Technology Drives Direct-to-Home Retail Deliveries, But Toronto’s Terminal Market Helps Independents Stay Competitive

Toronto’s vibrant food culture responds to whatever occurs in the city and translates it into new consumer experiences.

Originally printed in the April 2021 issue of Produce Business.

The Toronto marketplace is changing but what remains the same is the importance of fresh food and produce in particular at a time when health and wellbeing are of greater concern than ever.

Under the impact of the COVID-19 pandemic, retailers of all dimensions, including the virtual, and whether new or long-established, have launched initiatives for the immediate benefit of consumers but with implications for the future. In June of 2020, Sobeys, headquartered in Stellarton, Nova Scotia, launched a service that weds technology and convenience. Voilà by Sobeys is a web-based grocery delivery service based on technology developed by Ocado, based in the United Kingdom, that employs robots to put together deliveries in warehouses it calls sheds.

The company operates its own delivery system in the U.K. and has since developed exclusive relationships outside the country, with Sobeys in Canada and The Kroger Co. in the United States. After initiating warehouse construction across much of the U.S., Kroger planned the opening of its first shed for this month in the Cincinnati area. Sobeys launched the Voilà service in Vaughn, Ontario, a Toronto suburb and began a gradual geographic expansion.

Sarah Joyce, senior vice president of e-commerce for Sobeys, explains the Voilà service is now running “across the Greater Toronto Area, from Kitchener in the West, to Oshawa in the East, to Barrie in the North and to Niagara in the South. Customers can go online to confirm Voilà delivers in their area, and can order online at Voila.ca or by downloading the Voilà mobile app.”

Produce is among the product categories featured for purchase in the service, including items from the company’s Farm Boy banner, which has a history that started with a tiny produce-only store in Cornwall, Ontario. The banner promotes produce as the key to its success and makes a point of its sourcing from Ontario growers. Sobey’s taps its own and other operations, including local produce businesses in Ontario, to provide products for the delivery service.

“Voilà by Sobeys carries fresh produce and grocery items from Sobeys alongside customer favorites from Farm Boy, Well.ca and more,” Joyce notes.” Customers can shop online from a growing selection of over 17,000 products, but the facility has the ability to handle up to 39,000 over time. Produce and fresh meat are sourced from some of the very best farms in the country and around the globe. In the Voilà by Sobeys warehouse, we closely monitor the shelf life of all products, and only the freshest products are shipped. Our ‘Quick Reorder’ function automatically adds your favorite products to your cart to get you started, saving our customers time when building their weekly grocery basket.“

What Sobey’s refers to as the fastest growing local fresh food retailer in Ontario, Farm Boy opened its 36th location on January 28th in Toronto. The Front and Bathurst Street store is the company’s third in downtown Toronto, and comes in at a bit over 33,000 square feet. Sobey’s intends to have more than 40 Farm Boy markets open by the end of 2021, the company contends.

Automation has become a hot topic in the food business in the Toronto area, as Montreal-based Metro developed the Phase 1 of an automated fresh produce distribution center project in Toronto.

In a different sort of development, Loblaw Cos., Brampton, Ontario, expanded its PC Chef meal kit direct-to-home delivery service to include fresh, ready-to-make meals from top local restaurants in the metropolitan Toronto Area late last year. Torontonians can access a curated selection of favorite dishes from restaurants diverse as La Carnita, Fresh Restaurants, Fat Lamb Kouzina and Sala Modern Thai at home with next day delivery.

Pandemic’s Impact

Of course, COVID-19 has had a major effect over the past year, hitting foodservice hard and boosting retail produce sales, not to mention making considerations of wellness more important.

Michelle Broom, president of Ontario Produce Marketing Association, Etobicoke, Ontario, says, “Canadians are very health-conscious,” Broom says. “The whole plant-based eating phenomenon is strong and growing. The restaurant business has been front-and-center, leading that in vegan and vegetarian restaurants. And we’re seeing it growing in retail stores.”

The coronavirus crisis reinforced the importance of independent food retailers as they continue to operate in Toronto’s neighborhoods.

