Page 29 - BCHNews-122023-Web

CHRISTMAS 2023  WC DAIRY NEWS 29
2023 Food and Beverage Report: Mid-year update 2023 Food and Beverage Report: Mid-year update
Six months after our 2023 Food and Beverage Report was
Margins are looking to be lower in 2023
Six months after our 2023 Food and Beverage Report was
Margins are looking to be lower in 2023
published, we look at how food and beverage manufacturers
published, we look at how food and beverage manufacturers
Food and beverage manufacturing margins have been under
have performed so far this year, provide forecasts for the
Food and beverage manufacturing margins have been under
have performed so far this year, provide forecasts for the
pressure since 2019, and 2023 will be no different. Beverage
remainder of 2023 and early 2024, and highlight trends to
pressure since 2019, and 2023 will be no different. Beverage
remainder of 2023 and early 2024, and highlight trends to
margins will struggle more than food, with margins nearly 50%
watch moving forward.
margins will struggle more than food, with margins nearly 50%
watch moving forward.
lower than in our base year 2019 (Figure 2).
Inflation driving strong sales growth in H1 2023
Table 1: Food manufacturing sales are up in the first half of 2023
Inflation driving strong sales growth in H1 2023
Table 1: Food manufacturing sales are up in the first half of 2023
Sales numbers for the first half of 2023 (H1) were steady, with an
Sales numbers for the first half of 2023 (H1) were steady, with an
Index of gross margin % of revenue (2019 = 100)
Index of gross margin % of revenue (2019 = 100)
88.6
88.6
increase of 8.4% for food manufacturing and 7.3% for beverage
120
120
and specialty food
lower than in our base year 2019 (Figure 2).
increase of 8.4% for food manufacturing and 7.3% for beverage
manufacturing compared to the same period in 2022 (Table 1).
manufacturing compared to the same period in 2022 (Table 1). 100 Table 1: Food manufacturing sales are up in the first half of 2023 100
Table 1: Food manufacturing sales are up in the first half of 2023
80
80
2023
2024 60 2024 60
40
$, %, 40
54.9
54.9
Food and beverage
Food
BILL. Y/Y BILL.
Y/Y BILL. Y/Y
20
2023
H1 H2f
H1f
H1 H2f
%,
H1f
$, %, $, BILL. Y/Y BILL.
Y/Y
BILL. Y/Y
$, %, $, %, $, %, 20
80.6 8.3 84.0
2.7 82.4 2.2
Food and beverage
Food
80.6 8.3
73.2 8
84.0 2.7 82.4
.4 75.6 2.1 74.
0
31.60 201820192020202122023f 201820192020202122023f
2.2
73.2 8.4 75.6
2.1 74.3 1.6
Food
Beverage
Bakery and tortilla products
8.5 16.2 9.2
6.6 9.1 7.2
2018 2019 2020 2021 2022 2023f Food
2018 2019 2020 2021 2022 2023f Beverage
Bakery and tortilla products
Dairy products
8.5 16.2
8.9 6
9.2 6.6 9.1
.6 9.5 4.5 9.
7.2
Source: FCC Economics, Statistics Canada
5 7.0
Dairy products
8.9 6.6 9.5
4.5 9.5 7.0
Source: FCC Economics, Statistics Canada
Trends to watch
Fruit and vegetable preserving
5.2 11.3 5.5
1.8 5.4 2.5
Fruit and vegetable preserving
and specialty food
Grain and oilseed milling
5.2 11.3 5.5
1.8 5.4 2.5
Grain and oilseed milling
10.9 15.4 9.6
-12.0 9.4 -13.9
Softening labour markets
Meat products
19.6 5.2 20.1
0.9 19.8 1.2
The job vacancy rate for food manufacturing and food wholesalers
10.9 15.4 9.6
-12.0 9.4 -13.9
Trends to watch
Meat products
Seafood preparation
19.6 5.2
3.0 -1
20.1 0.9 19.8
.8 3.2 15.2 3.
SeafSouogdapr raenpdarcaotniofenctionary products
3.0 -1.8 3.2 15.2 3.5
2.7 10.1 2.8 2.0 2.
Sugar and confectionary proBdeuvcetsrages
2.7 10.1 2.8 2.0 2.5
7.4 7.3 8.4 8.6 8.
BeverSaogfet sdrinks
7.42.5 7.133
.7 8.42.6 8.63.1 8.02.
SoftBdrreinwkesries
2.53.5 13.78.1 2.64.0 3.19.7 2.73.
Distilleries
Breweries
3.5
0.7 13.1 0.8 27.9 0.
8.1 4.0 9.7 3.8
Wineries
Distilleries
0.8 -14.1 1.0 -20.0 0.
0.7 13.1 0.8 27.9 0.7
Wineries
Sources: Statistics Canada, FCC
0.8 -14.1
Economics
1.0
-20.0
0.8
-2.4
Sources: Statistics Canada, FCC Economics
largest agri-food trading partner – will impact export sales
These are nominal sales numbers, meaning they do not account for inflation. When accounting for inflation, growth for food
years. Any global slowdown – particularly in the U.S., Canada’s
These are nominal sales numbers, meaning they do not account
largest agri-food trading partner – will impact export sales opportunities.
manufacturers in H1 was 1.0% and -2.6% for beverage
for inflation. When accounting for inflation, growth for food
manufacturers.
1.2
Softening labour markets
5 15.6
is in line with pre-pandemic averages. Wage growth remains an
15.6
is in line with pre-pandemic averages. Wage growth remains an issue for employers.
5 -6.9
Foodservice demand
10.7
a recession.
The job vacancy rate for food manufacturing and food wholesalers
issue for employers.
-6.9
0 8.1
Earlier this year, real (i.e., inflation-adjusted) spending on food
7 8.91.2
8 91.20.7
services returned to pre-pandemic levels. With an economic
Foodservice demand
Earlier this year, real (i.e., inflation-adjusted) spending on food
slowdown occurring, this type of discretionary spending will struggle
services returned to pre-pandemic levels. With an economic
7 4.0
slowdown occurring, this type of discretionary spending will struggle
to grow. It could even contract if the slowdown turns into
8 -2.4
to grow. It could even contract if the slowdown turns into aSrelocwesisnigong.lobal economic growth
4.0
Exports are still strong in 2023, though lower than the last two
Slowing global economic growth
years. Any global slowdown – particularly in the U.S., Canada’s
Exports are still strong in 2023, though lower than the last two
opportunities.
manufacturers in H1 was 1.0% and -2.6% for beverage
For additional forecasts and commentary, read our full mid-year review at fcc.ca/Economics
Considering the large increase in nominal sales in H1, we see
manufacturers.
2023 sales for the food and beverage sector at $164 billion
For additional forecasts and commentary, read our full mid-year reGvrieaewmaet Cfcrco.scbaie/E, Scoeniomr Eicosnomist
Considering the large increase in nominal sales in H1, we see
(5.4% growth).
2023 sales for the food and beverage sector at $164 billion (5.4% growth).
Graeme Crosbie, Senior Economist
202
022