Montreal, the largest city in Canada’s Québec province, is a dynamic place where cultures, ideas and fashions intermingle, and the food culture is strong.
Although the city retains many French Canadian roots, the opening of a new supermarket in 2022 demonstrates it also has a diverse culture.
Last year, the first Quebec T&T Supermarket opened in Montreal, which gave the city a food concept from a major supermarket chain specifically tailored to the city’s Asian population. Originally founded in British Columbia by Cindy Lee, an immigrant from Taiwan, T&T is now a division of Loblaw Cos., which acquired it in 2009.
The T&T addition isn’t the only significant supermarket news emerging from Montreal over the past year or so. The IGA banner, operated by Empire Co., Stellarton, Nova Scotia, launched the Voilà delivery service in March of last year. Although Montreal is central to the rollout, a customer fulfillment center, located in Pointe-Claire, Quebec, serves the southern portion of the province from Gatineau, a suburb of Ottawa, to Montreal to Quebec City.
Although making progress in a number of ways, Montreal is still emerging from the stormy days of the pandemic that generated choppy waters in the form of inflation. That being said, things are, on the whole, looking up for produce wholesalers in the city.
POST-COVID WORLD
Chris Botsis, president of Botsis Fruits and Vegetables, Saint-Laurent, Quebec, says the wholesale produce business has been great since the pandemic waned. “When COVID restrictions eased, business picked up tremendously.”
The pandemic took out some weak operations in the Montreal market, but the effects varied depending on clientele. Botsis says foodservice operators who were having a hard time before the pandemic did not survive, and many restaurants shut down. Even those that did survive have had to scramble to deal with market conditions.
“It seems the foodservice sector is one that lost a fair bit of personnel, as the market for general and skilled labor instantly increased significantly,” he says. “I think COVID created a temporary boom in some sectors, shifting the workforce accordingly. As for retail, the big box stores fared better than the smaller ones that could not circulate as many people in stores.”
The pandemic wasn’t a pleasant experience, but Montreal-based and Fair Trade-focused Equifruit made the best of it.
“While scary at the outset, COVID actually gave us a pause we didn’t know we needed to address our branding and communications strategy,” says Jennie Coleman, president, Equifruit. “We worked with a creative agency, found a new voice, redesigned our packaging and point-of-sale material, as well as our website and social media strategy, and we’ve been on fire ever since. We’re bold, we’re unapologetic in our mission to achieve global fair trade banana domination.”
The pandemic generated change for Botsis, too, and he also turned to social media to drive new initiatives.
“During the initial onset of COVID, for the first time in our history, we offered what we called a ‘Rainbow Box’ to the general public,” he says. “This was basically various fruits and vegetables of our choice in a $100 box we offered initially on Facebook, which quickly turned into something significant.”
Coleman says Equifruit has recovered from pandemic lows, and “same-store retail is back to pre-pandemic norms,” she says. “What has changed for us is an increase to our overall retail customer base with the tremendous volume, which Costco has brought Equifruit.”
ECONOMIC UNCERTAINTY
Then, inflationary pressures hit the food industry, along with all economic sectors.
“Inflation has affected the end user more than anyone else,” Botsos says. “Rising costs have increased our average selling prices significantly, forcing the consumer to pay more. As costs increase, we have little choice but to raise prices.”
But while inflation has had its effects, Montreal consumers are sympathetic to social concerns, and that affects how they think about shopping.
“About 75% of our sales are organic, fair trade bananas, and we know that we’re not immune from consumers sometimes downgrading to conventional produce choices,” Coleman says. “However, our conventional fair trade bananas remain strong. Even with respecting fair trade minimum prices and social premiums, they remain the cheapest fruit in your basket.”
“Economic concerns are the greatest right now,” says Alex Zenebisis, president, Eagle Exports, St. Remi, Quebec. “With transport costs increasing and overall produce prices increasing rapidly against the value of the dollar, fresh produce is becoming a bit of a luxury. We are managing to maintain our professional standards of quality, variety and service, but profit margin does become squeezed.”
He says the pandemic didn’t dent consumer desire for fresh produce, but that doesn’t mean the marketplace emerged unscathed.
“Demand for fresh produce remained high during the pandemic and remains high now,” Zenebisis says. “Price and profit margin have been the major impacts of the pandemic. A few of the smaller businesses we worked with previously are no longer in business due to the pandemic, and this had some amount of negative impact. It’s sad to see a long-term customer go under, but for the most part, our business has remained healthy.”
As such, Zenebisis says, he and his employees have to work harder and longer to find new customers and suppliers to fill any gaps in the operations, while continuing to maintain the company’s quality reputation. Still, Eagle Exports has a certain advantage of position that works to its benefit.
