Conspicuous Consumption

Eating and drinking our way out of economic troubles.

Eating and drinking our way out of economic troubles.

Those attending the industry gala at the Pacific Agriculture Show in Abbotsford last February might have missed B.C. Agriculture Minister Ron Cantelon’s passing remark that agriculture is a stabilizing force in difficult economic times. A casual, well-meaning comment that in ordinary times might have been accepted as a ploy to forge a closer connection with his audience, this year the remark was a significant acknowledgement of the sector’s importance to the B.C. economy beyond the usual citing of economic figures.

Despite a minor decline in 2006, the province’s farm-gate sales have generally risen steadily, regardless of the state of the broader economy. Cash receipts last year bucked the contraction of the province’s economy, totalling $2.6 billion, up six per cent from the previous year.

It’s not just local farmers profiting from the “eat local” movement; while local farms and wineries hawk their artisan fare, the bigger processors and distributors are also sharing in the good times.

Sunrise Farms, one of the province’s biggest poultry producers, saw revenues grow 16.8 per cent in its most recent fiscal year, topping $260 million, while Russell Brewing’s aggressive growth plans took it to $5.2 million in revenues, up almost  300 per cent from 2007. Premium Brands Income Fund, which distributes many well-known branded food products, also posted significant growth of 37.7 per cent.

While the acquisition of Victoria-based Thrifty Foods Inc. by Nova Scotia grocer Sobeys Inc. in late 2007 disqualified the grocer from this year’s list of biggest B.C. companies (its revenues were fast approaching $600 million last year), the ongoing growth of T&T Supermarkets Ltd. ensures that grocers are represented on the list.

T&T guards its financial data closely; our estimate of $410 million in revenue is based on a modest increase in last year’s information, gleaned from the reports of T&T’s overseas shareholders. Its growth is apparent in the opening of new stores to serve growing markets in B.C., Alberta and Ontario. The Richmond-based grocer now has 16 stores across Canada, with a 17th set to open this summer in Edmonton.

The liquor industry is typically resilient during volatile economic times. Mark Anthony Group vice-president Kim Kapoor notes that group-wide sales for Anthony von Mandl’s Vancouver-based beverage maker and distributor rose more than six per cent last year. The group’s brands include Mission Hill Family Estate wines, Mike’s Hard Lemonade and a host of labels produced under the Artisan Wine Co. banner (including the hot new Ganton & Larsen Prospect Winery brand and the older Rigamarole line).

The group also has an expanding distribution business, which has been taking advantage of the rebalancing of other companies’ portfolios to add brands such as Henkell, Gunderloch and Tyrrell’s to its list.

Though the Mark Anthony Group doesn’t disclose sales numbers, estimates put sales for the liquor importer and distributor somewhere in excess of $400 million. The acquisitions position it for further growth.

“If you’re able to attract new suppliers of that calibre, it certainly adds to how your company is seen and perceived, and it bodes well for the future,” Kapoor says. “If you can get everything right, you’re going to be rewarded in the marketplace.” A case in point is the Ganton & Larsen brand, one of the biggest-selling premium wine brands for the group right now, thanks to a combination of taste and affordability.

Still, the recession hasn’t left the beverage industry untouched; overall growth is slowing, even while companies such as Mark Anthony post impressive gains. B.C. Liquor Distribution Branch figures, which reflect both retail sales and wholesale shipments to licensees through the government-run liquor system, undercut the sense that all is well in the province’s beverage sector.

Sales growth in the fiscal year ending March 31, 2008, of 6.8 per cent slipped to 4.3 per cent in the fiscal year ending March 31, 2009. Meanwhile, restaurant and bar sales as a percentage of overall sales declined from 19.1 per cent to 18 per cent, as consumers chose to drink at home, squeezing the province’s drinking spots.

The good news, according to Liquor Distribution Branch general manager Jay Chambers, is that adventurous B.C. consumers haven’t yet started trading down to cheaper products in the face of gathering economic clouds. While revenue growth slowed in the opening months of 2009, volumes experienced a sharper slowdown, growing just 0.9 per cent in the year ending March 31, 2009.

“They were still consuming, but they weren’t trading up,” Chambers says. “[Growth] is still out there; it’s just not as strong as it was before.”