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COVID-19 has driven the demand for larger pack sizes as consumers chose to stockpile products to minimize trips to stores/outlets. Bigger pack sizes were also benefitted from e-commerce platforms as they can be easily transported and safely delivered.

As pandemic-related restrictions are set to subside, both trends, the demand for larger pack sizes and the growth of shelf-stable products will reverse. Once consumers revert to pre-COVID-19 lifestyles, demand for a larger pack size will be reduced as consumers will no longer stockpile products. Shelf-stable products will face the same fate as they are perceived as health hazardous because of the high content of preservatives and coloring.

Biodegradable and compostable plastic is gaining momentum, but the waste management authorities have yet to catch up with the growth rate of these pack types. Hence these sustainable pack types end up in landfills. The local municipalities are asked by the government to beef up their capacity to process biodegradable and compostable plastic waste.

Canada aims to eliminate plastic waste by 2030. To achieve this goal, the government implemented a ban on single-use plastic so as not to shock small businesses with sudden changes. The companies are responding to the legislation by launching new innovative pack types such as recyclable packs, the circular economy, returnable packs, biodegradable packing material, etc. 

Canada introduced new changes to the design of nutrition labels and proposed warning labels for food with high content of sugar, salt, saturated fat, and calories. These changes aim at bringing transparency and awareness about the nutritional value of food.

Sustainable packaging persists as a trend and is widely accepted by consumers as well. Companies are positioning sustainable packaging in the premium segment. Companies are innovating with pack designs and packaging materials to cope with the innovative packaging types launched by rivals.

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• Beauty and Personal Care Packaging: This is the aggregation of packaging for baby care, bath & shower products, deodorants, hair care, color cosmetics, men's grooming products, oral hygiene, perfumes & fragrances, skincare, depilatories, and sun care. Black market sales and travel retail are excluded.
• Dog and Cat Food Packaging: This is the aggregation of dog and cat food packaging.
• Packaged Food Packaging: This is the aggregation of packaging for baby food, Bakery, canned/preserved beans, canned/preserved fish/seafood, canned/preserved fruit, canned/preserved meat and meat products, canned/preserved tomatoes, canned/preserved vegetables, other canned/preserved food, confectionery, chilled fish/seafood, chilled lunch kit, chilled processed meats, fresh cut fruits, dairy, dessert mixes, rice, frozen bakery, frozen desserts, frozen meat substitutes, frozen processed fish/seafood, frozen processed potatoes, frozen processed poultry, frozen processed red meat, frozen processed vegetables, other frozen processed food, ice cream, meal replacement, noodles, oils and fats, pasta, ready meals, sauces, dressings and condiments, snack bars, soup, spreads and sweet and savory snacks.
• Home Care Packaging: This is the aggregation of packaging for laundry care, dishwashing products, surface care, chlorine bleach, toilet care, polishes, air fresheners, and insecticides. 
• Beverages Packaging: Beverage packaging is the aggregation of alcoholic drinks packaging, hot drinks packaging, and soft drinks packaging.

• Growing demand for smaller dog breeds has resulted in more demand for smaller pack sizes. Budget-conscious pet owners also prefer smaller pack sizes over larger ones. As a result, one of the common pack types present within smaller pack sizes, flexible packaging, has grown by 5.8% within dog and cat food in 2020.
• Consumer demand for packs that are easy to open and reseal continued to grow in 2020. These zip/press closures are preferred for small stand-up pouches and freeze-dried products to preserve their freshness and authentic flavor. This has boosted the demand for flexible packaging formats such as flexible plastic in 2020.

• The manufacturers have grown conscious of the sustainability trend prevalent in the market and are utilizing it to gain popularity as well as greater consumer loyalty. For example, Petcurean launched Tetra packs that are easy to open and are resealable. These cartons are recyclable and are more cost-effective for transport as they occupy 40% less storage space. They are made from 65% renewable materials and are 100% recyclable. Another player, PureForm launched biodegradable canisters and compostable packaging material within its dog and cat food products. This new packaging type aims to replace HDPE packaging material in the future.
• Metal cans continue to be the main pack type in wet dog and cat food but PET jars are set to gain ground in this segment owing to the benefits it offers in comparisons such as easy handling, less storage space, and easy transport. Downsizing of packs, for example, downsizing larger packs to 100gm pouches, will further support this trend.

