Food and beverage industry businesses strive for growth
But at what risks and costs?
More than six in 10 food and beverage executives are anticipating growth in both revenues and profits in the coming months, according to the RSM Food and Beverage Industry Survey, but their widespread optimism is tempered by industry-wide strategic risks and reputational challenges, such as increased competition, food safety issues and the development of more effective approaches to marketing and sales.
The next superfood
Chief among the challenges executives are facing is their search for the next engine of growth. Nearly 80 percent of executives expect new products to drive their expansion, and they are turning to a number of emerging trends to find the next hot one. According to the survey, companies are leveraging at least four trends to stay competitive in the marketplace. These include adding a health and wellness focus, using natural or organic foods, introducing ethnic foods or beverages, seeking locally sourced products, and enhancing convenience and simplicity.
It seems everyone is looking for the next superfood, like kale or quinoa. The broad array of trends executives are chasing reflects their determination to be successful, but it also presents them with considerable risks. Staying competitive is one thing, but chasing trends and failing to prioritize key strategies could slow growth to a standstill. Companies may need to evaluate their aggressive product and sales initiatives and perhaps establish more focus to assure profitable growth. Included in this evaluation is assessing risk. Food and beverage company leaders should ask themselves, what are we risking if we implement this new program or growth initiative?
Do we have enough resources to implement? Will this be an excessive disruption to our existing business? Are there regulatory compliance issues to consider? Is this change aligned with our mission and future goals? What types of new systems and technologies need to be implemented? What external market and economic trends can put us at risk? How will we monitor challenges and assess success? Answering these key questions can help refine your critical growth choices.
And there's more
Other survey findings included the following insights that could directly or indirectly impact a company's growth efforts.
- 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, which, inevitably, will impact a company's growth pursuit. No people to do the work means no work and no product.
- More than half of the survey respondents said they plan to use social media to promote their products to consumers. A great idea to reach your consumers, but do companies have the resources and know-how to implement and sustain this ongoing conversation with their constituents?
- 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.
- 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.
- 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.
The RSM Food and Beverage Survey used an online questionnaire to collect responses from 179 executives, owners and decision makers at food and beverage companies with annual revenues between $10 million and $1 billion. Respondents included farm-to-table growers, manufacturers and processors, distributors and retailers.