StudyFebruary 2021Food and BeverageIndustry OutlookHow changes in the economy affect Canadianfood and beverage manufacturersbdc.caFood and beverage manufacturing industry outlookHow changes in the economy affect Canadian food and beverage manufacturers1
Industry at a glanceWhy it matters 118 billionof sales of manufactured foodand beverages (2019)290,000employed in foodand beveragemanufacturing7,800food and beverage processingbusinesses, 91% with less than100 employeesbdc.ca25% growth inexports over thelast five yearsFood and beverage manufacturing industry outlookAgri-food processing is the second largest manufacturingindustry in Canada, accounting for 17% of total manufacturingsales. The processing industry is an essential part of theCanadian food supply chain. It purchases about 40% ofCanadian agricultural production and sells over 70% of itsoutput to Canadian retailers and food service providers. Thisindustry still has strong growth potential, especially at a timewhen we are looking to diversify and strengthen our economyin a downturn. With the world’s population projected to riseto 10 billion by 2050, there are huge opportunities for ourmanufacturers to supply the growing global demand for food.30%of total manufacturingsales is exported70%of food and beverage productsare bought by businesses andconsumersHow changes in the economy affect Canadian food and beverage manufacturers2
Report highlightsProduction disruptions,labour shortages, reduceddemand from restaurantsand new social distancingmeasures all hindered theindustry in the early springof 2020. At the same time,demand for food servicesshifted to retailers. Overall,the industry declined5.2% to mid-2020 but hadalready recovered to prepandemic levels by the fallof 2020.bdc.ca15.6 %growth expected infood and beveragemanufacturing outputover the next five years.Food and beverage manufacturing industry outlookA shift to healthier,ethical and organicfood products—Canada’s foodprocessors can remaincompetitive by quicklyadapting to theseemerging consumerpreferences.Exports of processedfood and beverageproducts represent athird of the industry’soutput. The UnitedStates is the largestexport market with 72%of sales.Evolving consumerdemand, labourshortages and theneed to invest in newsmart manufacturingtechnology will presentboth challenges andopportunities tobusinesses operating inthis sector.How changes in the economy affect Canadian food and beverage manufacturers3
The foodand beverageindustrybdc.caFood and beverage manufacturing industry outlookFood and beverage manufacturers transforminputs into value-added products, which arethen distributed to food retailers, food serviceestablishments and consumers. The largest food andbeverage processing segment in Canada is meatprocessing, which accounts for 17% of the industry,followed by bakery (14%) and dairy (9%).How changes in the economy affect Canadian food and beverage manufacturers4
Regional compositionof the agri-foodprocessing sectorFood processing is the largest manufacturingindustry in most provinces. Ontario and Quebecaccount for most of Canada’s production withrespectively 42% and 24%.Meat processing is the most significant food industryin Quebec, Ontario, Manitoba and Alberta. Grain andoilseed milling represents the most important subindustry in Saskatchewan; beverage manufacturingis the largest sub-industry in British Columbia; andseafood product preparation is the most significant inthe Atlantic provinces.Exports of processed food and beverage productsrepresent a third of the industry’s output. Exportsincreased by 7% in 2019, compared to 2018. TheUnited States is the largest export market (72%),followed by China (8%) and Japan (6%).bdc.caBritishColumbiaMeat processing,breweries, wineriesand distilleriesFood and beverage manufacturing industry outlookPrairiesOntarioQuebecAtlanticGrain and oilseedmilling, meatprocessing, lentilsand legumesprocessingMeat processing,dairy, bread andbakery products,and sugar andconfectioneryproductsMeat processing,dairy manufacturing,sugar andconfectioneryproductsSeafoodproducts, potatomanufacturingHow changes in the economy affect Canadian food and beverage manufacturers5
5Consumers shift to eat-at-homeproductsConsumer demand is shifting to grocery purchasesand eat-at-home products.economicdrivers towatchSocio-economic factorsPopulation growth and rising incomes in Canadaand around the world present huge opportunitiesfor Canadian food manufacturers.Commodity price volatilityIncreasing input costs are an importantchallenge for processors.Changing consumer preferencesConsumers are demanding healthier, higher quality,locally sourced and ethical products. Canada’sfood processors can remain competitive by quicklyadapting to these changes in consumer preferences.Automating production andadopting technologyManufacturers need to integrate the latesttechnologies into their operations to boostproductivity and take on the competition.bdc.caFood and beverage manufacturing industry outlookHow changes in the economy affect Canadian food and beverage manufacturers6
