Food sales in Canada have been relatively stagnant recently. Data from Statistics Canada indicates the average Canadian is currently spending approximately $243 per month on groceries, marking the lowest expenditure in nearly two decades. This figure stood at around $305 in 2018, adjusted for inflation. Despite a growing population, it is clear that market dynamics are predominately influencing these trends.
It has been posited that Canada’s grocery sector is among the most competitive globally. The sector’s competitiveness stems from its capacity to adapt. Presently, with apparent stagnation in wealth and wealth creation, the economy is languishing, prompting consumers to seek economical options both in supermarkets and beyond. This scenario mirrors the economic conditions of the early 1980s.
While the market landscape was undoubtedly different four decades ago, the resilience and ingenuity in adapting to economic challenges have persisted. Current data highlights that retirees on fixed incomes are particularly affected by the cost of living, but Millennials are experiencing the most significant strain, being at an economically active stage of life. A recent study we conducted found that 41% of Millennials reported illness from consuming potentially unsafe food at home, driven by financial constraints preventing them from discarding questionable food items.
In 2023, Canadians allocated 9.3% of their disposable income to food purchases, according to Statistics Canada, an increase from 9.1% in 2022. Some regions, such as Quebec and Newfoundland, have seen this percentage rise by as much as 1.1% within a single year, with Quebec’s 0.6% increase being the highest in over three decades.
Although rising food prices contribute to this trend, stagnant wages also play a significant role. However, the resilience of markets suggests potential for recovery. Despite this, the proportion of income spent on food in Canada – 9.3% – remains one of the lowest globally, lower than in countries such as the U.S., the U.K., Singapore and Australia. Broadly, Canadians benefit from a robust food industry, though public perception does not always align with this view. Despite an actual average increase in food prices of 23% since 2020, a recent survey we conducted indicates Canadians believe prices have soared by 78%. This substantial perception gap poses significant challenges, particularly for grocers.
Although the current consumer climate is less than ideal, it is likely spending will rebound robustly in the future. Factors such as variety, quality and freshness, which enable grocers to expand their market share, will ultimately prevail. It is essential for grocers to recall that the food market is not a zero-sum game. The industry has consistently offered a strong value proposition for decades, and while economic cycles may cause temporary forgetfulness, consumers will eventually remember.
Sylvain Charlebois is a professor in food distribution and policy, senior director of the Agri-Food Analytics Lab at Dalhousie University, and co-host of The Food Professor Podcast
