The Canadian food and beverage processing industry ranks as the second-largest manufacturing industry in the country! The industry accounts for 17% of total manufacturing sales and 2% of the national GDP. It is also the largest manufacturing employer employing over 290,000 Canadians.
Processed food and beverage products from Canada are exported to a whopping 192 countries; these exports represent 1/3rd of the industry’s output, while Canadian businesses and consumers buy the rest.
2021 was a record year for the Canadian F&B processing industry, a 14.8% increase from 2020 with $144B in sales. The meat and dairy industries remain the two largest sectors in the F&B industry, accounting for a combined 26% of the market. Following closely behind are bakeries and tortilla manufacturing, which make up 11% of the sector.
The segments that witnessed the biggest increase in exports are:
- Fruits and vegetables (53%)
- Meat (26%)
- Seafood (29%)
86% of Canadian F&B manufacturing exports go to three primary markets:
- United States (72%)
- China (8%)
- Japan (6%)
Ontario Food and Beverage Manufacturing Sector
Ontario’s food processing sector is the third largest in North America, with yearly sales totalling more than $48 billion. More than 4500 business locations produce F&B products in Ontario alone, employing over 104,800 people.
Some of the major sectors within the food and beverage manufacturing industry in Ontario include grain and oilseed, sugar and confectionery, fruit and vegetable, dairy product, meat product, bakeries and tortillas, snack food, seasoning and dressing, soft drink and ice, breweries, wineries and cannabis.
Ontario’s food production resources include ingredient manufacturers, specialty importers, value-added processors, and essential services such as analytical laboratories, specialty packaging, storage, and transportation businesses.
It is no surprise that you will find the world’s biggest F&B manufacturers making the most of what Ontario has to offer. Some of them are Coca-Cola, Nestle, Pepsico, Kellogg’s, Unilever, and Kraft Heinz. Canadian companies like Maple Leaf Foods, Dare Foods Limited, and Weston Foods have also chosen Ontario as their base.
From Ontario to the World
If you’re interested in starting up in the F&B space in Canada, Ontario is a strategic sweet spot. With Ontario being a cultural epicentre, it is home to over 200 ethnic backgrounds. This multicultural population adds richness and diversity to Ontario’s production, priming it as a key player in global exports.
Additionally, Ontario-based F&B manufacturers get access to over 1.5B people across 51 countries through Free Trade Agreements like the Comprehensive Economic and Trade Agreement (CETA) and Canada-United States-Mexico Agreement (CUSMA).
Ontario’s vast transportation network adds to the convenience of reaching consumers fast and freshly. Let’s take the US market, for example; a $20T market with 142M consumers can be connected to through Ontario’s four international and 300 regional airports, 250,000 km of roads and highways and a dozen border crossings!
Ontario Governing Bodies and Industry Organizations for Food and Beverage Manufacturing
If you are planning to start a business or work within the F&B Manufacturing industry in Ontario, there are several important governing bodies and industry-led organizations you should be familiar with –
- Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA): This government ministry supports and promotes Ontario’s agriculture and food industry, including food processing and manufacturing. It is mandated to provide business support to farmers and ensure the sustainability of agriculture through research and innovation. Expand agriculture in the North, enforce and improve food safety, and strengthen Ontario’s rural communities.
- Canadian Food Inspection Agency (CFIA): The CFIA is a federal agency that regulates and enforces food safety standards in Canada. They are responsible for food licences, inspecting and monitoring food processing facilities, food labelling regulations, and conducting investigations in the event of a foodborne illness outbreak.
- Food and Beverage Ontario: This industry association represents food and beverage processors in Ontario and advocates for their interests. They are a not-for-profit leadership organization dedicated to advancing Ontario’s food and beverage industry. They also provide networking opportunities and support for businesses in the industry.
- Ontario Food Terminal Board: Known as the ‘stock exchange’ for fruits and vegetables, This is the largest wholesale fruit and vegetable distribution centre in Canada (located in Toronto) and the third largest in North America. It plays a crucial role in the supply chain for many food and beverage manufacturers in Ontario, distributing over 2 Billion Pounds of produce annually (an average of 5.6 million pounds per day).
