the Five Gyres Institute in Los Angeles estimates that at least 5.25 trillion plastic particles weighing 268,940 tonnes are currently floating in our oceans. Even these staggering numbers pale when compared to the estimated eight million tonnes of plastic that enter the oceans each year.

Plastic pollution is seen washed up on a beach in the Maldives in the Indian Ocean.
(Shutterstock)

Most of us cannot see the problem, but it is out there. While some trash skimmers capable of removing floating debris in marinas and harbours achieve modest success, a global clean-up is next to impossible with current technology.

The situation is being made worse by countries like Canada. Its food industry continues to generate more waste from single-use plastic food packaging every year.

More Canadians living alone

Given that more than 28 per cent of all households in Canada consist of only one person, and the number of Canadians living alone is going to continue to grow, the single-serve economy will likely expand as well, especially in food.

This means that the use of single-use plastic packaging and containers could increase at alarming rates.

Banning plastics is one swift way to deal with the issue, and offer a temporary path to more impactful, sustainable strategies.

The use of bio-plastics may be the future and could be a convenient solution for all concerned. More and more different feedstocks can be used to manufacture bio-plastics. Algae and shrimp shells are some examples.

In this 2011 photo, Eastern BioPlastics displays a handful of feathers and finished products at the plant in Mount Crawford, Va. Eastern BioPlastics uses chicken feathers to make biodegradable plastic products.
(AP Photo/Steve Helber)

To tackle the issue of single-use coffee pods, an increasing number of them sold in Canada are made of coffee shafts and are compostable, but muncipalities say they aren’t yet able to recycle them.

Recently, a Dutch supermarket chain opened the world’s first plastic-free food store. This project was only made possible by using innovative solutions to plastic packaging. You will find only biodegradable flexible bioplastic packaging and bags in the store.
The challenge with these alternatives, of course, is the cost.

Bioplastics are more expensive than regular plastics. But given how rapidly the narrative around climate change is shifting, the “green” premium is increasingly worthy of consideration by industry.

Once supply chains mature and become more developed to allow more access to affordable feedstocks, production costs and end prices for bioplastics will likely drop as well.

The notion of reduce, reuse, recycle has been preached for years now. Outright bans fit well within such a paradigm.

But the concept of replacing single-use plastics requires a revolution in consumer mentality. And so a much more interesting challenge is that of keeping grocery shopping from becoming either a burden on the environment or an inconvenience to customers.

Sylvain Charlebois, Professor in Food Distribution and Policy, Dalhousie University and Tony Robert Walker, Assistant Professor, Dalhousie University

This article was originally published on The Conversation. Read the original article.

Sylvain Charlebois: The economy is doing well, so why can’t Canadian grocers hike prices?

May 24, 2018 rbudd Leave a Comment

“Grocers appear to have lost the ability to increase food prices, despite our strong economy. This is a problem. Grocers now need to find a way to make inflation work for them.”

Dr. Sylvain Charlebois

Dr. Sylvain Charlebois
Dean, Faculty of Management
Dalhousie University

Retail food prices are not moving much these days. They are barely higher than last year, with a modest increase of 0.5 per cent. In fact, according to Statistics Canada, prices dropped over all by 0.7 per cent over the winter months. South of the border, U.S. grocers are dealing with the same issue. Since our economy has some momentum, you would expect food retail prices to inch higher. But they are not moving, and for several reasons.

Grocers will always pick the right time to raise prices. Unemployment is near historic lows, consumer confidence is relatively high and inflation is inching upward – normally, these are perfect market conditions. Not so. For one thing, both Walmart and Amazon are at war trying to attract customer loyalty through online strategies. Walmart’s online food sales were disappointing in the last quarter, but sales are growing nonetheless. Generic brands are becoming increasingly popular as consumers trade down. Brands are becoming less important to a growing number of consumers, so trading down has become less embarrassing and more of a statement consumers want to make while shopping. Loyalty – the most powerful tool a grocer needs to increase sales – is almost non-existent nowadays. The power has now firmly shifted into the hands of consumers, and grocers know it. With interesting tweaks to their strategy, profits are still there, but market shares are not.

