Major challenges in food and beverage industry to watch out for

Published Date: March 2, 2017   Author: Saipriya Iyer

The Food and Beverage industry has undergone massive changes over the last decade owing to increasing consumer demands and industry innovation. A behemoth in itself, this multi-billion-dollar industry is fast-paced and excessively customer-driven, restrained by the global population. Driven by changing global trends, the challenges in food and beverage industry are manifold.

A paradigm shift has been observed in the perspective of the masses with respect to the food and beverage industry. People are more nutrition-friendly, prefer fat-free products, and are generally more inclined towards maintaining robust health. Supporting this school of thought is the fact that food products are judged based on not just the quality, but also the nutritional content. This dynamic thought process has coerced food producers to bring about surplus changes in the existing manufacturing process to propel this market further.

Some of the prominent challenges in food and beverage industry are product traceability, raw material quality, and rising demand for innovation. These issues are outlined in the paragraphs below.

No Added Preservatives

The increasing incidences of food-related disorders have prompted consumers to bring about vital changes in their diet and lifestyle, making them more health-conscious than ever. Automatically, the train of thought is diverted towards purchasing foods without added preservatives that might hamper one’s health. The demand for products that do not carry the ‘healthy’ label is then bound to reduce, and to stay at the top, manufacturers must eliminate artificial constituents from their products.

Lessening the intake of sugar is one of the key regulations endorsed by the FDA, reducing the demand for products that contain natural or processed sugars. Most consumers turn away from products that contain artificial sweeteners as well. It is one of the biggest challenges in food and beverage industry for experts to come up with a strategy to provide consumers with sweet products that contain sugar content within the specified limit.

Healthy and Organic Products

While processed and ready-to-eat foods were once on top of the supply chain, this trend does not hold true anymore. People are on the lookout for foods that do not contain artificial ingredients. The drastic reduction in the demand for processed foods has fueled the organic food market. Growing awareness levels regarding natural foods and their positive health impact have favored the demand for natural, healthy, food products, as is evident from the healthy gains of the organic rice protein market, which is expected to exceed a revenue of USD 105 million by 2024. The dramatic no-show of consumers from the ‘center of store’ aisle products also demonstrates that consumers prefer to stay away from packaged goods. Industry giants will need to brainstorm different strategies to combat the increasing demand for organic stuff.

Going Green

Environment-friendliness is the next big mantra out there, owing to global warming and other issues. A product that is deemed to be “eco-friendly” obviously has more chances of a lucrative sale than a product that is assumed to be harmful to the environment. Companies are working toward making the entire manufacturing process more conducive to the environment, by utilizing renewable sources of energy, and adopting recycling practices. Employing green business practices is a critical part of the major challenges in food and beverage industry.

Increasing Product Value

It has been observed that consumers tend to purchase products with value addition. For instance, products reinforced with proteins, vitamins, and other nutrients are more popular and have better chances of a massive sale, fueling the food additives market, which is slated to record a CAGR of more than 5% over 2016-2022. Adding value to food products without diminishing their quality or compromising on taste, and yet maintaining the cost-effectiveness, adds to a long list of challenges in food and beverage industry.

The E-commerce Space

While core industries, like appliances, electronics, textiles, and other domestic products have already established their presence in the commerce domain, this sector has been relatively slow on the upkeep. This is one of the major challenges in food and beverage industry, considering that consumers are more tech-savvy and socially informed, thanks to the gargantuan monster, the Internet. Wholesalers and retail industries have already begun to invest in grocery e-commerce, but it is essential that manufacturers adopt e-commerce in their marketing tactics, which might eliminate risk to the supply chain.

Lesser timeframe for Newer Products

Innovation is amongst the top challenges in food and beverage industry today. To combat fierce competition, manufacturers must come up with innovative products. However, the predicted timeframe for the product life-cycle – from market research, conceptualizing, production, and marketing might take longer than anticipated, and by the time the product is launched, the trend would have possibly declined.

Product Traceability

The Food Safety Modernization Act was passed by the FDA in January 2011 with a view to reduce discrepancies within the supply chain, improve food quality, avoid food contamination, and enhance food tracing. Traceability is a vital challenge in the food and beverage industry, not just for record management but also to fulfill the bottom line – generating revenue for every sector. Maintaining precise data records will propel food processing companies to deploy advanced technology, like warehouse management systems and enterprise resource planning.

Government Regulations

This sector is continuously monitored by organizations such as the FDA, OSHA, FTC, and EPA. Federal reforms and regulations cover areas of waste disposal, food quality, raw material, surplus production, documentation, etc. Continuously changing reforms are likely to pose periodic challenges in food and beverage industry.

Waste Generation

The food industry is one that generates ample waste, right from the bottom of the supply chain to the top. Farmers, grocers, manufacturers, and wholesalers, every one of them generates product waste within the industry, despite technological advancements and the adoption of recycling procedures. Manufacturers must combat this challenge in the food and beverage industry with advanced methodologies.

Advanced Technology

It goes without saying that every industry is widely machine-controlled. Industry experts need to understand cold-type production, technological improvements, and automation. Keeping up with consumer trends and latest innovations in technology for convenience in food processing, canning goods, and packaging products is another important aspect of challenges in food and beverage industry.

Animal Safety

The growing concern toward animals is ushering in a change in the food patterns of the masses. With more and more consumers vying for vegetarian and vegan products, the demand for meat and other products has observed a significant decline. Social platforms and online information portals have paved the way for animal abuse awareness, and people prefer purchasing products with labels such as “humane-certified” and “cage-free”. Manufacturing products that vouch for animal safety has become a prime challenge for the food and beverage industry, as food manufacturers must maintain their reputation with regards to ethical treatment of animal concern.

The challenges in food and beverage industry are massive, owing to the ridiculously fierce competition. A single change is bound to affect the entire supply chain. Newer markets, changing consumer spending, increasing food prices, global appetite, and advanced technology are slated to bring about extensive changes in this sector in the next few years. Despite the current challenges in food and beverage industry, it is predicted to show healthy gains in the future. The Indian food retail industry alone is expected to register a CAGR of more than 10% over 2016-2020, driven by disposable income levels, changing lifestyles, and favorable government reforms.

Explore all reports on Food, Nutrition and Animal Feed industry segments by Global Market Insights, Inc. at .

We use cookies to enhance your experience. By continuing to visit this site you agree to our use of cookies. More info. I Agree