Even if it’s part of the broadest definition of wellness, the wellbeing of the community is a factor in Canadian produce purchasing, expressed as an affinity for local produce. The overall direction of market trends favors local foods because Toronto consumers want to know the origins of what they’re eating. Provenance underlies traceability and sustainability, which are both important to Canadians, as they want to understand growing conditions and route-to-the market and, so, the environmental impact of what they eat. Broom says both traceability and sustainability were important to consumers before the COVID-19 pandemic, and shoppers in Toronto are unlikely to lose interest in them after.

The local food trend supports the traditions and economic health of the region, too.

“It’s been growing over time both in restaurants and retail,” Broom says, noting that the OPMA has been working to support the trend toward local produce purchasing. “But it’s not just that it’s local, but it’s the story behind it. Who the grower is, where did the store or restaurant get it? We asked consumers recently if their shopping habits had changed, and one in three said they were looking for local produce, most often driven by wanting to help the local grower.”

Changes on the Terminal

Wholesalers on the Ontario Food Terminal have had to adapt to the coronavirus crisis as well, Broom points out, and suffered closures early on. She says the shakeup in the wholesale business that has resulted will take awhile to sort out and may include changing relationships in the produce sector, with growers offering boxed product assortments direct to consumers and the impact of meal kits ringing in.

Indeed, for busy consumers often working from home and supervising children learning remotely, boxed fresh and prepared food from a variety of sources, including Loblaw, has gained in the Toronto market. Yet, it isn’t just big supermarket chains and growers that are going direct to consumers with fresh food.

The Fruit Cart is a web-based direct fresh food delivery business that has taken off as the COVID-19 pandemic roiled the Toronto marketplace. In its online pitch to consumers, Fruit Cart states that the folks behind it were tired of seeing consumers overpay for substandard produce that didn’t taste great or lacked the appropriate shelf life. Consumers shouldn’t have to compromise on quality and value when it comes to food and nutrition, they insisted. Plus, consumers weren’t getting enough information about fruit origins, nutritional benefits and varietal characteristics.

With those considerations foremost, and a belief that, once folks experienced the benefits of eating premium fruit, their consumption would increase, the business took form. In function, Fruit Cart applies its expertise to ensure that consumers receive the best and freshest fruits and, now, vegetables around.

Fruit Cart acquired that expertise on the Ontario Food Terminal.

The Fruit Cart is the brainchild of Larry Davidson, president of North American Produce Buyers, which operates from that Toronto-located facility. Consumers have responded enthusiastically to The Fruit Cart, he says.

“We started business as more of a catered box, so they don’t have a choice about what goes in it, but we’ve seen great growth, with no drop-off, and that’s probably going to increase,” Davidson says. “People are ordering more products online, food wise. That’s here to stay.”

Davidson operates the delivery business as a separate entity from the wholesale operation, but, of course, it benefits from the know-how acquired by North American Produce Buyers, a multi-generation family produce business.

Davidson says consumers go to a restaurant for a chef to prepare dishes, which they could cook up themselves, so the idea of having someone with expertise select produce is not a big leap for busy consumers who want to eat healthy but sometimes compromise when squeezed for time.

Although consumer reaction has been strong, growing the Fruit Cart business hasn’t been easy, with a complicating factor shared by wholesalers in the Toronto market and elsewhere, labor shortages, exacerbated by the effects of COVID-19. Still prospects remain positive, and Davidson even envisions doing deals to develop boxes with a wider range of food, even meat. The challenge, and the opportunity, is maintaining quality.

“Toronto tends to be a pretty upwardly mobile society, so a lot of value is placed on fresh food and healthy living,” Davidson says. “The consumption of fresh produce is quite high.”

As a consequence, demand for produce is strong year ‘round, which is good for the North American Produce Buyers wholesale business as a major importer of Chilean fruits and vegetables.

The COVID-19 pandemic only will make already food conscious Torontonians more focused on what they consume. Organics have been gaining in popularity, a trend that seems to have been bolstered by the pandemic, Davidson says. However, he also contends that more flavorful produce varieties are gaining greater favor with Toronto consumers, such as the Cotton Candy grape.

When it comes to another market mainstay, apples, OPMA’s Broom says Canadian tastes have been gravitating toward sweeter varieties such as Ambrosia. In the recent past, and despite existing popularity in the market, Asian vegetables have been generating greater demand, including in mainstream supermarkets that, in Toronto, operate in the vicinity of any number of ethnic grocery stores.

