Food industry: Preparing for the next decade

BY 2025, the food industry will account for over $2 trillion in annual sales. Fast-forward to that year, can you envision the transformation in your own company? You can adapt if you know how the industry will be evolving in the coming years.

The research and management consulting firm Technomic recently released a cutting-edge report that offers a glimpse of the state of the food industry in the next decade, based on consumer behavior forecasts, economic projections, and models for food and labor costs. While the next decade will be challenging for all stakeholders involved in sourcing, processing, distribution, right up to marketing and sales, companies can prepare for the times ahead.

Food Industry Transformation: The Next Decade provides a 10-year projection and outlines the challenges and recommendations to help brands maintain their market position. Technomic recapitulates how companies can prepare for future growth:

1. Reimagine, Reinvent, Reallocate, Repeat: Restaurants, retailers and manufacturers must fundamentally reimagine how they go to market and reinvent themselves with a sense of urgency. Significant resources must be reallocated to growth channels and categories, which over the next decade will include a more healthful food supply built on fresher offerings, as well as digital platforms for buying and distributing those items.

2. Act Small to Grow Big: Food companies must accelerate their pace of change and speed to market and must act and think like a small company—or acquire small brands nimble enough to meet shifting demands quickly. They also must test new products and platforms and be ready to either scale those solutions quickly or fail fast and move on. The "less is more" mindset will play out in productivity initiatives and efficient store designs that fight skyrocketing food, labor and operating costs.

3. Embrace Digital and Big Data: A buildup of research and predictive-analytics teams for consumer and trade customer insights is a must for food brands. The challenges of the next decade—including consumers' demand for greater transparency and food integrity, falling profit margins, and disruptions to the supply chain—can be mitigated with data-driven solutions. Companies must turn today's transactional data into tomorrow's winning strategies.

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4. Anticipate and Pre-empt the Demand for a Health-Focused Food Supply: Consumers' definitions of health will continue to evolve, and descriptors like "fresh," "local" and "sustainable" will lose their elitist associations and be insisted upon by all consumers, not just the affluent and the activists. Companies must move their food offerings to higher levels of health and food safety before their key accounts begin to request them.

5. Boost Your CSR Quotient: Radical transparency will be the price of entry for consumers, not just on food companies' ingredient labels, but also on their identities as good corporate citizens. Restaurants, retailers and manufacturers who ignore societal and environmental issues do so at their peril, and they must audit their policies on the three P's (people, products, planet)—but still be mindful of the fourth P: profitability. Everything from antibiotics and humane animal treatment in the supply chain to carbon footprint to employee compensation, should be addressed—and be ready to show leadership in at least one of these areas.

Read the entire report, Food Industry Transformation: The Next Decade.