But make no mistake: Couche-Tarde is a giant in the food industry and may become even larger.

Okay, okay, I know. A big chunk of Couche-Tard’s business is in gasoline sales and as an operator of gas bars and convenience shops, its in-store business is certainly propped up by enormous volumes in cigarettes, pop and chips.

Then there is Couche-Tard’s signature drink in Quebec: Sloche, a frozen beverage for the skateboard set famous for its bizarre flavours (Tropical Cheddar anyone?) and sometimes controversial marketing campaigns (if you are squeamish, don’t click here.)

But those little food sales add up: In Canadian Grocer’s 2012 Who’s Who directory, which is based on figures from CIBC World Markets, Couche-Tard is the 9^th largest food retailer in Canada, with $1.15 billion in food sales last year. That’s a lot of chips and Sloches.

In fact, Couche-Tard sells more food that Shoppers Drug Mart, North West Company and H.Y. Louie, and more than Target will sell in Canada too (at least in the discounter’s first few years north of the 49^th parallel).

Couche-Tarde doesn’t just like selling food. It loves it and sees fresh food in particular as a key part of its growth strategy.

That makes sense. People are eating on the run more, and usually that means snacking rather than eating a full sit-down meal. Meanwhile consumers are looking for healthier foods. A convenience operator that can offer both is in a good position.

From a balance-sheet perspective, fresh food has lately been among Couche-Tard’s top sales and profit generators, with margins in the 18 per cent range, according to a statement by CEO Alain Bouchard late last year.

Overall, Couche-Tard aims to make fresh food, or foodservice (sales of sandwiches, coffee, frozen drinks and such), 15 per cent of its in-store sales and 25 per cent of profits. To help do that, last year it hired Joe Chiovera, a 7-11 executive, to lead its foodservice business.

A lot of the focus on foodservice seems to be in the U.S. now. But, as I said, Couche-Tard is no slouch (or should I say Sloche) in Canada.

Also, Couche-Tard is a terrific operator. It is one of the few Canadian retailers to make a go of it in the U.S., where it owns the Circle K convenience chain. It also licenses Circle K in Mexico, Japan, Indonesia and China.

Something to think about, perhaps, as Couche-Tard’s food strategy evolves.

“Cashiers are barred from interacting with customers until they have completed 40 hours of training. Hundreds of staffers are sent on trips around the U.S. and world to become experts in their products. The company has no mandatory retirement age and has never laid off workers. All profits are reinvested in the company or shared with employees.”

Yeah, every company likes to spout that employees are its most important asset. But Wegmans goes further than most living up to the ideal.

Wegmans has 79 stores and employs 42,000 people. Its VP of human resources, Kevin Stickles, says that: “When you think about employees first, the bottom line is better. We want our employees to extend the brand to our customers.”

If there’s one takeaway from Wegmans worth adopting in your own store it is to have an educated staff. Simply put, employees working at Wegmans know food. And that’s not by accident.

Staff are sent out to meet with suppliers and farmers so they can talk with authority about the foods in the store. For instance, a Wegmans butcher in one store actually visited the ranch in Montana where steaks sold at his counter come from.

Another employee was asked to work in the bakery department because Wegmans managers fell in love with the Italian cookies she makes at home. “They let me bake whatever I want,” that employee, Maria Benjamin, said in an interview.

AS THE SHARE SLIDES

A new report from the United States Department of Agriculture has some interesting statistics about Canada’s retail food industry.

• From 2006 to 2011, Canadian retail food sales (not including alcohol) increased 17 per cent. The constant compounded annual growth rate for the sector will be two per cent through to 2016.

• Most retail sales of food in Canada still happens at grocery stores and supermarkets (63.5 per cent). However, sales through non-traditional food channels such as mass merchandisers, club stores, drug stores and gas bars rose to 37 per cent last year from 33 per cent in 2009.

• Mass merchandisers and drug stores have been especially effective share takers. Mass stores had 11.7 per cent of the retail food market last year, up from 10.6 per cent in 2009; drug stores took 7.2 per cent last year, ahead of 5.9 per cent three years ago.

