The Global Vinegar Market: Opportunities for Canadian Vinegar Exporters

January 2011

The Government of Canada has prepared this report based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information. This report is intended as a concise overview of the market for those interested in its potential and is not intended to provide in-depth analysis which may be required by the individual exporter. Although every effort has been made to ensure that the information is correct, Agriculture and Agri-Food Canada assumes no responsibility for its accuracy, reliability, or for any decisions arising from the information contained herein. Please address any comments or suggestions you have on this report to: Ben Berry ben.berry@agr.gc.ca

Table of Contents
Overview ...................................................................................................... 3 History ......................................................................................................... 3 Vinegar Varieties............................................................................................ 3 Balsamic Vinegar......................................................................................... 4 Cider Vinegar.............................................................................................. 4 Infused or Flavoured Vinegar ........................................................................ 4 Malt Vinegar ............................................................................................... 5 Rice Vinegar ............................................................................................... 5 White Distilled Vinegar ................................................................................. 5 White and Red Wine Vinegar ......................................................................... 5 Health Benefits and Uses................................................................................. 5 Vinegar Trade................................................................................................ 6 Canada Vinegar Trade.................................................................................. 6 Global Vinegar Trade ................................................................................... 7 Global Market ................................................................................................ 8 Europe....................................................................................................... 8 North America ............................................................................................ 8 Asia Pacific ................................................................................................. 9 Latin America ............................................................................................10 Middle East and Africa.................................................................................10 Trends.........................................................................................................10 Opportunities ...............................................................................................11 Challenges ...................................................................................................12 Government Support .....................................................................................13 Key Resources ..............................................................................................14 Research from Magazines...............................................................................15

The Global Vinegar Market: January 2011

The Global Vinegar Market: Opportunities for Canadian Vinegar Exporters

January 2011
Overview Vinegar is a versatile product that has been used in all corners of the world for over thousands of years. Having long been viewed as a necessity for every home with its various applications, vinegar is increasingly popular with consumers as new blends, uses, and specialty products continue to enter the marketplace. While vinegar is a global product, its varieties vary by region. Today, traditional vinegar products specific to regional markets are appearing globally as new and innovative goods with marketable health benefits and multiple uses. Recently, there has been an increase in consumer demand for natural and organic foods that have nutritional value. Due to this strong global interest for new food products, including sauces and dressings, and an increase in trial purchases over the past few years, the vinegar market looks prosperous for Canadian exporters. History Our Western knowledge of vinegar originates from the old French meaning vin aigre, or sour wine, and its general principle involves fermenting natural sugars to alcohol, followed by secondary fermentation to produce vinegar. Produced from the oxidation of ethanol in wine, cider, beer, and fermented fruit juice, most table vinegars acetic acid concentration ranges from four to eight per cent. Vinegar is a source of vitamin B-1, riboflavin, as well as mineral salts that provide its distinct flavour. Dating back to 5,000 BC, vinegar was first used by the Babylonians as a condiment and preservative. Its use continued as Romans consumed vinegar as a beverage, and Greeks used it to pickle meat and vegetables. The healing properties of vinegar have also been referenced in the bible and the work of Hippocrates. By 2,000 BC, vinegar production became commercialized and served to treat disease and wounds in such historical events as the American Civil War and World War I. Today, vinegar is used as a staple culinary ingredient, as well as a cleaning, cosmetic, and medical agent. Vinegar Varieties Typical retail varieties of vinegar include balsamic, cider, infused or flavoured, malt, rice, white distilled, and white and red wine. Flavoured vinegars are particularly growing in popularity, as such specialty products are seasoned to add a unique taste when added to foods. Herbal specialty vinegars are made from wine or white distilled vinegar, with popular flavourings including garlic, basil, and tarragon. Specialty fruit vinegars are also made from wine or white distilled vinegar, and can be produced with fruit or fruit juice to create a sweet-and-sour taste. Apple and raspberry flavoured vinegars remain widely popular, as does maple vinegar which is indigenous to Canada.

