‘Creating opportunity from resilience’

Source: Fresh Plaza

The FCC Food and Beverage Report highlights opportunities and risks for Canadian food manufacturers to help navigate the economic recovery. 

The onset of COVID-19 provoked shockwaves throughout the agri-food supply chain. Shutting down foodservices caused significant disruptions as manufacturers were forced to re-evaluate their current business strategies and sometimes move production away from foodservice to the grocery store. New concerns over employee health forced companies to make significant investments in personal protective equipment (PPE) and adjust production processes. Vaccines bring hope as economies gradually re-open, but the pandemic still looms large on the economy.

Food and beverage manufacturing sales increased 3.5% year-over-year (YoY) to $122.9 billion in 2020. Declines in sales to the foodservice industry were offset by increases in domestic grocery store sales and growing exports. GDP for food and beverage manufacturing fell 1.0% from lower investment and higher costs.

Manufacturing sales and exports grew in 2020 YoY
Image: Statistics Canada.

Fruit, vegetables and specialty food
This industry is especially broad, including canned and frozen. fruits and vegetables, and frozen dinners and pizzas. 2020 was a profitable year as strong demand increased sales. 2021 is expected to be less fruitful.

Centre-of-store shopping outperformed the perimeter in 2020. With more people working from home, consumers filled pantries and freezers and moved to home meal prep. Frozen food and nonfrozen products in this industry offer convenience, affordability, and increasingly nutritious options. This is evident by the 9.9% increase in sales in 2020 YoY. The industry weathered the initial storm of COVID in Q2 2020 as sales grew over 11% in the quarter.

High demand for value-added products like frozen fruit and vegetables increased profitability. Lower labour costs also improved the industry’s profitability as total employment declined 1.9% YoY, with wages as a percent of sales down to 11.4%. A declining trade balance and higher production and distribution cost lowered GDP growth relative to sales.

Click here to read the full report.

Source: fcc-fac.ca