• The growth of smaller pack types using innovative and attractive packaging as a tool to achieve greater product sophistication and a premium perception towards sustainable and eco-friendly packaging will help the packaging industry to achieve value as well as volume growth over 2020-25.
• The growing pet humanization trend has contributed to the growth of premium-priced quality dog and cat products in the country. Moreover, since eco-friendly and sustainable pack types are perceived to be premium, manufacturers have started innovating on new sustainable and convenient packaging formats such as recyclable packs with zip/press closures.

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• Enhanced hygiene awareness because of COVID-19 led to a major spike inhome care products which further boosted the packaging in thehome care industry. Flexible pack types grew by 5.5% in 2020 as e-commerce sales rose exponentially during the pandemic. Flexible plastic and stand-up pouches, are economical, durable, and take up less space, hence it is favored by e-commerce trade channels.
• Despite the rise in sustainability packaging trends, the safety concerns among consumers about the usage of the circular economy scheme (a scheme wherein materials constantly flow around a 'closed loop' system, meaning packaging material once disposed of will again be used to make a new package), reusable bags and containers negatively impacted sustainability initiatives such as returnable packs, reusable bags, and refillable packs as they pose a risk of contracting the virus at touchpoints.

• Pandemic-linked restrictions in movement outdoors have significantly impacted consumer behavior as consumers now prefer stockpiling home care products as reserves. This trend resulted in the introduction of larger and value-for-money pack sizes in the home care industry.

• The Canada Plastics Pact was launched to chart a plan towards a circular economy for plastic by 2025. The pact will help support efforts towards ensuring that 100% of plastic packaging is reusable, recyclable, or compostable, aim for a target of at least 50% of plastic packaging being effectively recycled or composted, and see that at least 30% of recycled content is used across all plastic packaging by weight. This will eliminate single-use plastic. Also, this will require both trade channels (on-trade and off-trade) to accommodate and make arrangements for returnable and refillable products.
• Despite sustainability being deprioritized due to COVID-19 in the immediate future, it is likely to re-emerge as an important packaging trend within the country. This is mainly because more and more Canadians are getting environmentally conscious and are demanding products that can help make a positive impact on the environment. As a result, while some players are planning to offer reusable and returnable packaging formats within the home care segment, some others are planning to launch innovative product dispensing channels such as vending machines for refillable home care products.

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Travelers to Canada are still expected to wear a mask

• According to the World Health Organization (WHO), on May 2022, Canada’s total confirmed cases stood at 3,850,782, the total number of deaths reached 40,706, and the number of new cases on the day reached 2,919.
• The Canadian government announced several changes to current border policies, the most significant to date. Fully vaccinated travelers do not need to do a pre-entry test after April 1, 2022. They may still be subjected to random testing upon arrival, but they are not required to quarantine.
• That being said, even though most pandemic restrictions, including mask mandates, have been withdrawn by provinces and territories, the federal government still compels incoming tourists to wear a mask for two weeks.
• According to the WHO, on May 22, 2022, Canada’s total cases per million inhabitants reached 101,323, while the total vaccination per 100 people reached 82.7 totaling 82,754,363 on May 20, 2022.

The chart below shows Euromonitor International’s Recovery Index.

The quarterly reported Recovery Index is a composite index that provides a quick overview of economic and consumer activity. It keeps track of the latest quarterly economic/consumer data and forecasts in key economies to gauge when economic activity and consumer demand are likely to return to the pre-pandemic levels of 2019.

A score of 100 and over indicates a full recovery in which economic output, the labor market, and consumer spending all return to/exceed 2019 levels.
Detailed methodology is provided in the Appendix.

Quarterly Recovery Index and Related Indicators, Canada

Click here for more detailed information from Euromonitor on the overview of COVID-19 conditions in Canada.

This graph shows our “most probable” and “worst case” scenarios of how COVID-19 will impact real GDP in Canada. Our “most probable” or Baseline scenario has an estimated probability of 45-60% over a one-year horizon. Our “worst case” or Pessimistic scenario has an estimated probability of 13-23% over a one-year horizon. For more details, please refer to the detailed explanation of the COVID-19 scenarios in the Scenario Definitions section.

Please note that the forecasts will be adjusted every three months, according to the expected number of cases, recoveries, and deaths due to COVID-19 in this country, as well as shifting socioeconomic conditions (the most recent update was May 2022).

Baseline forecast refers to the “best case” COVID-19 scenario forecast, which has an estimated probability of 45-60%.

C19 Pessimistic refers to the “worst-case” COVID-19 scenario forecast, which has an estimated probability of 13-23%.