THERE GOES THE BAR CODE

Now this is cool! A new supermarket checkout scanner has been developed that visually recognizes different types of foods. No bar code required.

The Object Recognition Scanner, from Toshiba Tec in Japan, uses pattern and colour recognition technology to figure out that an orange is an orange and an apple is an apple.

The big idea here is that, right now, loose produce does not have a bar code and prices have to be inputted by hand. The scanner, which has a camera on it to examine each piece of fruit and vegetable, should be able to speed up the checkout process.

I could go on, but perhaps this little video below explains it better. One thing worth pointing out is that in the video three kinds of apples are scanned: a Fuji, Jonagold and Mutsu. The Fuji and Jonagold come from the same stock so anyone not familiar with apples would think they are the same. But the scanner can distinguish the subtle differences in pattern and colour. Check it out:

And by value, we don’t mean price. What we mean is, yes the no-name ketchup is cheaper, but I love Heinz ketchup and the extra money it costs to pay for Heinz ketchup is worth it.

That kind of value.

We’ve been hearing a lot about value because it’s the new sweet spot for manufacturers and retailers. If shoppers perceive you offer value, they’re going to buy your products, or be more loyal to your store.

With that in mind, there’s an interesting new study on value that’s worth checking out. It comes from the market research firm Millward Brown and examines which brands have the best value of all.

Millward Brown compared 7,000 brands around the world. It tried to gauge how desired each of these brands are by shoppers and then measured how pricey they are. The company gave top scores to brands that are desired by consumers and are also affordable.

As Millward Brown is owned by an advertising agency, it also came up with a catchy name for this scoring system: the Value-D score. (The D, of course, stands for desirable.)

So which brands topped the list. Globally Amazon ranked No. 1. But in Canada Maxwell House came out on top.

Maxwell House? Well, yes. Think about it. The brand has pretty good recognition (thank you Ricardo Montalban!) , but it’s not usually the most expensive coffee on the shelf.

Other CPG brands that cracked the Top 10 in Canada: Nestle Pure Life (No. 2); Nescafe (No. 3); Real Canadian Superstores (No. 8); and Aquafina (No. 9).

Globally, CPG brands with the best Value-D score included Colgate (No. 2); Pampers (No. 4); Coca-Cola (No. 6); Nescafe (No.9) and Lidl, the German limited assortment grocer (No. 10).

I wouldn’t take these results as definitive. For example, why isn’t Walmart showing up here?

Still, it’s a reminder that price isn’t enough to get shoppers to open up their wallets most of the time. By Millward Brown’s calculations, only 7% of global consumers buy on price alone, down from 20% a decade ago.

There could be several reasons for that. A larger global middle class, for instance. Yet it’s true that people are more brand conscious and think certain brands have more value and are worth the extra money.

One more assertion from Millward Brown. Brands that have high desirability also have more flexibility in their pricing–in good times and bad.

That means while any brand–retailer or manufacturer–should be competitive on price, it’s really desire that gives the biggest bang to the bottom line.

Certainly, it’s not always easy to do. Running a store and all that it entails keeps retailers busy.

But all stores should be thinking of incredible, memorable displays or events that they can parlay into higher sales and customer satisfaction.

Like this awesome Super Bowl idea. We were alerted to it by John Scott, president of the Canadian Federation of Independent Grocers.

The video comes from Sun Valley Supermarket in Toronto and can be seen on YouTube. It shows the display store owner Jim Bexis and his team created for the Big Game a few weeks ago, with a lot of help from Pepsi, Frito-Lay and Conagra.

It’s the little details the make it fun, like the “Super Bowl XLV” sign made of Pepsi cartons. You gotta love it!

And don’t forget, if you put together a great display of your own, tell us about it by sending over a few photos at feedback@canadiangrocer.rogers.com

Founded in 1957, Carrefour operates across Europe, China and other parts of Asia, Brazil, Argentina and North Africa. The closest Carrefour-owned store you’ll find to Canada is in the Dominican Republic.