The Global Vinegar Market: January 2011

Balsamic Vinegar Although widely unknown to many consumers, there are two types of balsamic vinegar: traditional balsamic vinegar, which is a very high-quality product produced in Modena and Reggio Emilia Italy, with limited availability, and non-traditional or commercial balsamic vinegar. Traditional balsamic vinegar, which can take hundreds of years to produce and can sell for hundreds of dollars a bottle, is treated with a reverence reserved for the finest wines. Traditional balsamic vinegar can also be blended with various aged vinegars to reduce costs. Traditional balsamic vinegar can be aged in various kinds of wooden barrels oak, chestnut, mulberry, cherry, ash and juniper, each one lending a unique aroma and affecting the colour. Over the years, it is repeatedly transferred to smaller and smaller containers with sensitive adjustments to its contents, using extremely accurate refining methods and giving careful attention to the racking of the barrels. Non-traditional/commercial balsamic vinegar is typically a blend of various ages of balsamic. This commercial variation can contain very high-end balsamic and is treated as a more economical alternative to the traditional version. Commercial balsamic vinegar is not subject to the same geographic and technological restrictions of its traditional counterpart. Currently, in North America there are no restrictions on the use of the term balsamic vinegar, and products vary from being of very high-quality to something purists would describe as unrecognizable. Regardless, commercial products remain of high-quality and are suitable for use in marinades, vinaigrette dressings, and sauces. However, the European Union (EU) continues to safeguard its traditional balsamic vinegars from international competition through its quality system regulations. Established in 1992, the program includes protected designation of origin (PDO), protected geographical indication (PGI), and traditional specialty guaranteed (TSG) laws and certification to protect the names of traditional and regional European foods. For example, balsamic vinegar can only be labelled and sold as such in the EU if it is processed according to traditional production practices and made in Modena or Reggio Emilia, Italy. Raw ingredients must also be sourced and labelled, providing consumers clear and concise information regarding their origin. Cider Vinegar Cider vinegar is produced from the double fermentation of the juice of apples. This vinegar variety is often sold unfiltered with a brownish-yellow appearance. Cider vinegar is commonly used in cooking and is very popular due to supposed health and beauty properties.

Infused or Flavoured Vinegar Infused vinegars are produced by adding flavourings (e.g. fruit, garlic, herbs) to cider, white distilled and wine vinegars. Infusing vinegars with flavours adds spicy and tangy qualities to the product, which can then be used as vinaigrettes, marinades, or in sauces for meat. Popular flavourings include raspberry, blueberry, fig, pear, thyme, and oregano.

The Global Vinegar Market: January 2011

Malt Vinegar Malt vinegar is made by malting barley and is typically light brown in colour. Malt vinegar has a distinct flavour that is most commonly used in England as a famous condiment for fish and chips. This type of vinegar is typically used for pickling.

Rice Vinegar Rice vinegar is traditionally an Asian product and is widely used in the preparation of Asian dishes, particularly sushi. Like its balsamic counterpart, rice vinegar has a renowned variety commonly known as black rice vinegar. This is also an aged product that is blended with various ages of rice vinegar, which determine its price. Due to its mild flavour, rice vinegar can be complimented with herbs, spices, and fruit flavouring. Rice vinegar can also be used over salads, fruit and vegetables, as well as in stir-fries and is available in "white" (light yellow), red, and black varieties.

White Distilled Vinegar White vinegar is made by oxidizing a distilled alcohol, or by producing an acetic acid and water solution. This vinegar variety is also commonly made from grains (e.g. maize) and water. White vinegar is commonly used in cooking, as a cleaning agent, and for medicinal purposes.

White and Red Wine Vinegar White wine vinegar has a distinct acidic taste and is clear or pale gold in appearance, while that of red wine vinegar is ruby in colour. Much like wine, wine vinegars range in quality depending on the duration of maturity in wood barrels, which often takes up to two years for a smooth flavour. Wine vinegars typically taste less acidic than their white distilled and cider counterparts. White wine vinegar can add flavour to fruit, sauces, glazes, fish, and poultry, while red wine vinegar can be used in salad dressings and red meat marinades. White wine vinegar is a healthy alternative to heavy cream or butter, and reduces the need for salt in many meals. This type of vinegar is most commonly used in the Mediterranean countries and Central Europe.

