‘Recession-proof’ food manufacturing industry posts modest growth

While profits will be down more than 20 percent this year in certain Canadian industries covered by the Conference Board of Canada’s Canadian Industrial Profile – Autumn 2009 (such as wholesale trade, and transportation and warehousing), one sector will close out 2009 unscathed: food and beverage manufacturing.

 

In contrast to many other industries, according the board’s recent report produced in collaboration with the Business Development Bank of Canada, food and beverage manufacturing has been largely recession-proof, growing modestly this year. Domestic food demand remained steady and exports to new markets grew in spite of the strong dollar, while lower commodity prices have pushed costs down.

 

The industry made $3.3 billion in 2008 and profits are expected to rise modestly to $3.4 billion in 2009. This matches up with the board’s prediection earlier in the year, which stated that profits in the food and beverage manufacturing industry would come close to the record highs recorded in 2008.

 

“Demand for everyday products such as food is not particularly sensitive to economic conditions, so the food manufacturing industry in Canada is expected to come through the economic turmoil without suffering too much,” said economist Valerie Poulin back in March.

 

Food is one of the most overlooked components of the Canadian economy. Food and beverages are the single largest component of retail sales, and food processing is the largest component of Canada’s manufacturing sector in terms of jobs.Food processors may be affected by changing tastes and diets, and consumers may choose cheaper products over premium ones, but total food consumption is not expected to drop significantly due to the recession.