If Walmart is known for perfecting the discount department store, then Carrefour’s claim to fame is the hypermarket–a combination of department store and grocery store that in North America we commonly call a supercentre.

Carrefour launched its first hypermarket back in the 1960s but a few years ago began having some problems with it. Sales at hypermarkets were declining even as its conventional stores were growing.

In response the company last August launched Carrefour Planet, a “reinvention” (Carrefour’s words, not mine) of the hypermarket concept. I’m told that Carrefour interviewed tens of thousands of shoppers before it launched the concept.

Vicente Trius, Loblaw’s incoming president, was responsible for opening Carrefour Planet stores in European countries outside of France.

Carrefour Planet stores, by the way, are quite funky. So it’s interesting to speculate what Trius thinks of Loblaw’s Supercentres, and what he could perhaps do to add a little flair to the format.

If you want to check out Carrefour Planet I highly recommend you watch this promotional video. It comes from Malherbe, a retail design firm involved in creating the hypermarket’s new look. It’s over the top, but does suggest that Loblaw, with it’s success in clothing through Joe Fresh, is better positioned than any retailer in Canada to generate an exciting hypermarket format.

Besides, a lot of those Supercentre stores are getting kinda old. Aren’t they due for a reinvention?

Nothing new there right? Manufacturers have had recipe sites for years and some are amazingly popular. Kraft, I’m told, gets visitor numbers that most old-school media companies would drool over. And it’s mobile iPhone Assitant app has been a massive hit. Other popular sites: General Mills’ BettyCrocker.com and UncleBens.com, where you can check out recipes and tour the old man’s office.

So what’s new about Conagra’s site? Here’s what: It tells viewers whether the food products used in the recipes are on sale at their local supermarket. It does this using a back-end system developed by a company called Grocery Server that keeps track of weekly flyers in grocery stores in some 55,000 postal codes in the United States.

So when a customer living in one zip code is on the site browsing, say, a spaghetti recipe, the website informs her whether Conagra’s Hunt’s sauce is on sale down at the local Supervalu.

It’s pretty cool stuff. Whether it drives sales remains to be seen. But it does promise one of the holy grails of advertisers these days: hyper-local marketing that reaches people online one neighbourhood at a time–and sends them to your store.

But here’s the scary part: when the economy recovered, shoppers remained immune to 5% and even 10% off. They had been permanently reprogrammed to expect half off. Otherwise it wasn’t a sale.

It’s a lesson grocers, and food manufacturers, may want to keep in mind as this year unfolds. That’s because recent research from the U.S. suggests the thrill of the deal is wearing off among grocery shoppers. SymphonyIRI Group, a research firm, recently found that even though the number of consumer packaged goods products sold on promotion was up last year, the average volume lift per promotion fell.

The company found that while more than 30% of CPG products were sold on promotion, the average lift per merchandising event declined across 57% of CPG categories. ”We do believe there’s a level of promotion fatigue out there,” Susan Viamari, the author of the report, said in an article in Advertising Age.

The dwindling impact of price promotions is an issue grocers will have to watch carefully this year. The other, of course, is rising prices. Commodity prices are on the march and manufacturers seem eager to pass this cost on to retailers.

In a perfect world, retailers would just raise their prices, too. But we don’t live in a perfect world and the financial situation of consumers is still really iffy. The average person’s wages are barely rising, their debt levels are no better than they were before the recession and there’s evidence that house prices–the de facto bank machine Canadians have relied on for the past decade to pay for everything–are starting to fall. Oh, and gas prices are through the roof, too.

So we’re now in a situation where food prices have to go up, but consumers can’t afford them. Yet the deals that enticed them to buy last year aren’t effective at moving merchandise.

It will force everyone in the industry to tweak their sales efforts. The result could be a greater focus on everyday low prices or a bigger push on shopper marketing strategies that go beyond discounts.

Either way, it’s going to make the rest of this year rather interesting.

For instance, 30% of Canadians say they’ll spend less on everyday groceries over the next year, according to the survey of 36,500 people by Brandspark International. By comparison, 10% of American shoppers plan to cut back.

