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Food and beverage manufacturing sector is what sustains our labour market
Editorial by Christian Saint Cyr
National Director / Canadian Job Development Network
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When you look at Canada's major businesses, it's easy to see the ones that stand out. All of the major banks that are based in Toronto, the tech companies in Vancouver and the oil companies in Calgary. We know marine technology dominates the economy in Halifax; aerospace in Montreal and agriculture is essential on the prairies.
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It's easy to see the big companies and the flashy industries in any community across the country and yet there is one industry that underpins the local economy whether your town has just a few thousand residents or multiple millions and that is food and beverage manufacturing.
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This industry exists in little manufacturing facilities on the edge or town where trucks filled with chicken, eggs, meat, fish, grains and produce are dropped off day and night, providing us with the groceries we need and the literal sustenance necessary to fuel our daily lives.
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In the job development world, it's often easy to forget these companies behind chain link fences and focus on the more high profile companies in town in retail, hospitality, banking, the non-profits and in transportation.
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While uncertainty abounds, the data isn't as gloomy as you might expect. Farm Credit Canada's recently released '2025 Food and Beverage Report' forecasts food and beverage sales will increase 0.6% in 2025, from $167.8 billion to $168.8 billion.
Let's put this into context. At $170 billion, that's more than two and a half times the revenue generated by the oil and gas sector and nearly twice what we spend on all education in Canada each year.
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The current trade war with the United States and China is putting much of this at risk while stimulating other pieces.
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Our reliance on crops from the United States and Mexico is stimulating some sectors to expand capacity but is simultaneously hurting others. China has placed a 100% tariff on canola oil and peas as well as a 25% tariff on pork and aquatic products.
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To this, I implore Chinese officials to please... 'Give Peas a Chance!' Sorry, I've been waiting since I was eight years old to make that joke.
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According to this year's report, Canada’s food and beverage manufacturers face a year of uncertainty, with opportunities tempered by economic challenges, trade disruptions and shifting consumer habits.
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While FCC economists forecast a modest 0.6 per cent increase in food and beverage sales but a 1.5 per cent decline in sales volume, reflecting ongoing adjustments to beverage manufacturing. Profit margins are expected to improve slightly, though they will remain below pre-2019 levels, with variation across sub-sectors.
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According to Amanda Norris, senior economist at Farm Credit Canada, “the food and beverage industry faces ongoing pressures from economic challenges and trade disruptions. While sales growth is projected to increase slightly, manufacturers will need to carefully navigate rising costs and shifting consumer habits to maintain profitability.”
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For 2025, FCC Economics forecasts a further decline in beverage sales of -2.5 per cent and -2.6 per cent in volumes. The anticipated decline is driven by a continued shift away from alcoholic beverages, particularly beer, and a slight slowdown in non-alcoholic beverage sales after four years of strong growth.
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To better understand the Food and Beverage Sector, it's helpful to look at specific sectors and what they can expect in the year to come.
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Grain and oilseed milling: Profitability softening coming off commodity supercycle
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After a strong four years, including two years of double-digit year-over-year growth, lower prices translated to a 15.5% drop in sales in 2024. The sector is heading into another year of declines, with sales projected down -3.8% and volumes (that is, sales adjusted for inflation) down -8.3%.
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Sugar and confectionery products: High reliance on exports to the U.S. clouds 2025 outlook
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Strong prices helped drive the sector to double-digit sales growth between 2021 and 2024. Prices will drive sales again in 2025, forecasted up 10.0%, while volumes (that is, sales adjusted for inflation) are predicted to increase 6.7%.
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Fruit and vegetable preserving and specialty food: Falling sales pressure already tight margins
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Strained household budgets coupled with high food inflation, high interest rates, and uncertain times have helped boost sales over the last three years. However, with both inflation and interest rates falling, sales are forecasted to fall -2.0%, while volumes (that is, sales adjusted for inflation) are expected to fall -6.5%, which aligns with volume sales in 2018 and 2019.
