Food and beverage companies all over the world have identified four outstanding trends in 2021 that will affect their priorities in the new year and beyond, according to a new whitepaper.
These are improving sustainability, ability to meet changing food regulations, protecting employee health and safety, and maintaining overall food safety, according to a survey conducted by IDC Information and Data.
The survey of 711 food and beverage companies conducted in July and August 2021 included respondents across 13 countries in four major regions and five different subsegments within the food and beverage industry, including food processors, food manufacturers, and food distributors.
The whitepaper found that the main food and beverage threats for the respondents, in order of gravity were global disruption, supply and demand volatility, shift in sustainability priorities, shrinking margins, changing consumer expectations, and labor/talent shortages.
It also found that improving sustainability is currently among the leading trends in the industry, and advises companies to move from “posters” to “practice,” which means not just giving the corporate social responsibility lip service but making sustainability a key element of how these firms run their business.
As younger consumers enter the market, they will often make purchases based on the sustainability reputation of a company. This has implications for traceability, visibility, and the ability for companies to accurately measure their carbon footprint, water consumption, and so forth, the document said.
“Consumer expectations are clearly shifting to be more attuned to sustainability as a purchase decision criterion. This is also true for employees. Food and beverage companies have noted to IDC that sustainability is something that prospective employees routinely ask them about,” IDC, a global market intelligence service provider for the information technology, telecommunications and consumer technology markets said.
As labor and talent shortages grow as a threat, the ability to differentiate a company as an attractive and responsible place to work has clear advantages. Beyond brand image benefits, there are tangible ways to increase profits through sustainability initiatives, said IDC.
“Reductions in energy/water usage and waste can add up to significant savings over time. For an industry like food and beverage that has to contend with shrinking margins, the ability for sustainability efforts to impact the bottom line should not be overlooked.”
The report also highlighted the link between sustainability and cost savings and operational efficiency.
“There are tangible business benefits that can be achieved through fostering sustainable operations; the impact around cost reductions or margin improvements cannot be overlooked,” it said.
The paper also underlined the importance of adopting and adapting to modern digital technologies, as this will be crucial to firms’ ability to reach business goals and solve business problems.
“Companies that are more advanced in their digital transformation journey generally outperform those that are less progressed. In other words, there is a clear business advantage to the prudent adoption of technologies like cloud, Internet of Things (IoT), and artificial intelligence (AI).”
“Global disruptions and supply chain and demand volatility will benefit greatly from the business and supply chain resiliency that modern/emerging technology can provide,” the report said.
Looking ahead, IDC said changes in consumer demand and sustainability are clearly the trends that will impact the food and beverage industry the most over the next five years.
“Food and beverage companies have already begun the transition from just selling products to selling products that deliver experiences, and mass-market fulfillment is shifting to personalization/contextualization at scale,” it said.
IDC suggests that companies “create and offer engaging consumer (the end user) and customer (mainly retail) experiences at scale. It is not enough to meet the needs of broad consumer segments but to meet and exceed the needs of individual consumers in both ways they expect and ways they have not yet imagined.”
IDC also predicts that over the next decade, 90 percent of the industry growth will be captured by those companies that successfully engage directly with consumers.”
“Connected consumers are a food and beverage company’s worst nightmare and, potentially, its greatest opportunity. It seems intuitively obvious that those companies that figure out how to best engage with these consumers will be the ones that get more than their fair share of growth,” it said.
Another consumer demand aspect for food and beverage companies will be the ability to deliver innovative new products. IDC expects that the contribution of new products (those less than three years in market) to overall revenue will increase by 20 percentage points by 2025.
There are many product categories within the food and beverage industry that already experience high churn. Whether new beverage flavors or an entirely new brand, IDC said this churn is only going to accelerate over time as consumers become more demanding of personalization and product differentiation. – Press release
April 19, 2024
