The price is not quite right for Canadian fruit and vegetables

August 15, 2017
6 min read

Canadians are avid fans of fruit and vegetables. Most of the population consider access to these foods as an indelible right, with fresh varieties, in particular, valued for their contribution to managing health. Accordingly, nearly all Canadians purchase fruit and vegetables, with loose, fresh formats most popular, according to Mintel’s latest research on fruits and vegetables in Canada.

While engagement and interest in the category is clearly high, there remain barriers to consumption. Just under half of Canadians say they eat the daily recommended serving of fruits and vegetables, with income a significant factor impacting usage. In fact, only a quarter of those who consider themselves to be struggling financially hit the recommended target, compared to the little more than half of Canadians who identify their financial situation as healthy.

This underscores how price has become a defining issue in the Canadian market. Lower oil prices and a weak Canadian dollar over 2015 and early 2016 impacted the cost of imports and led to spiraling grocery bills, particularly in the fresh produce section. As a result, price has become a key consideration in these aisles, with consumers ranking it as the second most important purchase driver, after freshness.

Inflation declines, but high prices likely to remain long term

31% of Canadians are eating less fruit and vegetables because of price rises.

Unsurprisingly, households with the lowest incomes are particularly focused on cost, and are more likely to have cut back on produce as it has become more expensive. Indeed, three in 10 Canadians are eating less fruit and vegetables because of price rises, peaking at nearly 6 in 10 of those who describe their financial situation as “struggling/in trouble.” This suggests that manufacturers need to do more to convey the value of products to consumers, even as the inflation of recent years subsides.

Canadians may still be concerned about the price of fruits and vegetables, but the cost of produce has actually declined significantly over recent months. Statistic Canada’s Consumer Price Index revealed that the cost of fresh vegetables dropped by 10.2% between March 2016 and March 2017, while the cost of fruit fell even further by 12.4%.

These reversals were the steepest of any food category over the period – with wider food inflation falling by just 1.9% – and represent a normalization in prices given the inflation experienced in late 2015 and early 2016. However, this has not yet filtered into consumer perceptions, with many Canadians still cutting back in the category due to price concerns, highlighting a time-lag effect from the period of high inflation.

Manufacturers now have an opportunity to bring attention to declining prices, but inflation is likely to become a reoccurring issue for the category going forward.

Waste not, want not

Waste reduction is likely to be key to improving perceptions of the fruit and vegetable category, potentially enabling manufacturers to both reduce the price of products on-shelf, and allow consumers to get more value from their purchases.

Food waste is quite literally throwing money in the bin, and in a market where high prices are inhibiting many consumers, ensuring greater efficiency in both the production and consumption of fruit and vegetables will be valued. Eliminating food waste is a global issue, as described by Mintel’s 2017 Global Food & Drink Trend ‘Waste Not.’

A study published by Value Chain Management International recently estimated that more than CA$31 billion of food is wasted every year in Canada, split relatively evenly between households and industry.

Waste is a major issue in the fruit and vegetable category, both on the supply side and in households. In fact, a recent study by Toronto Food Policy Council revealed that fruits and vegetables account for half of household food waste, equivalent to a loss of more than CA$500 annually per household.

Retailers and manufacturers are exploring two potential solutions to this problem: selling misshapen fruit and vegetables directly to consumers and developing packaging that can keep products fresher for longer.

The former approach has become popular globally in recent years amid greater environmental consciousness, with retailers encouraging people to accept the so-called ugly fruits and vegetables previously rejected due to their blemished or imperfect appearance. Such initiatives not only reduce wastage in the supply chain and improve returns for producers, but more importantly, lower the cost for customers as they are typically sold at a heavy discount.

42% of Canadian produce users are interested in purchasing oddly shaped produce at a cheaper price.

Canada’s leading food retailer, Loblaws, recently stated selling misshapen fruit and veg at a 30% discount. This offer appeals to the two in five Canadian produce consumers who are interested in purchasing oddly shaped produce at a cheaper price, according to Mintel research.

Meanwhile, the search for extended shelf life from packaging promises to provide consumers with solutions to reducing household wastage. The development of packaging solutions that can preserve products for longer after purchase will be welcomed by Canadians, especially the most cost-conscious. Indeed, the majority of produce consumers are interested in trying bags that keep produce fresher for longer, with interest peaking among those who describe their financial situation as ‘struggling/in trouble.’

What we think

Price remains a major constraint in the Canadian fruit and vegetable market despite a recent reversal of the inflation seen during 2015 and early 2016, suggesting that manufacturers should be doing more to convey the value of products. While we have experienced a steep decline in the value of fruit and veg over the last 12 months, making price less of an issue in the short term, it’s likely that concerns will remain moving forward. Our research shows that waste reduction can make products more affordable and accessible, with the introduction of misshapen fruit and veg potentially reducing the price on shelves, and packaging innovations allowing consumers to extract full value from purchases.

Patty Johnson, Global Food and Drink Analyst at Mintel, leverages her in-depth knowledge of consumer trends to bring keen, insightful and forward-thinking strategies and tactics to Mintel’s client base. She has built a strong reputation within the food industry by publishing articles in key publications and giving presentations at multiple food industry events and conferences.

Patty Johnson
Patty Johnson

Patty Johnson, is the Associate Director, Purchase Intelligence at Mintel. Patty brings insightful and forward-thinking strategies and tactics to Mintel’s Food and Drink client base.

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