For the past few years, grocers have been cutting costs and passing the savings onto consumers, all the while hoping that the perfect inflationary environment would return, so that they could raise prices again. The return of food inflation was exactly what the grocery industry was hoping for, but so far, results have been disappointing. What they did not expect was to lose the ability to increase retail prices. With higher general inflation, costs are increasing and grocers are now getting hit in more ways than one.

Grocers can try to justify their poor financial performance, citing higher minimum wages and how much pressure they are under, but top-line growth revenues are painfully idle for most of them. All grocers are moving aggressively on their online strategy, and all are also looking at home delivery, as soon as possible. In many markets – Toronto, Guelph, Ont., Halifax, Vancouver, among others – the number of stores is increasing. There are almost 24,000 food and beverage stores in Canada, which is up more than 5 per cent from about two years ago. It seems some grocers are remaining in this funk of building new stores just for the sake of it. Bricks-and-mortar stores may remain, from the perspective of some executives, a sign of business success, but this just isn’t true anymore.

Pressures are also coming from the online market, as more small- and medium-sized companies are chipping away at market shares in some specific food categories. It’s not just Amazon, but a portfolio of intriguing small companies using virtual platforms to brand and commercialize high-value products that cannot be found elsewhere. Innovation is always seen as a logical path to growth in the grocery business, but how we define innovation in food is also changing. Many innovative products are becoming known in Canada, but most are not sold by major grocers. They are sold online or through independent shops. This is another major problem that grocers in this country will need to fix and quickly. If grocers’ capacity to increase revenues is hampered by more competition, the consequences of these pressures will be shared with food processors and others in the supply chain. To make it worse, relationships within the food value chain have not been great in recent years.

Despite the food retailing woes we are seeing in North America, food service is a different story entirely. Prices have gone up by more than 4 per cent since the beginning of the year, and the sector is not showing signs of slowing down. The convergence between retailing and service will be a definite attraction for a food-retailing sector desperate for growth. In a sector facing swift changes in consumer preferences, meanwhile, given what more consumers are looking for, someone needs to realize that the number of food stores we have in Canada is not sustainable. Don’t be surprised to hear more about food-store closures in months to come.

Dr. Sylvain Charlebois
Dean, Faculty of Management
Dalhousie University
May 2018

A measly $292.50 that could have changed it all

May 17, 2018 rbudd Leave a Comment

“The Supreme Court failed to rule that Provinces have no right to erect interprovincial tariff barriers. This is indeed unfortunate news for Canadian consumers, but a relief for provinces who have allowed fiscal priorities to supersede consumer choice, for years. For the agrifood sector, the decision would have had tremendous significance.”

Dr. Sylvain Charlebois

Dr. Sylvain Charlebois
Dean, Faculty of Management
Dalhousie University

The Supreme Court ruling is a significant loss for consumers and our Canadian economy, but a great win for inertia. The Comeau case was never just about beer. It was essentially about enabling our domestic economy across the country to thrive. For the agrifood sector, the decision would have had tremendous significance.

Gerard Comeau made a purchase in Quebec of 344 bottles of beer, two bottles of whiskey and one bottle of other spirits, which he then brought back to New Brunswick. This is something he had done several times but which is in fact deemed illegal, based on a 90-year old law. This time, however, Mr. Comeau was arrested and fined $292.50. This was in 2012. More than 5 years later, the Supreme Court ruled the fine to be unconstitutional. Who would have thought that $292.50 had the potential to forever change the face of domestic food trade?