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Dairy product manufacturing: Strong demand supporting profitability
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Another strong year for dairy product manufacturing sales is expected for 2025. FCC Economics forecasts an 8.3% increase in nominal sales and a 6.0% increase in volumes (that is, sales adjusted for inflation), even with the prospect of slowing population growth.
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Meat product manufacturing: Rising prices not likely enough to offset rising input costs
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In 2024, the meat product manufacturing sector saw a sales growth of 1.4%, continuing a decade-long trend of consistent year-over-year increases. However, it was also the first year since 2020 that the industry experienced a decline in volumes (that is, sales adjusted for inflation), dropping by -1.4%. FCC Economics forecasts that prices will continue to drive sales into 2025. Sales are forecast to increase 2.8%, with volumes down -3.6%.
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Seafood preparation: Challenges with dependency on the U.S. market
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As anticipated in last year’s FCC Food and Beverage report, seafood preparation sales rebounded in 2024. Sales increased 13.2% while volumes (that is, sales adjusted for inflation) jumped 16.9%. After this rebound, sales and volumes are forecast to fall in 2025 but not wipe out all the gains from 2024.
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Bakery and tortilla products: Lower commodity prices supporting margins
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Over the last three years, sales of bakery and tortilla products were influenced by large price increases, with volumes remaining relatively stable year-over-year. In 2025, FCC Economics forecasts sales to decline -3.9% and volumes (that is, sales adjusted for inflation) -1.8%.
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Beverage manufacturing: Consumers move away from alcohol beverages
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Beverage manufacturers faced a challenging year in 2024 as many consumers pulled back on discretionary spending, while substituting away from alcohol in favour of low or non-alcoholic beverages. Growth in soft drink sales in 2024 could not overcome the downward pressure from alcoholic beverage sales. Overall sales fell -1.7% while volumes, (that is, sales adjusted for inflation), fell -7.0% . In fact, volumes sank last year to 2018 levels, wiping away gains during the pandemic.
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For 2025, FCC Economics forecasts a further decline in sales of -2.5% and -2.6% in volumes. The anticipated decline is driven by a continued shift away from alcoholic beverages, particularly beer, and a slight slowdown in non-alcoholic beverage sales after four years of strong growth.
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While I think the report does a good job of highlighting some of the trade challenges that await us, one note of encouragement for the year to come is the efforts of the federal government and the provincial governments to encourage trade back-and-forth between the provinces. It may not make it any easier to get strawberries in January or an avocado for Cinco de Mayo, but we can do a lot to offset international trade by helping products flow more smoothly over provincial boarders.
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This will be supported by Canadians who are choosing not just Canadian products but locally grown products as well. While this past week's annual three-game header between the Toronto Blue Jays and Seattle Mariners would typically attract as many as 25,000 Canadians, this year only a fraction (perhaps one-third) of this attended these games with large sections of the stadium empty as late as Friday afternoon.
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So we have this information, what do we do with it?
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I'm a huge fan of discovery. I feel this is a great opportunity for job developers and other employer engagement professionals to take this research in-hand and go and visit local food and beverage manufacturers and ask questions about how this trade war is impacting their business, operations, recruitment and staffing.
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Food and beverage manufacturers have lots of different vendors providing content, packaging, shipping, assembly, etc. The career development sector is their vendor providing staffing. By engaging in this sort of discovery, you're helping identify their problems and you're better able to provide staffing solutions.
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If you don't know where to look, check out the lonely Coca-Cola bottling plant out by the highway, the specialty candy maker or the commercial bakery in a little visited industrial park. Great job development ensures all parts of the local economy gets attention.
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We’ll be discussing job development in the food and beverage sector at our #MotivatingMondays meeting of the Canadian Job Development Network, Monday May 12th at 8:30am Pacific; 9:30am Mountain; 10:30am Central; 11:30am Eastern; 12:30pm Atlantic and at 1pm in Newfoundland.
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On the morning of Monday May 12th 'Click this Link' to join the session LIVE.
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