Trade shocks put food and beverage margins under pressure: 2026 mid-year update

Each year, we revisit our Annual Food and Beverage Report to assess how sales and margins are evolving. The first half (H1) of 2026 was stronger than expected at the aggregate level: Canadian food and beverage manufacturing sales reached $88.1 billion, up 4% from the first half of 2025. That headline masks sharply different subsector results, however, and the outlook for the second half has become more challenging as geopolitical risks and trade measures add pressure on both revenues and costs.

Sales growth masks sharply different sector performance
Food manufacturing sales increased 4% year-over-year in the first half of 2026, but the gain was far from broad-based. As Table 1 shows, the increase was driven by higher prices rather than volumes: nominal sales rose 4%, while volume estimated from real sales were flat. Grain and oilseed milling led the sector, up 28%, followed by fruit and vegetable processing and animal food manufacturing, both up 7%. Dairy sales increased 4% and meat sales rose 2%. In contrast, sugar and confectionery manufacturing declined 8%, while bakeries and other food manufacturing were each down about 1%.

Beverage manufacturing was weaker, with sales down 3%. Brewery sales declined 7% and distillery sales fell 12%, while wineries were a notable exception, up 13%. These differences matter for the outlook: some industries entering the second half with weaker sales are also among those facing the new U.S. trade restrictions.