For almost nine decades, interprovincial barriers have multiplied and have made the life of many food companies a living nightmare. For consumers, if no one catches you, you move on. For businesses, when buying ingredients or specialty products from another province, it’s been less than convenient. Moreover, many of these products were taxed only to support provincial government’s public coffers. Barriers were erected to suppress competition and sell more taxed and overpriced food products and beverages. Canada has a myriad of trade barriers in addition to the fact that the agrifood sector is addicted to marketing boards. For many, mechanisms countervailing power are the only methods possible to appease entrepreneurial angst in the sector. We just needed the Supreme Court of Canada to make us realize that we need to get our interprovincial act together. But it did not happen.

Because of this ruling, creative companies in smaller provinces will not have a fighting chance to expand and compete in larger markets, such as Quebec and Ontario. Wineries, craft cheese producers, craft breweries, speciality meat producers, and many other small-scale operations will face mounting obstacles, domestically.

But this would have also turned out to be the wake-up call our supply-managed sectors needed. Our provincially-based quota system to support dairy, poultry and egg production facilities will likely be targeted by this ruling. This could have represented an opportunity to recalibrate some of the agrifood wealth around the country. For example, dairy processing has historically been concentrated in the province of Quebec. Quotas are evenly distributed, based on domestic demand for milk, including processing. Now, it is likely that we will see other provinces play a much larger role in dairy processing. The Comeau ruling could have induced some deeply needed supply-management reforms to make the regime more flexible and current. New methods, capitalizing on terroir knowledge, could have made most gastronomic regions in Canada flourish. Right now, most production is done in Ontario and Quebec, and a different decision by the Supreme Court could have complemented what many consider a weak and obsolete equalization system which sees the “have” provinces supporting “have nots.”

A different outcome would have met a reduction in the price of a variety of products you now enjoy. More competition could have put pressure on prices. Fiscal policies could have changed, given how open provincial economies were going to become. But now, we will need to wait a while longer.

The will for more economic integration makes internal barriers undesirable. The case for a better flow of goods remains very strong in Canada, from an economic standpoint. Interprovincial trade barriers never made sense in the first place, never will. We are only 37 million inhabitants in one of the vastest counties in the world. Distribution costs are prohibitive for many of our small and medium-sized companies, who often drive the open agrifood innovation agenda in this country. These companies have long needed just such a chance to thrive beyond one or a few provinces.

Some favorable to the current regime believe the Comeau ruling could have triggered a race to the bottom, in terms of health standards and food safety. Such an argument is nonsense. Risk management practices in the Canadian agrifood sector are exemplary. As we continue to seek opportunities abroad, Ottawa and the provinces will need to clean house here first. It has taken over 90 years – and a timid fine of $292.50 – for Ottawa to finally receive a strong message that Canadians deserve better. But for no, the Supreme Court has opted to stay on the sidelines.

Dr. Sylvain Charlebois
Dean, Faculty of Management
Dalhousie University
April 2018

Sylvain Charlebois: A meatless Canada? Not quite, yet.

May 3, 2018 rbudd Leave a Comment

“Are more Canadians becoming vegetarians or vegans? A recent poll by Dalhousie University suggests the number of vegetarians and vegans among us has likely remain the same, but things are getting complicated out there.”

Dr. Sylvain Charlebois

Dr. Sylvain Charlebois
Dean, Faculty of Management

Canadians love meat. Many of us have been dedicated to our favourite protein source for years. But other sources of protein are emerging as potent alternatives to animal protein. Demand is up for vegetable proteins like pulses, as well as for fish and seafood, Loblaw has even started selling cricket flour and is trying to make insect consumption mainstream. As a result, some believe vegetarianism and veganism may be on the rise in Canada. Not so much, it seems. According to a recent poll conducted by Dalhousie University, it appears that the number of vegetarians and vegans have remained the same, but the number of Canadians who follow specific dietary practices is clearly on the rise.

Results suggest that 7.1% of Canadians consider themselves vegetarians, and 2.3% vegans. These numbers are fairly consistent with several other polls conducted over the last decade or so. Vegetarians maintain a meat-free diet, while vegans also abstain from any animal or animal-derived products, including dairy, eggs, and even honey. We should note that there are several variations of vegetarianism and veganism. But even if these percentages are not shockingly high, we are getting some indication that things may get more complicated in the future.

