Invest in the Greater Toronto Area Food & Beverage Industry Overview May 2014

Greater Toronto Area Value Proposition

1

About the GTMA

2

About the GTA

3

Food & Beverage Industry Profile

4

Reasons to invest in the GTA

5

How the GTMA can help you!

Mississauga City Hall, MISSISSAUGA City of Toronto

Greater Toronto Marketing Alliance (GTMA): Who we are Mandate: To attract foreign direct investment into the Greater Toronto Area (GTA). 29 municipalities, 35+ private sector companies - all in one place. Public-private, non-profit corporation. Staff of five to facilitate investor’s needs. 24-member board of directors. 35-member Honourary Board.

The single point of contact for foreign companies that are establishing their business in the GTA. Provides economic, sectoral & community profile information. Coordinates meeting itineraries and visitation programs.

Provides free & confidential advisory services. www.greatertoronto.org

GTMA’s Current Partners PRIVATE/ACADEMIC-SECTOR PARTNERS

PUBLIC-SECTOR PARTNERS

GOLD LEVEL

SILVER LEVEL CISCO Compass Creative Media Enbridge Gas Distribution Inc. Gowlings LaFleur Henderson LLP Greater Toronto Airports Authority INSIX Media Kilmer Group Miller Thomson LLP Ontario Power Generation Scotiabank TSI International Group Inc. BRONZE LEVEL Dentons German Chamber of Industry and Commerce Green and Spiegel Barristers & Solicitors Italian Chamber of Commerce of Ontario National Bank of Canada HSBC

ON-LINE ALLIANCE Lette LLP ORION

ENTREPRENEUR Global Link Isabella Bertani Chartered Accountant HR Options

EDUCATIONAL INSTITUTIONS Centennial College of Applied Arts & Technology Durham College University of Ontario Institute of Technology York University

Town of Ajax Town of Aurora Township of Brock City of Burlington Municipality of Clarington Town of East Gwillimbury Town of Georgina Town of Halton Hills Township of King City of Markham

Town of Milton Town of Newmarket Town of Oakville City of Oshawa City of Pickering Town of Richmond Hill Township of Scugog City of Toronto Township of Unxbridge City of Vaughan Town of Whitby Town of Whitchurch-Stouffville

To-date the Collaborative Efforts of the GTMA Partners Have Helped 113 Foreign Companies Start Operations in the GTA

• • • • •

The Greater Toronto Area (GTA) is the largest metropolitan area in Canada. Out of 24 global metropolises, the GTA was ranked 3rd place under the Scorecard on Prosperity. Sources: Scorecard on Prosperity 2014,Toronto Region Board of Trade

GTA Quick Facts • Area of 2,700 sq miles (7,000 sq km) • 20% of Canada’s GDP. • Population of 6.1 million (9.2 mill in 2036) • 58% holds post-secondary education. • 50% born outside of Canada. • 40% of Canada’s business headquarters and 14% of Canada’s businesses. • Within 90 mins of 135 million people. • Access to Great Lakes – 95% of North America’s fresh surface water.

Economic Engine of Canada: Growing Market l About the GTA

The GTA is projected to be the fastest growing region of Ontario. Toronto, 2004

Toronto, 2014 – 2,211 High-rise buildings

Toronto, 2023

Source: Scott Dickson, Creative Director

The population of the GTA is forecasted to increase: •From 6.1 million to 9.2 million by 2036. •This will account for almost two-thirds of Ontario’s net population growth.

Diverse economy offers compelling landscape l About the GTA

The GTA’s strong and diverse economy are largely intertwined with one another. GTA Industry

Food & Beverage

Automotive & Adv. Man.

Financial Services

ICT

Film & Media

Design

Life Science

North America Ranking

2nd

2nd

2nd

2nd

3rd

3rd

3rd

GTA Key Players

• A diverse economy is important because it will increase collaboration and competitiveness and lower risk. • The GTA’s unique strength in diverse sectors differentiates itself from most other major North American cities.

Agri-food Industry Overview l Food & Beverage Industry Profile

Supporting the agri-food industry is part of the government’s economic plan that is creating jobs for today and tomorrow. • Ontario’s agri-food sector contributes about $34 billion to the province’s economy and supports more than 740,000 jobs across the province. • Ontario’s Local Food Act allows the province to work with sector partners to set targets and goals to increase awareness, access and sales of local food in markets, schools, cafeterias, grocery stores and restaurants throughout the province. • The province’s food processors purchase about two–thirds of the food produced on Ontario farms. • Ontario’s investments in the Greenbelt Fund are connecting more farmers to new markets and putting more Ontario food in daycares, schools, universities, colleges, and restaurants, creating a projected return of $49.3 million — or a six to one return on investment for every dollar spent.

