There are many challenges facing the food and beverage industry in 2018. Some are unique to the times we’re living in, such as Brexit, while others are perennial pressures that need to be managed in all areas of the industry.
In this article we break them down, looking at the implications and how you can make sure you’re prepared.
1. The Environment.
You may have seen this video of what our oceans look like thanks to discarded plastic waste. If not, the screenshot below paints a stark picture.
Images like this are contributing to a gradual perception shift amongst consumers, who are increasingly aware of the potential harm their consumption habits are causing. The search trends for ‘reduce plastic’ show an increase in desire to reduce individual consumption, as do headline-grabbing acts like the first plastic-free aisle in a supermarket (“the food is wrapped in a compostable biomaterial made from trees and leaves”), and Iceland’s decision to remove plastic completely from its stores by 2023 (“it’s not going to be easy, but it can be done”).
These trends are likely to continue, and the environmentally friendly curve is a good one to be ahead of.
A third of consumers are receptive to words like “fair trade”, “gluten free” and “natural” on product packaging, according to an article on foodprocessing.com.
While the debate continues as to whether these are fads or whether they confer actual health benefits, scientific data is emerging to show that food allergies are on the rise across the globe (“the prevalence of food allergy in children increased by 50 percent between 1997 and 2011”).
Also consider the increasing pressure on food brands to reduce sugar in their products. A report by the UK government says obesity causes harm in all walks of life, from “bullying, low self-esteem and school absence” to “heart disease, type 2 diabetes and some cancers”.
This report is part of government efforts to remove 20% of sugar from food by 2020. Efforts focus on the nine products that contribute most to children’s sugar intake (“cakes, biscuits, puddings, ice cream, confectionery, morning goods (such as croissants and muffins), yoghurts, breakfast cereals and sweet spreads”), but the wider campaign will impact all areas of the food industry.
Factors like these combine to make consumers more discerning when choosing products, and lead to tighter restrictions on the industry. Making decisions to reduce sugar and prioritise healthier ingredients is also probably good curve to be ahead of!
Perhaps the defining news issue of this generation, and one that is having unseen implications across the board.
There are direct legislative impacts, yet to be decided by the deal we reach with the EU. If the UK's status relative to the EU becomes the same as other non-EU third countries, we will be charged the same tariffs as other WTO members: 30% on sugars and confectionary, 20% on tobacco and beverages, and 10% on fruit and vegetables. This is likely to result in increased prices throughout the whole supply chain.
There are also more conceptual impacts that are equally problematic. A Guardian article reports on crops being left to rot in UK fields, because of an increased “perception among foreign workers that the UK is xenophobic and racist” and a resulting drop in their numbers.
Just two examples of many, and this is before a deal has been reached, and a long time before our actual departure. Expect Brexit to continue to create challenges for this industry.
In our mind, these three issues will be hard to escape regardless of the size of your business and your position in the food and beverage industry.
There are other challenges to consider that won’t affect everyone. The recent KFC debacle is a reminder that even the best laid plans can go awry, and that supply chain issues aren’t exclusive to fledgling companies.
There are the perennial challenges too: inventory management, repair and replacement costs of equipment, developing new products in time to keep up with consumer trends. Some of these issues are outside the control or influence of the food and beverage industry, meaning preparation and considered response are the only options available.
Alternative finance is a reliable way to surmount these challenges and secure success for your business. Whether this is to invest in new equipment, to commission research and development to increase the appeal of new products, or to bring yourself in line with new regulation, we can help you find a solution that fits your needs.