Five economic drivers to watchConsumers shiftto eat-at-homeproductsThe food and beverage industry isone of the few to have experienced asurge in demand as a direct result ofthe pandemic. Restrictions, includingthe closure of restaurants, resulted inconsumers purchasing more groceriesand even stockpiling them. Overall, foodmanufacturers saw sales increase by 1.8%between March and May 2020, whilesales in the overall manufacturing sectordeclined by 27%.78.9%Low demand from restaurantsspike in grocery spending inMarch, 2020 over the previousyear was triggered by consumersshifting to eat-at-home productsand stockpiling food due to fears ofshortages.and the hospitality sector continues as operator capacity is hinderedby government imposed lockdowns, the absence of large events andreduced tourism. Demand for food manufacturers will by supported byconsumers, who will continue to spend more in supermarkets in thenear term.20%Figure 1 : Grocery spending is still 20% higherthan last yearhigher grocery spending inNovember 2020 over the samemonth in 2019 indicates thatconsumers continue to spend moreon groceries.Canada, year-over-year, % changeGrocery spendingDining spending80%End of 202160%40%Even when restaurants reopen,restrictions will likely reduce theircapacity for at least a few months.Therefore, higher demand forgroceries will remain into 2021. Itwill then slowly subside towards theend of 2021, counterbalanced byincreasing demand from 0%-80%Source: RBC Economics, RBC Data and Analyticsbdc.caFood and beverage manufacturing industry outlookHow changes in the economy affect Canadian food and beverage manufacturers7
Five economic drivers to watchSocio-economicfactorsPopulation growth and rising incomes inCanada and around the world presenthuge opportunities for Canadian foodmanufacturers to position themselves asglobal leaders.10 billionProjected world population in 2050.In addition, a billion people will beadded to the middle class and, astheir incomes rise, they will spendmore on food. Demand for meat andother sources of protein is expectedto rise significantly in Asia and Africa.40 million Canadiansby 2025Canada’s population is expectedto grow by 6.3% over the next fiveyears.Increasing demandfrom internationalmarketswill be a key driver of industrygrowth. Demand for protein isforecast to increase by as muchas 70% by 2050. Canada has thepotential to become the secondlargest agri-food exporter in theworld after the United States. Newinitiatives such as Protein IndustriesCanada, a supercluster receivingfederal government and matchingindustry investment, will help supportthis high-growth sector.COVID-19 anddisposable incomeDuring a pandemic, economistswould normally expect a sharpdrop in household incomes.However, Canadian workerswho lost their jobs during theCOVID-19 pandemic saw theirincomes sustained by the CanadaEmergency Response Benefitand other government programs.As a result, disposable incomeincreased by 11.8% in the secondquarter of 2020, explaining, in part,the resilience of the food market.14.5%expected growth in disposableincome in Canada by 2025.Disposable income is forecast to riseat a faster pace over the next fiveyears. Higher levels of disposableincome will result in consumersincreasing their spending on higherquality, higher quantities and a morediverse array of food products.bdc.caFood and beverage manufacturing industry outlookHow changes in the economy affect Canadian food and beverage manufacturers8
Five economic drivers to watchCommodity pricevolatilityPoor weather, natural disasters, climatechange, disease and trade disputes canall disrupt commodity prices. Higheragricultural commodity and energy pricesare reflected in many inputs used byfood and beverage processors, includingingredients, packaging, production costsand transportation. Ingredient supplies,in particular, are vulnerable to pricefluctuations and are a major factor inbusiness profitability.bdc.ca65%Innovative strategyof food processors’ expenses, onaverage, come from raw ingredientsand inputs.The Farm ProductPrice Index (FPPI)measures price changes for rawagricultural products purchased byfood manufacturers in Canada. TheFPPI index rose sharply during the2011-12 period, driven by a 25%increase in crop prices. In 2014,potato prices jumped by 15% andcattle and hog prices increased 18%.In the last two years, volatility camemainly from meat and vegetableprices.Traditional responses to increases in ingredient prices have been to substituteingredients, operate on thinner profit margins and/or pass price increases onto consumers. Manufacturers can adopt more innovative strategies to mitigatecommodity price volatility through such moves as focusing on higher value-addedproducts, vertical integration and diversifying their product offerings.Figure 2: Gap narrows between selling prices and ingredient costsCanada, 3-months moving average, Index 2007 100Farm Product Price Index (FPPI)Industrial Product Price index forfood manufacturing (IPPI)145135125A narrowing gap115between selling prices for foodprocessors, as reflected in theIndustrial Product Price Index (IPPI),and ingredient costs over the lastyear has been positive for theindustry. Yet, elevated uncertainty inthe global economy could lead toheightened volatility in commodityprices going forward.105Food and beverage manufacturing industry 420152016201720182019202075Source: Statistics CanadaHow changes in the economy affect Canadian food and beverage manufacturers9
