March 23, 2012 – The Conference Board of Canada has released its winter 2012 industrial outlook, determining that rising costs put pressure on food services and food manufacturing industries.
March 23, 2012 – The Conference Board of Canada has released its winter
2012 industrial outlook, determining that rising costs put pressure on
food services and food manufacturing industries.
Canada’s food services industry
Rising food and labour costs are the top two challenges facing the food services industry. Lower raw material prices expected for 2012 may provide a short-term break for the industry, but over the longer term, food prices are expected to continue their upward trend. The tight labour market will also add pressure on wages. Even though food service operators are hesitant to pass through the rising costs to customers, they may have to do so to stay profitable. However, the competitive nature of the industry will limit profit growth. Click here to read the entire abstract.
Canada’s food manufacturing industry
Increased cost pressures can be attributed to the high prices for agriculture commodities and oil. Facing pressure from retailers and price-conscious consumers, food manufacturers are having trouble passing on their rising costs to consumers. As well, it usually takes about 9 to 12 months for an increase in raw food material prices to work its way down to the grocery shelves. Therefore, higher production costs will outpace revenue growth during this period, leading to a second consecutive year of contraction in profitability in 2012. And while industry profits will improve in 2013 and beyond, growth will be limited. Click here to read the entire abstract.
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