Food retailers are going strong in the 416, but foodservice is slow to recover from the pandemic.
Originally printed in the April 2023 issue of Produce Business.
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.”
