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2016 Food and beverage industry update, part 2

Staying current, compliant and customer focused


In Part 1 of our food and beverage update, we discussed how companies are setting the stage for growth and change in 2016. From an increased focus on omnichannel communications to added preventative controls in response to new food safety legislation, the areas of focus—and the investment priorities—of leaders across the industry are shifting. In Part 2, we’ll take a closer look at a current state of the food and beverage environment, as well as some more factors driving transformation and innovation.

What customers want: Meeting demands for speed and quality

The term “flavor of the week” isn’t just a catchphrase—it’s indicative of how quickly food trends come and go, and how important it is for companies to keep up with the breakneck pace of new product innovation. In fact, according to RSM US LLP’s 2015 Food and Beverage Industry Survey, three-fourths of food and beverage executives look to new product introductions and line extensions to drive sales and profitability moving forward.1

Similarly, the recent KPMG Food, Drink and Consumer Goods (FDCG) Industry Outlook Survey reveals 27 percent of respondents cite new products and services as their top spending initiative, and of this group, more than half (52 percent) believe product innovation will be their key growth driver over the next one to three years.2   Enterprise resource planning (ERP) software can help companies streamline activities across the food and beverage supply chain, ensuring visibility at every checkpoint, leading to more informed decision-making, minimized operational risk and ultimately, faster speed-to-market.

A recent Aberdeen Benchmark Survey found that 94 percent of leading food and beverage manufacturers have implemented ERP into their operations. Through these investments, 49 percent are strategically standardizing business processes, 32 percent are streamlining and accelerating processes to improve efficiency and productivity, and 25 percent are modernizing their technology infrastructure and applications.3

Improved traceability also helps companies meet customer demands for cleaner, more transparent labeling. According to a recent report by Innova Market Insights, the top food and beverage trend for 2015 was “from clean to clear label”—an initiative that shows no sign of slowing as 2016 progresses.4

New markets and channels: Strategically diving into spaces for growth

At the same time that food and beverage leaders are making plans to improve internal capabilities and maintain a competitive edge by automating and streamlining their supply chain, they’re also on the constant search for innovative ways they can reach their audience.

From the rise of the premium grocery store (featuring everything from live piano music to grilling stations and sushi bars), to the fast-growing online grocery segment, the possibility for creative engagement has never been higher. As shoppers become more tech-savvy, the expectation for such offerings will only expand. For example, Business Insider predicts that between 2013 and 2018, online grocery sales will grow at a CAGR of 21.1 percent, reaching nearly $18 billion by the end of the forecast period.5

Yet, the challenge is deciphering exactly which new areas of technology innovation to invest in, as not every new gadget, idea or market will benefit all food and beverage companies across the board. To this end, a recent report by L.E.K. Consulting recommends examining your approach to ensure against being one-dimensional or over-exposed in any given area, whether your niche is online grocery or the foodservice industry or myriad touchpoints in between.6

What’s to come: Maintaining good taste and great expectations

While increased regulatory pressures, coupled with a more discerning and empowered customer base and a increasingly competitive marketplace can appear, on the surface, to act as challenges to food and beverage growth, in reality, they’re excellent catalysts. They drive industry leaders to make the types of decisions that will place them in the driver’s seat now and in the future. The result? A stronger, more responsive workforce capable of bringing a lot more than food to the table.

  1. “RSM Food and Beverage Industry Survey 2015,” p.6.
  2. “2014 Food, Drink, and Consumer Goods Industry Outlook Survey,” KPMG, p.7, 11.
  3. Castellina, Nick, “ERP in Food and Beverage: Tracing the Path to Success,” Aberdeen Group, December 2013, pp.2-3.
  4. Top 10 Trends for 2015: The Impact on Sweets and Snacks,” Innova Market Insights, p.4.
  5. Smith, Cooper, “How E-Commerce Is Finally Disrupting The $600 Billion-A-Year Grocery Industry,” Business Insider, January 20, 2015, pp.1-2.
  6.  Weber, Jon and Manny Picciola, “2015 State of the Industry: Food and Beverage,” L.E.K. Consulting, p.2.

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