To The Haldimand Press
Canada’s food and beverage manufacturing sector saw strong sales in 2022 despite a challenging environment according to the FCC Food and Beverage Report. Food and beverage manufacturing sales increased 10.6% to $156 billion in 2022, with gains predominately coming from higher export values and strength in the grain and oilseed milling industry. Modest sales growth is expected in 2023 at 2.2%, with the major protein industries of dairy, meat, and seafood expected to outperform that forecast. Margins were tighter last year as manufacturers navigated increases in prices of raw materials, labour shortages, and supply chain disruptions.
“It is difficult for food and beverage manufacturers to pass on those increased labour and material costs,” said J.P. Gervais, FCC’s Chief Economist. “Gross margins as a percent of sales fell to their lowest level in over 20 years in 2022. While margin trends vary based on industry, we do anticipate an overall improvement to gross margins (in 2023).”
“Consumers cut back on discretionary spending last year as they faced higher inflation, depleted savings, and higher costs of servicing debt,” Gervais notes. “Inflation led to changes in food consumption decisions which resulted in fewer purchases of locally made or higher-value foods that consumers supported in mass during pandemic lockdowns.”
Shifts in consumer spending resulted in a decline in the market share of domestic-made foods, reverting to the consumption mix of domestic vs foreign foods observed prior to the pandemic. That statistic also reflects an increasingly diverse Canadian population who is looking to put different kinds of food on their tables: “Despite inflationary pressures, we continue to see Canada’s food and beverage sector adapt and innovate to meet the changing market demands,” said Gervais. “The sector remains healthy and has a positive long-term outlook.”
Global demand for Canadian-produced food is growing rapidly. Promising innovations in food manufacturing can position Canada favourably to expand its reach into profitable food industries. There is also opportunity to grow the sector by meeting the consumer demand for affordable, convenient, and sustainably produced foods.
“How businesses adapt to changing consumer needs and economic conditions will determine their success going forward,” Gervais said.
The annual Food and Beverage Report features grain and oilseed milling; dairy, meat, sugar, confectionery, bakery, and tortilla products; seafood prep; fruit, vegetable, and specialty foods; and soft drinks and alcoholic beverages. By sharing economic forecasts, FCC provides expertise to help those in agriculture and food achieve their goals. For more information, visit fcc.ca.
