OP-ED: The car industry is hurting, and so is food manufacturing

Dr. Sylvain Charlebois writes, "If you needed a wake-up call for the global food-manufacturing complex, these past few months delivered it with a roar."

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Author: Dr. Sylvain Charlebois

If you needed a wake-up call for the global food-manufacturing complex, these past few months delivered it with a roar. Dr Pepper Keurig is breaking apart. Kellogg is splitting again. Kraft-Heinz is unraveling. And now Nestlé has dropped a bombshell: a plan to cut 16,000 jobs globally — one of the largest layoffs ever seen in the consumer-goods space outside of bankruptcy. In Canada, Nestlé refuses to disclose how many jobs will go, despite employing over 3,500 people across several locations. These seismic moves reveal a deeper reality: even the most established food giants are no longer immune to economic stress, shifting consumer habits, and structural disruption. The era when size guaranteed resilience is over.

Statistics Canada’s latest figures confirm that food manufacturing in Canada is faltering. Over the past two years, unadjusted sales have dropped in most provinces — down 7 per cent in Ontario and 5 per cent in Quebec, where most of Canada’s food processing occurs. These aren’t minor fluctuations; they signal an industry losing momentum, even before accounting for inflation. Food manufacturing is bleeding quietly across the country.

What’s behind this collapse? Both structure and behaviour. Consumer demand is changing — and shrinking — in mature categories. The rise of GLP-1 weight-loss drugs is subtly rewriting the rules of appetite. Households with a GLP-1 user are buying less food, particularly calorie-dense, processed items. Ironically, these drugs emerged from an industry trying to solve the very health problem the food sector created and could never fix. For the first time, the pharmaceutical industry — not the food industry — is making people healthier.

Meanwhile, corporate credibility is collapsing under the weight of shrinkflation — the unapologetic practice of selling less product for the same or higher price. Led by the same large corporations now announcing layoffs, shrinkflation has alienated consumers and shattered trust. People notice when chocolate bars get smaller, chip bags emptier, and cereal boxes lighter. The sense of betrayal has only deepened the divide between companies and their customers.

Inflation and rising input costs add another layer of pressure. Even as retail prices climb, manufacturers struggle to preserve margins because much of the growth is nominal, not real. Energy, packaging, freight, and ingredient volatility continue to erode profitability, while consumers increasingly push back against further price hikes. Food manufacturing is also costly in Canada, weighed down by interprovincial trade barriers, a multi-layered bureaucracy, and a fiscal regime amplified by an industrial carbon tax. These structural inefficiencies make it harder to scale, innovate, and remain globally competitive.

Then there’s the scale problem. What once was an advantage has become a liability. Large, diversified corporations can’t pivot fast enough to meet the demand for authenticity, local sourcing, or transparency. Their product lines feel distant, their innovation pipelines sluggish, and their structures bloated. “Big is beautiful” no longer resonates with consumers who equate value not just with price, but with trust and meaning. The more they grew, the more disconnected they became from the very markets that sustained them.

For Canada, the implications are profound. Food and beverage processing remains the country’s largest manufacturing sector by output and one of its top employers, supporting more than 300,000 Canadians. If multinationals like Nestlé or Kraft-Heinz downsize here, the pain will not be confined to corporate offices. It will ripple through farming, packaging, logistics, and rural communities. Once a plant closes, it rarely comes back — weakening local economies, undermining food resilience, and reducing Canada’s capacity to add value to its own agricultural output.

Policymakers should see this as a warning. Canada needs to strengthen its mid-sized and regional food firms — the companies that still understand local markets and can innovate quickly. According to the Global Agri-Food Most Influential Nations Ranking 2025, prepared by Dalhousie University and MNP, Canada’s ability to scale up food manufacturers lags most G20 countries. That must change. Targeted investment, modernization incentives, and export facilitation can help them compete in an era where agility, not size, defines success. At the same time, Ottawa must watch consolidation and foreign acquisitions closely to prevent the loss of critical processing capacity to offshore control.

This week’s Nobel Prize in economics offered a timely metaphor. Three scholars were honoured for their work on innovation and market dynamics — including a Canadian who advanced the idea of creative destruction: that growth should never be taken for granted, and that renewal is the essence of progress. The food industry is learning that lesson the hard way. The giants that once filled the world’s supermarket shelves are discovering that reinvention, not scale, is the only true measure of resilience. The wave of corporate breakups is no accident; it’s a symptom of an industry forced to evolve. Canada can either embrace this disruption as a catalyst for renewal — or brace for more closures, layoffs, and lost trust.

The choice, economically and morally, should be obvious.

— Sylvain Charlebois is director of the Agri-Food Analytics Lab at Dalhousie University, co-host of The Food Professor Podcast and visiting scholar at McGill University.