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4. Key Organic Foods 16 |ORGANIC FOOD PROCESSING IN CANADA Table 4.2. Top Canadian processed organic foods and 4. Key organic foods beverages by number of processors Processed Product Number of In this section, we examine major organic food types Processors in order of sales value. Beverages led organic sales Maple products 227 in 2017 (Table 4.1). Non-alcoholic beverages ranked Non alcoholic beverages 184 first in overall sales, while dairy was the largest selling Baked goods 138 food segment, followed by bakery products and ready Fruits & vegetables 98 meals. Maple products were the number one product Meat products 92 processed by Canadian organic processors (227 Dairy products 71 processors), followed by non-alcoholic beverages Snack foods 70 (184), baked goods (138), fruit and vegetable products Edible oils 55 (98) and meat (88) (Table 4.2). Sauces, dressings & condiments 39 Alcoholic beverages 37 Table 4.1 Top organic packaged foods sold at retail in Breakfast cereals 35 2017, $CAN millions Spreads 28 Processed Product Value Rice & pasta 27 Non alcoholic beverages 779.0 Ready meals 23 Dairy 377.6 Soup 16 Bakery products 237.4 Aquaculture products 8 Alcoholic beverages 230.0 Baby food 6 Ready meals 192.3 Breakfast cereals 132.3 Canadian retail sales values for each of the types Processed fruits/vegetables 86.4 of non-alcoholic beverages are shown in Table 4.3. Snacks 72.6 There were 184 organic non-alcoholic beverage man- Baby food 68.0 ufacturers in 2018, with the majority located in ON. Table 4.4 shows the number of manufacturers for each Meat 64.3 non-alcoholic beverage type. Note that the values do Sauces, dressings & condiments 56.9 not sum to 184 (Table 4.2) because individual compa- Pasta and rice 47.6 nies may produce more than one beverage type. Soup 47.5 Spreads 41.2 Table 4.3 Canadian retail sales of organic non- alcoholic beverages 2012-2017, $CAD, millions Edible oils 27.6 Sugar & sugar substitutes 10.4 Product 2012 2013 2014 2015 2016 2017 Maple syrup 8.3 Hot 263.7 288.1 316.1 347.7 384.9 421.7 Total 2.5 B Coffee 212.8 232.0 252.6 275.9 305.2 334.8 Tea 50.7 56.0 63.4 71.8 79.6 86.8 Source: Values estimated from Euromonitor 2017, Neilsen, 2017 and COTA, 2017 Other hot 0.1 0.1 0.1 0.1 0.1 0.1 Soft drinks 114.5 117.3 121.0 127.6 137.2 148.0 Fruit/vege- 113.9 116.6 120.3 127.0 136.6 147.2 table drinks Plant bev- - - - - - 61.4 4.1 BEVERAGES erages Powder Non-alcoholic beverages concen- 0.8 0.8 0.7 0.7 0.7 0.7 rates Canadian sales of organic non-alcoholic beverag- Total 492.9 522.8 558.1 603.0 659.4 779.0 es, were worth $779 M in 2017 (Euromonitor Inter- Source: All estimates from Euromonitor International, national, 2018, Table 4.1). Data include all bever- 2018, except plant beverages which are from COTA, ages except dairy which are covered in section 4.2. 2018b STATE OF THE INDUSTRY 2018 | 17 Table 4.4 Number of organic non-alcoholic beverage processors in Canada by beverage type, 2018 Company Profile Prov- Coffee Tea Other Soft Juice/ Plant Total ince Hot Drinks/ Purees Bevs Other Ethical Bean, Vancouver, BC YT 1 0 0 0 0 0 1 BC 24 18 1 5 7 1 55 Lloyd Bernhardt and his wife Kim Schachte started AB 3 1 0 0 1 0 5 an coffee roasting business in Vancouver in 2003. MB 0 2 0 0 1 3 Bernhardt was a former executive at a software ON 21 25 1 5 15 3 70 company. Initially, the pair opened several cafés QC 18 10 1 2 21 5 55 around the city, but closed all but one to focus on NB 0 0 0 0 1 0 1 retail and wholesale sales. The company started by NS 2 0 0 0 0 0 2 building a loyal customer base in BC, then expanded Total 69 56 3 12 46 9 192 into ON and QC, primarily through large retailers, followed by expansion into the U.S. market. Coffee The organic and fair trade certified B Corporation differentiates itself from its competitors in a hyper- Canadians love coffee. It is the dominant beverage in competitive marketplace through transparency and both organic and conventional channels with Canadians environmental stewardship across the value chain. ranking amongst the highest per capita coffee drinkers Each bag of coffee comes with a QR code that allows on the planet. In 2015, Canadians consumed 2.3 B consumers to track where their coffee beans were servings of coffee (The NDP Group, 2016). grown, who grew them, and even when the beans were roasted. The company spent about $10,000 Organic coffee is the single highest value organic on an app that has yielded benefits in bringing product processed in Canada, representing 43% of