Health Benefits and Uses Vinegar has many culinary uses. It is often flavoured with herbs, spices, and other ingredients to produce vinaigrettes which are very popular among North American consumers and in other parts of the world. Vinegar can stand alone as a condiment, and can be used as sauces, marinades, and salad dressings, in addition to the traditional use of pickling vegetables.

The Global Vinegar Market: January 2011

Research suggests that vinegar is one of the healthiest foods in the world. Vinegar is proven to reduce fever, release several toxic substances from the body, aid in diet control, and be a disinfectant. In fact, consuming vinegar with meals increases the feeling of fullness, therefore reducing the amount of food consumed. Even a single application of vinegar has shown to reduce food intake for an entire day. Most vinegar does not contain any fat and has less than three calories per tablespoon. However, specialty vinegars made with additional ingredients may contain more calories. Vinegar Trade * Please note that the information retrieved from Statistics Canada and the Global Trade Atlas databases represent statistics under the HS code 2209: Vinegar and Substitutes for Vinegar Obtained from Acetic Acid. Canada Vinegar Trade
Canadas Global Vinegar Trade (2009)
Total Trade Exports Imports Trade balance $31,770,337 $2,092,322 $29,678,015 ($27,585,693)

Canadas Top 5 Vinegar Export Markets (2009)

United States Cuba United Kingdom Australia Singapore $2,005,907 $29,542 $15,383 $12,678 $5,986

Canadas Top 5 Vinegar Import Markets (2009)

Italy United States France China Japan $15,333,554 $9,357,704 $1,170,263 $1,326,056 $510,259

Canadas total vinegar trade increased by just over 10% from 2008, reaching almost $32 million in 2009. Based on total country import statistics from Global Trade Atlas under the vinegar category in 2009, Canada was tied with the United Kingdom for the fifth largest importer worldwide, importing nearly $30 million. Canadas vinegar imports have consistently increased over the years, signifying greater consumer demand. Vinegar imports increased by 11% or $3 million between 2008 and 2009. In the same year, Canadian exports were valued at approximately $2 million. Over the past five years, Canadian exports have remained the same, neither increasing nor decreasing. In 2009, Canada exported the largest amount of vinegar to the United States (U.S.). This was Canadas most important trading partner as the country accounted for 96% of

Canadas vinegar exports. Cuba and the United Kingdom followed representing 1.4% and 0.74% respectively. Canada imported the largest amount of vinegar from Italy. Italys value (51.7%) represented just over half of Canadas total imports in 2009. Italy has always been Canadas largest source of vinegar. The U.S. is Canadas second largest partner with a value of approximately $9.4 million or 31.5%. This value increased by 9% from 2008.

The Global Vinegar Market: January 2011

Global Vinegar Trade

Worlds Top Ten Vinegar Exporters (2009)
Country Italy Germany Spain France United States Japan Greece United Kingdom China Austria Exports (CAD$ millions) $258 $31 $30 $27 $17 $17 $14 $10 $9 $6

million decrease from 2008. France, the U.S., Japan, and Greece were also among the top ten countries to export vinegar. Based on the statistics for vinegar and substitutes for vinegar obtained from acetic acid, it is evident that Canadas largest competitor is Europe; with Italy, Germany, Spain, and France all falling within the top five largest exporters. Among the top ten exporters of vinegar, half experienced a decline in value terms between 2008 and 2009. Despite this decrease, the reporting country total (includes all exporting countries) increased by $4 million. This is mainly attributable to an increase in the value of exports sent from countries in the Asia Pacific region. Total vinegar exports have increased by 30% from $370 million in 2005 to $483 million in 2009, continuously increasing over the four year period.