Canada’s economy returning to normalcy

• Following the detrimental impact of COVID-19 on the Canadian economy, annual real GDP growth in 2021 was 4.7%, compared to 5.1% for the developed world. Higher oil prices are expected to enhance Canada's vital energy exports. In the short term, consumers are projected to sustain economic momentum by resuming consumer spending and returning to more normal activity levels, due to a successful immunization program. In 2022, annual real GDP growth is expected to be 3.4%, compared to 2.9% for developed countries.
• In 2022, Canada's ranking in the Index of Economic Freedom places it in the “mostly free” group. However, the country's position dropped, pushing it more into the middle of this group. The government's spending and fiscal health pillars are the key reasons for the lower ranking, with the former being Canada's worst-performing pillar for the rating in 2022.
• Canada's budget went from a surplus to a large deficit of 10.7% of GDP in 2020 as a result of its robust fiscal response to the COVID-19 epidemic. The budget deficit shrank to 4.4% in 2021, although it remained substantial. In 2020, the public debt-to-GDP ratio reached an all-time high. While it was reduced to 111% of GDP in 2021, it is still above 100% and unsustainable. Low-interest rates, on the other hand, should help keep debt-servicing costs manageable in the medium run. As the pandemic fades and the economy recovers, the government is anticipated to implement fiscal consolidation to maintain long-term debt sustainability.

Please note that the forecasts are adjusted every three months according to the expected number of cases, recoveries, and deaths due to COVID-19 in the country, as well as shifting socioeconomic conditions.

The graph below shows the adjusted forecasts of the percentage growth for the categories mentioned, highlighting the impact of COVID-19 between our pre-COVID-19 estimates and the “most probable” (Baseline) forecast, which has an estimated probability of 45-60%.

Baseline forecast refers to the “best case” COVID-19 scenario forecast, which has an estimated probability of 45-60%.

A return to normalcy hampers the growth of hot drinks in Canada

• At-home coffee consumption surged considerably in response to the COVID-19 epidemic in 2020, following the many COVID-19-related limitations, with many coffee shops across Canada forced to close or reduce their capacity. As a result, coffee consumption shifted from the on-trade to the off-trade. However, with the gradual relaxation of limitations and the reopening of foodservice establishments, at-home consumption dropped once again in 2021, and on-trade coffee volume sales rebounded after being devastated by the pandemic. Many Canadians began heading out for coffee during lunchtime after more than a year of being restricted to their houses, even if they continued to work from home. Hot drinks sales recorded 1.2% growth according to Euromonitor’s Baseline scenario forecast, as opposed to the 12.5% growth anticipated in the pre-C19 scenario forecast.
• One of the most important factors shaping consumer needs (and thus new product development) in 2022 and beyond will be sustainability. Products such as Loop, a brand that focuses on sustainability, recycling, and reusing all packaging materials, are now available in Canada. The company also caters to the growing health and wellness trend by including 40% fresh-pressed juice from various fruits and vegetables in its recently launched probiotic soda. Such products illustrate the expanding consumer base of younger Canadians who are looking for products that are both healthier and more sustainable. More corporations are expected to follow suit over the forecast period, including larger players such as Coca-Cola, which alongside 30 other companies, joined the Canadian Plastics Pact in 2021.

Please note that the forecasts are adjusted every three months according to the expected number of cases, recoveries, and deaths due to COVID-19 in the country, as well as shifting socioeconomic conditions.

This graph shows our “most probable” and “worst case” estimate scenarios of how COVID-19 will impact the percentage growth for the sectors covered in Canada. Our “most probable,” or Baseline scenario, has an estimated probability of 45-60% over a one-year horizon. Our “worst case,” or Pessimistic scenario, has an estimated probability of 13-23% over a one-year horizon.

Baseline forecast refers to the “best case” COVID-19 scenario forecast, which has an estimated probability of 45-60%.

C19 Pessimistic refers to the “worst-case” COVID-19 scenario forecast, which has an estimated probability of 13-23%.

