Despite some setbacks caused by the pandemic, Canada’s food and beverage sector may emerge even stronger in 2021, according to a new FCC report.
“The pandemic has brought losses that can never be recouped, but it has also opened a floodgate of opportunities for Canada’s food and beverage sector to become an even stronger part of the national economy,” said J.P. Gervais, FCC’s chief economist. “In many ways, the pandemic did not create these opportunities, but accelerated the tide of underlying trends that promote them.”
Despite the challenges posed by the pandemic, the report shows most economic indicators for the food and beverage processing sector are strong compared to other sectors of the Canadian economy.
Capital expenditures and employment in food and beverage processing, for example, fell less as a percentage than all industries combined.
The report also notes that higher disposable income and savings in 2020 will likely spur growth in food and beverage consumption once it is safe to fully reopen food services.
Success in containing the virus abroad also carries significant implications for Canada’s food and beverage processors, since more than 30 per cent of sales have gone to export markets over the past five years, according to the report.
Consumer trends and export markets offer a variety of opportunities for different parts of the food and beverage sector, which together represents the largest manufacturing employer in Canada with almost 300,000 workers.
It’s also the second largest manufacturing sector in terms of value of production with sales of goods manufactured worth $122.9 billion in 2020.
That year, the sector represented 1.8 per cent of the national Gross Domestic Product (GDP).
Grain and oilseed milling is expected to see the most significant increase in sales at 13.4 per cent, due to increased demand for edible oils, flour, and other baking products domestically and abroad.
Plant-based products are expected to capture a greater portion of food spending as part of a growing consumer trend.
Sugar and confectionary products are projected to see a 12.3-per-cent increase in sales for 2021 as consumers appear ready to indulge after going through various lockdowns, according to the report.
There are also projected sales increases for dairy products (5.6 per cent), beverages (4.9 per cent), processed seafood (4.7 per cent), meat products (4.6 per cent), and bakery and tortilla products (2.1 per cent) in 2021. Fruit, vegetables and specialty foods sales are expected to remain steady in 2021.
“The food and beverage processing sector showcased its resilience by adapting to the evolving trends and challenges posed by the pandemic,” Gervais said. “Government investments in food security and safety, along with low interest rates, a weak dollar and strong demand for healthy and high-quality Canadian food, could be the catalyst the sector needs to lead Canada’s economic recovery.”
By sharing agriculture economic knowledge and forecasts, FCC provides solid insights and expertise to help those in the business of agriculture and food achieve their goals.
For more information and insights, visit fcc.ca/Economics.