The largest exporting countries of vinegar in 2009 based on both value and volume were Italy, Germany, and Spain. Italy exported $258 million dollars of vinegar globally; ranking first in the category. Italy is well above any other countries with an export volume of almost 83 million litres compared to the 49 million litres that Germany, the runner up, exported. Spain, the third largest exporter in 2009 had a value of $30 million and a volume of 30.6 million litres. This is a 9% or $3

The largest importing country of vinegar worldwide was the U.S., importing almost Imports (CAD$ $100 million in 2009. The countrys Country millions) dominance in the import market coupled United States $98 with Canadas long trade history presents Germany $72 several opportunities for Canadian France $38 companies looking to export. United Kingdom $30 Canada $30 Germany was the second largest country, Switzerland $24 importing $72 million of vinegar and Italy $19 substitutes for vinegar obtained from acidic Austria $16 acid in 2009. Although this is a slight Spain $16 decrease from $75 million in 2008, Belgium $16 Germanys vinegar imports have been on the rise, increasing 64% from 2006. Other prosperous markets for Canadian companies wishing to export include France, the United Kingdom, and Switzerland. Similar to the top ten vinegar exporters list, Europe remains a key market with regards to vinegar trade. Total country imports reached $495 million in 2009. This is less than a 1% increase from 2008, but a 33% increase from 2005 when imports were $371 million.
Worlds Top Ten Vinegar Importers (2009)

The Global Vinegar Market: January 2011

Global Market While vinegar is a global product, its uses and variations vary considerably by market. From North Americas household staple white vinegar, to rice vinegar in Asia, to Italys balsamic or Britains malt vinegar, the similarities and differences between vinegar varieties can act as both barriers and areas of opportunity for Canadian producers in the world vinegar market. Europe The European marketplace is home to some of the finest traditional vinegars worldwide; therefore, marketing innovative vinegar varieties of the best quality Canadian ingredients may be most successful in European countries. Due to its renowned products and long history of vinegar consumption, Europe holds seven out of the worlds ten largest vinegar markets making the region a key target market for premium Canadian vinegar products. However, the EU maintains a high level of protectionism for many of its regional foodstuffs through a quality system regulation program, making it increasingly challenging for Canadian products to enter the European marketplace. For more information on EU legislation, go to the Balsamic Vinegar section of this report or visit: http://europa.eu/legislation_summaries/agriculture/food/l66044_en.htm There is also an EU protected designation for organic products. This organic regulation will also impact Canadian vinegar producers looking to sell organic products in Europe, as they will have to comply with EU organic certification standards. Detailed information on the EUs organic designation and its regulations can be found at: http://ec.europa.eu/agriculture/organic/home_en. Specific vinegar varieties of interest may include organic, blueberry, cranberry, Saskatoon berry, Icewine, maple syrup, and dessert products. High-end European foodservice and hospitality sectors may hold the most opportunity for Canadian vinegar products. Each year Mintels Global New Products Database (GNPD) creates a report on Dressings and Vinegar. During the third and fourth quarters in 2008, Europe became the most active region in the Dressings and Vinegar category, surpassing Asia and accounting for 37% of all new product launches. The Netherlands, the United Kingdom, and Italy were the most active countries, together accounting for over 40% of the market. This region saw 46% of all organic launches and 55% of all premium products.

North America North America is the second largest market for vinegar behind Europe. Both the U.S. and Canada are among the top ten countries with a combined total trade of $147.5 million in 2009. Not surprisingly, Italy remains the largest source for imported vinegar in the U.S. with a total of $71 million in 2009. Spain ($8.5 million), France ($4.7 million), Japan ($4.4 million) and the Philippines ($1.8 million) follow Italy as major vinegar suppliers to the U.S. Therefore, Canadian vinegar producers have to compete with these high-quality European varieties and inexpensive Asian products in the American marketplace. In order for Canadian companies to penetrate the American marketplace, it is suggested that vinegar products are marketed using claims that promote the innovation and quality of the varieties.

The Global Vinegar Market: January 2011

The gourmet foodservice and retail grocery industries may hold areas of opportunity for Canadian vinegar exporters. According to the same Mintel report on Dressings and Vinegar, North America was the third most active region with a fifth of the market during the third and fourth quarters in 2008. Product naturalness was the dominant concern in this region, focussing on dressings with no additives/preservatives, all natural and organic claims. Of all the launches in this 2008 review period, 66% featured the all natural claim. North America also saw the highest proportion of low/no/reduced transfat products compared to any other continent, with 74% of all such lines launched here.

