Executive summary

Overall findings from the Food and Beverage Monitor survey results

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The food and beverage industry has wrestled with a series of changes that are fundamentally reshaping its markets and operating environment. The rise of disposable income in both developed and emerging nations―combined with consumers who are demanding healthier products and greater transparency about what is in those products―favors small and middle market players who are nimble enough to adjust to these trends. At the same time, cybersecurity represents a significant external threat, and food safety, labor and commodity prices are pressuring profitability.

Still, nearly half of the participants in the 2017 RSM Food and Beverage Monitor survey report their companies are thriving, with nearly four in 10 saying they expect double-digit revenue growth in the next 12 months. Much of this increase is driven by an array of new product introductions these middle market companies are putting into the field to remain competitive. To accommodate growth, these firms are investing in both operational and online technologies that can improve efficiency and open new e-commerce channels with customers.

Here’s a capsule look at key activities in four important areas:

  • Growth: New product introductions are a significant avenue for small and middle market companies to build market share, while large players are pursuing an “innovation by acquisition” approach to offset faltering sales of many long-time brand staples. As part of their growth strategies, companies are developing offerings that cater to a broad range of consumer trends, while also carefully monitoring the level of investment required to bring such products to market.   
  • Risk: Without question, food safety is a major issue for industry leaders, particularly given the costs of regulatory compliance and the potential brand and revenue damage a negative incident can create. In addition, the threat of cyberattacks, local market competition and another economic downturn are critical challenges leaders must consider as part of overall risk management.    
  • Technology: While the food and beverage industry is not considered leading edge in its deployment of technology,1 executives are investing in systems that can improve product quality and safety while reducing operational costs. On the other hand, leaders have mixed views on how best to leverage the internet of things, and may not be fully optimizing information technology (IT) tools to monitor the full extent of the supply and distribution chain.  
  • Profitability: Operating margins have been solid over the past year and leaders expect that trend to continue in the near-term. While rising costs for recruiting and retaining skilled workers is a global concern, companies outside the United States see commodity fluctuations, distributor requirements, funding and promotional spending as greater threats to overall profitability.   

The survey captured a rich level of detail about the successes and challenges facing middle market food and beverage companies in a complex, fast-changing operating environment. The following analysis of these four important areas is designed to provide perspective from industry peers, and offer insight on how to map a path forward through challenging times.  

Profile of participants

  • 345 Total survey participants
  • 31% Respondents’ titles are chairman, chief executive officer, president, managing director, partner or owner
  • 100% Respondents between $10 million and $1 billion in revenue
  • 61% Respondent’s company is privately or closely held business
  • 71% Respondents leading companies outside the United States

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