What’s your appetite for change? Four items to consider in 2016

In November 2015, Plante Moran hosted its annual Food Forum, which brought together more than 130 industry leaders to share perspectives and growth strategies. Among the speakers and panelists featured was Joe Pawlak of Technomic Inc., a research and consulting firm specializing in the food and beverage industry. We thought we’d share a few of Joe’s insights and recommendations for companies as we begin 2016.

Four major trends impacting food and beverage

1. The hourglass economy. Success here depends largely upon your customer base. Wealthy consumers are buying premium brands, whereas those with low incomes are frequenting discounters and quick-serve restaurants. Due to stagnating incomes, the middle class is moving toward discount retailers as well. That leaves the traditional grocery store historically geared toward the middle class with significant challenges ahead.
2. Supply chain challenges. From a crumbling infrastructure to driver shortages to shorter cycles and delivery time demands, it’s becoming more challenging to supply customers with what they need.
3. Regulation nation. While we’ve been awaiting the Food Safety Modernization Act, the industry has begun to self-regulate and develop its own requirements, which are reinforced with a trend toward clean labels and local foods. Another key issue here is the minimum wage push. A $15 minimum wage will have a huge impact on the industry, causing greater automation and a decrease in employee headcount.
4. The “food with integrity” effect. What do today’s consumers want? Clean, fresh, natural foods that, preferably, are grown locally and have a story to tell—foods that are better for them, that are made-to-order, and that are without additives and preservatives. It’s no wonder that many processors are changing their ingredient structures to support a clean label.

Four ways to get fit for 2016 and beyond

1. Reimagine, reinvent, reallocate, and repeat. Don’t become stuck in your current frame of mind. To be successful, it’s critical to be nimble and capable of adjusting to support the ever-changing needs and desires of your customers. While true of any business—this is particularly important to the food and beverage industry, as the consumer preference is making a statement about the individuals’ values. Read the tea leaves, and stay ahead of the curve.
2. Act small to grow big, and boost your corporate social responsibility (CSR) quotient. Increasingly, the perception in the industry is this: the smaller and more intimate the company, the better it is for you. Large companies are becoming perceived as “bad.” You have to be intimate with your customers. Local is best, but if you can’t be local, work on your story. Why would a customer want to buy from you when Company B is less expensive? Give customers a reason to trust in you, to buy into your story.
3. Enhance digital and big data. An unparalleled amount of data regarding food distribution and consumer behaviors will enter the marketplace over the next several years. Take advantage of it and use that data to refine your long-term strategy.
4. Preempt demand for a health-focused food supply. The key here is “preempt.” Be proactive when it comes to food safety and standards. The key is to exceed standards and expectations—not just the quality of the food but also its safety and healthiness.

The food and beverage industry is undergoing a variety of changes, but the good news is they’re manageable—as long as you get out in front of them. For more information, give us a call.