The challenges facing food and beverage manufacturers in 2024

• Pressures on margins are intensifying due to the cost of living crisis.
• Global events and trade tensions are causing significant supply chain disruptions.
• Aging workforce and skill shortages necessitate digitisation and new talent attraction initiatives.
• Digital transformation improves efficiency but implementation is a struggle.
• Increasing cybersecurity risks come hand-in-hand with new technology adoption.
• Consumer demand for sustainability and health influences product innovation.

The food and beverage sector is navigating an array of challenges. Importantly, this sector is an indispensable part of our everyday life. It not only satiates our daily needs but also plays a crucial role in economies, cultures, and environmental sustainability.

Food and beverage producers face hurdles such as supply-chain instability, economic fluctuations, and evolving consumer preferences, complicating food production processes.

In this episode of the Manufacturing Matters podcast, I discussed these challenges with insights from Lee Winer, Sales Director for North America at Factbird, who brings extensive manufacturing experience to the discussion. 

Here’s a summary of what we talked about.

The Cost of Living Crisis

The ongoing cost of living crisis, characterized by soaring inflation, increasing interest rates, and escalating job insecurity, is significantly affecting consumer spending habits. People are increasingly opting for budget brands over premium ones, impacting the already tight margins in the food and beverage industry. Now that inflation is cooling off, consumers' expect reduced prices on the shelves, adding further financial strain on the industry.

Supply Chain Disruptions

Supply chain issues remain a persistent challenge, exacerbated by raw material shortages and global events such as the COVID-19 pandemic, conflicts in Ukraine and the Middle East, and international trade tensions, with Brexit being a notable example. These disruptions are a significant hurdle for the industry, affecting production timelines and increasing costs.

Labor Shortages and Workforce Management

The food and bev industry is grappling with labor shortages, particularly in skilled positions. This is compounded by the retirement of experienced workers and a lack of initiatives to make the industry appealing to new generations. However, companies like Coca-Cola Europacific Partners (CCEP) are leading by example through their focus on disability inclusion, with one of the many benefits from their programme being access to a larger workforce pool.

Digital Transformation

Digital transformation is reshaping the food and beverage industry through data collection, data analytics, automation, and other Industry 4.0 technologies. The adoption of new technologies like real-time production monitoring and cloud-based solutions is essential for enhancing efficiency and productivity. However, integration of new technologies presents its own challenges, and managing the shift from non-digital practices can be time consuming and costly.

Cybersecurity

With the rise of cloud-connected operational technologies, the food and beverage sector is increasingly vulnerable to cyber threats, particularly ransomware attacks. The importance of incorporating cybersecurity measures capital investments from the outset, and not as an afterthought, cannot be overstated. Effective strategies include robust backup and recovery procedures, secure communication protocols such as MQTTS, and application whitelisting to safeguard against these threats.

Consumer Trends

Consumer demand is rapidly evolving, with an increased emphasis on sustainability, ethical sourcing, and healthier options. This has led to more innovation in product development and marketing in the industry, with regulatory approvals for cultivated meat products signaling a significant shift in food production and consumption trends. The USDA has given its approval for at least three products made with cultivated meat, and Singapore and Switzerland have also approved cultivated meat products. Then Australia and New Zealand are very close to approving their first product now as well (Source: Cultivated Meat Regulation: Where Are We?).

Beyond the core issues

The six challenges facing food and beverage manufacturers mentioned here are not all of the problems facing manufacturers. Further challenges, such as regulatory compliance, which included food safety, labeling, and environmental standards, and adapting to new tax schemes, such as VAT changes in the UK, add to the headaches facing the industry as a whole.

By addressing these challenges head-on, the food and beverage industry can navigate the complexities of the modern market and continue to thrive in 2024 and beyond.

A solution that can help with all of the challenges here is optimizing operational processes for better performance. Real-time production visibility, data-driven decision-making, automation, and clear reference points, such as Overall Equipment Effectiveness (OEE) systems, will help you increase uptime, reduce waste, and improve productivity. This in turn helps food and beverage manufacturers navigate the hurdles of labor shortages, increases competitiveness, and improves profits.

Further reading

Check out the links below for more information on potential solutions to the challenges facing food and beverage manufacturing today:

• Case Study: See how Broxburn Bottlers can fix problems before they happen with better production visibility.
• Case study: Raymundos make authentic, ready-to-eat food products and boosted their efficiency with real-time production data.
• Food and beverage solutions: Increase production capacity and consistently deliver on time.
• Free trial: Try Factbird's production monitoring and analysis solutions for yourself.
• The dinner mentioned in the podcast was at Maple Casual Dining in Copenhagen and it was top notch!

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