Toronto’s consumers are determined to get the best quality and freshest fruits and vegetables, Broom says, emphasizing that “quality is king in produce” for the city’s shoppers. A large proportion of Torontonians are fond of experimenting with flavors and, so, keen on tasty fruits and vegetables.

Diversity Leads Trends

Even if they want produce choice all year, Bill Loupée, COO at Ben B. Schwartz, Detroit, says Torontonians are consistent with other Canadians in their concern for local produce and growers.

“Canadians as a group firmly believe in supporting local growers above all else, and if given a choice will default to local goods,” he says. “Of course, that presents a challenge for Ben B. Schwartz, but seasonally we’re able to find gaps in supply that we fill with either higher quality produce or providing volume in a commodity when local volumes are down.”

Loupée identifies the growth of home delivery of prepacked and portioned meals as a major trend affecting the market overall, including foodservice. Restaurants have found a number of ways to enter that competitive arena, as with Loblaw, in the one instance.

“Leading up to COVID, we noticed slight upticks in meal kits and home delivery, with a healthy balance between our retail and foodservice clients,” he says.

Yet, Loupée says, the Toronto metro area is so varied enough that no one trend can turn the market topsy-turvy. So it is with delivery of packaged food and meals.

“We’re seeing a balance in demand here between younger, more tech savvy generations pushing demand higher, while the strong ethnic group population in Toronto who still believe in evening family meals and Sunday family gatherings pulls demand back,” he says.

Although it’s possible to identify trends, Toronto is a diverse market and, even if some qualities are evident throughout, they are always a coalescence.

“Toronto is an extremely food-driven city,” Christian Sarraino, chief marketing officer of Fresh Taste Produce, Toronto, says. “We pride ourselves on the diverse food options and new wave restaurant scene always competing to stay current and trendy. We have one of the most multicultural cities in the world. We are constantly striving to fulfill the demands of our consumers. We must carry a wide assortment of fruits and vegetables to satisfy all ethnicities 365 days a year.”

As the coronavirus becomes a lesser issue and the foodservice business ramps up again, Davidson expects that chefs will contribute to the growth of fresh and healthy food as they encourage consumers to eat at restaurants again. Wellness in the broad sense will be something to emphasize given what Toronto consumers have been through and how their priorities have evolved. However, he says, restaurants will play heavily on the Torontonian desire for new flavor sensations.

“We have one of the best restaurant cities in the world,” he says. “It’s a reflection of the multi-ethic marketing place, the supporting food cultures and people who want to try everything.”

Broom affirmed the importance and leadership role foodservice plays in Toronto’s food culture. So, she observes, the local food culture, specifically the demand for new and better taste sensations will get another boost as restaurants reopen their indoor dining spaces, and will further drive produce consumption in the post-COVID Canada.

Retail Developments

While the retail market in the Toronto area is being heavily influenced by expanding supermarket chains, including Sobeys, and their recent delivery initiatives wholesalers are stepping in to assist the smaller independents run successful produce departments in a market where consumers demand consistent high quality and availability, Davidson says. However, simultaneously, the constant consumer demand for quality produce can buoy independents in the Toronto core, as consumers want the kind of quality, availability and accessibility neighborhood independents provide.

The coronavirus crisis reinforced the importance of independent food retailers as they continue to operate in Toronto’s neighborhoods.

“The independent retailers are an important aspect of the marketplace and play a large part in defining our city’s unique personality.”

Christian Sarraino, Fresh Taste Produce

“The independent retailers are an important aspect of the marketplace and play a large part in defining our city’s unique personality,” Sarraino says. “This past year they continued to play a vital role in aiding their respective neighborhoods through COVID.”

Loupée points out, “As a marketplace for fresh produce and food choices, Toronto is a metropolitan area with a population of over six million people made up of approximately 250 ethnic groups and over 170 different languages spoken. The city has a plethora of food choices, and produce imported from every corner of the world.

The retail business faced challenges in responding to the COVID-19 pandemic, but he expects Toronto consumers to continue using all the resources at their disposal in their ongoing quest for wellness and flavor.

“We see the retail business continuing to stay strong,” Loupée says,” Particularly as retailers get a boost from consumer confidence in companies like Shipt and Instacart. Consumers are interested in healthier lifestyles, and we’re thrilled to be in an industry which supports that initiative,” he says.