- Ontario Craft Brewers: This organization represents small and independent craft brewers in Ontario and promotes the growth of the craft beer industry in the province.
Canadian Food & Beverage Research and Innovation Facilities available in Ontario
Ontario’s food and beverage industry thrives on innovation, which fuels economic growth, job creation, and international trade. The province is abundant in networks of world-class research centres and laboratories specializing in multidisciplinary research that promotes agri-food discoveries, stimulating further research. Some of the facilities available are:
1. Agricultural Research Institute of Ontario
The Agricultural Research Institute of Ontario (ARIO) is a corporate body accountable directly to the Minister of Agriculture, Food and Rural Affairs. It represents the agri-food sector and is committed to leveraging science and innovation to leverage Ontario’s rural and agri-food industries.
The Agricultural Research Institute of Ontario (ARIO) possesses 14 research properties located throughout Ontario. The University of Guelph runs and overseen these research facilities under the Ontario Agri-Food Innovation Alliance. Each centre specializes in different research focuses, like – poultry, aquaculture, field crops, dairy, and more.
You can view the full list here.
2. Canadian Food Inspection Agency (CFIA) Ontario Laboratory Network
The Canadian Food Inspection Agency (CFIA) operates 13 reference and research laboratories throughout Canada, of which three are located in Ontario. These laboratories offer specialized expertise and scientific insight required to inform regulatory and risk-based strategies for safeguarding the safety of Canada’s plants, animals, and food.
Ottawa (Carling) Laboratory
The services provided by the Ottawa Laboratory (Carling) encompass food quality evaluations, microbiology and chemistry assessments of animal feed, fertilizers, and food products, and advanced research into DNA-based techniques for analyzing food-borne bacteria.
Greater Toronto Area Laboratory
This laboratory specializes in food analysis to identify bacteria and contaminants that may endanger public health.
Ottawa (Fallowfield) Laboratory
This laboratory is the only large-animal facility in eastern Canada. It is a World Organisation for Animal Health reference laboratory for rabies, scrapie and chronic wasting disease and an international collaborating centre for the control and epidemiology of rabies in carnivores.
3. Conestoga Food Research & Innovation Lab
The Conestoga Food Research & Innovation Lab (CFRIL), located in Cambridge, Ontario, is an applied food research laboratory catering to industry requirements through technical expertise, education, training, and research. CFRIL offers various services, like formula development, packaging testing, shelf-life studies, and scale-up using their pilot plant equipment.
4. Food Innovation Research Lab
Longo’s Food Retail Lab and Schneider’s Research Lab, located in Guelph, Ontario, are a part of The Gordon S. Lang School of Business and Economics at the University of Guelph. It hosts food retail research that deepens our comprehension of how consumers make decisions, consume food, and respond to food advertising.
The Longo’s Food Retail Lab
This lab focuses on studies on price processing, the effect of labelling on product choice, customer processing of packaging information, and the impact of nutrition labelling.
The Schneider’s Research Lab
This lab is equipped with computer monitors that allow researchers to gauge participant reactions to advertising, and complete surveys and other analyses. The research here focuses on understanding customer behaviours, eating patterns, menu design, and other important food service topics.
5. Food & Beverage Innovation Centre
Located at Niagara College’s Welland Campus in Ontario, the FBIC provides many services to facilitate industrial innovation and commercialize novel products and processes in the F&B Industry. They can support research in all stages of production, from product development, conceptualization and recipe formulation to shelf-life assessment, prototyping, and small-batch production.
6. Ontario Agri-Food Venture Centre
Located in Colborne, in Northumberland Country, OAFVC offers plug-and-play production support to food entrepreneurs and farmers. If you’re looking for economic sustainability through shared production and storage spaces without committing to a larger facility or partnering with a co-manufacturer, this is a great place to start.
