U.S food policy will impact Canadian industry
Make America Healthy again will impact Canadians
This is the seventh of our trends that we have published for 2026. Given all of the challenges with geo-politics, dramatic shifts we are experiencing with U.S. trade policy and other changes in Canada’s biggest trading partner it is risky to say we agree with some of the initiatives. We disagree with most of it but what they are doing in food and beverage will have some positive impacts.
The administration in the U.S. is aggressively pursuing change to food ingredients and processing. As policy changes to eliminate specific ingredients such as artificial dyes are implemented, Canadian processors should be exploring options if they are using these ingredients. Supply could be a challenge and products will not be permitted into the U.S. market. The U.S. are heading down a path of discussion about ultra processed foods (UPF). We even see certifications for non-UPF. Another trend in the US market that will impact Canada is the rapid adoption of GLP-1 drugs. These appetite suppressing prescription drugs will impact sales in some categories.
Our SKUFood trends are different. We focus on the entire value chain and look for insights to help you as you navigate through another year in this challenging industry. There are several sources for trends to help you understand what is happening with consumers. They are important and we encourage you to consider how they impact your target market and your products.
Ingredient changes
The U.S. food and Drug Administration has initiated changes to several petroleum based synthetic dyes. They have revoked authorization for two synthetic food colorings—Citrus Red No. 2 and Orange B. They are also working with industry to revoke authorization for FD&C Green No. 3, FD&C Red No. 40, FD&C Yellow No. 5, FD&C Yellow No. 6, FD&C Blue No. 1, and FD&C Blue No. 2—from the food supply by the end of next year.
These changes will impact processors in Canada because many might not even be available as they are phased out in the U.S. market. Although the dyes are still approved in Canada supply could be a challenge. Processors need to find alternatives and ensure they have a dependable source of supply and understand the impact on cost of goods. We talk regularly about the importance of service level and you do not want any interruptions because you cannot get ingredients.
Many consumers (and customers) probably do not understand how many products include these ingredients. Some are more prevalent in products targeted at children because they result in bright coloured cereal or popsicles. If you are making changes to formulation and corresponding changes to packaging make sure you plan for the change and keep product flowing into the market.
Ultra-processed foods
The people responsible for the Department of Health and Human Services (HHS), Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA) believe the overconsumption of ultra-processed foods is one of the driving factors of the childhood chronic disease crisis in their country.
To address the issue and improve consumer information and/or increase regulation they must first define ultra-processed foods. This consultation process is underway now. In a USDA news release, they state that, ‘It is estimated that approximately 70% of packaged products in the U.S. food supply are foods often considered ultra-processed, and that children get over 60% of their calories from such foods’.
Watch for the definition and how the U.S. market plans to address the issue. This could create opportunities in some categories if products are forced to change their formulation/ingredients or even implement front of pack labelling to highlight this type of product for consumers to make more informed decisions.
Glucagon-like peptide-1 (GLP-1) drugs
GLP-1 medications are a class of drugs that mimic a natural gut hormone to regulate blood sugar, slow digestion, and reduce appetite. You might be familiar with brands like Ozempic, Wegovy, and Mounjaro. They are popular as they dominate the advertising during olympic and other sporting events on tv. They were developed for type 2 diabetes and chronic weight management. They help people taking the drugs feel full longer, which can result in significant weight loss and improved metabolic health.
In the U.S. market, 1 in 8 adults have taken GLP-1 drugs, according to UC Davis. This has a significant impact in the grocery store. A study released by Cornell University found that consumers taking GLP-1 drugs reduced their grocery expenditures by 6%. This is a huge number in our industry. The current administration is focused on reducing prices of these drugs to enable more Americans to afford them. Whether this is for votes or health you can decide but reality is the number of Americans taking these drugs is likely to increase.
The popularity of GLP-1 drugs in the U.S. is showing up in Canada too. According to market research firm Ipsos, 1,400,000 Canadians are taking one of these drugs. This has an impact on the food and beverage they buy. The reduced appetite and focus on avoiding high sugar drinks and salty snacks will impact sales. 2026 is the final year for the leading brand Ozempic to have patent protection in Canada. We will see generic options which reduces the price and probably will result in more people taking the drug.
If your product is in a category impacted by these societal changes, your volume could be impacted. Watch the trends in the U.S. market because they are further along the curve of adoption than Canada.
New dietary guidelines
The U.S. Department of Health and Human Services released a new Dietary Guideline for Americans The basic messaging released with the guidelines is ‘eat real food’. The first paragraph of the guidelines is tough to argue with:
There is always debate when food guidelines are released about the influence of lobbyists and the corporate world. A good debate that should be conducted. We have no idea how much these guidelines were impacted by these influencers. We also do not really know how much food guidelines impact consumers at the store. Perhaps they have more impact on the next generation if they learn these principles in school. Regardless this will get attention. It will impact categories and consumption. If you are selling into the market or in a category impacted watch the changes because they could be reflected in Canada too.
Canada is shifting to be much more independent from the U.S. but the reality is our food and beverage systems are very integrated. We sell a lot of food to them and they sell a lot to us. As the market there changes it impacts Canada. We have to remember our country is +/- 10% of their market. Decisions will be made based on trends and regulations there, that will impact the shelf in Canada.
I do have travel coming up to Toronto, Regina Saskatoon and Guelph so if you want to connect or have an event in any of these locations give me a call or send me an email.
Peter
SKUFood Recipes for Success Podcast
In this episode of SKUFood Recipes for Success, we sit down with John Ernst, a next-generation leader from Terra Beata Farms, one of Atlantic Canada’s most recognized cranberry growers and processors. After graduating from the Smith School of Business with a passion for entrepreneurship, John stepped into the family business during a period of rapid growth and hasn’t looked back.
Over the past six years, he has played a key role in expanding Terra Beata’s reach across retail, food service, and export markets, while also contributing to acquisitions and capital projects that continue to shape the company’s future. John’s perspective blends formal business training with hands-on experience in agriculture, manufacturing, and brand development within the agri-food space.
In this conversation, we explore what it means to join a family business at a pivotal moment, how Terra Beata has evolved from a cranberry farm into a value-added food brand, and the realities of scaling operations while staying true to their roots. This episode highlights the balance between tradition and innovation, and what’s required to grow a legacy brand into its next chapter.
If you would like to be a guest send us a note. We are always working on the upcoming episodes.
Food service industry challenged
There are four overall channels food producers and processors should consider: retail, food service, institutional and ingredients. Often selling into more than one channel can reduce risk and improve profitability. You do need to have different sales plans etc. but there can be a good payback. It is not so good when one of the channels you are trying to sell into is struggling. We do know people have to eat but where they eat and how they eat can impact your business.
It should be no surprise restaurants are challenged with increased food cost. With consumers focused on higher prices at the grocery store and prices really moving up restaurants are in a tough spot. People do not want to pay more. Usually food costs are +/- 30% of the price you see in restaurants. They also have to commit to menus with prices further out. Retailers can change the price on the shelf easily without much over sight. Restaurants figure out food cost and build menus. When prices go up profits get reduced or as they are telling us now eliminated.
With the focus on Canadian food and beverage we wanted to share a program we have developed with Alain Bosse, the Kilted Chef. We partner to share insights about Canadian food and beverage at conferences and events. We talk about where products come from, share insights about some hidden gems and of course Chef Alain has great tips for using the products at home. This is designed to be entertaining and engaging. Not just for food industry audiences, it works for everyone.
I do have travel coming up to Toronto and Fredericton so if you want to connect or have an event in any of these locations give me a call or send me an email.