Much was happening in the Canadian food and beverage industry in the past year, despite the lack of growth in shipments and markets.
Some of the bigger moves in shipment and market volumes reflected significant run-ups in inventories (dairy, seafood) or their depletion (confectionery), but there was real market contraction in the fresh baked goods sub-sector in response to continued high prices. Mergers and acquisitions tended to concentrate the focus of the purchasers, particularly in the meat sector, rather than diversify their products and markets. Capital investments consolidated distribution on a regional basis or developed production capacity for a North American or global market. New product development favoured higher-margin, better-for-you products and decadent indulgences.
Negotiations on the Canada-European Union Trade Agreement and the Trans-Pacific Partnership could loosen the supply management restrictions on dairy and poultry products this year. The December ruling of the World Trade Organization may reduce the U.S. Mandatory Country of Origin Labeling (COOL) restrictions on our beef and pork exports. The consensus view of moderating commodity prices for 2013 should moderate retail price inflation allowing consumers to reset their expectations of a fair price for bread and meat.
Canadian food and beverage manufacturers, if they follow-through on their intentions, will increase their capital investments in construction, machinery and equipment by 24 per cent this year. Much depends on how consumers respond to weak but positive economic growth in Canada and the U.S. if current forecasts are correct. They may take the respite as an opportunity to cut household spending and grocery budgets to build up savings for a rainy day or invest their current savings in a kitchen renovation to make more meals at home.
To read more, and to order a copy of the report, contact Daniela Piccone at [email protected], or at (416) 510-6773