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This is a report on the state of the market for organic and natural foods in Canada, from the perspective of US firms that might be interested in moving products into Canada. It includes information on Canada in general terms of population and food markets, government, regulations, food testing, the distribution network. There are data on shares of chain stores in conventional food markets, names and addresses of many natural food outlets and organic support organizations.
It also includes results from a survey of the natural food and organic industry, and a price survey of conventional and organic products in eastern Canada.
The price survey was conducted during the late summer of 1991. Unfortunately, dispite the comprehensiveness of the goods surveyed, there is no discussion of methodology and given the one shot nature of the survey, it is of no value.
Duplication and overlapping jurisdictions between the federal and provincial governments are seen as creating potential problems for importers: labelling must be created to satisfy both federal and all provincial goverments where the product will be sold
As yet there are no specific regulations regarding organic claims
The Food and Drugs Act, Sec 5 prohibits use of misleading claims, statements or representations on food labels, or advertisements; designed to protect consumers from fraud; industry responsible for self-regulation with respect to organic foods, however there is an "industry Code of Practics" found in the Guide for Food Manufacturers and Advertisers published by CCA. The same applies to the use of the word natural in the context of food
The use of health claims is generally not permitted; organic food in and of itself is not considered to be healthy. e.g. claims related to lowering of cholesterol or certain types of cancer are not that uncommon in the US, while Canadian companies are limited in this respect, "a major difficulty for American companies exploring the Canadian market is in the understanding of such restrictive claims policies" (p57).
BFB identifies the most problematic area for natural and organic products as "the fundamental marketing strategies for natural and organic foods involve the promotion of inherent compositional characteristics. In many cases such promotions are in conflict with Canadian labelling and advertising guidelines" (p58).
Processed products are not considered to be organic, but rather made up or organic ingredients and labelled as such.
Guidelines re: natural claims are much stricter than in the US and thus may create problems for US firms.
The Canadian Natural and Organic Industry
- about 1000 health or natural food retail stores in Canada.
- the largest (Alternative, Big Carrot, TAU) have sales in excess of $1 million/year.
- many stores limited by not having wide variety of produce or refrigerated or frozen products.
- quote 1989 Harrowsmith estimate of organic industry at $90 million.
- interest in organic by large retailers is small; introduction of organic produce by Loblaws was not successful and was temporarily abandoned; chain stores prefer to deal with manufacturers directly for reasons affecting profit margin.
- the boom for organic has yet to occur although there is growth; supply has been improved; domestic foods gaining market share; growth of processed organic products expected in late 1990's.
- Quebec is noted several times as a different market than the rest of the country: labelling, and that tastes and preferences are different; it is identified as the most highly developed of the organic markets.
- survey sent to about 100 firms, only 18 replies so the results have no statistical validity.
- they are unable to generate an estimate of the size of the industry.
- estimate current growth rate at 15-20% with future growth expected to be about 30%.
- majority of natural/health products are of US origin (52%) and these tend to represent high turn over and sales volme products; cereal and fruit juices identified as the more popular products.
- suggest that the CUSTA will make access to US products easier and that more products can be expected since US costs are generally lower than for Canadian goods (p52).
- note that Quebec retailers and distributors often criticize the lack of promotion informational and advertising in French; they suggest this is one reason why the natural and organic food industry in Quebec is doing well - "the lack of such promotional support and inadequately French food labels, opens a large niche that is being quickly satisfied by domestic products" (an indication that a cultural/institutional barrier can help launch an industry).
- identified some concerns about the quality of US goods; some concern regarding standards in US compared to Canada.
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