Trade disruptions stifle growth for Canadian food and beverage manufacturers: FCC
Farm Credit Canada released its mid-year food and beverage report update.
According to the mid-year update, the Canadian food and beverage manufacturing sector has “faced slower-than-expected growth in the first half of 2025, with sales and margins experiencing pressure given the challenging trade and economic environment,” notes a press release.
The update states the sector saw a modest sales increase of 0.8% in the first half of the year, but projects a 0.3% decline in the second half.
FCC Economics forecasts “overall sales growth for 2025 to be restricted to just 0.2%, down from the April projection of 0.6 per cent. If this holds, it will mark the lowest annual growth for the sector since 2005.”
The update notes that while the vast majority of Canadian food and beverage products continue to enter the U.S. market tariff-free, the case is not the same for Canadian exporters. Overall food exports to the U.S. are down in 2025.
Sectors with higher reliance on export markets faced more headwinds than those selling primarily into the domestic market.
"The first half of 2025 has been a test of resilience for our industry," said Amanda Norris, FCC senior economist, in a press release. "Despite the challenges, we have seen some sectors show remarkable strength, driven by sales diversification."
A potential bright spot for 2025 is an uptick in per capita Canadian household expenditure on food and non-alcoholic beverages in both the first and second quarter of 2025.
A continued strong demand for non-alcoholic beverages including energy drinks with new flavour profiles and functional ingredients is a longer-term trend and that momentum is expected to continue into 2026, notes the report.
There is cautious optimism for 2026, with expectations of stabilizing or even falling input prices, particularly for grains and oilseeds.
