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Top 2019 trends for food and beverage industry businesses

From product innovation to transparency, what’s happening in food?

INSIGHT ARTICLE  | 

There are a variety of opportunities for growing food and beverage businesses in 2019, but staying on top of emerging technologies like blockchain, along with changing consumer preferences and rising costs, all while innovating, will be essential in this competitive marketplace. With so much happening inside the industry, what major business trends should food and beverage companies focus on for 2019?

Changing consumer preferences

Similar to 2018, bold and exotic flavors, snacking, and health and wellness are still in the forefront for consumer food preferences, but in an even more elevated way. Consumers want fortified and functional foods that promote gut health, fuel their brains and benefit their physical appearance. Grocery shelves will continue to be stacked with products like kombucha and others that provide additional function to consumers’ bodies. Consumers also want foods that are not only good for them, but good for others, whether the food they eat is a product like the Impossible Burger, a plant-based, faux meat, or is in environmentally friendly packaging. More than millennials, Generation-Z consumers are “clean eaters” and have a strong interest in not only what the product is but how it is made and by whom. Transparency into how food is made and where will be key. With today’s instant access to information, if a consumer can’t understand or find out where and how a product is made and what’s in it, they’ll be more inclined to leave it behind. The rise of clean labels and sustainability efforts will continue, but so will the rise of positive branding by companies that are leading in being good and also doing good.

Food safety and transparency

The romaine lettuce recall of 2018 was another reminder of the importance of food safety. As consumers demand to know more about the food they eat, food safety issues are costing the food and beverage industry billions each year. It will be more important than ever for the industry to pinpoint safety issues immediately; technologies like blockchain will continue to gain traction. Companies will move beyond trying to understand what blockchain is, to figuring out how to be a part of it. A 2018 RSM survey of middle market food and beverage chief financial officers found that just 12 percent are currently using blockchain, but that number will increase as more become aware of blockchain’s benefits across the entire food chain—from the grower to the manufacturer, distributors and beyond.

Rising uncertainty

Food and beverage companies are facing growing uncertainty in the marketplace. The tariff and global trade tensions from 2018 will continue this year coupled with rising costs. The Chinese tariffs, for example, are creating excess supplies and driving down other prices (e.g., pork, soybean). Other uncertainties include rising labor costs, the tightening labor market, transportation’s truck driver shortage and planned interest rate hikes. Some companies are already facing issues with on-time delivery due to the truck driver shortage. Consumers and grocery stores will absorb only so much of the cost so companies will have to look to new, innovative solutions to help control their costs and still grow.

Innovation and differentiation

With so many different products available for purchase in a multitude of channels—from in-store, farmer’s markets, online, social media and more, product innovation and differentiation will be important to middle market food and beverage companies. Large companies are already looking to emerging technologies for help with this. For example, Kraft Heinz recently opened a new digital hub to create “digitally powered business models and launch other entrepreneurial ideas to fuel growth for Kraft Heinz.” This team of of software engineers, data analysts, designers and e-commerce managers demonstrate how today’s digital transformation has disrupted not only how consumers purchase apparel and household items, but what food they eat, too. Other companies are looking to trending flavors and unique packaging to differentiate themselves, such as the Thanksgiving Pringles Flavors of 2018 or Chobani’s new packaging and label design.

Mergers and acquisitions

On-trend food and beverage companies are still attractive to both private equity (PE) firms and large brands. Many companies will still look to rising brands to help add new product lines versus investing in their own research and development to help save time and money, as well as reach new consumers. Companies will even undertake acquisitions in segments that have better prospects, even if they’re outside their traditional business. But companies looking for investment from PE will have to remain mindful of how tariffs affect their business as PE firms are continually taking that into consideration when evaluating prospects.


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