Did you know that the food and beverage (F&B) industry is one of the most essential components of several economies across the world? Do you know where that whole wheat bread or packet of chips is produced and under what conditions? Are you aware of the procurement process and supply chain networks of the food and beverage companies across the world? Food and drinks are an important part of several cultures and they own a personal/social space in the consumer’s hearts and minds. The global food and beverage industry is highly consumer driven with a multi-dimensional and global network that has transformedthe consumers’ eating habits and preferences.
The food and beverage industry has witnessed phenomenal growth due to factors like growing population, technological advancements, streamlined manufacturing processes and improved cold chain facilities. The profit margins in the industry has been relatively small, resulting from the growing price wars in this highly competitive market. Globally, the industry is dominated by category captains who dictate the retail space and indulge in mergers and acquisitions (M&A) with smaller food and drink companies and manufacturing units.
Food and beverage manufacturing companies are increasingly seeking supply market intelligence to customize their product lines and categories to suit the current trends and consumer preferences. SpendEdge helped a leading food and beverage company to streamline its sourcing and procurement processes, thereby decrease its overall category spend and drive profitability.
Top Food and Beverage Industry Trends
#1 Nutritional Foods
With high level of awareness and access to information sources, consumers are increasingly seeking food and drink products that are healthy, fresh and score high on nutritional value. Additionally, customers gravitate towards products that are sugar-free, gluten-free, lactose-free and have a low calorific value. Food and drink manufacturers are focusing on procuring natural ingredients and substituting them for artificial flavors and substances. This has brought a major change in the procurement strategies of the F&B companies across the globe.
#2 Functional Beverages
Consumers are on the lookout for beverages that hold the nutritional value of food as well as the convenience of a beverage. Recent terms such as drinkable food products and ‘snackification’ of beverages are becoming popular. These functional beverages act as nutritional drinks as well as meal replacements that are guilt free. These power beverages address various consumer needs like refreshment, satisfaction, energy booster and a range of functional benefits. This trend has been fueled by the constant decline in the demands for sugar based and carbonated drinks that have been identified to be harmful for consumption.
#3 Convenience Food Products
Today no one has the time and patience to prepare a meal from scratch and therefore they look for convenience food products i.e. food products that score high on convenience and require very little effort in meal preparation. Convenience food products include Ready-to-Eat (RTE), Ready-to-Cook (RTC) and Ready-to-Drink (RTD) food and beverage items, available on retail shelves all over the world, thanks to globalization.
#4 Supply Chain Transparency
Supply chain visibility is gaining momentum, thanks to several new concepts like sustainability, farm-to-table movement, and fair trade practice. Basically, supply chain transparency offers information and access to consumers about the products provenance and manufacturing process. Thereby, building a loyal customer base and a credible reputation in the market. The farm-to-table movement enables the consumers to know from where exactly the food on the table has been sourced, procured, delivered and under what conditions with the help of the new-age technology and package labeling. Fair trade practice and sustainability refer to ethical labor conditions and environment-friendly manufacturing and food processing practices.
#5 Innovative Packaging
‘Customers buy what they see’ believe the top food and beverage industry heads. Thus, companies are turning to creative, innovative and sustainable ways of packaging and presenting their products. Not only is there a competition to grab the retail shelf space but also to entice customers and convince them to buy your products. The food and drinks companies must develop their packaging designs on three points: simplicity, mobility and environment friendliness.
At SpendEdge, we help organizations gain actionable insights, drive cost reduction and devise price negotiation strategies, thereby driving profitability. We help clients in category management and spend benchmarking to ensure commercial success and drive profitability.