The COVID-19 pandemic has presented the food and beverage industry with several significant challenges, including lockdowns of production facilities, critical labour shortages and supply chain issues. Despite the challenges, the one-in-a-hundred-year crisis has created exciting industry opportunities.
According to the CSIRO, the size of Australia’s food and beverage industry is predicted to grow from $23 billion in 2019 to $25 billion by 2030. In recent years, they’ve suggested that the pandemic has created additional room for growth in this critical industry, even with the added uncertainty surrounding market forecasts caused by the pandemic.
To compete in the $25+ billion industry, you must understand the challenges and opportunities that exist within it today.
This article will explore the most significant food and beverage industry trends and how you can help solve or overcome those challenges.
8 Trends that will change the future of the food and beverage business sector over the next few years
Supply chain difficulties in carrying on
Before this year, former Prime Minister Scott Morrison said that the days of domestic lockdowns were gone. However, disruptions to international supply chains will likely continue. According to some reports, global supply-chain issues in Australia may not improve until 2023. A survey of 356 private-sector CEOs in December 2021 revealed that half of the Australian businesses expect disruptions to continue in 2023.
Increasing food prices are forecast to continue
A report from investment and advisory group Jarden indicates that the cost of food and other regular needs items is set to increase by an annualized rate of 6.8% this year. The inflationary challenges caused by increasing food and fuel prices will affect different segments of the food and beverage industry, with only a few retailers likely to benefit from increased consumer spending.
Rising food prices are essential to keep an eye on for the hospitality industry. For instance, restaurants typically increase their menu prices when ingredient costs rise; however, if wage inflation doesn’t keep pace with food inflation, price increases may dampen consumer demand.
Staff shortages are expected to continue
The hospitality business sector has been particularly hard hit by staff shortages associated with the global pandemic. The ABS Business Situation and Sentiments Report shows that the accommodation and food services sectors reported difficulty finding qualified staff to fill jobs.
As of 2022, the emerging issue in the hospitality industry continues to be one of the current trends in food service. A recent warning from KPMG suggests that this concern will continue for at least three more years.
Conscious consumers to drive growth
Consumer inquiries about environmental issues and sustainability are expected to increase demand for food and beverage products. A survey of 1,035 Australian revealed that 20% of shop owners use sustainability to choose their retailers, brands and products. Consumers also find recyclable packaging and biodegradable elements as the top two most important factors in purchasing sustainable products.
The adoption of digitalization and automation will increase
Additionally, the pandemic has prompted the food and beverage industry to adopt digitalization and automation technologies. For example, e-commerce in the food and beverage industry has increased to match consumer preferences for online shopping.
The Australian Food and Grocery Council has alerted that significant investment in developing local food manufacturing technology is necessary, or the industry will lose ground to imports.
The rising popularity of products that offer consumers convenience and simplicity
The prepared meals production sector experienced growth during the worst of the pandemic, as time-poor consumers boosted demand in the industry. IBISWorld predicted an industry revenue of $1.5 billion by 2022.
Healthy consumer food preferences are expected to increase over time
Consumers are increasingly focused on improving their health via improved diets; for example, the growing consumer focus on being healthy was the number one global trend for the industry in 2022.
The demand for non-alcoholic drinks is on the rise
In line with consumer focus on health, Australia’s non-alcoholic drink sales have skyrocketed. In the 2020-21 financial year, non-alcoholic drink sales increased by over 83%.
At Acacia, we have more than 30 years of experience helping food and beverage businesses overcome issues, rebound and become more profitable. We help optimise, automate and improve the traceability of your business. Acacia has the knowledge and experience across a range of industries to provide the most cost-effective solution for your business. If you are interested in finding out how Acacia can help you automate your business, please contact us.