Greater Toronto Area Value Proposition for European Food & Beverage Businesses. Your ideal destination for international expansion

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1 Greater Toronto Area Value Proposition for European Food & Beverage Businesses Your ideal destination for international expansion

2 Canadian Market Trends Trends for Canadian consumers. Healthy products are popular since baby boomers are getting older and their interest in health and wellness are influencing the market. 70% of Canada s population growth comes from immigration. It is important to understand what these new Canadians want, and be innovative in their product offering to capture that market. SOURCE: KPMG, 2011 Consumers are looking for innovative and creative products, everything from environmentally friendly packaging to socially conscious product labeling, to transportation and logistics that focus on reducing the carbon footprint. Companies can incorporate online and social media strategies into their marketing efforts to help communicate to and with consumers about their products. High levels of consumer debts in Canada, currently at 150% disposable income. Consumers will remain cautious when it comes to spending.

3 Ontario Food Market On September 16, 2013, Ontario Premier Kathleen Wynne announced that applications are now open for a new Local Food Fund. The fund is part of a $30 million dollar investment from the province to create jobs and support innovative local food projects over the next three years. This fund is also part of the government's broader local food strategy to increase awareness and demand for foods grown and made in Ontario. Ontario Premier & Ontario Minister of Agriculture and Food Kathleen Wynne Top Reasons To Build Your Food Business in Ontario Easy Access to Major Markets - You have access to more than 450 million North American consumers when Ontario is your base. The province's highly efficient transportation infrastructure makes delivering products from factory to market quick and convenient. Easy Access to Ingredients - More than 200 agricultural commodities are grown on Ontario's farms, many which are processed within the province. Competitive and Stable Marketplace - Ontario has a top-ranked business climate with low energy prices, streamlined regulations and a low-risk investment climate.

4 Ontario Food Market The retail market for food consumed at home in Canada is expected to total $91.4 billion in Of the $91.4 billion, analysts report that approximately $64 billion will be sold through supermarkets. Canadian Food Retail Major players: Loblaws, Sobeys and metro 66% of sales. 2% growth forecast for Canadian Food Service Industry Major players: Tim Hortons 16.2% and McDonalds 10.7%.

5 Ontario s Food Cluster The Agri-food sector is Ontario s leading employer. One of the largest food clusters in North America, supporting 740,000 jobs and annual sales in excess of $34 billion. The food sector is the largest industry sector in Ontario. Efficient infrastructure and transportation linking the North American market. Ontario government is committed to the food & beverage industry. Major R&D advantages and tax incentive programs. SOURCE: Ontario Food Cluster Overview Brochure

6 North American Food Giant establishments producing food products in the GTA. Ontario s agri-food sector employs 740,000 people and is valued at $52 billion. Home of several industry giants including Nestle, Kelloggs, Kraft, Arla, and Parmalat. Total GTA Gross Farm Receipts in 2010: Million

7 Food & Beverage companies in the GTA

8 The GTA Food Processing Cluster GTA food company locations represented by red dots. Dark areas represent agricultural areas in the GTA. Source: GTMA Agri Study

9 Leading Agri-food Education Leading edge agri-food university and college training programs.

10 Cost Competitive An incredible cost advantage when compared to any other G7 economy. Cost Comparisons Between Canada and Other G-7 Economies CANADA FRANCE GERMANY ITALY JAPAN U.K. U.S. Agri-food sector 96.9 (1) Overall costs 59.1 (1) Overall result These results reflect the combined impact of 26 location-sensitive cost components associated within: -Labour -Facility -Transportation -Cost of Capital -Taxes other than Income -Income Taxes NOTE: (1) = ranking among G-7 countries SOURCE: KPMG, Competitive Alternatives, 2010 & 2012 CITY OF BURLINGTON, HALTON REGION

11 Competitive Corporate Income Tax Rates Canada and Ontario governments are committed to competitive tax rates. Competitive Corporate Income Tax Rates, Ontario vs. Selected US States, 2011 GTA businesses are subject to Canadian and Ontario corporate taxes. The General Federal/ Ontario corporate tax rate is 26.5%. Ontario Ohio* Texas* Michigan* New York Wisconsin Indiana California Illnois Pennsylvania The Federal/Ontario small business tax rate is 15.5%. (Canadian-controlled private corporations claiming the small business deduction) Federal Provincial/State