Five economic drivers to watchChangingconsumerpreferencesCanadian food and beverage processorscan no longer afford to compete on pricealone. Growing numbers of consumers aredemanding higher quality, locally sourcedand ethical products. This has promptedmany manufacturers to develop healthierversions of existing products and launchnew products. Companies that fail toadapt to these pressures may lose out tomore nimble competitors.27%Buy local movementof consumers are health consciousin Canada. Additionally, three in fourCanadians try to eat healthy.1drives Canadian consumers and food processors to source locallyproduced ingredients when available. An estimated 21% of Canadiansincreased their consumption of local products since the beginningof the pandemic, and 74% say they want to buy even more localproducts.Higher quality andnatural food productsChanging consumer preferences areboosting demand for healthy andorganic products, including foodfree from artificial ingredients andadditives, alternative protein sources,leaner meats, and low sugar and fatproducts.Transparencyis important to consumers. They now want to know more about thefood they eat, including how it was processed, where it came from andhow it was grown.Ethical consumersare another influential segment,demanding safe and sustainableproducts. There is increasingpressure on manufacturers to reducewaste in their operations, includingthrough progressive ingredientsourcing strategies and innovativepackaging. Ethical products are evenmore important for those under 35years of age.1. Attitudes Toward Healthy Eating 2017 studybdc.caFood and beverage manufacturing industry outlookHow changes in the economy affect Canadian food and beverage manufacturers10
Five economic drivers to watchAutomatingproductionand adoptingtechnologyThe industry is automating and makingbetter use of technology and data.Investments in these areas by Canadianfood and beverage processors can drivemajor productivity gains. While, overallbusiness investment is forecast to takearound two years to return to pre-crisislevels, investment by food processorsshould rebound faster. This will be drivenby a need to increase productivity and afavourable outlook for the industry.bdc.ca 3.2 billion capitalinvestmentLabour shortages, high wage inflationand strict social distancing protocolsin machinery and equipment in2019. More food processors areinvesting in new equipment to furtherautomate production.have hurt production and profits. To remain competitive, manyoperators will have to invest in technology to automate aspects oftheir production processes and decrease labour costs.Lagging in tech adoption86%growth in investment in thelast five years, with particularlylarge increases in 2018 and2019. In comparison, the overallmanufacturing sector’s investmentgrew by only 23% over the sameperiod.While the industry has seen increasing investment in recent years,Canada’s food processors still have low rates of technology adoptioncompared to other countries. Companies that fail to embraceautomation, digitization and other technological advances willbecome increasingly less competitive.49%of firms in the food processingindustry invested in advancedtechnologies in 2017.Food and beverage manufacturing industry outlookHow changes in the economy affect Canadian food and beverage manufacturers11
What is the outlook for thefood and beverage sector?Strong growth over the next 5 yearsFigure 3 : Food and beverage manufacturing output in CanadaWhile the pandemic caused a 5.2% output declineto mid-2020, it had already recovered to prepandemic levels by the fall of 2020. We estimatethe food and beverage manufacturing industryexperienced overall growth of 1% in 2020. Theindustry is expected to grow by 2.4% in 2021 andgain a further 4.5% in 2022. Compared to its precrisis level, gross output is expected to grow by acumulative 15.6% by 2025.Quarterly, seasonally adjusted at annualized rate, Index 2019 100115110105100Index 2019 100Our baseline scenario assumes that the overalleconomy will return to its pre-crisis GDP only bymid-2022.12095902019 Q12020 Q12021 Q12022 Q12023 Q12024 Q12025 Q185Sources : Oxford Economics, BDC Economics.bdc.caFood and beverage manufacturing industry outlookHow changes in the economy affect Canadian food and beverage manufacturers12
