The Canadian Budget Food & Drink Shopper Market Report 2023

Overview

• What you need to know
• This Report looks at the following areas
• Definition

Executive Summary

• Top takeaways
• Market overview
  • Figure 1: Outlook for inflation and food and drink shopping, 2023-27
• Key consumer insights
• Frustration among shoppers is palpable as many accuse the food industry of ‘greedflation’
• Empathy takes on greater importance as inflation takes a mental toll on shoppers
• More than anything, shoppers want prices on staples capped
• Consumers are coping by hunting for deals
• Consumers are most willing to compromise on the quality of snacks to save
• As food inflation rises, shoppers rely more on discount retailers

Market Factors

• Inflation’s grip on food prices is exasperating for consumers
  • Figure 2: Canadian year over year consumer price index (annualized inflation rate) for all items and food from retail, by month, 2019-22
• • Figure 3: Concerns expressed by Canadians (any rank), March-December 2022
  • Figure 4: Expected increase in household income vs household spending by quarter among Canadians, 2014 Q4-2022 Q4
• There is no price relief across grocery categories
  • Figure 5: Annualized monthly change in prices of food purchased from stores by category, December 2022 vs December 2021
• It may not be the most important consideration, but ethics do matter to Canadians
  • Figure 6: Importance of ethics in food and drink, 2021

Competitive Strategies and Market Opportunities

• As prices rise, transparency matters even more for brands
• ‘Local’ can help shield brands from some inflation-related acrimony
• Having a recognizable spokesperson can be a target for ire
• Private label helps retailers combat inflation
• Sustainability and food waste take on heightened importance as food inflation runs rampant
• Consumer-centric solutions that promote sustainability
  • Figure 7: Too Good To Go Instagram post, 2021
• A tighter labour market incentivizes advances in automation
• Loblaw is testing autonomous delivery trucks for the ‘middle-mile’
  • Figure 8: Gatik and Loblaw make history with first fully driverless deployment in Canada, 2022
• More ways to checkout make for a better shopping experience
  • Figure 9: New Scan, Bag, Go App I Scan bag Go FAQs I Kroger, 2021

The Budget Food and Drink Shopper – Fast Facts

Perceived Change in Grocery Budgeting

• Most shoppers are spending more on groceries
  • Figure 10: Change in grocery spending compared to before the most recent period of rapid inflation, 2022
• Moms are more likely to be ‘feeling the pinch’
  • Figure 11: Change in grocery spending compared to before the most recent period of rapid inflation, by parental status, 2022
• • Figure 12: Change in grocery spending compared to before the most recent period of rapid inflation, by region, 2022

Where Consumers Shop

• Even with rampant inflation, most shop at supermarkets
• • Figure 13: Where consumers shop for groceries, 2022
• Financial situations impact where consumers shop for groceries
• • Figure 14: Where consumers shop for groceries, by financial situation, 2022
• • Figure 15: Where consumers shop for groceries, by age, 2022
• As budgets tighten, Canadians are shifting where they get their food from
• • Figure 16: How where shopping for groceries has changed, by store type, 2022
• • Figure 17: How where shopping for groceries has changed by store type, by household income, 2022

Shifts in Shopping Behaviours Due to Food Inflation

• Consumers are willing to switch brands to save money
  • Figure 18: Changes in shopping behaviours due to food inflation, 2022
• Those worse off financially are more willing to compromise on quality
  • Figure 19: Changes in shopping behaviours due to food inflation (% agree), by financial situation, 2022
• • Figure 20: Changes in shopping behaviours due to food inflation (% agree), mothers vs fathers vs overall, 2022

Actions Taken to Save Money

• Shoppers are on the hunt for deals to combat food inflation
  • Figure 21: Actions shoppers take to save money on groceries, 2022
• • Figure 22: Flashfood Instagram post, 2023
• Those struggling financially are most likely to cut back in order to save
  • Figure 23: Actions shoppers take to save money on groceries, by financial situation, 2022
• • Figure 24: Actions shoppers take to save money on groceries, by age, 2022
• • Figure 25: Actions shoppers take to save money on groceries, South Asians and Chinese Canadians vs overall, 2022
• • Figure 26: Actions shoppers take to save money on groceries, by age, 2022

Categories Where Shoppers Are Willing to Sacrifice Quality to Save

• Shoppers would rather compromise on the quality of processed than whole foods to save money
• • Figure 27: Categories shoppers are willing to sacrifice quality on to save money (top three), 2022
• Those struggling financially are more likely to compromise on quality across multiple categories
  • Figure 28: Categories shoppers are willing to sacrifice quality on to save money (top three), by financial situation, 2022
• • Figure 29: Categories shoppers are willing to sacrifice quality on to save money (top three), by age, 2022
• • Figure 30: Categories shoppers are willing to sacrifice quality on to save money (top three), by parental status, 2022
• • Figure 31: Categories shoppers are willing to sacrifice quality on to save money (top three), South Asians and Chinese Canadians vs overall population, 2022

How Grocers and Producers Can Help Shoppers Save

• Shoppers want a cap on food prices
  • Figure 32: Steps shoppers want grocers and manufacturers to take to help them save money, 2022
• • Figure 33: Paysan Naturally Smoked Bacon (Canada), May 2020
• Solutions younger shoppers would like to see suggests a more malleable approach to saving on food
  • Figure 34: Steps shoppers want grocers and manufacturers to take to help them save money, by age, 2022
• • Figure 35: Demand for grocers and manufacturers to sell lower priced but lower quality versions of products to help shoppers save, by financial situation, 2022
• • Figure 36: Steps shoppers want grocers and manufacturers to take to help them save money, British Columbia vs overall, 2022

The Mental and Emotional Impact of Food Inflation

• Rampant food inflation has given rise to a profound sense of unfairness
  • Figure 37: Attitudes toward the impact of food inflation, 2022
• Food inflation is less likely to cause stress for those with ‘healthy’ finances
  • Figure 38: Perceptions of the stress caused by food inflation and using inflation as an excuse to price gouge (% agree), by financial situation, 2022
• • Figure 39: Attitudes toward the impact of food inflation (% agree), by parental status, 2022
• • Figure 40: The pace at which food costs have risen has given me added stress” (% agree), by region, 2022

Impact of Food Inflation on At-home Behaviours

• Inflation is impacting Canadians’ perceived ability to eat healthily
  • Figure 41: Attitudes about the impact of food inflation on eating and planning behaviours, 2022
• For some, they have a hard time affording food, let alone healthy food
  • Figure 42: Attitudes about the impact of food inflation on eating and planning behaviours (% agree), by financial health, 2022
• • Figure 43: Attitudes toward the impact of food inflation on eating and planning behaviours (% agree), 18-44 vs over-45s, 2022
• • Figure 44: Attitudes toward the impact of food inflation on eating and planning behaviours (% agree), mothers vs fathers vs overall, 2022
• • Figure 45: Attitudes toward the impact of food inflation on eating and planning behaviours (% agree), Quebec vs overall, 2022

Appendix – Data Sources and Abbreviations

• Data sources
• Consumer survey data
• Consumer qualitative research
• Abbreviations and terms
• Abbreviations