Sugar and confectionery products: 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.

Input cost relief tempers margin volatility but sugar demand slows

The sugar and confectionery manufacturing sector includes establishments primarily engaged in manufacturing sugar and confectionery products, including sugar refined from sugarcane or sugar beets, as well as chocolate and nonchocolate confectionery products made from cacao, sugar or purchased chocolate. There are just over 600 establishments, primarily employing less than 100 people and located in Ontario and Quebec, serving both domestic and export markets.

Sugar and confectionery products: 2026 sales forecast

Sugar and confectionery manufacturers extended their growth for another year in 2025, with sales increasing 7.6%, driven by a combination of higher selling prices and resilient consumer demand. Volumes (that is, sales adjusted for inflation) increased 2.0%, supported by strong demand for chocolate products that continue to perform well as consumers look for small indulgences, even in a higher-price environment (Figure 3.1).

Figure 3.1: Sales for sugar and confectionery product manufacturing slow in 2026

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).

Sources: FCC Economics, Statistics Canada

In 2026, however, the sales outlook is expected to soften amid headwinds. Even then, both sales and volumes are forecast to remain above the previous five-year average. Sugar and cocoa prices are easing from recent highs, slowing the growth in selling prices, while softening global demand for sugar is expected to push volumes down.

The U.S. is Canada’s primary destination for sugar and manufacturing products, making up approximately 80% of sales. Therefore, the USDA’s December 2025 outlook predicting lower sugar use in food and beverage processing in 2026 will be a key driver of the downtrend in volumes. The USDA cited both inflationary pressures and reduced overall food and beverage consumption, partly linked to the growing use of GLP-1 weight loss drugs, as the reason behind their outlook.

Future sales growth will depend on managing demand conditions and adapting to health-conscious consumers, including growing interest in alternative sweeteners such as honey and maple syrup.

Ingredient insights: Cocoa

Cocoa has been one of the most challenging ingredients for confectionery manufacturers over the past two years. Cocoa prices jumped in 2024 and reached a peak in early 2025, driven by persistent supply disruptions in key producing regions. Although prices eased from their highs as 2025 ended, they remain historically high, keeping cost pressures for manufacturers in place.

Poor growing conditions due to extreme weather patterns pushed up the cost of cocoa beans and, in turn, imported cocoa products (Figure 3.2). The average cost of importing cocoa and cocoa preparations into Canada increased from $9.48/kg to $12.69/kg between 2024 and 2025, sitting well above previous years’ prices.

Figure 3.2: Cost of imported cocoa products reached new highs in 2025

Source: Statistics Canada and FCC Economics

Higher cocoa prices have directly impacted manufacturer margins. With household budgets already under pressure, confectionery companies face limited ability to pass higher costs on to consumers. As a result, many manufacturers have been forced to absorb a portion of the increase or explore product reformulation and portion adjustments to protect profitability.

Looking ahead, cocoa prices are expected to decline in 2026, provided weather conditions improve and stocks are replenished. At the same time, innovation is gaining momentum. Advances in labgrown and alternative chocolate technologies are attracting attention as potential longterm solutions to supply volatility, offering the industry new ways to manage risk in an increasingly uncertain climate.

Sugar and confectionery products: 2026 margin forecast

Margins in the sugar and confectionery manufacturing sector improved in 2025, increasing 9.7% as stronger revenues more than offset continued cost pressures (Figure 3.3). In recent years, manufacturers have had to contend with rapid shifts in both sugar and cocoa prices, contributing to significant margin volatility as businesses balanced higher selling prices with consumer price sensitivity amid elevated food inflation.

Figure 3.3: Margins for sugar and confectionery products rise for another year

Sources: FCC Economics, Statistics Canada

The outlook for 2026 is more supportive for margins, with the moderation in input costs expected to lift gross margins above pre-pandemic levels for the first time since 2020. In February 2026, sugar futures prices were roughly 50% lower than their peak in 2023, while cocoa futures are 75% below their peak in early 2025. Strong global sugar supplies are expected to keep downward pressure on prices throughout the year, while cocoa supplies are entering a period of recovery.

Other trends to monitor in 2026

• While indulgence has not disappeared, demand is shifting toward smaller portions and more intentional treats rather than impulse consumption. Demand for premium, artisanal, sustainably sourced chocolate products including “bean-to-bar” varieties are becoming popular.

• Imports continue to take a larger share of domestic sugar and confectionery supply and will continue to compete with domestic producers, especially in lower-priced candy categories.

• Regulatory labelling shifts intensify reformulation pressure. As of January 1, 2026, Health Canada’s front-of-package labelling, sweetener disclosure and related nutrition amendments are reshaping how products communicate health cues to consumers.

Alternative sweeteners: maple syrup and honey

Demand for Canadian maple syrup and honey continues to increase in the global market. Export volumes of maple syrup grew again in 2025, up 15.7% over 2024 and 21.1% over the five-year average. For honey, the U.S. is a key export destination, and exports struggled slightly in 2025 with tariff uncertainty and the removal of the de minimis exemption, but volumes are still tracking above the five-year average.

In response to strong demand, additional production capacity has come online (Figure 3.4). Between 2015 and 2025, bee colonies increased almost 18% and Quebec maple syrup taps increased 27% between 2015 and 2024. And we already know more taps are on their way. Following the 2025 season, Quebec Maple Syrup Producers issued another seven million taps that will come into production over the next three years. These additional taps are on top of similar expansions announced in both 2021 and 2023, bringing the announced five-year increase to 50%. For honey production, there has been a steady increase in bee colonies since 2022, after a significant portion were lost that winter.

Figure 3.4: Additional honey and maple syrup production capacity comes online in the last decade

Sources: Statistics Canada and Quebec Maple Syrup Producers

With millions of new taps set to come online and expanding bee populations, producers will be watching winter and spring forecasts closely. Quebec Maple Syrup Producers anticipate an additional 120 million taps will be needed by 2080 to meet increased demand. While the strong demand does offer opportunities, the supply will be dependent on weather.