After hitting a record $165 billion in food and beverage manufacturing sales last year, 2024 is expected to see sales moderate in sync with slowing inflation and tighter household budgets.

Despite sector-specific headwinds and changing consumer shopping habits, the overall outlook is more positive. Population growth and stabilizing input costs are two reasons margin improvement is expected in 2024.

“High inflation and interest rate increases over the past two years have put pressure on household budgets, leading to changes in consumer spending habits,” said FCC chief economist, J.P. Gervais in highlighting the evolving consumer landscape. “As a result, Canadians spent less on average on food and beverages in 2023.”

“While changing shopping habits may pose challenges, they also present opportunities for food and beverage manufacturers,” said Gervais. “Taste remains the top consideration for consumers, but price sensitivity has increased, leading processors to innovate and meet evolving consumer demands.”

“FCC Economics is projecting a slight decrease of 1.4 per cent in food and beverage manufacturing sales for 2024. However, we anticipate gross margins to improve by 1.7 per cent on average. One wildcard in our forecasts is the resilience of the U.S. economy, which could lead to growth in exports,” added Gervais.

The report forecasts a decrease in the inflation rate for food purchased at grocery stores, falling below 2.0 per cent this spring and stabilizing around pre-pandemic levels thereafter.

The annual FCC Food and Beverage Report features insights and analysis on grain and oilseed milling; dairy, meat, sugar, confectionery, bakery and tortilla products; seafood preparation; and fruit, vegetable and specialty foods, as well as soft drinks and alcoholic beverages. 

Visit FCC Economics at fcc.ca/Economics.

Source: Farm Credit Canada April 10, 2024 news release