By Amy Bostock
TORONTO — The Coffee Association of Canada (CAC) held its annual conference live recently at The Globe and Mail Centre in Toronto. Themed “The Road Ahead,” the sold-out event brought together executives and decision makers from across all coffee sectors.
Following the opening remarks from Robert Carter, president, CAC, the Seize the Data panellists took to the stage to look at past, present and future coffee industry trends, both in retail and foodservice. Moderated by Carter, panellists included Cheryl Hung, vice-president, Research, Dig Insights; Jenny Mabley, vice-president, Consumer Panel Services, Nielsen IQ; Vince Sgabellone, director, Client Development, Foodservice, NPD; and Vanessa Toperczer, senior vice-president, IMI International.
“What we learned from the pandemic is that not even COVID-19 can stop Canadians from drinking coffee,” said Hung to kick things off, pointing to data that shows that, on average, 74 per cent of Canadians are drinking at least one cup of coffee a day on any given day, a similar umber to pre-pandemic times.
But while there was little change to Canadians accessing coffee overall, trends within the category did show some movement. A survey of 1,500 Canadians carried out by Dig Insights showed that espresso-based beverage (EBB) sales remained fairly steady throughout the pandemic, which Hung said was a bit of a surprise as those specialty beverages are traditionally consumed outside the home.
In terms of coffee sales in restaurants, Sgabellone said traditional coffee is still the number-1 consumed product in Canadian foodservice. Even though there was a dip in sales during the pandemic “we’re heading back up and approaching three billion servings per year in out-of-home coffee every year, which is very encouraging.”
He cautioned, however, that even before COVID-19 the industry was seeing some changes in consumer behaviour that were only accelerated by the pandemic. Some examples of changing behaviour include 24 per cent of all out-of-home coffee is consumed in the home, a large increase during the pandemic; about one third of all out-of-home coffee is consumed in the car as people resume their out-of-home lifestyle; 22 per cent are consuming coffee at eating places; and the at-work portion of out-of-home consumption is way down as more people continue to work from home.
He added traditional brewed coffee still represents about two-thirds of all sales, but has diminished over the last couple of years due the rise in demand for specialty coffees.
View from the Top
The CEO Panel brought together three industry leaders to talk about consumer demands, trends in coffee sales and challenges facing the coffee industry.
Moderated by Richard Southern, reporter, 680 CityNews, the panel included Kate Burnett, president, Bridgehead; Christine Cruz-Clarke, CEO, Balzac’s; Mary Graham, president, Fresh City Farms; and Fred Schaeffer, president & CEO, Mother Parkers.
The discussion kicked off talking about whether consumers are demanding more from their coffee.
“Through the pandemic, we’ve seen people start to invest more in their coffee and coffee equipment,” said Cruz-Clarke, adding that the pandemic really gave rise to the ‘home barista.’ She said consumers are paying more attention to coffee labels and trying to understand what makes a great cup of coffee.
Southern then asked the panellists to weigh in on what the biggest challenges are facing the Canadian coffee industry. Cruz-Clarke said that one of the biggest problems is “not new, and that’s inequities in the supply chain. The amount the coffee farmers receive has nothing to do with the cost of production.” She said many of them can’t earn a living wage and, as a result, are diversifying into other products. And the next generation are watching their parents working hard, living a challenging life and moving away from a life of farming coffee. The industry, she said, has to recognize that “farmers are the backbone of what we do and if we don’t recognize that in a substantial way, and ensure that everyone along the supply chain can earn a living wage, then we won’t have the industry that we have right now.”
According to Schaeffer, global warming is another issue that can’t be ignored. “We’re seeing it already decimating crops across the world and when we talk about coffee and where it’s its’ grown, as an industry, we need to tackle (global warming) collectively.”
The conversation shifting to certification and Schaeffer admitted the industry has not done the best job of talking to our consumers about sustainability in the coffee segment. “We have certified, we have verified, we have various types of certification, fair trade organic — and as an industry we haven’t helped our consumers think about what sustainability means and what it means to make progress on sustainability. So, collectively, we have an opportunity to talk to our consumers in more of a unified voice about what [sustainability] means.”
By the Numbers
Benjamin Tal, managing director/deputy chief economist, CIBC and Dimitri Mazur, senior manager, Restaurant Finance, CWB, took to the stage to offer an overview of the current state of Canada’s finances from both a consumer and business-to-business standpoint.
“I’m going to divide my presentation in to three parts,” said Tal. “The first part will be about inflation. The second part will be about inflation. And the third part will be about, you guessed it, inflation. Because inflation is everywhere.”
But he said, the conversation isn’t really about inflation, “but the cost of bringing inflation down to two per cent, the target of the Bank of Canada. If you give the Bank of Canada two choices — inflation or recession — it will choose recession every time.”
He said at any given time there are three sources of inflation, all of which have implications for the Canadian foodservice industry — supply-driven inflation, demand-driven inflation and “we-don’t-know-driven inflation.” He said supply-chain inflation, which accounts for 50 per cent of inflation, is starting to go down, thanks in part to the cost of shipping starting to decrease. “Things are moving in the right direction and you can see the correlation between improved supply chain and the price of goods.”
Mazur then shared his view of the lending landscape and the cost of money in Canada. “If I had to take a step back and look at the lending landscape during COVID, back then I would have said it would be a complete shutdown,” said Mazur, adding 2020 and 2021 were lining up to be “some monster years because money was cheap.”
He says the majority of M&A activity, aside from the Second Cup acquisition by Foodtastic, was on the coffee shop and franchisee level. He said that was a result of retiring owners/franchisees getting out of the space; someone negatively affected by all the commotion around COVID and looking to sell; or buyers looking for discounts at a cheap rate.
“This is what spurred all this activity and lending, even through a global pandemic.”
Mazur said the pace remained fairly consistent in 2022, “at least until the last quarter. We do predict that it’s going to slow down,” as qualifying for funding begins to get more challenging.
To read more coverage of the CAC conference afternoon sessions, watch your inbox for Hospitality Headlines on Monday, Nov. 28.