the new retailers on-stream. It has also allowed Ethical value of all organic non-alcoholic beverage sales and Bean to track purchase location when consumers close to four times times the value of organic tea sales. opt in. The app also allows consumers to make online purchases, a factor that has enhanced sales. Of course Canada does not grow coffee, but it does Future directions include an app for the growers roast it. According to Euromonitor International (2018), that will enable them to communicate directly with organic coffee sold by Canadian grocery retailers was the people who use their products. worth $334.8 M in 2017 (Table 4.3), growing at a CAGR of 8.9% between 2013 and 2017. Organic coffee sales Ethical Bean uses compostable coffee pods made are expected to grow at the same rate (8.9 CAGR) from coffee bean chaff. Pods break down in less than between 2018 and 2022 (Euromonitor International, 84 days. The company also runs a return program 2018). Fair trade organic whole-bean coffee, now for its foil-lined bags. For every 12 bags returned, represents 12% of the Canadian organic coffee market consumers receive a free bag of coffee. Bags are and this segment is dominated by Vancouver based turned into tote bags, seeding pots or are donated Kicking Horse Coffee. to schools for use in craft projects. Ethical Bean’s 10,000 sq. ft. roasting facility was built to LEED Since Canada began tracking organic imports, raw Gold Standard specifications. The plant has been coffee has been the number one import amongst Carbon Neutral since 2007. In 2010, the company tracked commodities. As of December 2018, the value partnered with Climate Smart to track and measure of unroasted organic coffee bean imports was $126.4 greenhouse gas emissions. A new energy-efficient M for the year. A further $9.9 M of roasted beans were Loring Smart Roaster allowed the company to roast imported over the same time period. The value of 11% more coffee while reducing natural gas use by imported roasted coffee has been declining since 2013 70%. Power is purchased from Bullfrog Power which when it was $35.6 M, while the value of unroasted coffee uses methane captured from a landfill. Carbon imports has been increasing ($77.9 M in 2013) over the credits are purchased to offset total emissions to 0. same time period (Statistics Canada, 2019). This trend Chaff and other waste is composted. 18 |ORGANIC FOOD PROCESSING IN CANADA reflects the growth in domestic organic coffee roasting from compostable paper and other materials, the rings capacity. Exports of roasted coffee were worth $40.4 M are made from a blend of bioresins from renewable in 2017, with 95% of exports destined for U.S. markets. sources with at least 20% of the materials from coffee British Columbia exports the most organic roasted chaff, and the mesh is also made from a compostable coffee at a 2017 value of $15.1 M, followed by QC at bio-based substance. The pods won gold in the $12.7 M and ON at $12.5 M (Statistics Canada, 2019). sustainable packaging category in May 2017 at the PAC Canadian Leadership Awards. Other companies Globally, there was close to 0.9 million hectares with organic lines, including Mother Parkers, are also of organic coffee production in 2017 (Willer and developing their own sustainable packaging concepts Lernoud, 2019). This represents 8.5% of the total for the single serve coffee market. coffee harvest. Leading organic coffee producing nations are Mexico (231,000 ha), Ethiopia (161,000 Another trend is cold brewed coffee in a can. Canned ha) and Peru (110,000 ha) (Willer and Lernoud, 2019). coffee is available at retail from organic businesses such as Salt Spring Coffee and Kicking Horse Coffee. Canadian consumers want coffee to be sustainably produced. According to the World of Organic Agriculture, Key players coffee leads the globe in sustainability standards with 25.8% of the global coffee area certified under at least Coffee, including fair trade and organic, is a competitive one sustainability standard (Willer and Lernoud, 2019). and heavily fragmented business. Top players by market share in 2017 (Euromonitor, 2018) were Kicking In 2018, there were 69 organic coffee roasters across the Horse Coffee owned by Luigi Lavazza SpA (7.0% of country (Table 4.4). Not surprisingly, British Columbia total organic packaged food sales and 21.1% of the is home to the largest share of these establishments organic beverage category), the Van Houtte brand with 35% of the total.
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