Grants, Funds, and Programs Available to Canadian F&B Manufacturing Businesses
As the food and beverage industry continues to show off its economic power in Canada, several grants, funds, and programs are available to further strengthen the growth and development of Canadian F&B manufacturing businesses. From funding for research and development to financial assistance for expansion projects, these resources can help businesses of all sizes take advantage of new opportunities and overcome challenges:
The Ontario Agri-food Research Initiative provides funding for open research programs that help create innovative products to support the agri-food industry. The initiative is managed by OMAFRA and funded under the Canadian Agricultural Partnership.
The Partnership offers cost-share funding opportunities for processors and other agri-businesses to help modernize practices, equipment and operations. The governments of Canada and Ontario are investing up to $6 million in eligible projects.
This research program provides funding to support research, training, innovation and outreach to benefit Ontario’s agri-food sector. The Principal Investigator must be a faculty staff member from the University of Guelph, and they are encouraged to partner with industry players.
This fund offers support for projects and investments to businesses, municipalities, and not-for-profit organizations in eastern Ontario that are all about creating jobs, attracting private sector investment, and promoting innovation and collaboration.
The Southwestern Ontario Development Fund supports projects and investments in businesses, municipalities, and not-for-profit organizations for economic development in Southwestern Ontario.
This program encourages business productivity, expansion, and global investment in northern communities.
A federal program that helps Northern Ontario’s businesses invest in projects that improve productivity, reach new markets, facilitate access to capital, foster investment, encourage entrepreneurship and cultivate industry collaboration.
The Canadian Dairy Commission, as part of its dairy marketing initiatives, is offering The Matching Investment Fund (MIF) designed to help eligible companies and Food Technology Centres (FTC) with product development initiatives that help stimulate demand for Canadian dairy products and ingredients.
And Dairy Innovation Program (DIP) provides access to additional milk volume and encourages product development to help grow the market for Canadian milk and milk products.
Small and medium-sized F&B businesses looking to up their innovation game might want to check out the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP). They offer advice, funding, and connections to help you take your ideas to market.
These are helpful Incentives that can assess and help implement energy savings technology in your F&B manufacturing business. Save on Energy programs include Retrofit, incentives to upgrade to high efficiency, ventilation, chillers, motors, fans and more. Small Business Lighting, incentives to upgrade to energy-efficient lighting. Energy Manager Program, funding to hire an Energy Manager who has the technical expertise to recommend energy-saving equipment and technologies.
Eligible corporations can claim a 20% refundable tax credit for qualified expenditures on scientific research and experimental development work performed in Ontario.
The SR&ED tax incentives encourage businesses to conduct research and development in Canada. Depending on the size and type of business, SR&ED incentives can be a deduction against income or an investment tax credit (ITC) that can be non-refundable/ refundable.
Trends and Opportunities to watch out for in the Food & Beverage Manufacturing Industry
Digitization & Automation
Recent reports show that only 46% of Canadian food processors invested in advanced or emerging technology in 2019, positioning the industry as “under-digitized” compared to other sectors. Automation is now a priority for F&B manufacturing businesses seeking out efficiency, standardized quality control, improved worker safety, and reduced wastage.
Premium Pricing for Ethics and Health
The Canadian food market is experiencing growth driven by health and wellness, as well as environmental concerns, as more consumers seek premium and specialty food items. Factors such as the origin of the food, ingredients, and animal welfare are increasingly important to consumers. This presents an opportunity for manufacturers to cater to this demand and offer products that meet these needs at a premium price point.
Shift in Spending Behaviour
44% of consumers reported trying to eat less meat, 3 in 4 Canadians have increased their consumption of alternate meats, and 79% increased their spending on plant-based milk. These statistics show a marked shift in demand for health-conscious, vegan and sustainable alternatives. Spending on fresh vegetables is expected to become the second-largest spending category by 2025, overtaking dairy spending. Specifically, the demand for organic vegetables will continue to increase.
Source: Page 19, BDC Study : Canadian Food and Beverage Industry 2022 Outlook
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