Fruit and vegetable preserving and specialty foods: 2026 FCC Food and Beverage Report

The following information is from the 2026 FCC Food and Beverage Report, which highlights the opportunities and challenges for Canadian food manufacturers by sector. To get the big picture, read the full report.

Rising fresh produce costs squeeze margins

Fruit and vegetable preserving and specialty food manufacturing comprises roughly 630 establishments across Canada. The sector includes frozen foods as well as canned, pickled, and dehydrated fruit and vegetable products. Businesses are geographically dispersed, with the largest concentrations in Ontario and Quebec, reflecting proximity to agricultural production and processing infrastructure. The industry is dominated by small and medium-sized firms but includes several large processors with national and export-oriented operations.

Fruit and vegetable preserving: 2026 sales outlook

In 2025, the fruit and vegetable preserving and specialty food manufacturing sector recorded solid sales growth at 6.1%. While higher selling prices were the primary driver, volumes (that is, sales adjusted for inflation), also rose by 1.8% (Figure 4.1). This stands in contrast to the broader food manufacturing sector, where volumes remained under pressure. Historically, this sub-sector has shown relative resilience during periods of economic stress, as consumers look for shelf-stable, value-oriented products such as canned and frozen fruits and vegetables as substitutes for fresh options.

Figure 4.1: Fruit and vegetable preserving and specialty food sales increase

Total sales and volumes (in $, billions) are on the vertical axis and shown by the height of each bar. The number above each bar is the year-over-year growth as a percent. Volumes are sales deflated by a price index (January 2020=100).

Source: FCC Economics, Statistics Canada

Trade dynamics also supported domestic sales performance in 2025. Imports of processed fruit and vegetable products from the United States declined, while unit prices increased, largely reflecting Canada’s retaliatory tariffs in place from March to August. Although imports from other countries offset the decline, domestic processors were able to regain some market share that had been steadily eroding over the past decade. Between 2014 and 2024, imports as a share of domestic supply increased from 47% to 56%. In 2025, this trend reversed, with shares falling to 54%.

Looking ahead to 2026, sales growth is expected to moderate to 0.3% while volumes are projected to decline 2.8%. The removal of retaliatory tariffs is likely to stabilize import prices and renew competitive pressure from imports, particularly as consumers continue to look for value at the grocery store.

Ingredient insights: Fresh fruits and vegetables

While the fruit and vegetable preserving sub-sector includes a variety of prepared food products from frozen to canned, the primary raw material costs are driven by fresh vegetables (12%), fresh fruit and nuts (5%), and preserved fruit and vegetables (5%).

Canada produces a wide range of fruits and vegetables, but production remains highly seasonal due to climate constraints. As a result, the sector relies heavily on imports to meet off-season demand or supply products not well suited for Canadian climates, while also exporting surplus volumes during peak harvest months. This creates a unique trade dynamic in which Canada can be both a net importer and net exporter of the same product throughout a single year.

Production outcomes in 2025 were mixed across the country, as weather conditions strained some areas while benefiting others. Fresh fruit production declined overall, driven largely by significant drought conditions in Atlantic Canada that reduced blueberry production (which is the highest-value fruit crop produced domestically). Apple production also faced challenging growing conditions in certain regions, which offset strong gains in strawberries and grapes (Table 4.1). In contrast, fresh vegetables generally experienced favourable growing conditions, resulting in strong yields and increased production across most major crops (Table 4.2).

Table 4.1: Fresh fruit production annual percent change, 2025

Table 4.2: Fresh vegetable production annual percent change, 2025

Fruit prices led input cost pressures for fruit and vegetable-based ingredients in 2025. Prices for domestically grown fruit increased 18%, while imported fruit prices rose 3%, raising input costs for processors reliant on fruit ingredients. Both domestic and imported vegetable prices declined modestly, but these decreases were insufficient to offset the sharp increase in fruit prices, resulting in higher overall ingredient costs for processors with significant fruit exposure.

Looking ahead to 2026, upward price pressure could persist for fresh fruits and vegetable inputs. Canada relies on the U.S. for roughly 40% of fruit and vegetable imports, and supply risks are increasing. Winter freezes have disrupted key U.S. growing regions, tightening availability and pushing prices higher. At the same time, Canadian exports have increased during winter months as U.S. buyers seek alternative supply. For processors, this points to potentially tighter supplies – particularly of domestic produce – given that Canada remains well ahead of the upcoming growing season.

