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.