The New Normal in Alberta’s Food Industry
By Deb Draper
In December 2020, there were 1,627 grocery stores in Alberta. Combined with beverage stores the food retail sector took 20 per cent of total retail sales, showing an increase of five percent in the last quarter of the year. During the COVID-19 pandemic, restaurants had to restrict dining in, consumers were forced to pick up/order in meals and cook more at home, and that meant an even bigger grocery shopping list for consumers.
Alberta Food First
As the pandemic progressed, so did the demand for local products as consumers looked to the food security of local businesses. Alberta is well positioned to supply these demands with more than 180 egg farmers, 250 family-owned and operated chicken farms, and over 6,000 growers of pulses. Contributing $9.2 billion in GDP and employing nearly 70,000 Albertans, agriculture is a key economic driver for post-COVID-19 recovery.
The Honourable Devin Dreeshen, Minister of Agriculture and Forestry, Alberta stated, “In 2020, agriculture was a bright light in Alberta’s economy, and 2021 is off to an even better start. We saw farmers seeding well ahead of previous years with good moisture levels across most of the province. Pair this with the strong projected prices for crops and livestock and 2021 is shaping up to be a great year for farmers and ranchers.”
There has never been a better time for food retailers to bring Alberta products to its customers. Last year, Sobeys launched its popular Alberta Box featuring 22 products produced locally, catering to customers looking for “Made in Alberta” and bringing awareness to companies trying to break into the consumer market.
Tightening the Budget Belt
Consumers will also continue to let go of branding and build new shopping behavior and loyalties with increasing food prices. The annual Canada’s Food Price Report 2021 predicts an overall food price increase of three to five per cent across the country, mainly in meat, vegetables and baked goods; however, Alberta is one of the few provinces with a below-average expected food price increase. Even still, it’s going to cost more to feed a family of four in 2021 – as much as another $700.
Empire Company Ltd. is responding to the resulting shift to value-based products and essentials with expansion of its FreshCo discount banner, revealing in May this year that the next three FreshCo locations will be in Alberta – two in Edmonton and one in Fort McMurray, confirming a total of 12 of its planned 65 locations in Western Canada will be in the province.
Bringing it Home
“With the outbreak of COVID-19, the pandemic created a pivotal opportunity for the online grocery market in Canada,” states Statista in Online Grocer Market in Canada, February 2021. “Between February and April 2020, food and beverage stores experienced a 107 per cent increase in e-commerce sales. Over 10 per cent of Canadians ages between 18 and 54 plan to order food online more regularly even when the pandemic is over. Such developments present an exceptional growth opportunity for the online grocery market.”
In March 2021 Empire announced Voilà it has expanded its e-commerce offering to Alberta with the launch of “Voilà by Safeway Curbside Pickup. “Now available at three Safeway store locations in Calgary and one in Edmonton with plans to expand to multiple Safeway locations across Alberta in the coming months.”
The past year has seen an unprecedented rise of home-delivery grocery businesses such as SPUD, offering local, organic and sustainable groceries sourced and delivered to customers in Calgary and Edmonton. Or the Organic Box, delivering a variety of seasonal, organic fruits and vegetables to the Edmonton area.
The Uproot Food Collective is made up of 70 vendors – 60 from Alberta – that together have found a way to reach consumers through their online food store. Over the past year, Albertans have become more familiar and reliant on e-commerce and delivery, and the Collective’s sales have tripled.
With this development and acceptance of online ordering platforms and delivery models, farmers and food processors are increasingly moving online to sell directly to consumers, and traditional food retailers are having to up their game in the connected world.
A Stonger Supply Chain
The COVID-19 pandemic has brought into focus the importance of food security, and the Alberta agri-food industry has a key role to play as an essential service.
Since 2021, the food manufacturing sector has seen the loss of 40,000 jobs due to plants closing and lack of investment. “The impact of processing plant slowdowns and shutdowns were felt across the food supply chain, and our government stepped up to develop programs to support producers in a number of sectors including a $37M cattle set-aside program and a $4M hog set-aside program.” (Alberta Agriculture & Forestry)
Minister Dreeshan adds, “Our $1.4 billion value-added strategy is well underway, attracting nearly $900 million in value-added investments in the first two years, resulting in the creation of more than 2,100 jobs.”
Some of this investment money is going into supporting new start-ups looking to enter the value-added industry such as the fibre and plant-based protein processing facilities in Vegreville, putting $25 million into expanding the Agrivalue Processing Business Incubator in Leduc, and leveraging the new $30 million lending limit of the Agriculture Financial Services Corporation.
Meanwhile the population of Alberta has continued to grow slowly – 0.6 per cent as of June 2021, and as the province is already showing strong signs of economic recovery, this growth will increase. For the food industry, this is a double-edged sword. More people means more food sales, but meeting increasing demand while negotiating the roller coaster Alberta economy, new shopper trends, and higher prices overall won’t be easy.