“We are located in the heart of the agricultural district south of Montreal,” Zenebisis says. “Our close relationships with our local suppliers gives us first pick of local fresh produce. Ninety-percent of our export business goes to the U.S., and the current exchange rate has made Canadian ‘local produce’ (in the U.S.).”
Satisfying Montreal consumers can be demanding, yet rewarding. The strong traditions of the French-speaking community and the region’s diverse residents often have cooking as a core activity.
“Montreal remains a very ethnic community in which families are larger than the average, and they love to cook,” Botsis says. “There is, no doubt, year after year, an increase in the overall consumption of fresh fruits and vegetables. The main challenges include procuring quality products from around the world in a year that saw extreme adverse weather patterns. It was a year like no other. Montrealers remain sharp and hard to please, always keeping us on the hunt for the best available produce.”
Zenebisis says that, with all of the other challenges present in the market, consumers have come through a period that has given them an appreciation of wellness and the value of nutrition. For many, wellness extends beyond themselves to the community and environment.
“People are definitely gravitating to healthy choices when it comes to food,” he says. “They are eating less processed foods, less modified foods, and less canned or packaged foods. They want to make their meals themselves at home to make sure they know exactly what is in the meal they are putting in their bodies.”
“Because of this, people are choosing more than ever to eat fresh fruits and vegetables with the least amount of plastic packaging as possible,” Zenebisis adds. “Also, people are more aware of the global environmental challenges we are facing, and they want to do their part.”
TOWARD THE FUTURE
Today, the Montreal market is evolving to deal with opportunities and challenges.
“Online purchasing and/or purchasing with an app and getting home delivery are taking over the retail market,” Zenebisis says. “People are so busy, they don’t have the time or energy to make it to the grocery store. This new way of buying your groceries is becoming more and more appealing to more and more people everywhere.”
Convenience remains important, and, even if plastic has its naysayers, retailers are using forms of packaging to deal with internal challenges.
“Packaging has become a retail favorite as labor issues still plague many,” he says.
Fuel prices, transportation costs, labor costs and inflation, which are being felt across North America, are all factors Montreal wholesalers are managing. Still, Montreal’s own economic development is changing market conditions.
“The industrial sector has ballooned,” Botsis says, adding he’s not sure it’s here to stay, “but rising rents could prove significant for some whose leases may be expiring soon.”
Logistics is an ongoing, if brightening, consideration, Colemen says. “This winter has been so much easier than last year, that we’d be hard pressed to complain. Of course, we wish prices were lower, but we also wish there was no war in Ukraine causing ongoing fuel price spikes. It’s a little like the logistics version of the serenity prayer: Sometimes you have to accept that there are elements beyond our control and keep working to optimize those which are.”
Toronto: Retailers are going strong but foodservice slow to recover
Toronto is home to an educated food consumer who is interested in health, but also trying something new as a way of having a good time.
The fourth largest city in North America, with a population of 2.7 million in the city proper and 6.4 million in the greater metropolitan area, Toronto is home to the most highly educated population in North America, based on the proportion of people holding college degrees. Toronto also is diverse, with almost half of its population born outside of Canada, Canada Population notes.
Food retailing has been going strong in the market, wholesalers say, with foodservice advancing more slowly. Although inflation is likely playing a hand in that, tourism plummeted as COVID-19 spread.
Pre-pandemic, foodservice generated more than $10 billion (Canadian dollar) in economic activity in 2019, according to Destination Toronto. Tourist spending has been rebounding after peaking at CA$706.5 million in August 2019 and falling to CA$19.5 million in April 2020, to reach CA$393.3 million in August 2022.
Healthy food retail also is popular. Empire Co., the Stellarton, Nova Scotia-based operator of Sobeys supermarkets and other banners, has its own approaches to healthy eating. One is Farm Boy.
With emphasis on perishables, Farm Boy opened its 47th location, this in downtown Toronto in the Sugar Wharf development on Lake Ontario, in February. Fresh produce is a store highlight, with organic in-season products as well as full-service hot, salad and soup bars, among other features.
The new Farm Boy emphasizes organics as an important part of the produce mix, but that’s not all. Michael Miranda, produce category manager at Farm Boy, says local, in-season produce is an important element in the assortment, and the stores promote it with distinct signage.
“At Farm Boy, fresh produce has always been at the heart and soul of our business. During peak growing seasons, we have a strong focus on offering local Canadian produce. During peak growing seasons, 50% of our produce is from Ontario, and a total of up to 85% of our produce is Canadian grown. Focus on supporting and buying local is present in all of our promotional efforts, including store experience, blog, recipe content and social media.”
When it gets colder, Farm Boy still offers and promotes local produce, this from the expanding Canadian greenhouse growing sector.
THE WHOLESALE DIMENSION
The Ontario Food Terminal has been able to move forward, despite the tough circumstances of recent years, keeping the Toronto area supplied with healthy fare. Bruce Nicholas, general manager, says the Ontario Food Terminal is on the rebound, both on its wholesale and farmers market sides, from the depths of the COVID-19 pandemic.
