Industry survey uncovers top priorities for food and beverage executives
Focus on profits, preventing reputational damage and technology security
It seems companies in the food and beverage industry have their plates full these days. There are many opportunities for expansion and growth, but not without some level of concern, forcing executives to weigh the complex risks of employing new strategies.
Whether it’s dealing with shifting consumer needs and trends, analyzing ever-present competition, monitoring technology security or addressing a vacillating economy, these issues continuously challenge business leaders. What are some of the areas causing the greatest focus?
According to the recent RSM Food and Beverage Industry Survey, executives indicated improving profitability was a major focus, and in response, many companies are pursuing multiple strategies to address consumer tastes and a stubborn economy. The nearly 180 surveyed executives in the food and beverage industry indicated they would be employing four or more strategic marketplace trends to grow profits. These efforts include: diversifying product offerings, sales channels and marketing strategies; innovating to meet consumer tastes for more specialty products, including natural and organic, healthy or locally sourced food and drinks; as well as utilizing social media to promote these products.
Yet while addressing this endless list of consumer trends and marketplace possibilities might seem like a competitive way to stay viable in the market, are companies spreading themselves too thin with their variety of strategies that may not make sense for their long-term growth objectives? Are they trying to be too many things for all consumers? Some companies may need to take a step back to evaluate aggressive product and sales initiatives and perhaps establish more focus to assure profitable growth. Staying competitive is one thing, but throwing the whole bowl of strategic spaghetti at the wall to see what sticks may not be the way to go.
Recalls and reputation
Another priority area includes preserving company reputation. Specifically, respondents indicated concern about the effects of product recalls on their reputations. Recent recalls, like those involving Blue Bell Creameries Ice Cream and Sabra Dipping Co. hummus, are indicative of the damage a product recall can levy on a company and its consumers. More than 45 percent of survey participants indicated product recall capabilities were a priority for them, and over 50 percent said ingredient and lot tracking were other areas of major focus. Yet, only a little more than a third of the companies surveyed said they were actually confident in their present safety and recall strategies. Could one adverse event cause irreparable harm to a company, especially one that has limited recall capabilities? It’s a question many food and beverage executives should be losing some sleep over.
Follow the “very confident”
Like other industries, technology security is an increasing concern for food and beverage businesses. Data breaches can not only threaten a company’s reputation, but impact operations and revenue and launch legal woes for years to come. Fortifying the importance of this risk area among executives, more than 40 percent of those surveyed indicated they had protective initiatives in place and were “very confident” in their data and systems security from unauthorized access. Bolstering their confidence on technology security were actions such as enhanced employee security protocols, upgraded security efforts, employee training, engaging data security consultants and installing new or upgraded hardware.
Companies who were less confident in their security efforts trailed on all these efforts, with the greatest margin occurring in the “enhanced employee security protocols” action. Fifty percent of “very confident” companies said they were using that effort to enhance their security, while all other firms came in at just over 35 percent. What does this say to underconfident companies? Follow the leader. Executives should adopt practices and programs used by the “very confident” companies to improve their data security proactivity. They’re leading the way, and if other companies don’t follow suit, a data breach is sure to follow. As our RSM risk advisory consultants sadly say, it’s not if you experience a data breach, it’s when, and the best defense against a looming hacker is a proactive offense, with a variety of systems and practices in place for mitigation and protection.
And there’s more
Other risk-related findings and takeaways from the survey included:
- Quality, cost and speed are major operational focus areas for companies.
- New products and line extensions are most likely to drive growth.
- A majority of survey participants are worried about competition, economic conditions and their own sales effectiveness.
- Human resources issues are increasing in scale and complexity for food and beverage businesses. Labor and wage concerns are impacting the ability to hire and retain top talent.
- Surprisingly, a majority of food and beverage company executives said they had no concerns with regulations, including regulatory areas, such as immigration reform, Occupational Safety and Health Administration requirements, tax requirements and Affordable Care Act and Food and Drug Administration regulations.