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October 31, 2002
Study assesses emerging trends and solutions for Toronto's food industry
  
City of Toronto staff yesterday presented a key food industry group with a
report on the outlook for the industry. The report predicts steady growth but
advises that steps need to be taken to ensure that enough land and physical
infrastructure are available to support expansion in the city.

"With annual sales of $15 billion, the food packing industry is one of
Toronto's most important economic sectors and represents one-half of the
activity in Ontario - a world leader in food technology, research and
development," said Councillor Denzil Minnan-Wong, chair of Council's Economic
Development and Parks Committee.

The report, entitled Food Industry Outlook: A Study of Food Industry Growth
Trends in Toronto, says that innovation, modernization and investment have
strengthened the industry's performance and will help sustain its global
competitiveness. The industry also benefits from close links to related sectors
including tourism, packaging, design, media, biotechnology, and business and
professional services.

The report notes that the demand for food processing space in Toronto is
expected to double in size within five to ten years. However, the emergence of
many challenges to the industry include a shortage of affordable and suitable
land, zoning restrictions, new technology, training for skilled labour, demand
for innovative products, high taxes and government regulations.

To help smaller food processors, more work needs to be done to ensure that
enough financing will be available to support expansion, that the supply of
industrial land will be adequate, and that smaller firms co-operate to share
co-packing and freezer capacity.

To retain the larger food processors within the city, work should focus on
ensuring that these firms will be able to grow at their current locations for
as long as possible. The City should also increase efforts to publicize the
value of a location within the boundaries of Toronto.

The report was presented for comment yesterday to the Food Industry Forum, a
group of key public and private sector industry leaders. Results of the
discussions will help City staff develop an implementation plan with
recommendations in four areas: capital investment, physical infrastructure,
food industry, and business infrastructure and communications.

The study was completed by WCM Consulting Inc. in August 2002, based on a
survey of fifty food processing/manufacturing companies and comments from
government and related industries, such as real estate, with generous financial
support from the Ontario Ministry of Agriculture and Food. It was adopted by
Toronto Council at its meeting in early October.

The study is available on the City's Web site at
http://www.toronto.ca/economic_profile/food.htm.

Backgrounder 1
Toronto: a thriving food industry cluster

-- Toronto is North America's second largest and fastest-growing food industry
cluster.

-- 11,000 food establishments comprise: 6,800 restaurants, 3,800 food retail
stores, 400 food manu-facturing facilities, and provide 126,000 jobs.

-- Canada's top-ranked food and beverage manufacturers are headquartered in
Toronto. Food plants in Toronto include: Kraft Canada, Maple Leafs Foods,
Nestle Canada, Redpath Sugars, Parmalat, Campbell Soup Co., George Weston Ltd.,
Molson Breweries, Redpath Sugars, Canada Bread, Gay Lea Foods, Wrigley
(Canada) Inc.

-- 400 food and beverage manufacturing facilities are distributed across the
city providing a steady source of employment.

-- 25,000 food manufacturing jobs represent 12 per cent of the total
manufacturing employment in the city.

-- $15 billion in annual sales represent 50 per cent of the Ontario food
manufacturing turnover.

-- Export accounted for 50 per cent of food manufacturing growth over the past
five years.

-- Small-and medium-size enterprises (SMEs) are a significant component of the
Toronto food cluster and are poised to grow:
-- Two thirds of the city's food companies are SMEs.
-- SMEs are experiencing the fastest growth and export potential.
-- Concentration of Toronto 'specialty food' processors is 50 per cent higher
that the provincial average of 13 per cent.
-- The specialty food sub-sector is representative of Toronto's
multi-ethnic/cultural communities.

-- Food manufacturing is expected to grow within the next 10 years:
-- Anticipated facility size growth: double or an additional 10-15 million sq.
ft.
-- Projected sales: 12 per cent
-- Anticipated employment growth: 10,000

-- Food trade shows held in Toronto include: Canadian Food and Beverage Show,
Canadian Fine Food Show, Grocery Innovations, Hostex, Bakery Showcase and PacEx
International.

