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Organic Market ResearchCanada & BCFirst Phase ResultsCHFA West ConferenceApril 2013

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OverviewIntroduction • Market research objectives • Funders and collaboratorsConsumer research • Demographics • Spending patternsOrganic sales • The big picture • Trends by sectorOpportunitiesQ&A • Release details

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Canada Organic TradeAssociation …active since 1985Missionpromote and protect the growth of organic trade to benefit theenvironment, farmers, the public and the economy.Membersgrowers, shippers, processors, certifiers, farmersassociations, distributors, importers, exporters, consultants, retailersand others.Activitiesall regulatory and policy aspects of the Canadian organic sector, firstresponders in media, raising public and government awareness.

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Organic Market ResearchGoal: Support the growth and development of the organic sector bydemonstrating its value and potential.Provide accurate, up-to-date research to inform businessplanning, marketing efforts and sector support strategies.Research supported by:

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Phase One: BC analysis BC Steering Committee GuntaVitins – Resilient Solutions Consulting/Vitins Consulting Ian Walker – Left Coast Naturals Rob Horricks – Blush Lane Organics Garth Owen – Organic Grocer Billy Potash – Nature’s First Fruit Results •National highlights • Detailed BC report

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Majority of Canadians Choose Organic58% buy organic groceries weekly • 91% agree that eating properly is critical to staying healthy • 64% are willing to pay more food they know is good for themselves & families • Over half believe organic farming is better for a healthy environment • Nearly half believe organic products are more nutritious

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BC: Organic Leaders 66% buy organic groceries weekly In BC, more than half: • Believe organic farming is better for a healthy environment • Believe organic products are more nutritious • Are trying to avoid GMOs

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BC’s Highest Weekly Organic Grocery Buyers

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Organic Grows Up90%80%70% BC: Organic grocery purchasers60% BC: No weekly organic50% grocery purchases40% Natl: Organic grocery30% purchasers20% Natl: No weekly organic grocery purchases10%0% 25-34 35-44 45-54 55-64 65+

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Local & Organic Are Top Influence of claim on likelihood to purchase Made in Canada Local Free range / grass fed Canada organic certifiedNon GMO, or non-genetically engineered Natural / All natural BC USDA organic certified Vegetarian National Gluten-free Lactose free Vegan Kosher 0% 20% 40% 60% 80% 100%

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More Organic-Friendly Segments Canada BCNatural Believers The Usual Suspects Fitness First Skeptics Sold on the System The Untouchables

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BC GrocerySpending Organic vs.Conventional Shoppers

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The Where of Organic Buying Regular grocery storesNatural health stores/grocers Direct from farmer Mass retailers BC National Other Pharmacy/drug stores Online retailer 0% 10% 20% 30% 40% 50% 60% 70%

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Growth Expected More consumers in BC expect to spend more next year Organic fruits and vegetablesOrganic/free range meat or poultry Organic breads and grains Organic dairy products Organic snack foods BC Other organic food and beverages National Organic packaged foods Functional foods and beverages Regular foods and beverages 0% 5% 10% 15% 20% 25% 30%

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Estimated Value of Canadian OrganicSales, 2012 $3.7 B

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Strong Growth Continues A tripling of mainstream retail sales in six yearsSTUDY (data year) MAINSTREAM MAINSTREAM TOTAL RETAIL RETAIL GROWTH MARKET ESTIMATEOACC (2006) $586.3 M - $1 BillionACNielsen data and primaryresearch by A. MaceyAAFC (2008) $643.2 M 7% $2 BillionACNielsen data annual growthCOTA (2012) $913.3 M 9% $3 BillionACNielsen data, Vision Critical annual growthdata, and primary research byS. MacKinnon

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Organic Grocery Sales, 2012

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Supermarket Sales BC organic market share continues to lead National Grocery + Drug + Mass, 52 weeks ending Oct. 201276 Organic grocery, excl.5 alcohol4 Organic fresh fruit3 Organic fresh vegetables21 Organic fresh meat0

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Supermarket Sales BC organic sales by product category ($ millions) National Grocery + Drug + Mass, 52 weeks ending Oct. 2012 2% 1% 4% 4% Fruit & Vegetables 8% Beverages 43%9% Bread, Grains & Baking Aids Dairy & Eggs 13% Packaged/Prepared Foods Bulk 16% Condiments Snack Foods Meat, Poultry & Fish

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Supermarket Sales Largest organic category segments by sales ($ millions) National Grocery + Drug + Mass, 52 weeks ending Oct. 2012Fresh vegetables (Excl pkg salads/greens) $46.86 Fresh fruit $31.14 Pre-packaged salads/greens $19.65 Coffee - Roast & Ground $15.41 Yogurt products $11.79 Milk $10.05 RTE Cereal $7.83 Bread (Commerical) $6.94 Soya drinks $6.86 Soup $5.01 Eggs $3.99 Juices & drinks (Shelf Stable) $3.31 $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50

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Imports vs. Domestic Organic pre-packaged grocery sales by country of origin National Grocery + Drug + Mass, 52 weeks ending Oct. 201250%45%40%35%30%25% Value20% Volume15%10%5%0% Canada USA Unknown Other Europe

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Canadian Products Top BC sellers labeled as product of Canada ($ millions) National Grocery + Drug + Mass, 52 weeks ending Oct. 2012 COFFEE - ROAST & GROUND MILK YOGURT PRODUCTS BREAD - COMMERCIAL EGGS SOYA DRINKS RTE CEREALSJUICES & DRINKS - REFRIGERATED BABY FOOD BUTTER & DAIRY SPREADS SOUP PURE MAPLE SYRUPS $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00

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Natural Health & Foodservice Natural health maintaining market share • Sales growth remains in the double digits since 2008 • Companies in the sector are optimistic about future growth Importance of the incubators • More direct producer-relationships and lower volumes allows fostering of new, local & unique products • Act as trendsetters shaping wider tastes Organic coffee, shining star in foodservice • Most available organic product in foodservice • Distribution in single-site cafes and mass-market venues

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BC Farmer Direct Sales Five-fold growth in six years Direct-to-consumer sales Estimated value Farmers’ market $45.5 M Farm gate (on farm sales) $17.7 M Community Supported $ 0.8 M Agriculture TOTAL $64.0 M

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Growing Importance of Farmers’ MarketsBC farmers’ market vendors marketing strategies Number of farms reporting use of each channelFarmers Market Farm gate Restaurant Certified Organic Retail Natural Wholesale Conventional CSA Live Animals 0 20 40 60 80 100

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Provincial Comparisons Strong organic share with room to grow • Impressive 40% of farmers’ market sales certified organic • Number of CSAs relatively low compared to ON & QC Organics still small percent • 10% of farmers’ market sales certified organic • 5X the CSAs in BC, but only 28% certified organic Best organic CSA program • 100 CSAs with $5 M total sales • 90% certified organic

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Opportunities• Broaden & deepen the consumer market• Strengthening local, organic food systems• Embracing the incubator role• Support for scaling up• A focus on foodservice• Building a viable meat & poultry sector

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Q&A Reports available • Canada’s Organic Market: National Highlights • The BC Organic Market: Growth, Trends & Opportunities • Detailed national report available September, 2013 Look for articles in • The Organic Reporter • BC Organic Grocer • Western Grocer • Canadian Grocer • Vancouver Sunwww.ota-canada.ca

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www.organicweek.ca