Canada's Organic Food Market Expanding Rapidly
Canada braces for frenzied growth of organic food: U.S. outlets expand

July 06, 2001 06:11 AM

Source: Financial Post, July 06, 2001, Page 1

HOLLIE SHAW

After decades of having to seek out specialty stores or growers to meet
their needs, Canadian consumers who want to buy organically grown food are
about to enjoy a feast of choices.

Natural foods have been the fastest-growing category in U.S. supermarkets
during the past decade, expanding at a rate of 20% a year into a
US$8-billion business, and a similar explosion is set to erupt in Canada
over the next two years.


Whole Foods Market Inc., the Texas-based company that has built itself into
the leading natural food supermarket in the United States, will jump into
the Canadian market with a store in Toronto this fall and plans to open as
many as 10 of its large-scale outlets coast to coast in Canada over the next
few years.

Colorado-based Wild Oats Markets Inc., the number two player in the United
States, already has four outlets operating under the Capers banner in
British Columbia and is scouting locations in Toronto and Calgary.

Lucrative as the Canadian market may appear, the U.S. chains won't find they
can scoop it up without a fight. That's because Canada's major grocery
chains -- Sobeys, A&P, Safeway and Loblaw Cos. -- have already smelled
what's cooking on the organic food front and have been rapidly stocking up
on a widening assortment of natural foods.

Loblaw, the country's biggest supermarket chain, is so keen on organics that
it has created a separate private label for them. President's Choice
Organics was launched late last year and sells about 25 products, including
coffee, cooking oil, cereals and condiments.

Loblaw plans expand it to 200 offerings by the end of this year. In
addition, all new Loblaw stores will be built with Natural Foods sections,
which occupy about three to four half-aisles.

"There is a segment of healthier eating and healthier lifestyle that is
growing in Canada, and there is increased demand for these types of
products," said spokesman Geoff Wilson, who would not reveal specific sales
figures.

Loblaw has carefully monitored the strategy of Whole Foods --which stocks
both organic and traditional fare free of additives and chemicals -- retail
experts say. Customers say they never have to visit traditional supermarkets
because Whole Foods sells all of the additional household items they need.

Like Loblaw, Whole Foods has its own private label, 365, which consumers
find appealing because it comes with a lower price tag. And like Whole
Foods, Loblaw has hired natural foods experts to staff its aisles, educating
consumers about the products and helping them make choices.

"Loblaw has been watching this market for a long time," said John Williams,
a retail consultant with J.C. Williams Group of Toronto. "If you look at the
(most recent) Loblaws Insider Report, it's just amazing the emphasis the
company is placing on organic or whole foods."

Roy Kingsmith, marketing director at Yves Veggie Cuisine Inc., Canada's
biggest producer of soy-based meat alternatives such as veggie bologna, says
10 years ago 80% of the company's customers were vegan or vegetarian. As
Yves' business grew, that number has shrunk to 4%.

"Clearly, these are mainstream consumers looking for healthy alternatives,"
Mr. Kingsmith said.

While Whole Foods and Wild Oats surely pose a threat to smaller, independent
health food stores, all of them could face more formidable competition from
Canada's traditional supermarket giants, Mr. Kingsmith said.

"Regular grocery stores are on top of it. They are building their own
store-within-a-store concept to try to keep the Whole Foods customers to
themselves."

Both Mr. Williams and Mr. Kingsmith believe the trend toward natural eating
has been spurred by a growing desire among consumers to improve their eating
habits, particularly as the population ages.

At the same time, fears about genetically modified foods are on the rise.
NPD Group Canada, a market research firm, said 85% of the consumers polled
in a recent survey want products free of genetically modified ingredients to
be labelled as such.

Though more consumers appear to want organic foods, they still have far to
go to be sure of what they're getting. The Canadian government has created a
standard for what can be called organic food. It says such products must be
free of genetically engineered or modified organisms and must not be
preserved through ionizing radiation.

But there is no official certification body in Canada that polices the
labelling of foods as organic -- and the Canadian standard is voluntary.

There are several groups across Canada that inspect organic farms and some
are seeking to qualify as certifying agencies, but not all of them are
defining organic in the same way. The Canadian General Standards Board is
currently in talks to establish a national standard for the label
"GMO-free."

www.loblaw.com/
www.wholefoods.com/
www.wildoats.com www.safeway.com/

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