-- Toronto food companies thrive because of easy access to Canada and U.S.
markets, co-packing capacity, availability of food industry-friendly government
programs such as the Toronto Kitchen Incubator, access to skilled labour and
training, availability of technical and scientific support, as well as
potential for joint ventures.

Backgrounder 2
Food Industry Outlook: A Study of Food Industry Growth Trends in
Toronto


Toronto is home to the second largest food industry cluster in North America.
The Ontario Ministry of Agriculture and Food (OMAF) and the City of Toronto
have completed a joint research initiative to provide a better understanding of
the critical physical infrastructure and spatial needs to accommodate the
anticipated growth of the food industry in Toronto.

The food industry represents one of the key strategic sectors in the economy of
the city. It provides a steady source of employment across the city and is
poised for future growth. According to the study, with $15 billion in annual
sales, food processing represents 50 per cent of the Ontario food manufacturing
turnover.

Toronto's food and beverage industry continues to experience steady growth. The
industry benefits from strategic links to other economic sectors including
tourism, packaging, design, media, biotechnology, and related business and
professional services. Innovation, modernization and investment have
contributed to the food and beverage cluster's strong performance, and will
continue to keep the industry competitive in the global market.

According to this study, the demand for food processing space is anticipated to
double in size over the next 5 to 10 years. However, a shortage of affordable
and suitable food-grade space has been consistently mentioned by industry
representatives as a challenge facing small-to-medium sized companies in the
city. Standard industrial buildings do not meet the requirements for most
food-processing operations, while stringent regulations require an
exceptionally high capital investment to meet standard requirements. This
represents a financial hardship for growing food businesses. Furthermore, once
capital is invested in a facility to make it food-graded, there is a limited
return on that capital investment when relocation is required to accommodate
growth needs.

The study completed by WCM Consulting Inc. in August 2002, included interviews
and a survey of 50 food processing/manufacturing companies (12.5 per cent of
the city's total), together with significant contributions from government,
trade organizations and the real estate industry. A list of participating
companies and organizations is included in the study.

The Food Industry Outlook: A Study of Food Industry Growth Trends in Toronto is
available on the City of Toronto's Web site:
http://www.toronto.ca/economic_profile/food.htm.


Key Findings

-- 400 food and beverage manufacturing facilities are distributed across
Toronto.
-- 25,000 food manufacturing jobs represent 12 per cent of the total
manufacturing employment in the city.
-- Food processing is expected to grow between 9 and 12 per cent over the next
five to ten years in the city, with an anticipated additional employment of
7,000 to 10,000 new skilled and semi-skilled jobs.
-- Export accounted for 50 per cent of food manufacturing growth over the past
five years.
-- An additional 10-15 million sq. ft. of food processing space will be
required to accommodate the industry's expected growth over the next five to
ten years.
-- Small-and-medium size enterprises (SMEs) are a significant component of the
Toronto food cluster and are poised to grow:

-- Two thirds of the city's food companies are SMEs.
-- SMEs are experiencing the fastest growth and export potential.
-- Concentration of Toronto's specialty food processors is 50 per cent higher
than the provincial average of 13 per cent.
-- The 'specialty food' sub-sector is representative of Toronto's
multi-ethnic/cultural communities.

Opportunities and challenges

There are business development and employment opportunities and challenges
identified in this study. The study recommends actions focussed on four main
themes:
a) capital investment;
b) physical infrastructure;
c) food industry business infrastructure; and
d) communications with the industry.

At its meeting of October 1 to 3, 2002, City of Toronto Council adopted staff
recommendations to develop an implementation program with input from the
industry, to address opportunities and issues identified in this study. Hosted
by the Ontario Ministry of Agriculture and Food and the City of Toronto, a food
industry forum is scheduled for October 30, 2002, to obtain industry feedback.


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