Demand for home products and organic packaged food will increase further in the post-pandemic era

• Many packaged food producers and brands postponed new product introductions and marketing campaigns due to the impact of the COVID-19 outbreak and the associated uncertainty. For those players that launched new products during the pandemic, “organic” was one of the key claims that resonated with Canadian consumers across many categories for packaged food. In recent years, "organic" has been one of the most popular claims for new breakfast cereals for example. Aside from organic breakfast cereals, there were a slew of other organic launches, including Chickapea's organic chickpea elbows and lasagna pasta, Kraft Heinz's new organic versions, Once Upon A Farm's organic baby food, and Nuts for Cheese's organic dairy alternatives, with these all launched over 2020-2021.
• As the concern over COVID-19 fades, growth in home care stabilized starting in 2021. With the implementation of Canada's COVID-19 immunization program, the country is expected to return to normalcy by the end of 2021. COVID-19, on the other hand, is expected to have a longer-term impact on how customers view proper hygiene practices. Concerned about the spread of COVID-19, consumers are cleaning more surfaces and focusing on products that claim to be germicidal and virucidal, and this trend is expected to continue throughout the forecast period, helping home care sales overall. Manufacturers are also likely to take advantage of the situation, focusing on teaching consumers about the importance of good hygiene in all areas of the home.

The following tables display adjusted market size for 2021, market size forecasts for 2022, and the percentage difference between the February 2022 and June 2022 estimates for the year 2022.

Please note that for the current quarterly update, the following table coversbeauty and personal care packaging and home care packaging industries only.

The Canada Plastics Pact is slated to result in a circular economy for plastics by 2025

• On January 27, 2021, the Canada Plastics Pact was launched to reduce and eventually eliminate plastic waste and pollution. More than 40 partners joined forces to rethink how they design, consume, and reuse plastics, to achieve a circular economy for plastics by 2025. The Canadian Beverage Association, the Circular Innovation Council, and the Circular Plastics Taskforce are among the Pact's partners, along with several firms in the FMCG industry. Firms will work together to identify "problematic" or "unnecessary" plastic packaging and explore strategies to eliminate it. They will also support efforts to ensure that all plastic packaging is reusable, recyclable, or compostable, with a goal of at least 50% of plastic packaging being effectively recycled or composted and see that at least 30% recycled content is used across all plastic packaging by weight.
• Players began to offer reusable and returnable package formats within the home care sectors in response to the increased environmental awareness of packaging waste in Canada. For example, on February 1, 2021, the worldwide reusable packaging platform Loop, in collaboration with Loblaw Companies Ltd, launched in Canada to provide numerous refillable grocery and home care products. Over the review period, SC Johnson began to introduce its new line of concentrated home care products in North America. This included lines such as Scrubbing Bubbles, Windex, and Fantastik, as well as refills for these products, with the latter aimed at cutting plastic waste. Other lines that are also available in the concentrated refill bottles include Pledge and Shout.
• Reckitt Benckiser already teamed with Dow's Packaging and Specialty Plastics unit to create improved recyclable packaging for its perfume-free Finish dishwashing brand, echoing consumer demands for more environmentally friendly products and packaging. The resealable stand-up pouch is made of a polyethylene film created by Dow's Packaging and Specialty Plastics unit and is designed for recyclability and end-of-life disposal in existing recycling processes.

• Beauty and Personal Care Packaging: This is the aggregation of packaging for baby care, bath & shower products, deodorants, hair care, color cosmetics, men's grooming products, oral hygiene, perfumes & fragrances, skin care, depilatories and sun care. Black market sales and travel retail are excluded.
• Dog and Cat Food Packaging: This is the aggregation of dog and cat food packaging.
• Packaged Food Packaging: This is the aggregation of packaging for baby food, Bakery, canned/preserved beans, canned/preserved fish/seafood, canned/preserved fruit, canned/preserved meat and meat products, canned/preserved tomatoes, canned/preserved vegetables, other canned/preserved food, confectionery, chilled fish/seafood, chilled lunch kit, chilled processed meats, fresh cut fruits, dairy, dessert mixes, rice, frozen bakery, frozen desserts, frozen meat substitutes, frozen processed fish/seafood, frozen processed potatoes, frozen processed poultry, frozen processed red meat, frozen processed vegetables, other frozen processed food, ice cream, meal replacement, noodles, oils and fats, pasta, ready meals, sauces, dressings and condiments, snack bars, soup, spreads and sweet and savory snacks.
• Home care Packaging: This is the aggregation of packaging for laundry care, dishwashing products, surface care, chlorine bleach, toilet care, polishes, air fresheners and insecticides.
• Beverages Packaging: Beverage packaging is the aggregation of alcoholic drinks packaging, hot drinks packaging and soft drinks packaging.

Recovery Index Methodology

Euromonitor International’s Recovery Index is a composite index that provides a quick overview of economic and consumer activity and helps businesses predict recovery in consumer demand in 48 major economies. The index takes into consideration total GDP and factors that determine consumer spending - employment, consumer spending, retail sales, and consumer confidence. Index scores measure the change relative to the average per quarter for 2019.