A Look into the Future of the Food and Beverage Industry Post the COVID 19 Pandemic- SpendEdge’s Vivek Sikaria Offers His Perspective on the Future Course of This Industry
There is no doubting the fact that enterprises in the food and beverage industry are riding the highest tides of demand as the COVID 19 pandemic is firming its grip around the globe. Indefinite lockdowns and restricted mobility of goods are painting a sordid picture for consumers who are resorting to panic buying of consumables. […]
There is no doubting the fact that enterprises in the food and beverage industry are riding the highest tides of demand as the COVID 19 pandemic is firming its grip around the globe. Indefinite lockdowns and restricted mobility of goods are painting a sordid picture for consumers who are resorting to panic buying of consumables.
However, amidst this buying frenzy, fractured supply chains and inadequate infrastructure are heralding immense challenges for the enterprises in the food and beverage industry. A majority of such enterprises are issuing SOS because of completely depleted inventories. It will not be a long shot to say that the current COVID 19 pandemic has induced enterprises in the food and beverage to re-strategize their supply chain management objectives. It is expected that the current crisis will change the way the future of the food and beverage industry will look.
On this note, SpendEdge’s Vivek Sikaria has shed light on the degree of preparedness of the current food and beverage industry and has assessed the possible trends that will characterize the future of the food and beverage industry.
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How do you think will the food and beverage industry pan out during the COVID 19 pandemic?
Vivek- Apprehensions of an empty refrigerator will continue to work in the favour of enterprises in the food and beverage industry. However, the question is about their readiness to cater to such a demand surge. Most of them have contingency plans that can help them to weather through emergencies, but they are no match with the current pandemic. Inventory shortage, inadequate storage infrastructure will continue being the antagonizing forces in this industry. Meanwhile, a majority of consumers are shying away ordering from takeaway restaurants because of the latter’s lack of integrity on sanitary measures. This is a major blow to the growing sentiments of the food and beverage industry. I would further like to add to these observations about a certain extent of a curb in consumer’s choices of eateries. The decrease in customer footfall and supply chain disruptions have forced scores of small-time cafes and restaurants to post bankruptcies. Some of them have opted to merge with bigger brands. This consolidation in the food and beverage industry effectively reduces the choices and can be bad news for consumers in terms of their pocket-pinch while dining out.
According to you, what are the sectors in the food and beverage industry that will benefit the most out of consumer’s purchasing behaviour in light of the current COVID 19 pandemic?
Vivek- Rightly said about the impact of consumer’s purchasing behaviour. I have observed major demand shifts across sectors in this industry as consumers are being driven by frenzied buying. It is interesting to note that food is serving as a comfort factor for a number of people during the period of lockdown. Snacks and non-alcoholic beverages are becoming regular staples for students trapped in their solitary confinements. They find more comfort and convenience in such consumables than raw ingredients that have to go through an elaborate process of cooking to be consumed. Meanwhile, because of the inconsistent supply of raw ingredients, millennials are preferring to consume ready-to-eat frozen products.
What do you foresee in the future of the food and beverage industry post recovery from the COVID 19 pandemic?
Vivek- To start with, I see a major change in the perspective that evaluates growth in the food and beverage industry. I believe that stakeholders in this industry have learnt a crucial lesson from the current COVID 19 pandemic albeit in the most difficult way that prospects of high demand do not necessarily translate into success. You ought to have a responsive infrastructure in place to cater to demand that will see its highs and lows from time to time. I can foresee a large-scale proliferation of automation across certain sectors in the food and beverage industry. This, I believe will be in line with the contact-less service concept which will prevail for quite a long time. This will also make for the lack of human labour which was the reason of agony for numerous sectors in the food and beverage industry during the COVID 19 pandemic-induced lockdown.
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From a sourcing and procurement perspective, what are the strategies that you think will secure the future of the food and beverage industry?
Vivek- It is no more a surprise that a poorly maintained supply chain has wreaked havoc for most of the industries. Lack of ownership across the entire supply chain will continue to trouble enterprises in the food and beverage industry. It is extremely important for such enterprises to ensure that their vendors practice complete adherence to GS1 traceability standards. This is particularly relevant for procurers for raw ingredients such as poultry meat. The GS1 standard requires suppliers to provide traceability in elements like cattle information such as age and source and livestock mob movement declaration in case of livestock. Other elements such as global trade item number of the carcass, carcass grade, and government or authority issued registration number of slaughterhouses, and meat transfer certificates are also supposed to be maintained by suppliers.
The assessment of the storage capacities of suppliers holds extreme importance in the food and beverage industry. Procurers must analyze the available storage capacity across a supplier’s facilities within a specific region and in proximity to the demand markets. The more the area allocated to storage reduces supply shortage risks in the event of supply fluctuations due to natural calamities (crop infections and unfavorable weather conditions) and economic downturns.
Anticipations of future supply shocks make it essential for procurers to engage with suppliers who have implemented effective forward contracts to ensure reserves of products and consistent supply during shortages and price fluctuations. In addition, the implementation of forward contracts by suppliers can protect buyers against factors such as exchange rate fluctuations and variation in the physical properties of products.
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