Beverage manufacturing companies are an important part of Canada’s food and beverage manufacturing sector and will play a critical role in Canadian economic growth in 2021. The sector employs over 42,000, 15% of all food and beverage manufacturing jobs, and contributes $7.0B in GDP to the economy.
Beverage manufacturing is a low-margin, high-volume business. Major shifts in demand or production costs like we experienced in 2020-21 have significant financial implications. The COVID pandemic shifted consumer purchases to retail away from food service, removing a core revenue stream. It forced businesses away from bulk packaging and increased costs. Overall, sales grew 4.0% in 2021, while GDP (defined as value-added output) declined 0.4% as higher production costs took hold.
Leading the sales growth in 2020 were wineries (21.3%), breweries (5.0%) and distilleries (3.1%). Conversely, non-alcoholic beverage sales declined 2.9%, based on Statistics Canada data. Beer remains the top-selling alcoholic beverage, but its market share has been declining to other drinks. Higher total sales are attributed to people drinking more when confined at home and a slight increase in selling prices (up 0.2% in 2020 YoY).
Producer prices have declined 1.3% through the first four months of 2021, although we have seen strong volume growth as food service establishments have increased inventory in anticipation of a re-opening. As a result, 2021 sales are up 14.6% YoY thru April.
Approximately 57.5% of all alcohol consumed in Canada is produced domestically, led by beer with many craft breweries and large manufacturers. For the remainder of 2021 and into 2022, we see strong demand for Canadian-made beverages.
Click here to see more...