What is the outlook for the food and beverage sector?Taking advantage of post-crisis trendsEvolving food demand, labour shortages as wellas a need to keep investing in new technologywill present both challenges and opportunities forbusinesses operating in this sector.Export diversificationEvolving food demandTight labour markets andevolving skill requirementsRethinking hallengeThe concentration of food exports in termsof products and trade partners is a traderisk to be monitored in an era of risingprotectionism and commodity price volatility.A growing middle class around the world isdemanding higher quality products, whilesocially conscious consumers want locallysourced and sustainable food.OpportunityOpportunityCanadian food processors face labourshortages. These shortages will intensifyas markets for Canadian products expand.Moreover, the skill sets required for thesector are evolving.A goal for the industry is to diversify itsproducts and trade partners away from theU.S. Firms should orient their diversificationstrategy toward the rising middle class indeveloping countries, which is creating newexport opportunities. Much of the futuregrowth will come from there.Market research and product developmentcan help companies determine customerneeds and what products will meet them.Companies that embrace new trends andinnovative products will position themselvesas preferred suppliers.Managing resources and processesrepresents a major challenge—one-thirdof global food production is lost in thesupply chain. Unexpected contingenciesdemand flexible provisioning and adequateinventory management systems, while varyingtemperature and humidity conditions requiresafeguarding supply chains.bdc.caFood and beverage manufacturing industry outlookOpportunityTo compete, companies will need to investin automation and digital logistics systems,as well as in training employees to work inincreasingly high-tech facilities.OpportunitySmart manufacturing has the potentialto drastically change the way processorsperform their operations. Optimization tools,precision scheduling and analytics allowcompanies to maximize capacity and uptime;adapt to customer needs in real time; reduceingredient and food waste; and reduce costs.How changes in the economy affect Canadian food and beverage manufacturers13
How food companies canbeat the competitionRe-evaluate yourdistribution strategyWith many consumers nowworking at home, it’s importantto review your distributionstrategy to make sure yourproducts are where yourcustomers are.Focus on digitalmarketingThe growth of online groceryshopping means foodprocessors have to improvetheir digital marketing game orrisk being left behind.bdc.caFood and beverage manufacturing industry outlookThink positioning firstwhen developing newproductsMany food companies don’tgive enough thought to whatconsumers want in terms ofnew products, including pricing,before diving into developingtasty new offerings.Market research is keyto exporting successExporting is tough. It requires adedicated team and investmentin research to understandconsumer preferences andother dynamics in your targetmarkets.How changes in the economy affect Canadian food and beverage manufacturers14
MethodologyBDC produced its forecasts using the Global Economic Modelfrom Oxford Economics. It uses an error correction methodology,where multiple time series estimate the speed a dependent variablereturns to its equilibrium after an exogenous shock. This large-scalemacroeconomic model has the advantage of being comprehensiveas it includes thousands of macroeconomic variables.BDC is here to help.We provide business loans and advice to help thousandsof entrepreneurs just like you grow and better managetheir company.Discover our advisory solutions for entrepreneurs.Find out how we can help with financing.Author:Isabelle Bouchard, Economist, BDC,[email protected] more information1 888 INFO-BDC (1 888 463-6232)[email protected] document est aussi disponible en version française.ISBN : 978-1-989306-70-3ST-OUTLOOKF&B-E2021
and beverage industry Food and beverage manufacturers transform inputs into value-added products, which are then distributed to food retailers, food service establishments and consumers. The largest food and beverage processing segment in Canada is meat processing, which accounts for 17% of the industry, followed by bakery (14%) and dairy (9%).
22 Mazars Mazars 2022 Food & Beverage Industry Outlook Section VI: Methodology and study participant profile The Mazars Food & Beverage Industry Outlook was developed to seek the views of industry leaders and decision makers. This report is meant to explore industry trends and build a knowledge base of
ABB drives for food and beverage industry: — 01 Micro and machinery drives — 02 A, B General purpose drives — 03 Industrial drives — Drives and automation for food and beverage industry — 01 — 02 A — 02 B Drives are an important tool to deliver safety for food and beverage machinery. ABB's Variable Speed Drives (VSD) have been used
Outlook 2013, Outlook 2016, or volume-licensed versions of Outlook 2019 Support for Outlook 2013, 2016, and volume-licensed versions of Outlook 2019 ends in December 2021. To continue using the Outlook integration after the end of 2021, make plans now to upgrade to the latest versions of Outlook and Windows. Outlook on the web
the food products and beverage industry of bangladesh 3.2 types of foods and beverages products made in bangladesh. 16 3.3 impact on bangladesh gdp 18 3.4 employment opportunities 21 3.5 strategic issues in bangladesh. 22 3.6 swot analysis of food and beverage of bangladesh 23 3.6.1 strengths of bangladesh foods and beverage industry 24 3.6.2 weakness of foods and beverage industry of .