Asia Pacific Countries in the Asia Pacific region vary greatly in levels of development, wealth, and consumer markets; therefore, vinegar opportunities for Canadian products significantly differ by market. Rice vinegars have been a part of local cuisine and culture for many years and are extremely popular in Asia. The health vinegar trend is also emerging, with consumers drinking products for their nutritious properties. One of the most prominent health vinegars in the Asia Pacific region is Moromi vinegar. This drinking vinegar is rich in nutrients and high in amino acids. The vinegar which originates from southern Japan is blended with onion vinegar and brown sugar juice for flavour. According to the Japan Food Analysis Center, Moromi contains vitamins B1, B2 and B6, and minerals such as iron, calcium, potassium, and magnesium. Japan has also recently experienced a trend in colourful foods. Ingredients such as black sesame, black vinegar, and cranberry are of significant demand. Two black vinegar drinks, mixed with honey lemon, blueberries, and additional supplements for health conscious consumers were launched in the market. On top of this, wine vinegar represented 4.8% of Japans top ten ingredients in the oils and fats new product launches, by ingredients in 2009. Japan represents the largest vinegar market in Asia with a total trade value of $26.2 million in 2009. This value increased by 13% from 2007 and 6.4% from 2008. Vinegar as a beverage is a growing trend in Japan and is enjoyed mixed with champagne, water, or milk. Top vinegar exporters supplying the Japanese market in 2009 and therefore Canadas largest competition include Italy ($5.2 million), France ($1.8 million), China ($1.3 million), Spain ($507,525), and the US ($336,992). The Chinese market remains highly saturated with inexpensive vinegar varieties, making it difficult for Canadian producers of high-quality products to compete in the marketplace. Therefore, potential opportunities for Canadian exporters may only lie in offering unique, gourmet vinegar varieties to upper class consumer segments in wealthy, urban areas of China. Particular gourmet vinegar varieties that may be well received in China and other Asian markets include maple, Icewine, Saskatoon berry, pumpkin, and dessert vinegar. According to Mintels Global New Products Database (GNPD) report on Dressings and Vinegar in 2009, Europe became the most active region in the last six months of 2008, surpassing Asia and accounting for 37% of all product launches within the Dressings and Vinegar category. Despite this fall, Asia accounted for almost a quarter (23%) of total launches, making them the second largest region in the world. Thailand, China, and Vietnam were the

The Global Vinegar Market: January 2011

most active countries during the six months to December 2008, together accounting for 56% of new product launches in Asia. New product launches in Asia are focussing on reducing the fat content and the amount of additives and preservatives in dressings and vinegars. Continuing with the health trend, naturalness emerged as a dominant pattern with 36% of launches being unflavoured or plain; the highest proportion of any of the regions.

Latin America Herb-infused and fruit flavoured vinegars are extremely popular in the Latin American region; therefore, Canadian vinegars made from well known domestic goods (e.g. apples, berries, herbs, honey) may prove most popular amongst consumers. Balsamic, red, and white wine vinegars are most consumed in the Brazilian marketplace. The degree of brand loyalty correlates with the amount that Brazilian consumers are willing to pay for a particular vinegar variety. It is because of this that many companies, most notably from Italy, Portugal, and Spain have heavily invested in country-wide branding initiatives. These initiatives help to raise their products image and thus increase sales. Brazil is the largest country in Latin America according to total trade, importing and exporting a combined $3.5 million in 2009. Mexico and Chile follow at $3.4 million and $1.6 million respectively. Latin America accounted for 18% of Dressings and Vinegar product launches during the six months to December 2008. Mexico, Brazil, and Argentina were the most active countries in the region, together accounting for over 80% of launches. Low/no/reduced allergen, gluten free and low/no/reduced calorie were the top claims in Latin America for this review period. Of launches, 27% were unflavoured/plain, with mustard and garlic representing the most popular flavours.

Middle East and Africa Blueberry and date vinegar varieties are popular in the Middle East. Canadian exporters are encouraged to introduce infused or other fruit flavoured vinegars into this market as they may prove to be the most successful. Specific fruit varieties that may be well received are apple, cranberry, raspberry, honey, and potato.

