REGINA, SK, April 1, 2026 /CNW/ - 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.
Performance will vary across subsectors. Margins are expected to improve in meat processing, seafood preparation, bakery products, grain and oilseed milling, and sugar and confectionery manufacturing. By contrast, fruit and vegetable processing and beverage manufacturing are expected to face renewed pressure.
Trade uncertainty continues to influence the outlook. Tariffs, supply chain disruptions, and geopolitical tensions are affecting export markets, input costs and creating uncertainty for businesses planning future investments. The conflict in the Middle East stands out as a potentially important risk shaping the outlook.
"Demand conditions remain uneven across product categories, and that will shape performance across the industry," said Johnston. "Businesses that improve productivity, manage input costs and adapt to changing consumer preferences will be better positioned as conditions evolve."
Investment trends reflect the cautious environment. Capital expenditures in the food and beverage manufacturing sector declined 5.3 per cent in 2025, and early indicators suggest investment may weaken further in 2026. Sustained declines in capital spending could limit productivity growth, reduce capacity expansion, and slow the adoption of new technologies across the sector.
Canada's food and beverage manufacturing sector includes more than 11,000 businesses and employs roughly 318,000 people, making it the largest manufacturing employer in the country and a critical link between Canadian farms and consumers. The sector serves both Canadian households and export markets, with many processors relying heavily on international demand, particularly from the United States, while trade disruptions, tariffs and shifting global demand continue to influence sales and investment decisions.
The annual FCC Food and Beverage Report provides forecasts and analysis across key segments of the sector, including grain and oilseed milling, dairy and meat processing, sugar and confectionery manufacturing, bakery products, seafood preparation, fruit and vegetable processing, and beverage manufacturing.
By sharing economic knowledge and forecasts, FCC provides insights and expertise to help those in the business of agriculture and food achieve their goals. For more economic insights and analysis, visit FCC Economics at fcc.ca/Economics.
About FCC
FCC is the leading lender in Canadian agriculture and food. We are investing in industry success through innovation, productivity and sustainability. Our customers rely on us for financing, capital, AgExpert management software, knowledge and industry connections. As a trusted partner and commercial Crown corporation that reinvests profits into ag and food, FCC is essential in building a stronger, more prosperous food industry for all Canadians. fcc.ca
SOURCE Farm Credit Canada
For more information, graphs, or interviews, contact: Deborah Movoria, Media relations, Farm Credit Canada, 306-530-9325, [email protected]
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