12 Tax Incentives for the Agri-Food Sector SUPPORT PROGRAMS/INCENTIVES CRITERIA HOW MUCH Agri-Processing Initiative (API) Canadian Dairy Commisssion s Matching Investment Fund (MIF) Growing Forward2 (More info on next page) - Predominantly engaged in the processing (physical or chemical transformation) of raw agricultural commodities or agri-based ingredients Registered Canadian companies or recognized food technology centres (FTCs) that develop, manufacture and/or use Canadian dairy products and ingredients are eligible. GF2 programs will focus on innovation, competitiveness and market development to ensure Canadian producers and processors have the tools and resources they need to continue to innovate and capitalize on emerging market opportunities. - Contributions of up to $2 million per project, or up to 50% of eligible costs, towards the cost of purchasing and installing new-to-company machinery and equipment in Canadian facilities Receive up to $50,000 for consultations and $250,000 for product development. This funding must be matched in cash or in kind by your business. $3 billion dollar investment by federal, provincial and territorial (FPT) governments and the foundation for government agricultural programs and services over the next five years. Full listing of federal programs and support: Click here Full listing of provincial programs and support: Click here

13 Growing Forward2 Under Growing Forward 2, three new federal programs came into effect on April 1, 2013: Click Here for more information SUPPORT PROGRAMS/INCENTIVES ABOUT HOW MUCH The AgriInnovation Program AgriCompetitiveness Program AgriMarketing Program Focus on investments that expand the sector's capacity to develop and commercialize new products and technologies Target investments that help strengthen the agriculture and agrifood industry's capacity to adapt and profit in domestic and global markets. Will help industry improve capacity to adopt assurance systems, such as food safety and traceability. It will also support industry in maintaining and seizing new markets through branding and promotional activities Industry-led Research and Development Stream: Provide non-repayable contributions to approved applicants (cannot exceed $10 million per year) Commercialization Stream: Provides repayable contributions to approved industry-led pre-commercial demonstration, commercial or adoption projects $114.5-million program comprising a combination of government initiatives and contribution funding for industry-led projects. $3 billion dollar investment by federal, provincial and territorial (FPT) governments and the foundation for government agricultural programs and services over the next five years.

14 Case Study: Dr. Oetker, Pizza Plant "After 50 years of building roots in Canada, we are thrilled to be expanding our operations in Ontario and creating hundreds of new jobs in London. With an array of fresh, high-quality Ontario ingredients nearby, we look forward to supporting local food processors and businesses by sourcing these products for use in the production of our pizzas. Dr. Martin Reintjes, Executive Vice President, Dr. Oetker GmbH Company: Dr. Oetker Sector: Agri-Food Country of origin: Germany Ontario presence: Mississauga & London Nature of Business: Produces high quality frozen pizza. The plant procures about 24 million pounds of high-quality ingredients produced locally in Ontario - hence savings on import costs. 50 million frozen pizzas per year to be shipped throughout Canada and the USA starting in Type of investment: $50 million investment to create 130 manufacturing jobs supporting an additional 300 spinoff jobs. Investment influence: Rural Economic Development Program of Ontario

15 Growth & Business Opportunities Main Drivers Growth and opportunities Ageing population Ageing population trends demands healthy and natural foods as opposed to processed. Growing multi-cultural population The GTA s population will increase by from 6.1 million in 2009 to 9.1 million in 2036 (50% increase). 27% of the population growth will occur in Toronto, and 75% in the surrounding regions across the GTA. Automation Trends Consumers and companies alike are searching for innovative/simple solutions to simplify, enhance and the reduce cost of their experiences and operations. Societel Trends Sustainability and health. Smaller household size, value and convenience. Summary Organic Currently majority comes from imports. Organic market driven by age and income and clustered in urban areas. Capturing the growing market for bio-products. Ethnic Foods Driven by new immigrants in clustered settlements with specific demands. Automation of food processing Automation of food packaging Automation of retail sales/stock floor and inventory. Automation in e commerce and increased online consumption and mobile/tablet technology. Smaller packaging, low cost, and quick meals increasing over traditional timed meals. Understand and target these niche markets. Identify producers who grow or could grow the required inputs Link producers with potential processors. Producers need to create linkages, market products and establish retail outlets that connect with and take advantage of these market niche market opportunities.

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