“We’re recovering,” he notes. “We had a 3% increase in tonnage in the last fiscal year.”
Wholesalers on the market are largely positive about the recent rebound.
“The last year has been a positive one for our market and its constituent parts,” says Hutch Morton, senior vice president, J.E. Russell Produce, Toronto. “As a wholesaler in our market, we have seen continued strength with our retail customers and a rebounding foodservice clientele.”
But, he adds, “the end consumer is struggling with all of the various inflation inputs, and we have seen some trading down. It seems that more of our customers are really seeking value that they can pass through to their customers. We are fortunate to be in a place where we can source and offer that value to meet our customers where they are.”
The pandemic struggles yielded positive results, too, though.
“As a wholesaler, it has opened doors to shippers that we didn’t previously work with,” Morton says, enabling J.E. Russell to “bring them to a wide customer base at the Ontario Food Terminal. That’s one of the many gratifying things about being a wholesaler at a terminal market.”
Some aftereffects of the pandemic still resound in Toronto’s wholesale produce business.
“Just as many in white-collar jobs were forced to work remotely, we have seen an uptick in sales that are done by phone or other digital platforms,” Morton says. “Where sales were traditionally always done face-to-face and hand-to-hand, we are now set up for our sales to be done in the format that best suits a customer.”
Another byproduct of the past few years, he adds, is that the company has increased local deliveries to support “customers who might not be at the market as often as they were before.”
Morton says changes wrought by the pandemic may have been tough to endure, but produce wholesalers have been able to apply the lessons learned to more traditional challenges.
“In produce, as in much of life, the more things change, the more they stay the same,” he says. “Being nimble continues to be the guiding force in wholesale produce.”
Jeremy Smith, general operations manager, North American Produce Buyers, Toronto, says economic factors now weigh heavily across the Toronto market, and wholesalers have to accommodate them.
“Post-COVID, inflation has become a bigger concern both for buyers at the market as well as consumers in the stores,” he says. “Buyers are buying noticeably less product at a time to try to minimize shrink at the store level. This leads to them buying less cases at a time, but, in the end, ordering one or two more times per week.”
Still, how the Toronto market will move is only starting to become clear.
“Business is more normal than during the peak of COVID, but normal is different now than it was three years ago. Economies have changed, and the consumer has changed,” Smith says.
“We try and stay on top of any new developments, not just in our categories, but in the fresh produce business in general,” Smith adds, “and make the most informed decisions we can to provide value to our customers as well as the growers we represent by sharing information with them, whether that be new sustainable packaging or new varieties.”
Michael Bruno, of Italian Produce Co., says the shakeup experienced by wholesalers in the height of the pandemic — as foodservice declined and retail gained — was extraordinary, but the company has been able to advance, deal with changes in the food business and gain traction.
“The retail side of things has been going really well over the past year,” Bruno says. “There has not been too much of a big change there. On the foodservice side, a lot of people started eating at home, and people are still staying home a lot, and that’s why retail has been going really well.”
Danny Simone, general manager, Stronach & Sons, Toronto, says sales have been solid, but business slowed a bit since midwinter. “The numbers are still coming in the same as last year, but the last few weeks this winter have been a little slower. I suspect with weather changing, soon things will pick up. They always do.”
SUSTAINABILITY ISSUES
Sustainability is important to many consumers, but convenience and the hygienic quality of packaged fresh produce are also attractive to Toronto shoppers. Smith says that’s a situation the produce industry in general, and wholesalers as part of the supply chain, will have to address.
“Packaging is on everyone’s mind,” he says. “I think the next innovation in packaging and sustainability of said packaging will be borne out over the next couple years, and I think a large majority of what we purchase in store will have some sort of packaging that you literally add to the compost pile and not even the recycle bins.”
Greater interest in health and wellness has also been a factor driving fruit and vegetable sales in the Toronto market.
“There’s no such thing as a very bad vegetable to be found,” Bruno says. “People eat healthier — that speaks to why we’re doing well with the retail side of the industry. There is no superior fad. It’s just about any produce item that’s doing well.”
As is true elsewhere, labor is an issue among produce wholesalers in Toronto. They can attract labor, but finding and retaining top-notch workers can be a tougher proposition.
Simone says labor is an issue, but it’s not one that was created, even if complicated by, the past few years. “Labor always seems to be a problem,” he says. “It’s always hard to find good people.”
Smith says, despite the recent past, it’s important today to be forward-looking. “Our current challenges are minor these days. The question marks right now revolve around customer growth and retention, maintaining the business you do while trying to find space to add wherever you can,” he says.
“Logistically, we still are seeing some lingering effects moving freight east to west. It is much improved this last year, but we are still not where we should be as far as availability of logistics goes.”