Ontario Food Market l Food & Beverage Industry Profile

The retail market for food consumed at home in Canada is expected to total $91.4 billion in 2013. 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 2009-2013.

Canadian Food Service Industry • Major players: Tim Hortons 16.2% and McDonalds 10.7%.

Canadian Market Trends l Food & Beverage Industry Profile

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.

Ontario’s Food Cluster l Food & Beverage Industry Profile

The Agri-food sector is Ontario’s leading employer.

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

North American Food Giant l Food & Beverage Industry Profile

3000+ establishments producing food products in the GTA.

Ontario’s agrifood sector is valued at $52 billion. Home of several industry giants including Nestle, Kelloggs, Kraft, Arla, and Parmalat.

Total GTA Gross Farm Receipts in 2011: 746.16 Million

Food & Beverage companies in the GTA l Food & Beverage Industry Profile

The GTA Food Processing Cluster l Food & Beverage Industry Profile

• GTA food company locations represented by red dots. • Dark areas represent agricultural areas in the GTA.

Source: GTMA Agri Study

Leading Agri-food Education l Food & Beverage Industry Profile

Leading edge agri-food university and college training programs. • University of Toronto: Department of Nutritional Sciences • Ryerson University: Centre for Studies in Food Security • George Brown College: Culinary School • Centennial College: Food and Nutrition Management, Food Service Worker • Humber College: Food and Beverage Service

Cost Competitive l Food & Beverage Industry Profile

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)

101.4

99.5

105.3

98.6

100

Overall costs

59.1 (1) 179.7

122

152.9

152.3

73.3

100

4

5

6

2

3

Overall result

1

97.8

7

These results reflect the combined impact of 26 location-sensitive cost components associated within: -Labour -Facility -Transportation

NOTE: (1) = ranking among G-7 countries SOURCE: KPMG, Competitive Alternatives, 2010 & 2012

-Cost of Capital -Taxes other than Income -Income Taxes

CITY OF BURLINGTON, HALTON REGION

Competitive Corporate Income Tax Rates l Food & Beverage Industry Profile

Canada and Ontario governments are committed to competitive tax rates. Competitive Corporate Income Tax Rates, Ontario vs. Selected US States, 2011 Ontario Ohio* Texas* Michigan* New York Wisconsin Indiana California Illnois Pennsylvania

15

11.5

35 35 35 35 35 35 35 35 35 Federal

Provincial/State

4.95 7.1 7.9 8.5 8.84 9.5 9.99

GTA businesses are subject to Canadian and Ontario corporate taxes. The General Federal/ Ontario corporate tax rate is 26.5%.

The Federal/Ontario small business tax rate is 15.5%. (Canadian-controlled private corporations claiming the small business deduction)

The Local Food Fund l Food & Beverage Industry Profile

The Local Food Fund provides funding for innovative projects that support the achievement of increased awareness; demand for and access to local food. At a minimum, all applicants must meet the following eligibility criteria: •

Be a legal person (corporations, community or not-for-profit organizations, primary producers, food processors, distributors, food service, retail, municipalities, industry associations, economic development associations, First Nations, Metis and Inuit, and broader public sector organizations )

•

Have the authority to enter into a legal agreement.

•

Provide financial funding to the project

•

Have the experience and knowledge to complete the project.

The Local Food Fund – Eligible Projects l Food & Beverage Industry Profile

Project Categories There are four project categories for purposes of the Local Food Fund: a) Regional and Local Food Networks Projects that build capacity along the value food chain to improve access and supply of local foods by information sharing and collaboration between value chain partners. b) Enhanced Technology, Capacity or Minor Capital Projects that focus on increasing the supply, capacity and distribution of Ontario foods. c) Research and Best Practices Projects that undertake research and analysis that lead to the development and implementation of recognized best practices. d) Marketing, Promotion and Education. Projects that focus on marketing and promotional activities that improve consumer awareness and demand for local foods. For more information on the fund, please click here. To find out the Ontario Local Food Fund Recipients, please click here.

Case Study: Dr. Oetker, Pizza Plant l Food & Beverage Industry Profile

"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: Sector: Country of origin: Ontario presence: Nature of Business:

Dr. Oetker Agri-Food Germany Mississauga & London 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 2012. 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

Growth & Business Opportunities l Food & Beverage Industry Profile

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.

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 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.

• 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.

Summary • 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.

