Rising prices a high concern of meals and beverage leaders, survey finds

Dive Temporary:

  • Rising commodity and different prices are the highest exterior concern amongst meals and beverage trade executives surveyed by tax, audit and advisory agency Mazars USA for its 2021 trade outlook. One-quarter of respondents, who included a mixture of manufacturing, wholesale/distribution and restaurant executives, stated they had been “very involved” by this issue, whereas supply prices additionally ranked throughout the high three. 
  • When it comes to inner issues, the very best share of “very involved” responses went to the necessity to improve gross sales (41%), growing product/buyer profitability (34%) and the impact of the pandemic (31%). Corporations with fewer than 100 staff had been 24 factors extra more likely to contemplate themselves “very involved” about the necessity to improve gross sales. One-fifth of companies anticipated no gross sales progress in any respect in 2021. 
  • Pursuing progress within the waning months of the pandemic has challenged companies to each trip the tailwinds generated by the well being disaster — rising shopper curiosity in well being and wellness, plant-based and useful meals — whereas shouldering the unwanted side effects of revived demand within the type of price will increase. 

Dive Perception:

From meals commodities to transportation, growing prices have been the hallmark of the post-COVID-19 period. Costs for corn, soybeans and wheat just lately hit their highest stage in eight years, The Wall Road Journal reported, whereas oil is at a two-year excessive. 

Many massive meals and beverage producers have seemed to go alongside these increased prices to shoppers within the type of worth will increase, with Coca-Cola, Unilever, NestléMondelēz Worldwide and Common Mills as only a few taking this route. 

For smaller meals and beverage firms, this isn’t essentially the best path to progress within the face of fierce competitors from massive CPGs. Within the Mazars survey, solely 30% stated increased promoting costs can be an element behind progress in 2021. Roughly two-thirds of these polled have lower than 100 staff. The preferred avenue: bringing on new prospects, whereas about half had been eying new merchandise, boosting gross sales and getting into new gross sales channels. 

Within the yr forward, companies clearly anticipate well being to be a progress driver for meals and drinks. Tendencies resembling plant-based, better-for-you, allergen/GMO/gluten-free and natural outranked snacking, sustainability, transparency and cannabis-infused merchandise as having a optimistic influence on gross sales within the Mazars survey. This is not so stunning, contemplating the massive affect the COVID-19 pandemic has had on shoppers’ curiosity in well being and wellness. It is one which meals and beverage gamers clearly anticipate to final.    

The 2021 survey marked the primary time that Mazars polled companies on COVID-19, and the pandemic ranked among the many high three inner and exterior issues for operators. The best share of “very involved” responses for exterior issues went to the pandemic’s results. Even worker recruitment and retention, which has been a wrestle for CPGs in each the white collar and manufacturing ranks, ranked a lot decrease. The truth is, almost 4 in 10 companies anticipated progress merely from the easing of the pandemic. 

Cybersecurity additionally ranked surprisingly low as a priority for companies, with solely 10% “very involved” by the risk, up 0.6 factors between 2019 and 2021. The meals and beverage trade has been a well-liked goal for hackers. Mondelēz was hit in 2019, whereas Molson Coors reported a cybersecurity incident in early March 2021 that knocked a lot of its operations offline. The survey, which was performed from late February via April, occurred shortly earlier than information broke that meat processing large JBS was hit by a large cyber assault. 

Regardless, the pandemic is clearly serving as a springboard for product innovation and future progress. Greater than 40% of survey members anticipate to extend R&D spending in 2021, up from 31% in 2019. New product growth additionally ranked as the highest strategic response to the pandemic. 

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