The latest results from Canadian retailers suggest that the consumer market continues to be something of an outperformer in terms of developed states. This is reflected in the strong share price performances of two of the countrys largest retailers, which have outperformed our grocery retail index since the start of 2011. While the Canadian economy has certainly been affected by weak global growth and the poor state of the US economy, the consumer remains in a relatively strong position to continue purchasing, which should bode well for steady (if not spectacular) results for the countrys leading grocery retailers and producers.Headline Industry Data (local currency)
- 2012 per capita food consumption value = 1.1%; forecast to 2016 = 6.9%
- 2012 alcoholic drink value sales = 1.6%; forecast to 2016 = 15.6%
- 2012 soft drink value sales = 2.8%; forecast to 2016 = 19.6%
- 2012 mass grocery retail value sales = 2.3%; forecast to 2016 = 15.0%Key Company Trends And Developments
Corby Offloads 17 Brands To Sazerac As Firms Pursue Contrasting Strategies: In September 2011, Canadian spirits producer Corby Distilleries, a subsidiary of French spirits giant Pernod Ricard, agreed to sell a selection of its spirits brands to US-based Sazerac Company for US$32.9mn. The 17 brands are described as non-core and include Grand Duke vodka, De Kuyper gin and Silk Tassel Canadian whiskey. The move is in line with Pernod Ricards wider strategy of divesting its low-priority brands to concentrate on its core offerings. For Sazerac, the move continues its expansion, with the firm proving to be willing to step in and take control of unwanted brands being divested by major drinks producers.
Sobeys Continues To Record Positive Figures; Expanding In Convenience: In December 2011, Canadian retailer Sobeys reported positive figures for the second quarter of its fiscal year, with sales up by 3.4% to US$3.98bnn and same-store sales increasing by 1.9%. Operating profits for the period were up by 8% to reach US$109.8mn, implying that this growth has not been driven by simply cutting prices. These results represent a continuation of the firms first quarter performance, when revenues increased by 3.2% and same-stores sales rose by 1.7%. In conjunction with its latest results, Sobeys announced the purchase of 250 petrol station outlets from Shell Canada, a move which fits with the growing opportunity within Canadas convenience sector.Key Risks To Outlook
China Slowdown: We still remain concerned about the growth cycle in China, which could ease significantly as the government there tightens policy to stave off soaring inflationary pressures. This would have knock-on effects on Canada via several channels, not least commodity prices.
Drop In Property Prices/Increased Interest Rates: We have some concern that house price appreciation may top out (but not end in a crash), which would cap the wealth effect. A second risk is that interest rates move higher more quickly than we are currently forecasting, which will increase the cost of credit and reduce the propensity to borrow.The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
Click for Report details:Canada Food and Drink Report Q1 2012