REGINA, SK, Oct. 1, 2024 /CNW/ - Sales of sugar, confectionary products and non-alcoholic soft drinks are expected to lead growth in the food and beverage sector in the coming months, with sugar and confectionary sales anticipated to increase 16.9 per cent when compared to 2023, according to the Farm Credit Canada (FCC) Food and Beverage Report mid-year update.
The growth is attributed to higher volumes and prices, resulting from stronger demand and higher costs of inputs.
"Canadians are starting to spend more on food and non-alcoholic beverages when compared to last year," said Amanda Norris, FCC senior economist. "But even with slowing inflation and interest rate cuts, retail prices remain significantly higher compared to four years ago, so the overall consumption trend is mixed."
Sales in the food and beverage sector were estimated at the beginning of the year to fall 1.4 per cent, but sales are now expected to decline 0.7 per cent.
In the first half of 2024, food manufacturing sales were up across several food product categories including bakery and tortilla products, dairy, fruit and vegetable preserving and specialty food, meat products, seafood preparation, and notably, sugar and confectionery, but declines are likely in the second half. After large gains, mainly due to inflationary pressures, grains and oilseeds will see sales drop closer to the long-term historical trend as lower commodity prices work their way through the supply chain.
In beverage manufacturing, sales declined 6.6 per cent in the first half of the year. Strong non-alcoholic soft drink sales in the second half of 2024 and first half of 2025 will help the sector recover, as alcohol sales continue to struggle. Wine sales are expected to decline in 2024 towards 2019 levels after large gains from 2020-22. Distilleries can boost sales by taking advantage of the growing ready-to-drink market and loosening restrictions around the sale of alcohol in Ontario.
"Looking forward, we're anticipating overall soft sales in the food and beverage sector in the second half of 2024 and going into 2025, as inflationary pressures ease and consumers remain under pressure due to high debt servicing," said Norris. "Manufacturers and retailers are finding ways to meet consumer needs through opportunities such as discount stores, private labels and value-size offerings."
Food and beverage manufacturing gross margins also remain under pressure. The index of gross profit margin is anticipated to improve 0.5 per cent on average this year, slightly below earlier predictions of 1.5 per cent. This is largely due to persistent high input costs, including wages and benefits. However, margins are expected to improve significantly in 2025 as costs moderate.
FCC is proud to be 100 per cent invested in Canadian agriculture and food. The organization's employees are committed to the long-standing success of those who produce and process Canadian food. FCC provides flexible financing and capital solutions, while creating value through data, knowledge, relationships and expertise. FCC offers a complement of financial and non-financial products and services designed to support the complex and evolving needs of the industry. As a commercial Crown corporation, FCC is a stable partner that reinvests profits back into the industry and communities it serves. For more information, visit fcc.ca.
SOURCE Farm Credit Canada
For more information, photos or interviews, please contact: Sarah Mazenc, Corporate Communication, Farm Credit Canada, 306-780-5219, [email protected]
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