In Canada, 54% think we’re still in recession. Only 12% of Americans agree.

I have to admit I’m not surprised by this result: 84% of Canadians believe companies are exploiting environmentally friendly claims for marketing purposes. If marketing could solve the world’s environmental problems, the whole planet would be in great shape now. Alas, advertising only goes so far.

And most consumers (87%) think that manufacturers have a long way to go reducing the amount of packaging in their products.

On the health front, that great wording “all natural” crept into the survey results. Two out of every three Canadians think it’s important that a product be made from all-natural ingredients. A quarter believe it’s important that food products be organic, but only 32% think health, beauty and household products should be organic.

There were also some survey results on private label that reinforce the data we are seeing at checkout. Sixty-eight per cent of shoppers prefer to buy name-brand products on sale than private label. That’s despite the fact almost as many Canadians believe that those same name-brand manufacturers make the private-label products.

Meanwhile, 60% of Canadians believe that private-label food products are as good as name brand, but only 40% believe private-label health and beauty products are as good.

Brandspark also asked consumers to rate their most trusted brands. Tops in food was Kraft, followed by President’s Choice, Campbell’s, Kellogg’s and Heinz. In household cleaning, Mr. Clean came in first. Next was Lysol, Hertel, Vim and Tide. The top five beauty brands were Olay, Dove, L’Oreal, Cover Girl and Aveeno.

Touchdown in Aisle 5

The Super Bowl is less than two weeks away, so there’s still time to make sure your snack sales strategy is ready for the inevitable boom in potato chip, dip and nacho sales. I’m not much of an NFL fan (ah, Roughriders there’s always next year’s Grey Cup) but I do find the Super Bowl fascinating. Not the game mind you. It’s the “event.”

From the funny ads to the elaborate parties people throw, Super Bowl is like a second Christmas–except it’s okay to guzzle beer. And when people celebrate with invited guests, you know they are going to go all-out to impress. As we mentioned in our Super Bowl report in our most recent issue, a lot of party hosts are going beyond chips and dip to fancier fare. I think this is an opportunity for grocers to help customers give their guests the best Super Bowl menu they’ve ever had.

Just keep in mind one thing. All that stuff about eating healthy goes out the window on game day. A survey done for U.S. grocery giant SuperValu found that 60% of men and 46% of women don’t feel guilty indulging in unhealthy treats on Super Bowl Sunday. Indeed, many actually look forward to eating all the bad foods they try to avoid the rest of the year.

The danger of higher food prices

Last year, grocery executives bemoaned declining food prices. Certainly higher sales would be nice for retailers facing tight margins. But be careful what you wish for. In the U.S., the research firm NPD Group is finding that as grocery food prices start to rise, consumers are turning back to restaurants.

You may remember the story: when the recession bit, households took one look at their maxed-out credit cards and got back to cooking at home. But now, food price hikes are rising and they are impacting grocers before restaurants. And so consumers, who are still cost conscious, are returning to eat out. You can read that article here.

Fresher than Joe Fresh?

Last week I wrote about the grocery strategy at Target Corp., the U.S. discount chain that’s going to take over Zellers locations in the next few years. I was trying to assess how much of a threat Target’s food department will be to Canadian grocers. I should have mentioned one more thing: that Target will be an especially big thorn in one Canadian grocer’s side, but it won’t be in food.

The one thing that Target does really well is sell chic clothing at ultra-low prices. You can get stylish T-shirts at Target for 10 bucks. So which Canadian retailer combines style and savings in clothing? Why Loblaw’s Joe Fresh brand, of course.

This could get interesting. Or messy.

Target’s brilliance at chic and cheap is why throngs of Canadians head south to its stores every weekend. And why those same people were last week cheering the news that Target will take over Zellers’ lifeless leases. None of the hoorays were because Canadians can’t wait to get their hands on Target’s selection of Rice Crispies or Coke.