Location for 40% of Canada’s headquarters l Reasons to Invest in the GTA

Located within an 800 kilometre (500-mile) radius of 139 million customers. Located within 90 minutes of: • • • •

New York Chicago Boston Washington

Toronto’s proximity to these markets makes the region an ideal place to headquarter North American operations. The headquarters of 37 companies with over $600M in annual revenue are located in the GTA.

8th Best Tax System in the World l Reasons to Invest in the GTA

Canada’s Corporate Tax 2010 - 2014 Provincial (Ontario) Federal Total

2010

2011

2012

2013

2014

12%

11.5%

11.5%

11.5%

11.5%

18%

16.5%

15%

15%

15%

30%

28%

26.5%

26.5%

26.5%

SOURCE: [1] 2012 KPMG Competitive Alternatives [2] Ontario & Canadian Budgets

Percent

Combined Federal-Ontario General Corporate Income Tax

45 39.3

40 35 30

25.6

26.5

28.8

OECD Average

Ontario

G20 Average

30.8

25 20 15 10 5 0 SOURCE: Ontario Ministry of Finance 2013

G8 Average

US Average

World Class Education – GTA Universities/Colleges l Reasons to Invest in the GTA

Ontario Universities/Colleges

Most educated workforce in the G8 – 64% of the Ontario labour force aged 25-64 holds a post-secondary degree or equivalent.

Universities/Colleges located in the GTA • University of Ontario Institute of Technology • Ontario College of Art & Design • Ryerson University • University of Toronto • York University • McMaster University • Queen’s University • Trent University • Centennial College • Durham College • George Brown College • Humber College • Seneca College • Sheridan College In addition, 14 Universities & 18 Colleges are located within 90 minutes drive from the GTA

35% of all R&D conducted in Canada takes place in the GTA l Reasons to Invest in the GTA

GTA Leaders of Innovation

Atomic Energy of Canada Bell Canada Enterprise Inc. Ericsson Canada Inc. GlaxoSmithKline Canada Hoffman – La Roche IBM Canada Ltd. Magna International MDS Inc. Ontario Power Generation Inc. Open Text Corporation Rogers Communications Inc. Sanofi-Pasteur Search Engine People TELUS Corporation 360 Incentives

After-Tax Cost of $100 R&D Expenditure, Small and Medium Sized Manufacturers, 2013

R&D expenditure (general)

R&D expenditure (at eligible Ontario research institutes)

Gross expenditure

$100.00

$100.00

Actual after-tax expenditure

$50.54

$39.31

Note: data as of June 2013. Sources: Ontario Ministry of Finance and Canada Revenue Agency

A Multicultural Population stimulates a welcoming and rich business environment l Reasons to Invest in the GTA

One of the world’s most international cities; 50% of population born outside of Canada. Over 163 languages and dialects are spoken in the GTA In 2011, three-quarters (74.5%) of Canada's foreign-born population were able to conduct a conversation in more than one language The GTA continues to be a national hub for new immigrants into Canada and is one of the major contributors to GTA’s economic strength relative to other Canadian cities.

Chinese

Other Italian

Canada is home to 6.8 million foreign-born residents, or 20.6 per cent of the population. Almost one in five people living in Canada is a visible minority. (Statistics Canada, 2011)

Punjabi Spanish Dutch Ukrainian German Vietnamese

Greek

Polish Arabic

Portugese Tagalog

We get the best and the brightest young people from around the world. We have an incredible opportunity for innovation, for entrepreneurial activities, for learning from each other, for having a diverse labor force. (Toronto’s former Mayor, David Miller, 2012)

Premier Region for Quality of Life l Reasons to Invest in the GTA

No. 2 in places where people would want to live in the world Reputation Institute, 2013

The GTA offers its residents the best of both worlds – the relaxed pace of a small community or the hustle and bustle of a large multicultural centre. Milton, Ontario HALTON REGION

Ranked 1st in Youthful city of the year 2014 Ranked 2nd in health, safety, security Ranked 3rd for most promising city of opportunity among 27 global cities (Cities of Opportunities – PWC, 2012) City of Oshawa, Ontario DURHAM REGION

Let us help you succeed in the Greater Toronto Area!

Is the single point of contact for the GTA Provides economic, sectoral & community profile information Presents the competitive business case for investing in the GTA

Provides introductions to public sector officials and private companies Coordinates meeting itineraries and visitation programs Free & confidential advisory services in: corporate legal / accounting & taxation / immigration matters / staffing & recruitment / financial services / real estate

visit us at: www.greatertoronto.org