North America Food and Beverage Market Outlook to 2028

North America Food and Beverage Market Overview

The North America Food and Beverage Market was valued at USD 1069.47 Mn in 2023. The market's expansion is primarily driven by increasing consumer demand for convenience foods, rising health consciousness, and continuous innovation in product offerings, especially in the premium and organic segments.

The market is highly competitive, with several key players including Pepsi Co Inc., The Coca-Cola Company, Nestl USA, Tyson Foods Inc., and Kraft Heinz. These companies have established a strong foothold in the market through extensive product portfolios, innovative marketing strategies, and large-scale distribution networks.

A notable development in the industry is the increasing investment in sustainable and plant-based products. Tyson Foods announced a significant expansion of its plant-based product line under the Raised & Rooted brand, aiming to capitalize on the growing demand for alternative proteins. This move aligns with the broader industry trend towards sustainability, driven by consumer awareness of environmental issues and health concerns.

The United States is the dominant region in the market, due to its large population, diverse food culture, and significant agricultural output. The states has high demand for organic and locally sourced products. California's dominance is also attributed to its robust distribution networks and the presence of major food and beverage companies headquartered in the state, making it a crucial hub for the industry.

North America Food and Beverage Market Segmentation

The market is segmented into various factors like product, distribution channel, and region.

By Product: The market is segmented by product into beverages, dairy products, and packaged foods. In 2023, the beverages segment held the largest market share, due to the high consumption of carbonated soft drinks, energy drinks, and alcoholic beverages in the region.

By Distribution Channel: The market is segmented by distribution channel into supermarkets/hypermarkets, online channels, and convenience stores. In 2023, supermarkets and hypermarkets dominated the distribution channel segment with a market share due to the convenience they offer in terms of a wide variety of products under one roof, competitive pricing, and attractive promotions.

By Region: The market is segmented by region into the United States and Canada. In 2023, the United States held the largest market share by its large consumer base, high disposable income, and advanced distribution infrastructure.

North America Food and Beverage Market Competitive Landscape

Company

Establishment Year

Headquarters

Pepsi Co Inc.

1965

Purchase, New York

The Coca-Cola Company

1892

Atlanta, Georgia

Nestl USA

1867

Arlington, Virginia

Tyson Foods Inc.

1935

Springdale, Arkansas

Kraft Heinz

2015

Chicago, Illinois

The Coca-Cola Company: Coca-Cola will launch its Body Armor sports drink in Canada starting January 2025, marking its first international expansion since the brand's inception in 2011. The company aims to leverage its global bottling system and consumer insights to drive growth in new markets, targeting health-conscious consumers with its low-calorie options.

Pepsi Co Inc.: In 2024, Varun Beverages, a Pepsi Co franchise partner, plans to invest $7 million each in Zimbabwe and Zambia to set up snack manufacturing units for the 'Simba Munchiez' brand, aiming to expand Pepsi Co's footprint in the African snacks market.

North America Food and Beverage Market Analysis

Market Growth Drivers

Expansion of E-commerce in Food and Beverage Distribution: The e-commerce sector has played a crucial role in the food and beverage industry, with online grocery sales in North America, the sales in the USA are expected USD 120 billion annually by 2028. This growth is supported by the increasing consumer preference for convenience and the wide variety of products available online. Major retailers and food brands have invested heavily in their online platforms, enhancing the user experience through personalized recommendations, subscription services, and same-day delivery options, thereby driving market expansion.

Rising Demand for Functional Beverages: The market for functional beverages, including energy drinks, protein shakes, and enhanced waters, has seen robust growth in North America. This surge is attributed to the growing consumer interest in health and wellness, as functional beverages offer specific benefits such as hydration, energy boost, and immune support. Companies like Pepsi Co and Coca-Cola have capitalized on this trend by introducing innovative products tailored to meet evolving consumer needs.

Growth in Ethnic and Exotic Food Consumption: The market has experienced increased demand for ethnic and exotic foods. This trend is driven by the diverse population and the growing interest in global cuisines. The proliferation of international food festivals, cooking shows, and the availability of authentic ingredients in supermarkets have further contributed to the popularity of ethnic foods, making it a growth driver for the market.

Market Challenges

Supply Chain Disruptions: In 2024, the North America food and beverage sector faced challenges due to ongoing supply chain disruptions, leading to delayed shipments and shortages of key ingredients. The impact of these disruptions was particularly felt in the fresh produce and dairy segments, where the delay in transportation led to spoilage and wastage of food. These challenges have forced companies to re-evaluate their supply chain strategies, investing in more resilient and localized supply networks.

Rising Costs of Raw Materials: The cost of raw materials, including grains, dairy, and meat, has seen a sharp increase in 2024, with prices of key commodities like wheat and corn rising by 15% to 20% compared to the previous year. These rising costs are driven by factors such as adverse weather conditions, geopolitical tensions, and increased demand for biofuels. This has resulted in higher production costs for food and beverage companies, which are often passed on to consumers, leading to concerns about affordability and price sensitivity.

Government Initiatives

Healthy Food Financing Initiative (HFFI): The USDA, in partnership with the Reinvestment Fund, has launched the Food Access and Retail Expansion Fund (FARE Fund) with $60 million in funding from the American Rescue Plan. This initiative aims to enhance access to healthy foods in underserved communities over the next five years, supporting food retailers with loans up to $5 million and grants up to $250,000.

Nutrition North Canada Program Expansion: In 2024, the Canadian government allocated$23.2 millionfor the Nutrition North Canada program, aiming to enhance food security in remote communities. An additional$101.1 millionover three years will support local food initiatives. This investment seeks to improve access to nutritious foods and bolster local retailers.

North America Food and Beverage Market Future Outlook

The future trends of North America food and beverage include the continued growth of plant-based foods, expansion of the functional beverages segment, increased e-commerce sales, and a stronger focus on sustainable and ethical sourcing across the industry.

Future Market Trends

Rising Demand for Plant-Based Alternatives: The demand for plant-based alternatives in North America continues to surge. This shift is largely driven by health-conscious consumers and a growing trend towards sustainable diets, leading to significant investments from companies like Tyson Foods in expanding their plant-based product lines.

Focus on Sustainable and Ethical Sourcing: Sustainability and ethical sourcing will continue to be major themes in the food and beverage industry over the next five years. By 2028, it is estimated that over 50% of food and beverage products in North America will come from sustainably sourced ingredients.
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