Canada’s food and beverage manufacturers are expected to see modest sales growth in 2026, but weak demand continues to challenge the sector, according to the latest Farm Credit Canada (FCC) Food and Beverage Report.
FCC Economics forecasts food and beverage manufacturing sales will increase 0.8 per cent in 2026, driven by higher prices, while sales volumes are expected to decline by 0.7 per cent. That would mark the fourth consecutive year of falling volumes, continuing a trend where higher prices support revenues while underlying demand remains weak.
“The gap between modest sales growth and declining volumes highlights the demand challenge facing food manufacturers,” said Craig Johnston, chief economist at FCC. “Weak volume growth shows the sector is still adjusting to tighter consumer spending and slower population growth.”
Input costs have risen sharply in recent years as supply disruptions pushed prices higher across the agricultural supply chain. Events such as avian influenza, drought in cocoa-producing regions, and tight livestock supplies increased costs for many manufacturers. Looking ahead to 2026, prices for key inputs including cattle, hogs, canola and cocoa are expected to ease, providing some relief for processors. It should be noted that this outlook is subject to uncertainty, as the conflict in the Middle East has introduced new risks to energy and commodity markets.
Gross margins for food and beverage manufacturers are forecast to improve in 2026 and 2027 following several years of pressure. In 2026, the improvement is expected to come mainly from easing raw material costs as sales growth remains modest and volumes continue to decline. As market conditions stabilize, margin gains in 2027 are expected to reflect a combination of improved cost conditions and stronger revenue growth.
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