The Canadian food and beverage manufacturing sector has faced slower-than-expected growth in the first half of 2025, with sales and margins experiencing pressure given the challenging trade and economic environment. According to Farm Credit Canada’s (FCC) Food and Beverage Report mid-year update, the sector saw a modest sales increase of 0.8 per cent in the first half of the year, but this momentum is not expected to hold, with a projected 0.3 per cent decline in the second half.
After a promising start to 2025, food and beverage manufacturers are beginning to feel the pinch of trade disruptions. FCC Economics now forecasts overall sales growth for 2025 to be restricted to just 0.2 per cent, down from the April projection of 0.6 per cent. If this holds, it will mark the lowest annual growth for the sector since 2005.
While the vast majority of Canadian food and beverage products continue to enter the U.S. market tariff-free, it's far from business as usual for Canadian exporters. Canadian businesses must ensure thorough documentation to demonstrate compliance with CUSMA regulations, adding complexity to the trade landscape. As a result, overall food exports to the U.S. are down in 2025 and uncertainty is hurting businesses investments.
Much of the sales growth seen so far is price-driven: sales are slowly trending up because of price increases, while the volume of goods sold is declining. Sectors with higher reliance on export markets faced more headwinds than those selling primarily into the domestic market. For example, dairy products and meat product manufacturing showed positive sales early in the year while grain and oilseed milling faced significant challenges early on due to tariffs and biofuel policy uncertainty.
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