percent is generated through the sales of food and beverage. Even though room sales is supposedly more perishable product of a hotel as compared to food and beverage sales, but the importance of food and beverage sales cannot be taken away as the majority of the publicity and reputation of the organization largely depends on food and beverage .
food and beverage businesses, enterprise resource planning software is a critical need, designed to solve the industry's most pressing problems. Beginner's Guide to ERP: Challenges facing the food and beverage industry The food and beverage industry is a dynamic, ever-evolving sector. Companies today grapple with key operational and .
LLP's food and beverage industry group, executives at five Wisconsin-based food and beverage manufacturers talked about the challenges they face and the opportunities they see in the coming year. They, like Jurewicz, see the food and beverage industry playing an important role in Wisconsin's economic future.
The Digital Future of the Food and Beverage Industry 5 Today, the food and beverage industry is looking at tremendous e-commerce growth. Revenue from online food and beverage sales is predicted to exceed 27 billion by 2023 in the U.S. alone. Globally, online sales will make up 15-20% of the sector's overall sales
Source: Ipsos, Reputation Snapshot for the Food and Beverage Sector, Ipsos Global Reputation Centre, 2012, p 04 There are myriad of features that make the Algerian food and beverage industry an exemplary case for CSR. One distinguishing feature is enormity of size, the Food and beverage Industry is the second largest industry in Algeria.
How Digital Innovation is Transforming the Food & Beverage Industry 2 Digital Innovation The oldest industry in the world, food and beverage, now finds that modern . technology must be on the menu. Food and beverage companies need digital
Your Food and Beverage Certificate (FB) is a subordinate permit to your primary permit and will be printed on the face of the primary permit. The primary business at your establishment must be food service as long as you are maintaining the Food and Beverage Certificate. Alcoholic beverage sales cannot exceed 60% of gross receipts of the licensed
Water Use Benchmarking in the Beverage Industry Trends and Observations . Clean, high-quality water is the essential ingredient for all products of the beverage industry. For years, beverage companies have focused on water use avoidance and conservation to demonstrate one aspect of environmental stewardship. Since 2007, the Beverage Industry
FOOD & BEVERAGE Food and beverage exports are important to New Zealand and the country is a major F&B exporter. The food and beverage industry accounts for 46% of all goods and services exports. Exports are growing strongly and the country's export performance is strong and improving relative to peers.
There is no better time than now to locate or expand a food and beverage industry facility in Kentucky. Food and beverage manufacturers and distributors, along with numerous container and packaging manufacturers, packaging plants, refrigerated warehousing operations and other food and beverage industry facilities are thriving in the commonwealth.
What is food and beverage manufacturing? 4 Industry structure: understanding the current food and beverage sector 6 Leveraging existing strengths 8 Meeting future needs 9 Barriers to scale 9 3. Vision: food and beverage manufacturing 11 4. Growth opportunities 11 Key areas of opportunity 12 Building on the Australian Government's priorities 17 5.
The food and beverage processing sector has been in transition over the past 15 years and continues to evolve. Today food and beverage manufacturing is an urban centric industry rather than a rural manufacturing industry. Municipal governments have the most interaction with food and beverage manufacturers on a daily basis and this is a
Food and Beverage Management offers general managerial training combined with production chain-specific competencies, to produce specialist professionals capable of dealing with the challenges of the food and beverage industry in an international and multicultural context. Why Italy. The Italian food and beverage industry is growing
2 2021 BEVERAGE TRENDS DRIVING CHANGE CONTENTS 3 Dominant Trends in the Beverage Industry 4 Opportunities Abound for Beverage Suppliers 6 Consumers Looking for Sustainability 11 Beverage Functionality and Convenience 13 Health Consciousness is a Driver of Change 15 SKU Expansion for Most 17 COVID-19: The New Variable 22 Beverage Manufacturers' Machine Needs
beverage industry 2 we are not only product specialists, but we also offer the following services to the food & beverage industry: in the past three years, we've documented a savings to our 1.9 million dollars a total of in fact, through our solutions. food & beverage customers our solutions are designed to reduce our customers total cost of .