Results show that 32% of Canadians do observe some sort of committed dietary regime. This number is one of the highest we have seen in recent years. Women are 0.6 times more likely to consider themselves vegetarian or vegan than men. Level of education also seems to be a significant determinant. People with an university degree are three times more likely to consider themselves vegetarians or vegans than those with a high school diploma. Consumers living in British Columbia are 1.6 times more likely to identify as vegetarians or vegans than consumers living in the Prairies or the Atlantic Region. Wealthier people also seem to commit more to specific diets. Consumers who earn more than $150,000 per year are twice as likely to consider themselves vegetarians or vegans than consumers earning less than $80,000.

Nothing very surprising here, but younger consumers are really making things interesting. Consumers under 35 are three times more likely to consider themselves vegetarians or vegans than consumers who are 49 or older. Three times — that is a lot.

Experts argue that the rise of specialty diets is due to consumers associating vegetarianism and veganism not just with animal welfare, as they did in the past, but also with healthier and cleaner products. Others are simply rejecting the model of industrialized agriculture altogether, but health appears more and more to be a factor.

In fact, the poll suggests that over 12% of Canadians are diabetic, according to the survey. Consumers aged 49 and up are twice as likely to adopt a diabetic diet over time, than those under the age of 35. As our population gets older, it is difficult to see how that number could drop anytime soon.

Questions concerning allergies also garnered interesting results. Almost 12% of Canadians mentioned having allergies, and over 20% of households with more than two children declared having to constantly watch for allergens. These are alarming results. For many years now, allergens have been a nightmare for food companies and the Canadian Food Inspection Agency alike. So far, in 2018, of the 35 food recalls issued by Federal regulators, almost a third of were due to the presence of ingredients undeclared on the label. Oddly though, consumers in the Prairies are two times more likely to suffer from food allergies than consumers in Quebec.

Religious beliefs are also enticing Canadians to choose specialty products like halal or kosher foods, but results show these categories remain somewhat marginal. A total 2.3% of Canadians mentioned eating Halal foods regularly while less than 1% choose Kosher products. Supply remains an issue across the country, as Halal and Kosher foods are not always easily available. But with our ambitions around immigration, this could change.

Obviously, this is just one survey which polled only 1,049 Canadians. As with any survey, results must be taken with a grain of salt, no pun intended. Still, these results point to a much more heterogeneous food demand than we have seen in recent years. No wonder Air Canada now offers 18 different special meal options for its international flights. Catering companies and restaurants also know very well that serving patrons is an art that is slowly becoming more about customizing servings than delivering a standardized meal.

So, if you are one of those who have no specific dietary needs of any sort, you are still in the majority. But with a younger generation seeking more dietary nuances, this could change over the next decade or so.

Dr. Sylvain Charlebois
Dean, Faculty of Management
Dalhousie University
March 2018

Sylvain Charlebois: The Rise and Fall of National Food Brands

April 26, 2018 rbudd Leave a Comment

“Dr. Oetker in Grand Falls and Campbell’s in Toronto: two closures, almost 600 jobs. The bloodbath in food manufacturing in Canada continues. But despite appearances, the future in food processing has never looked brighter.”

Dr. Sylvain Charlebois

Dr. Sylvain Charlebois
Dean, Faculty of Management

The bloodbath in foreign-owned, large-scale food manufacturing in Canada continues. In the past few days, we’ve learned that two plants, employing almost 600 highly-paid workers, are closing: Dr. Oetker in Grand Falls, and Campbell’s in Toronto. Estimates suggest that Canada has lost over 30,000 similar positions in food manufacturing in a decade. This is not new.