Trends According to the Nielsen Company, global vinegar sales have been increasing with specialty vinegars leading the way. Balsamic and red wine vinegars are leaders in the specialty category. These vinegars hold 45% of the dollar share of vinegar and 12% of the unit volume. The remaining 88% of unit volume is dominated by private label white distilled and apple cider vinegars. The Nielsen Company conducted another study, analysing the most popular consumer retail outlets for vinegar. With 65.9% of vinegar dollar sales, large grocery stores were the most popular. Supercenters were next at 13% and then Warehouse clubs at 9.1%. Mass merchandisers and other category followed at 2% and 10% respectively.

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Well-targeted flavour innovation is a crucial part in the successful launch of new products. Trends in flavour generally reflect other major patterns in food and drink, such as the move towards naturally healthy foods and the rise of antioxidant-rich fruits such as blueberries. With modern consumers becoming increasingly sophisticated in their diet, demand for food enhancing dressings is growing strongly. Several emerging patterns, including convenience eating and cooking, increased interest in ethnic cuisine, and health concerns have led to a greater demand for low fat and natural products. The U.S. is becoming one of the key geographical areas for growth in the organic food market. Sales of organic food and beverages have grown from $1 billion in 1990 to $20 billion in 2007. The 2009 Tutto Food Italian trade show that took place in Milan was the venue for exporters and distributors to look at key trends and innovation in the food industry. Vinegars, along with sauces and ready meals were covered at the show. Although many companies in the vinegar sector were conscious of the importance of value and price, there was a strong focus on premium goods. Clean and simple labelling helped portray this idea of superiority and decadence. Premium vinegars and dressings were frequently marketed like wine, highlighting barrel-aged, vintage, and a sophisticated bottle. Other approaches that were observed at the trade show included promoting the vinegars versatility; flavouring food, boosting health, and vitamin/mineral supplement. Although many people think that the gourmet industry was negatively affected by the economic downturn, studies have shown otherwise. Consumers have come to enjoy the affordable luxury that special gourmet sauces provide when dressing up a scaled down meal. Consumer awareness and demand for high quality, healthy attributes, natural ingredients, and organic standards often find this fulfilled in specialty and gourmet foods. Retail sales of gourmet, specialty, and premium foods and beverages in the U.S. are growing at a much faster rate than those of the overall food and beverage industry. The segment soared 10.9% to US$59 billion in 2007, according to a report from consumer goods research publisher Packaged Facts. Similar consumer surveys suggest that there is still a place for profitable gourmet and specialty foods, aimed at consumers who want to treat themselves in a way they can still afford, as opposed to spending more money at restaurants. Opportunities Sustainable options are a focus for many companies. Consumer packaged goods companies are looking for ways to cut costs and are finding that sustainability is a big opportunity to do that, while remaining socially conscious. Another opportunity for Canadian producers of vinegar is to capitalize on the positive reputation that Canadian agriculture and agri-food products have worldwide. High-quality ingredients such as apples, cranberries, and raspberries can help give Canadian vinegar an edge in foreign markets. Potential product and marketing opportunities that Canadian vinegar producers and exporters can capitalize on are outlined in the following sections: Quality, Canadian Ingredients Offering high-quality vinegars made from agriculture and agri-food products that Canada is renowned for worldwide, e.g. berries (blueberry, cranberry, raspberry, and

