The COVID-19 pandemic has dealt the food and beverage industry some significant challenges, ranging from lockdowns to critical labour shortages, and supply chain issues to currency fluctuations.
Yet despite these challenges, the one-in-a-hundred-year crisis has also served up some interesting industry opportunities too.
According to the CSIRO, the size of the Australian food and beverage industry is growing. Back in 2019, they forecast that it could be worth as much as $25 billion by 2030. And since making that prediction, they’ve suggested that the pandemic has created further room for growth in this most critical industry.
That’s even with the added uncertainty around market forecasts that the pandemic has caused.
However, for your business to claim its share of the $25+ billion pie, you need to clearly understand the specific challenges and opportunities that exist within the industry today.
So, let’s explore the most significant current trends in the food and beverage industry and how you can help overcome or harness them.
10 trends that will shape the future of the food and beverage industry in 2022
Supply chain challenges to continue
Earlier this year, Prime Minister Scott Morrison said that the days of domestic lockdowns are gone. While this approach may help to alleviate supply chain issues nationally, disruptions to critical global supply chains are set to continue.
For example, Gary Edstein, chief executive of DHL Express Australia, said in a recent interview that worldwide supply chain issues may not ease until 2023. Whilst a survey of 356 private-industry CEOs in December 2021 revealed that half of Australian businesses expect disruptions to continue in 2022.
Food inflation forecast to increase
According to industry research from investment and advisory group Jarden, “the price of food and other grocery items is set to increase by an annualised rate of 6.8% this year.”
This inflation will have varying impacts across the food and beverage industry – and while it’s good news for large supermarket players, others in the industry may well feel the price squeeze.
And given how integral food and beverage products are to the hospitality industry, rising food inflation is an essential factor to keep an eye on. For example, restaurants typically increase their menu prices when ingredient costs rise, but if wage inflation doesn’t keep pace, price increases may dampen consumer demand.
Staff shortages set to linger
Pandemic-related staff shortages have hit the hospitality industry particularly hard. According to the latest ABS Business Conditions and Sentiments Report, accommodation and food services businesses were the most likely to report difficulty with finding suitable staff to fill jobs.
What was an emerging issue in the hospitality industry back in 2020 is still one of the current trends in the food service industry in 2022. And, as per recent warnings from KPMG, it may remain a concern for the next three to five years.
Conscious consumers to drive growth
Rising consumer concerns about environmental issues and sustainability are also forecast to drive growth in the food and beverage industry.
A 2020 survey of 1,035 Australians by the intelligence platform Toluna revealed that one in five shoppers use sustainability to define their choice of retailers, brands and products.
Consumers also identified recyclable packaging and biodegradable elements as the top two most important factors they associate with sustainability.
Uptake of digitalisation and automation to increase
Additionally, the pandemic has increased the food and beverage industry’s uptake of digital and automation technologies. For example, e-commerce in the food and beverage industry has proliferated to match consumer preferences and time for online shopping.
However, the Australian Food and Grocery Council has warned that significant tech development investment in local food manufacturing is required, or the industry risks losing ground to imports.
Growth of meal prep kits and food boxes that offer consumers convenience
IBISWorld industry research indicates that time-poor consumers have boosted growth in the Australian prepared meals production sector. While growth slowed during the worst of the pandemic, IBISWorld forecasts an industry revenue of $1.5 billion by the end of 2022.
Healthier consumer food preferences to trend upwards
Consumers are becoming increasingly focused on improving their health via improved diets. For example, multinational dairy giant FrieslandCampina identified the growing consumer focus on ‘being healthy’ as their number one global trend for the industry in 2022.
Demand for non-alcoholic drinks to keep rising
In line with an increased consumer focus on health, non-alcoholic drink sales have skyrocketed in Australia. In the 2020-21 financial year, sales data from Endeavour Group, the parent company of BWS and Dan Murphy’s, revealed that non-alcoholic drink sales increased by over 83%.
And it appears that the trend shows no sign of slowing.
Demand for plant-based and alternative proteins to grow
According to Food Innovation Australia Limited (FIAL), plant-based and “alternative proteins are forecast to capture 10% of global meat consumption in the next decade.”
This potential growth represents $5 billion in value-added opportunities and 6,000 new jobs in the sector.
Payment delays and insolvencies to increase
The federal government pullback on economic stimulus may trigger an increase in industry payment delays and insolvencies in 2022.
That’s according to global commercial debt collection agency Atradius. Their Food Industry Trends Australia – 2022 report states that the impacts will mainly affect “food services businesses with weak liquidity and heavy gearing.”
How to harness the opportunities to grow your food and beverage business
Some of these trends need to be overcome, and others harnessed. Regardless, the tangible actions you can take to help protect and grow your food and beverage business include:
- Investing in digitalisation and automation technologies. For example, automation and robotics can help improve productivity, particularly for food manufacturing businesses. Sensors and predictive analytics can improve competitiveness by reducing water and energy consumption, and minimising equipment downtime.
Meanwhile, artificial intelligence and virtual reality can also speed up the product development process in the food industry. E-commerce digital infrastructure allows businesses to better meet the growing consumer preference for online shopping. Online wine retailer Vinomofo is a successful e-commerce business example in the food and beverage industry to take note of.
- Adapting products to meet changing consumer preferences. Growth opportunities exist for food and beverage businesses to adapt or introduce non-alcoholic drinks or other products, focusing on health, sustainability and plant-based/alternative proteins, all while promoting convenience. Sustainable packaging should also be considered.
- Undertaking robust business continuity planning. To help prepare for future market uncertainty, Food Innovation Australia Limited (FIAL) suggests that food and beverage businesses rethink their business continuity planning, including cash and liquidity planning.
Unlock your business potential with Octet
At Octet, we can help you capitalise on these industry opportunities with our intelligent working capital solutions. Designed for the unique requirements of the food and beverage industry, our smart, fast and flexible finance solutions give you the power to leverage opportunities as they arise and overcome challenges too.
We’ll work with you to unlock your business potential by:
- Strengthening your cash flow. Our Debtor Finance solution lets you access up to 85% of the funds from your unpaid invoices within 24 hours. That means you get cash when you need it most to help your business withstand the payment delays forecast to impact the industry in 2022. The result is increased cash flow, more liquidity and – ultimately – less risk for the entire supply chain
- Helping you ride out pricing and exchange rate fluctuations. Our secure platform helps to manage the peaks and troughs of commodity price and exchange rate fluctuations. It allows you to make cross-border payments with your existing debit/credit cards, bank accounts and Octet finance solutions.
- Giving you the flexibility to adapt. Meeting changing consumer preferences requires flexibility. Having cash flow available in line with your invoiced sales lets you evolve your product offerings or invest in food-and-beverage-industry-specific technology without going into uncharted financial territory. With our Trade Finance facility, you’ll have access to a convenient, revolving line of credit so you can seize opportunities as they arise.
- Reinforcing your supply chain. By using Trade Finance as an intelligent procurement tool, you’re also able to take advantage of any available early payment discounts with both local and overseas suppliers. This might allow you to buy extra stock or take advantage of bulk purchases to attain discounts. In turn, this can help you to reduce the potential supply chain disruptions that are forecast to impact the industry in 2022.
Powering the food and beverage industry
Octet provides solutions for all of your supply chain business finance requirements in one central location. We can help you better manage your cash flow, grow your business and leverage both global and local opportunities.
Get in touch today to discover which options will best suit your business.