Fruit and vegetable preserving: 2026 margin forecast

Strong sales growth was key to supporting a rebound in margins for fruit and vegetable preserving and specialty food manufacturing in 2025. Businesses continued to adjust to the challenging years they had in 2022 and 2023 that were brought on by higher wage costs weighing on margins. While margins did improve, they remain between 55% and 60% of their 2019 levels, underscoring that the recovery for this sector is still incomplete (Figure 4.2).

Cost pressures eased in 2025, thanks in part to the stabilization of wage growth. For 2026, wage costs are forecast to increase modestly as firms reduce headcounts while raising hourly pay to keep pace with inflation. Given the sector’s labour-intensive nature, improving productivity will be critical to offset higher per-hour costs, an area that has been historically challenging.

Figure 4.2: Fruit and vegetable preserving and specialty food margins rebound

Sources: Statistics Canada, FCC Economics

Margins are forecast to fall 8.5% in 2026 as the 0.3% increase in sales won’t be enough to offset higher costs for fresh fruits and vegetables and labour. However, input costs remain a key swing factor. Unlike other food manufacturing sub-sectors that rely heavily on one or two core inputs, this sector uses a range of ingredients, making raw material cost pressures more firm-specific and difficult to manage. In addition, aluminum packaging – still subject to tariffs – continues to pose an upside risk to costs.

Whether processors can hold onto recent margin gains will depend on how effectively they manage labour productivity, packaging costs and shifting consumer preferences in an uncertain economic environment.

Other trends to monitor in 2026

• Health perceptions continue to pressure processed categories. As consumer attention remains focused on sugar, sodium and ingredient lists, some canned fruit and vegetable products face ongoing scrutiny around processed food, even as they provide affordable and shelf-stable nutrition.

• Pricing pressures are narrowing the value gap. Retail prices for frozen and preserved foods have risen faster than overall food prices over the past five years, reducing some of the category’s traditional price advantage.

• Packaging decisions are moving front and center. Rising expectations around sustainability, food safety and traceability have processors rethinking packaging materials as steel and aluminum tariffs and front-of-package nutrition labelling requirements add complexity.

Processing potato outlook

Potatoes are grown coast to coast, and the majority of Canada’s crop is destined for the processing sector. Products such as french fries, chips and frozen hash browns dominate end use, and Alberta and Manitoba together supply roughly 40% of the potatoes grown for processing. This concentration underscores the central role of the Prairies in Canada’s processing potato supply chain (Figure 4.3).

In 2025, growing conditions across the Prairies were generally favourable, with yields improving in both Manitoba and Alberta. However, production outcomes diverged. In Manitoba, total output declined as seeded acres fell, reflecting processors’ early‑season decisions to scale back contracts. Potatoes grown for processing are typically contracted before seeding begins, making acreage highly responsive to processor demand. That contract‑driven model is central to the processing potato story: processors locate close to production, lock in volumes and varieties ahead of planting, and rely on growers with sophisticated storage to deliver consistent quality year‑round.

Figure 4.3: More potatoes in the Prairies go towards processing than other major producing provinces

Sources: AAFC, Statistics Canada, FCC Economics

Alberta, by contrast, more than offset declines elsewhere. Production surged 13.1% year over year as seeded acres expanded 6.8% and average yields rose 2.8%, supported in part by expanded processing capacity. Over the past decade, both Manitoba and Alberta have increased production, but through different paths. Manitoba’s growth has been driven primarily by yield gains (+18.8%), while Alberta’s expansion reflects a much larger increase in seeded acres (+45.8%). As a result, Alberta has firmly established itself as Canada’s top potato‑producing province.

Canada produces more processed potato products than it consumes domestically and remains a net exporter, with the United States as the primary market. In 2025, export volumes declined 2.7% and unit prices increased. Domestically, potato prices continued to rise, up 4.6% – the fifth consecutive annual increase – though at a much slower pace than in 2023 and 2024. As Canada’s fifth‑largest primary crop, potatoes play an important role in supporting domestic fruit and vegetable processing capacity, export markets and value‑added growth across the Prairies.

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