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blackberry), apples, potatoes, wheat, beer and honey, may prove successful in entering and/or expanding Canadian vinegar business in foreign markets. Innovative Varieties, Native to Canada Introducing new, innovative vinegar varieties to foreign markets (e.g. Saskatoon berry, Icewine, organic, pumpkin, maple syrup, and dessert vinegars, etc.) that act as niche products to existing vinegar offerings may also assist Canadian vinegar producers with expanding their business overseas. Promoting such marketable features and vinegar varieties in new ways to international markets will be key to successful market entry and increasing market share. For example, since vinegar beverages are currently popular in China and Japan, marketing yet another vinegar drink to the market may prove unsuccessful. However, introduction of an innovative product variety or use, such as Icewine or dessert vinegar (which would capitalize on the popularity of Canadian Icewine and the current vinegar beverage trend), may be popular with affluent consumer segments in such Asian markets and benefit from first-mover advantage. Marketing Health Properties/Benefits of Vinegar Canadian producers can also benefit from the global trend toward healthier living, by leveraging the marketable health properties and benefits of vinegar, an attractive feature for health conscious consumers. Vehicles/Venues for Foreign Market Entry Canadian vinegar producers looking to enter foreign markets and/or expand their current exporting business should consult the Agri-Food Trade Service web site for listings of trade shows and events taking place in their area and in foreign markets of interest at www.ats-sea.agr.gc.ca/eve/eve-eng.htm. Industry events worth noting include foodservice, retail food, specialty food, hospitality, and gift shows. Events showcasing Mediterranean, European, Western and Asian cuisine may also be of interest to vinegar producers, depending on their intended target markets. Exporters should also note that the high-end restaurant industries in international markets may be excellent points of entry for Canadian vinegar products, as many Canadian exporters have found success through these sectors. International gourmet culinary shows provide great forums for exporters to showcase their products to foreign buyers. This is also an excellent arena for determining whether a particular variety suits a market or compliments local fare, a very important step in developing a market. Although the U.S. remains Canadas greatest market for vinegar exports, other international markets and regions hold considerable potential for new, innovative, and high-quality Canadian vinegar products. However, careful consideration of marketing and product positioning needs to be made for each market of entry, as vinegars popularity, product variety, and traditional uses vary by region Challenges Companies are finding that in order to distance their food and beverage products from the competition, they must effectively communicate the benefits of the product, whether being price, value, or health. There are clear, scientific and regulated guidelines for how to properly state good-for-you claims in marketing. Companies

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are often surprised that federal rules govern this playing field. For further information on labelling, nutrition, and health claims, visit the Canadian Food Inspection Agency at: www.inspection.gc.ca/english/fssa/labeti/nutrition-pagee.shtml In a market with so many competitors, it is difficult developing new flavours and improved product ideas. It is estimated that 80% of all new product launches over the past twenty-four months were products that already existed in the marketplace. The other 15%-20% of the new flavours were innovations or represented product evolutions. The final 5% were considered to be real breakthrough innovations. Ten years ago, this category represented almost 20% of new products. This shift demonstrates the challenges that companies are having when coming up with new flavour ideas. Companies must ensure that the new product launches are renovated to have a much better cost value, delivering more without compromising the taste. A recent article from Chemistry Industry News and Intelligence focused on the food additives that have been used for centuries, including those used to preserve food by pickling with vinegar. Studies have shown that there has been a steady rise in the production and consumption of processed foods since the 1950s. This trend has initiated research towards food additives and the potential harm they can cause to consumers' health. In a recent attempt to regulate the food industry in Europe, an adoption of the food improvement agents package (FIAP) was introduced. The package consists of four new regulations providing a common authorization procedure for food additives, food enzymes and food flavourings, and individual regulations on enzymes, additives and flavourings. The regulations came into force in January 2009, with most of the measures applying from the start of 2010. Keeping up with the ever changing labelling requirements is a challenge for many companies in the food industry. However, despite the significant amount of legislation, many parties agreed that it has been more helpful than restrictive; boosting the competitiveness in the food industry. Government Support The Government offers a variety of services for Canadian exporters. In particular, the regional offices of the Canadian Trade Commissioner Service can help exporters conduct their business and achieve their goals. The Foreign Affairs and International Trade web site can be located at: www.tradecommissioner.gc.ca. This web site is also useful as it highlights various aspects of international trade. Topics ranging from import and export controls, funding opportunities, and travel tips can be found here. The Federal Government in the 2009 budget announced a program called the AgriProcessing Initiative. This initiative is designed to help the processing sector in Canada. The program contributes up to $2 million per project, ending March 31, 2014. For further details regarding the AgriProcessing Initiative, please visit: www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1262273502078&lang=eng The Ministry of Research and Innovation is investing more than $715 million to support key partnerships in innovation. The purpose of the Innovation Demonstration Fund (IDF) is to develop emerging technologies with a preference towards the environment, whether being an innovative green technology, process, and/or product. More information regarding this program can be found at: www.mri.gov.on.ca/english/programs/idf/guidelines.asp

