A lot has changed since our 2021 Food and Beverage Report in March, yet the pandemic continues to be the headline:
- Foodservice sales have rebounded along with the re-opening of the economy and stronger household incomes.
- Higher agricultural commodity and material prices are challenging profitability.
- Workforce shortages continue to be an issue, and unfilled orders (up over 42% YoY) are slowing the growth in sales.
All said, food and beverage manufacturing sales have been strong amid challenging conditions, and the outlook remains positive.
Food and beverages manufacturing sales forecast
According to Statistics Canada, food and beverage manufacturing sales have increased 11.8% YTD thru July. Sales should continue to be strong in Q4 assuming the economy isn’t disrupted by rising COVID cases. We project sales to increase 15.9%, finishing the year up 13.3% before decelerating into Q2 of 2022 (Table 1). A big catalyst for this additional growth is consumers getting back together with extended family for the holidays. It also breaks down the drivers of 2021 YTD sales into a volume index and price index.
Leading this sales growth is grain and oilseed milling. Demand is up, with volumes up 10% and selling prices up over 32%. Into Q4 and 2022, sourcing product and keeping up will be key after the summer drought lowered crop yields in western Canada.
Weaker price inflation (and even some deflation) was registered for seafood, bakeries, dairy, and beverages, even as these sectors have experienced strong growth in sales. Beverage demand outside of wine appears to have reached a short-term peak, and there exist oversaturation and inventory concerns in the seltzer and beer markets. Sugar and confection are seeing similar growth and benefiting from a stronger preference towards convenience. This growth is expected to slow as we head into cooler weather.Click here to see more...