Both cases have common denominators: both plants were ancient, outdated, and in dire need of a retrofit. However, the companies opted instead to consolidate assets and have products manufactured at more modern facilities. In other words, they never intended to reinvest to modernize the existing plants. The use of better automation and robotics could have helped, but instead the facilities were left to rot and die a natural death. Announcements were made as news came and went. Ontario and other provinces have countless aging plants, owned by foreign companies, and in need of a significant influx of capital to remain in compliance with modern-day standards of food safety and product advancement. So do not be surprised to see more of these types of closures as we are now paying for years of foreign control in this sector. Brands are now worth more than the human capital working in their facilities across the country. It’s not personal, it’s just business.

National brands, often seen as symbols of out-of-touch food corporations, are becoming an endangered species. Every week now, national brands, historically more expensive than private label food products, are marked down. Price points are much cheaper due to more attractive prices on store-owned labels. As well, many consumers, starting with Millenials, are moving away from major brands. More and more people are looking for organic, multicultural foods — hardly concepts mega-enterprises have been associated with, at least until recently. The pace of this demographic shift is spectacular. We are seeing more consolidation in food processing around the world because consumers in the Western world are looking for something different, natural, and local. Many of the brands we all know do not resonate with people looking for these so-called value-based brands.

This pressure is leading to seismic shifts in the sector. Overseas, we learned recently that Keurig Green Mountain, the maker of coffee pod machines, is planning to purchase the Dr Pepper Snapple Group in a massive $18.7 billion transaction. The portfolio of the new company will include products varying from coffee to soft drinks. This deal is really about competitiveness at retail and allowing major brands to remain competitive. Brand equity, which has ruled grocery aisles for decades, is slowly becoming an afterthought. Margins must be better managed and merchandising strategies will need to be reinvented. Consequently, becoming bigger and more resourceful is key.

Most Canadians do not appreciate that the food processing sector is the second largest manufacturing industry in Canada, in terms of value of production, with shipments worth $112.4 billion last year and employing over 250,000 people. This represents 2% of our overall economy. It is a massive sector which has flown under the proverbial radar for decades. This is why “Food & Beverage Canada” was just created by the sector, so processors can have a voice. Without a vibrant manufacturing sector, Canada’s agri-food sector cannot prosper.

Growing commodities is helpful for rural economies and small to medium-sized businesses. As Canadians, it is what we know best. But given how our world is changing, this is no longer enough. Food manufacturing has a multiplier effect on growth. which cannot be emphasized enough. For years, we have been reliant on foreign brands to offer job opportunities in small communities.

Most of these brands, however, are American. The Canadian brand has never been fully exploited in the food value-added sector, a missed opportunity indeed. The needle is slowly moving in our country, recognizing that food processing needs to find its mojo. The Agri-Food Innovation Centre at the University of Saskatchewan opened this year, to support the sector’s will to diversify and launch new businesses. Many incubator and accelerator programs in Toronto, Montreal, Halifax and elsewhere have been launched to create ag-tech companies, which focus on providing more value-added products to the market, both domestically and abroad. Quebec now has a new market access program to support companies looking for new markets. It is no longer just about spreading money to different sectors across the agri-food continuum. Scalability and generating significant economic activity throughout the country are becoming priorities for most stakeholders in both government and industry.

Becoming a world-class agri-food giant involves building an ample food processing sector. We also need to provide the sector with ways to mitigate against higher wages, restrictive trade rules and fluctuating currencies. Looks like someone is finally getting the message.

Dr. Sylvain Charlebois
Dean, Faculty of Management
Dalhousie University
January 2018

Archives for The Dean’s Column

The trouble with edibles

Labelling required

Industry shake up

Uncertain stance

Shrinkflation: When less is not more at the grocery store

Thousands of products have shrunk

Reformulating is dangerous

Is shrinking packaging obscuring inflation?

The increasingly bleak outlook for Canadian grocery stores

Cutting costs

Innovation could lead to growth

The battle to ban plastic bags

Polystyrene also a target

Reservations about banning plastic bags

Toronto rescinded its ban

More Canadians living alone