That’s not to say Target can’t be a considerable threat to grocers here if it chooses. While Target isn’t nearly as big into grocery as Walmart, it has in the last year paid a lot more attention to food sales, especially fresh food.

Historically Target stores have had a limited grocery section. And by limited I mean a decent selection of canned and boxed goods, similar to what Walmart stores had in Canada a decade ago. Last year, though, Target announced that it would speed up the introduction of fresh food into its stores.

Target intends to have fresh food in half of its 1,500 stores in the U.S. by the end of this year. The program, dubbed P-Fresh, is a departure from Target’s earlier food strategy, in which full grocery departments were only available at a small number of SuperTarget bannered stores. In P-Fresh stores, about 30,000 sq. ft. of space is devoted to food, with total store square footage of about 125,000 sq. ft.

Like other non-grocery retailers stocking up on milk and cookies, Target sees food as a way to draw in shoppers more frequently. Sales and traffic at Target stores with complete grocery sections are 6% higher than at Target stores that don’t have them.

Target is emphasizing food in a way that goes beyond a few cases of cheese and heads of lettuce. Its newer stores feature plenty of fresh vetagetables and bakery items, all surrounded by refrigerated items like chicken. It also carries sandwiches and other lunch items in stores near offices.

The big question of course is, Will Target bring this new fresh-food focus to Canada? The official answer from the company is “gee, we’re not sure yet.” But somehow I doubt it’ll divert from its U.S. strategy and leave all that food business to grocery stores and Walmart.

Even if Target only take a half-hearted stab at groceries, it will certainly draw more food sales than Zellers. The reason is that Target is a much smarter retailer than Zellers and will attract many more customers on a weekly basis to its stores. At many Zellers locations you could shoot a cannonball down the power aisle and not hit anyone most days. Target will do much better and by default its customers will pick up grocery items just because they are in the store.

Of course, for any grocery store in a mall that also has a Zellers, Target could be good news.  Your mall will start to get busier as Target lures in more shoppers. In that regard, Target could be good news. Sort of.

Whole lotta square footage

Remember the nuclear arms race during the cold war? Seems in the U.K. right now there’s an arms race of a different sort, with the top four or five grocery chains trying to out-do one another in store expansion. The Guardian newspaper reported last week that Tesco, Morrison’s, Sainsbury and Asda are together adding 4.8 million square feet of floor space each year. Total floorspace in grocery will rise by one fifth by 2014.

Tesco is adding 292 stores this year, Sainsbury 130, Asda 184, and Morrison’s 19. Waitrose, meanwhile, is adding 39.

As you can imagine, this means big demand for new staff. Tesco, already the U.K.’s biggest private sector employer with nearly 290,000 staff, will have 9,000 vacancies to fill this year and next. Sainsbury will create 20,000 jobs over the next three years.

Alas, the debt-saddled British government is doing its part to help fill those jobs. It’s cutting over 300,000 public-sector jobs.

Who impressed you most in 2010?

That’s the question we asked in our website poll recently. Some 500 of you voted and we can now report that Sobeys and its FreshCo format won. Sobeys received 32% of the votes, followed by the “Independent Grocery Retailers” at 31%, Loblaw at 21% and Walmart at 16%. Visit our home page to answer this month’s question.

Douglas Fir and other “wild by nature” Flavours (stage 1): Chefs are finding a new source for ingredients: nature. They’re foraging in forests and on seashores for plants, herbs and flowers.

Cloudberry (stage 1): Nordic cuisine is hot and this berry, grown in alpine and arctic climates, is showing up in jams and alcoholic beverages such as liqueurs, beer ad wine and sparkling drinks. This could be the next elderberry for the beverage world (or perhaps the catchy new name for the next Blackberry smartphone?)

Arepas (stage 1): Arepas is a South American griddled cornmeal patty that’s gaining a following across Latin America and areas in the U.S. with Colombian and Venezuelan immigrants. There’s lots of opportunity to take it mainstream. It’s filling, delicious, vegetarian-friendly and gluten-free. In Latin America, electric arepas makers, similar to waffle iron, are sold to speed up cooking time in the kitchen.

