If you’re a decision maker in the food manufacturing space, ask yourself these questions:
- Does your company value sustainability and transparency in its processing?
- Is your boardroom as diverse as your customer base?
- Are your company’s leaders listening to those customers to anticipate what they want?
- Is your company taking tangible steps to be innovative, or does it just say it is?
If you want to thrive — not just survive — in today’s market, you must be answering “yes” to these questions… or at least taking actionable steps toward a “yes.”
The food and beverage industry is changing more than ever before thanks to disruptive innovation, the internet, evolving customer values and more.
Don’t be the next Blockbuster, Kodak or Myspace. The key is to be proactive, not reactive. Where should you begin? Consider these leading trends shaping the industry.
Clean labels: Fresh products vs. shelf life
It’s no secret that consumers have increasingly favored more natural products with “cleaner” labels. However, some manufacturers have been reluctant to sacrifice shelf life (i.e., preservatives) to meet this demand.
The result? Those consumers have been willing to pay more for what they want and are taking their dollars elsewhere.
Meeting this demand for fresher food means rethinking processing and the supply chain. We’re seeing a greater focus on shipping efficiency and increased investment in tracking technology to monitor product through distribution.
This has led to the emergence of more vertically integrated supply chains and the growth of regional greenhouses. These climate-controlled greenhouses have sprouted in urban settings like Cincinnati and New York to shorten the distance between harvest and retail. Plus, climate change is reducing our ability to grow produce outside, leading to about 52.7 billion square feet of indoor farming space around the world.
Minimizing food waste
Today’s consumers care more about where their food comes from and how it’s made. They’re curious about the operations of the business and who they’re supporting with their dollars.
A lot of it is generational: Millennials and Gen Zers grew up in a digital era with immediate access to information, so they have a greater awareness of the industry that was once kept behind the proverbial curtain.
These consumers prioritize food waste and sustainability more than their predecessors — and some producers are keying in on this. For example, yogurt production requires a lot of water. The soury milk byproduct was often disposed of, but some processors are now finding ways to repurpose the liquid for other uses.
We’re seeing this reflected in some restaurants as well, with more chefs utilizing all components of a product to minimize food waste. Celery hearts may be used in one dish and the leaves may be used to garnish another, or kale leaves may form the base of a salad while the stems are used in a stew.
Diversity in the boardroom
Big Food brands have struggled to truly understand who their consumers are. Many of these companies are led by more traditional Baby Boomers who aren’t necessarily entrenched in how Millennial and Gen Z consumers think.
A major key to success today is making your boardroom diverse. While diversity includes gender and ethnicity, it’s also generational. Younger consumers are more global, have broader tastes and appreciate the flavors of other cultures.
Do you consider the input of Millennials and Gen Zers in your decision-making process? Do you encourage diversity in your C-suite? Your leadership and decision-making process must be a reflective mosaic that is true to the diversity of today’s consumer base.
Decreasing brand loyalty: Values and food insecurity
In general, Millennials and Gen Z consumers are less brand loyal than previous generations. Their loyalty is correlated to their values. Many times, if a brand deviates from their values, these shoppers will move on to another company that better aligns with what they believe.
We must also recognize that we’re at a unique juncture in our history in the United States, because food insecurity is more prevalent than ever. Processed foods have become the most cost-effective to produce, making less “healthy” foods the most affordable. And as the middle class has become hollowed out, food insecurity has encompassed an even larger group of people.
This significant number of consumers in lower income brackets still want the natural, healthy, clean-label foods as higher-income shoppers, but they can’t afford them. The question for food manufacturers: How do you scale these products that you once could provide to the middle class?
This is why retail brands are more of a competitor to Big Food than ever before. They’re willing to take lower margins to deliver their product — and consumers are responding.
Denise Holloman is Principal & Chief Advisor at DAH Operations Advisors. In 2015, she retired from her position at General Mills as VP of Project Management Office and Global Continuous Improvement. Prior to joining General Mills, Holloman spent 12 years with Procter & Gamble in various operations management, maintenance/reliability, project management and systems engineering roles.