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There is also a web site that offers business service advice for entrepreneurs and may be of use when conducting further research. The Canada Business Services for Entrepreneurs web site highlights opportunities for Financing for Innovation, Business Planning, and Regulations. www.canadabusiness.ca Furthermore, the Agri-Food Trade Service Regional offices will be able to assist with both FDA guidelines and labelling requirements. The contact information for the Ontario office is: Ontario Region Agriculture and Agri-Food Canada 174 Stone Road West Guelph, Ontario N1G 4S9 Tel: 519-837-9400 Fax: 519-837-9782 For a specific list of other regional office contacts, please visit: www.ats-sea.agr.gc.ca/reg/reg-eng.htm Key Resources A Guide to Good Vinegar: Common Questions and Some Less Common Answers Zingermans 2007 http://www.zingermans.com/Article.pasp?ArticleID=article31 Agriculture and Agri-Food Canada: AgriProcessing Initiative- 2010 http://www4.agr.gc.ca/AAFCAAC/displayafficher.do?id=1262273502078&lang=eng Agri-Food Trade Service: Regional Office Contact Information- 2010 http://www.atssea.agr.gc.ca/reg/on-eng.htm Canada Business: Services for Entrepreneurs- 2010 http://www.canadabusiness.ca/eng/ Canadian Agriculture Trade Statistics (CATS) - 2010 http://www.ats-sea.agr.gc.ca/stats/da-do-eng.htm Datamonitor: Oils and Fats in Japan to 2013- March 2010-06-29 DeLallo Foods- Vinegar from the Gods- 2010 http://www.delallo.com/articles/vinegar-gods European Commission Food Quality Geographic Indicators- 2010 http://ec.europa.eu/agriculture/foodqual/quali1_en.htm European Commission Organic Farming http://ec.europa.eu/agriculture/qual/organic/index_en.htm Foreign Affairs and International Trade Canada- 2010 http://www.international.gc.ca/trade-agreements-accords-commerciaux/agracc/nafta-alena/texte/chap04.aspx

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Global Trade Atlas Navigator Database Vinegar and Substitutes for Vinegar Obtained from Acidic Acid- 2010 http://www.gtis.com/gta Industry Canada- 2010 http://www.ic.gc.ca/eic/site/ic1.nsf/eng/home Mintel Custom Solutions Data Global New Product Database (GNPD) - 2010 http://www.mintel.com/ Moromi Vinegar- Drinkable Health Vinegar (Japan) - 2009 http://www.himfr.com/dp114050585466521100-Sell_Drinkable_Health_Vinegar_Japan/ Ontario Ministry of Research and Innovation: Innovation Demonstration Fund (IDF) 2010 http://www.mri.gov.on.ca/english/programs/idf/guidelines.asp The Vinegar Institute Market Trends and Todays Vinegar - 2007 http://www.versatilevinegar.org/markettrends.html The World of Food Ingredients: Natural Flavour Advances: Robin Wyers- February 2010 Research from Magazines Association of Food Industries: New Food Safety Requirements are Coming: John Bode- 2009 Canadian Food & Grocery: Hot Topics in the Regulations of Food: Jennifer McKenzie2007 Canadian Grocer: Salad Days of Produce: Michael Pollan- April 2008: Canadian Grocer: Sauces stirring up sales in the ethnic food aisle and Tips for heating up your ethnic sauce sales- March 2008: Exporter: Ontario Food Exports- 2008 Exporting to the United States: A Guide for Canadian Business- 2008 Food and Drink: Claim Game- July/August 2006 Food in Canada: Colour it Green: Deanna Rosolen- September 2008 Food in Canada: The 2009 Buyers Guide- October 2008 Grocer Today: Cheating at Home, Italian Style: Amanda Ryan- September/October 2008 Grocer Today: Organic Growth: Lauren Kramer- January/February 2008 Progressive Grocer: Grocers test alternative fuel in Texas- July 2006 Progressive Grocer: Indulge Me: Gail Fleenor- June 2008: Progressive Grocer: Oil Can: Bridget Goldschmidt- August/September 2009 The Global Vinegar Market: January 2011 15

Sunbelt Foodservice: Condiments, Sauces, and Spices: Mandy Rodgers- August 2009:

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