Canadian food and beverage sector faces mixed outlook for 2025: FCC report

Canada’s food and beverage manufacturers are headed into a year of uncertainty in 2025, as economic pressures, trade disruptions and shifting consumer habits weigh on modest growth projections, according to Farm Credit Canada’s (FCC) latest Food and Beverage Report.

FCC Economics forecasts food and beverage sales will rise just 0.6 per cent to $168.8 billion, while sales volumes are expected to fall by 1.5 per cent, largely due to changes in the beverage manufacturing sector.

“The food and beverage industry faces ongoing pressures from economic challenges and trade disruptions,” said Amanda Norris, senior economist at FCC. “While sales growth is projected to increase slightly, manufacturers will need to carefully navigate rising costs and shifting consumer habits to maintain profitability.”

Beverage sales are expected to decline 2.5 per cent, with volumes dropping 2.6 per cent amid waning interest in alcoholic beverages — especially beer — and slower growth in non-alcoholic drinks.

Meanwhile, per capita consumption of food and non-alcoholic beverages fell for the fourth straight year in 2024, down one per cent from the year before and eight per cent since 2021, although a late-year recovery showed some promise.

“Consumer behavior is shifting, with a growing emphasis on value and products that align with individual preferences,” said Norris. “In this environment, manufacturers who adapt to changing trends and focus on meeting diverse consumer needs will be better positioned to build brand loyalty and strengthen sales.”

The report points to bright spots in dairy and confectionery. Dairy product manufacturing is forecast to see an 8.3 per cent jump in sales and a six per cent rise in volume, while sugar and confectionery sales are expected to grow 10 per cent, buoyed by strong export demand despite high cocoa prices.

Norris said the sector “is at a crossroad, with both risks and opportunities ahead,” and emphasized the importance of innovation, cost management and market diversification.