The Ethnic Market
Opportunities in the Grocery Segment
Ethnic consumers represent the fastest growing segment in the Canadian marketplace. For food retailers, especially in major urban markets, this represents both a challenge and an opportunity. While the Canadian population is aging, we have seen an increase in immigration. 2005 had the greatest increase to-date with 260,000 immigrants. We have also seen a shift from primarily European to Asian (61% of immigrants in 2005 were Asian), and a marked increase from Central and South America, Africa and India. As a result the past few years have seen a great demand for authentic ethnic foods. While immigration accounts for 70% of Canada's population growth, by 2017 it is estimated that about half of all visible minorities in Canada will be South Asian or Chinese, according to Statistics Canada. By that time it is estimated that visible minorities will make up 51% of the population of Toronto, 49% in Vancouver and 19% in Montreal.
Similar trends are expected in all major urban centers. These changes represent a radical change in our consumer mix and represent tremendous opportunities in retailing as this growth escalates and continues into the future.
Surprisingly retailers have not paid this trend the attention it deserves. The challenge is how to effectively reach this important, yet diverse market. This is a non-traditional buying sector, and for that reason traditional grocery marketing techniques may not be as effective.
Ethnic Food in the Traditional Market
While recognizing the changes in our market demographics, we need to be sight full on the impact these flavourful and nutritional ethnic foods are having on the Canadian consumer. Canadians are increasingly exposed to different cultures through work, school, friendships, mixed marriage and travel. With globalization, attitudes towards trying new foods are becoming more adventuresome and open. The food experience continues to be a focal point of social and family gatherings, particularly at home. Many consumers are willing to pay for higher quality and diverse ingredients for these special meal occasions.
An increasingly multicultural society means more ethnic restaurants. The traditional Canadian consumer is turning to these foods as an alternative, and in some cases may adopt (and adapt to) these ethnic foods. In the 1990's although people would go out to a restaurant for an Indian meal it was very unlikely that the same people would attempt to cook the same meal in their home. Over the past 20 years the trend has shifted dramatically. Ethnic food products such as rice, nacho chips and salsa as well as cooking sauces have become a basic staple for many Canadian consumers. Ethnic foods are consumed daily by a large percentage of the population.
Two food trends, diversification and fusion, had emerged by the millennium. Diversification is represented by the proliferation of distinct foods, specialty stores and restaurants focused on traditional ingredients, recipes or types of cuisine. Fusion is a combination of two cuisine types or ethnic styles. A newer wave, "blended cuisine", takes fusion one step further. Chefs create blended dishes by focusing on a specific flavour or ingredient and building a dish around it, while consumers blend food concepts (ie. curry stew or the chicken enchilada quiche). The most frequently blended cuisines are Asian, Mexican, and Mediterranean.
Within the growing ethnic population, the various groups are borrowing from each other and are learning more about the foods and products available. Stir fry sauces, oyster sauce, Soya sauce, basmati rice, curry sauce and curry powder, coconut milk, jerk seasoning, "naan" and "roti", falafel and tahina, just to name a few, are appearing in more kitchen cupboards right across the ethnic map. Within the above groups, there are some variations of the cooking ingredients used, regional differences and brand preferences.
Marketing and Pricing
The key to success in this fast-changing ethnic food marketing is flexibility. Flexibility to recognize and accept and flexibility to adopt. It becomes very important that we understand our customers, their heritage, their cultural differences, eating habits and buying patterns. Retailers will have to be flexible enough to change their listing base, product mix, merchandising setup, pricing and promotional strategies. Furthermore, product mix in grocery, produce, meat as well as the dairy sections, should reflect the dominant segment of ethnic shoppers in a given market area. Authentic national brands from these countries will have greater impact as they make the ethnic consumer feel more at home as they see... and buy... products they are accustomed to.
Pricing becomes the most challenging decision in the marketing of ethnic foods. While the difficulties around product procurement and packaging (not to mention UPC scanning problems) can be managed by suppliers, it is also a fact that both discrepancies and the need for standardization tend to push the costs. The pricing strategy should keep in mind the objective of attracting and keeping the ethnic consumer shopping for their "total" food dollar... including pasta sauces, hot dog buns, paper products, soups and ketchup. One also has to deal with their "back home" and/or "ethnic store" price perception. The knowledge and experience of the suppliers can be extremely valuable in designing the entire strategy and package.
Take advantage of these opportunities!