The fast-moving consumer goods (FMCG) market in Canada today is driven by disruptions that are defining a new marketplace. In the last six months alone, recreational cannabis became legal across Canada, opening up tremendous opportunity for retailers. However, cannabis is not the only disruptor affecting the Canadian marketplace and redefining growth opportunities. Smaller brands are fueling incremental growth across the country.
Today, the top 20 brands in Canada, based on dollar sales, account for nearly 30% of the FMCG market; however, they’ve only contributed 13.3% to the overall growth in the last year. On the other end of the spectrum, smaller brands (top 101-plus brands) account for 25.8% of the market but have contributed 33.8% of growth. The resulting sales have contributed an additional $514.8 million in sales, more than double the dollar contribution of the top 20 brands.
DIgging deeper into the small brands driving growth, more than half (64%) are food brands and have grown by 6% in the last year. On the other hand, while grocery and health and beauty aids (HABA) account for 14% of all small manufacturers, neither are finding the level of growth that food manufacturers are experiencing. As Canadians are demonstrating a preference for small brands, the opportunity for growth is still ahead for grocery and HABA manufacturers.
As small brands gain momentum, consumers are showing a growing preference for Canadian brands verses products produced across the border in the U.S. In fact, more than half (51%) are local Canadian brands, with 4% growth over the previous period. Comparatively, small U.S. brands account for 32% of small brand sales and growth of only 1%. As larger brands and non-Canadian brands look to boost sales, understanding consumers’ attitudes and preferences for brand origin can be informative as go-to-market strategies are developed.
For big brands competing in Canada, there are still a number of things they can do to maintain and grow their market share. Larger brands have the opportunity and likely resources to merge and acquire smaller brands that are leading growth. In addition, larger brands can learn from their smaller competitors to become more nimble, making quick decisions to stay relevant and on trend.