Yuzu and exotic citrus (stage 2): “We have been spotting new foods made with the floral-flavoured Japanese lime at fancy food shows lately and believe this trend is ready to blossom,” is the line from Packaged Facts. The rationale: lime is already a flavour standard, so yuzu and other citrus varieties like sudachi offer consumers an exotic twist for salad dressings, condiments and drinks.

Coconut oil (stage 2): After the flurry of coconut water launches in the last few years we should have seen this coming. Coconut oil is healthy and can be substituteed for butter for dairy-free baking and cooking. “The fact that it makes stir-fried greens taste great seals the deal,” Packaged Facts sums up.

Popovers & gougers (stage 2): The traditional airy popover and cheesy French cream puff are two new ways to freshen up the breadbasket.

Grass-fed dairy (stage 3): “Free of artificial hormones and containing higher levels of healthful fatty acids, products made from grass-fed dairy appeal to both health-focused consumers and those seeking more natural, traditional and authentic foodstuffs,” says Packaged Facts.

Umami (stage 3): You won’t find umami growing on trees or in the ground. Umami is the least known of the five flavour types (the others are sweet, sour, bitter and salty). Umami is commonly known as savoriness and some experts doubt the flavour really exists. For non-skeptics, however, umami is a pleasant taste that comes from glutamate and ribonucleotides, which occur naturally in meat, fish, vegetables and dairy products. “Expect to see more applications of umami-laden ingredients–soy sauce, fish sauce, dashi, mushroom broths–in 2011,” says Packaged Facts. Oh, and to learn more about umami, check out the Umami Information Center website.

IGD seminar in Toronto

In the December/January issue of Canadian Grocer we’ve got an interview with Joanne Denney-Finch, chief executive at IGD. This U.K.-based organization does a great job studying the grocery and consumer packaged goods industries worldwide. You can read the interview here. But if you want more, IGD is holding a free seminar in Toronto Feb. 16 to share how global best practices in retail, supply chain and category management are likely to be put into place in Canada. Stewart Samuel, IGD’s senior business analyst (who’s based at the company’s Canadian office in Vancouver) says the session is useful for both retailers and manufacturers. You can find out more at http://www.igd.com/cpgseminar

What’s for dinner? Ask Google

I just learned that Google has launched a food and beverage division. Now Google is one of those companies that you have to be impressed by. It’s less than 15 years old but with sales of more than US$23 billion, it’s bigger than McDonald’s. It’s also relentlessly innovative. It’s said that Google employees get to spend one-fifth of their time at work on whatever projects happen to fire their imagination.

But what Google is really good at is organizing all that information littering the Web. So I’m not surprised they’re turning to the food industry. With people spending more time staring at iPhones and iPads, it makes sense that these devices will become the place people turn to make shopping lists, find out about products and get recipes and speak to their grocery store.

And just think about it:  if Mom is staring at her iPod at 2 p.m. trying to figure out what to make for dinner, that means food and beverage companies (and supermarkets) will want to be there too, sending her ad message, coupons, etc. That’s where you’ll see Google start to get involved.

Asda’s 10% price guarantee

Last winter U.K. grocery chain Asda came out with a price guarantee. This Walmart subsidiary promised to be chaper than all major competitors on the overall grocery bill. To prove it, shoppers could go to www.mysupermarket.co.uk to compare prices. Now, Asda has come out with a new guarantee. It’s promising to beat competitors by 10% on price.

Not everyone figures Asda can pull it off. But it’s an interesting marketing tool aimed at giving a lasting impression in consumers’ minds that Asda is cheaper than, say, Tesco. Asda knows that few shoppers will take the time to actually punch in the numbers on the website and do the comparison. We’ll keep tabs on this one and let you know if it’s working or not.

…Speaking of the U.K.

Belinda Youngs, formerly chief marketing officer at Sobeys Inc., has been hired as “own brand director” at Morrison’s, which is another large British grocery chain. Youngs has some experience already in the U.K. food industry having worked at Sainsbury’s.