09/22/2023 by Christine Morris
The food and beverage industry has faced significant challenges and growth over the past couple of years. After several unpredictable years, many hope we’ll see more stability back in the industry. So, what’s currently affecting the food and beverage sectors? In this blog, we’re going to dive into some of the latest trends in the food and beverage industry.
CONTINUED COLD CHAIN GROWTH
CONSUMERS ARE MORE COMPLEX
SUPPLY CHAIN TRANSPARENCY
INCREASED COFFEE PRICES
LIMITED TEMPERATURE CONTROL SHORTAGE
One of the well-known trends in the food and beverage industry is the continued growth of cold chains. Recently, a Grand View Research study shows that the cold chain market was estimated at USD 233.2 billion in 2022. Furthermore, it’s estimated to grow at a Compound Annual Growth Rate (CAGR) of 18.6 percent from 2023 to 2030.
Recently, there’s been an increased demand for temperature-sensitive drugs (think covid vaccines and biologics), rising demand for better food quality, a surging need to reduce food waste, and growing demand for generic drugs. All this is anticipated to drive the market’s growth.
In light of the pandemic, the risks of COVID-19 have made consumers more interested in healthier, less processed foods that will boost their immune systems. However, less processed foods mean more food products that will need temperature control.
Shipping temperature-sensitive items? Check out our Temperature Shipping Guide for temperature suggestions.
Additionally, the frozen food sector looks to be growing. Besides filling home freezers, frozen foods are growing in restaurants. Restaurants are also providing new menu items for the frozen grocery aisle. In an American Frozen Food Institute report, 72 percent of frozen food consumers said they combine frozen and fresh ingredients in their meals.
Comparatively, shippers are also using more cold chain services to preserve the shelf life of their products, even when temperature-controlled transportation isn’t needed.
Growing climate issues are making sustainability a common trend in almost all industries. However, food waste is a major contributor to greenhouse gas emissions globally, contributing to cold chain issues. This makes sustainability one of the top trends in the food and beverage industry.
In fact, an S&P Global Ratings report says food waste contributes to 10 percent of emissions and that $1 trillion of food is wasted each year. Similarly, according to the U.S. Environmental Protection Agency (EPA), between 73 to 152 million metric tons of food get wasted each year in the U.S. The most wasted foods are fruits and vegetables, followed by dairy and eggs, with over half of all waste occurring in households and restaurants. In addition, the food processing sector generates 34 million metric tons of food waste per year. And over the past decade, the total U.S. food waste has increased by 12 percent to 14 percent.
To put it differently, the EPA said halving food waste in the U.S. would save 3.2 trillion gallons of water, 640 million pounds of fertilizer, 262 billion kilowatt-hours of energy, and 92 million metric ton equivalents of carbon dioxide. According to the Agency, reducing the waste of meats, cereals, and fresh fruits and vegetables would have the most significant impact.
Due to this growing issue, governments and businesses have been working hard to improve sustainability efforts. In July 2021, the Zero Food Waste Act was introduced to provide grants to businesses that significantly reduce their food waste. Additionally, in November 2021, the Food Donation Improvement Act was introduced to lower food waste by making it easier for companies to donate food instead of throwing it out.
Cold chain improvements have seen growing importance even outside the food and beverage industry. One example is UPS Healthcare developing a system and opening facilities to move medicines safely. Part of their plan includes using reusable cold chain packaging. In addition, Amazon is working on insulation packaging to reduce material waste and replace 735,000 pounds of plastic film, 3.15 million pounds of cotton fiber, and 15 million pounds of non-recyclable plastic.
Labor shortages are common among other industries, making this another relatable trend in the food and beverage industry. As a result, hiring workers in the U.S. is becoming near impossible. According to a recent U.S. Bureau of Labor Statistics’ report, 750,000 jobs are unfilled in the manufacturing sector, despite unemployment being at historically low levels. This echoes Deloitte’s prediction that 2.1 million manufacturing jobs will remain unfilled in the U.S. by 2030.
For this reason, advanced technology can help remove some redundant tasks and help supplement amidst labor shortages. Relying on older technologies and manual processes will only grow current challenges for food manufacturers.
Over the years, consumers and their choices in food and beverage and their preferred shopping habits, have become more complex. Because of this, there is a greater assortment of products than ever, with more items requiring temperature control as consumers move away from processed foods and look for fresher, healthier items. Consequently, the supply chain for grocery continues to evolve as the message from consumers is clear. They want what they want, when they want it, where they want it, and expect businesses to respond to their demands.
In speaking to consumer shopping preferences, it looks like online grocery shopping, food delivery, and food subscription boxes are here to stay. Many consumers prefer the option to receive food and beverage products at their door. For instance, a recent Forbes article shared that 60 percent of consumers now order delivery or pickup at least once a week, with takeout predicted to rise to 21 percent of restaurant industry sales by 2025. Additionally, it was shared that 73 percent of consumers recently bought groceries online.
Additionally, inflation and rising costs for everyday items, including food and beverages, have consumers rethinking what they buy. Not only are increased prices having consumers rethink how much they buy, but what they buy. For example, a recent study showed categories such as meat, poultry, eggs, and dairy with significant spending declines in 2022 as consumers sought more shelf-stable and affordable items. Private-label brands will continue to see growth as shoppers look to save money whenever possible.
Consumers are also becoming more interested in knowing where the products they buy come from. Products with long lists of ingredients are now turnoffs and more natural, less processed food items are what they seek. A study by ADM Outside Voice research found that nearly 70 percent of consumers surveyed looking for food products that have a short, recognizable list of ingredients.
Besides the ingredients list, more consumers also want to know how they products they buy were manufactured. They’re looking for companies who show concern to how their manufacturing affects the planet’s life span and how their product is raised or grown. Consumers want to feel like the products they choose to buy will make a difference.
Recently, coffee prices have reached a 10-year high, with analysts expecting tightness in the market to continue. Currently, the commodity has seen its value surge more than 80 percent this year.
Outside of global inflation, the main blame for the coffee spike falls on the severe drought and unusual frost conditions in Brazil, the world’s largest supplier of coffee beans. This extreme weather has threatened the coffee supply and set off alarm bells in financial markets.
The last time coffee prices rose and hit their highest was in 2011. Brazil faced similar issues that year in growing its coffee crop. Alongside the bad weather faced this year, global supply constraints have had an impact on the coffee market too.
Coffee inflation is the latest example of how extreme weather creates additional nightmares for farmers and makes food more expensive every day.
Artificial intelligence (AI) is a buzzword across all industries, but how could it affect food and beverage? One way is through providing clearer insights into shopper preferences, helping companies better market to them to grow brand loyalty. It can help with supply chain optimization, helping businesses better understand consumer demand and optimize production planning and management, reduce overstocking, and minimize waste. Some companies, like Campbell Soup Co., are using AI to help with product development, tracking data and discovering what its customers want next.
The uses for AI in the food and beverage industry is extensive and it will be interesting to see how companies make the most use of it.
The demand for refrigerated warehouses is soaring, but it’s getting harder to both find and build more of them. Temperature-controlled storage is critical to many sectors, from grocery to pharmaceutical companies. The growing demand for cold storage facilities comes from the need to stock temperature-controlled pharmaceuticals like Covid vaccines, and companies that need those warehouses for other perishable goods. Because of this, the total capacity of refrigerated warehouses worldwide increased by 16.7 percent from 2018 to 2020. By 2025, it’s estimated to reach 627.5 billion.
Likewise, by 2027, cold storage construction is projected to reach $18.6 billion in value, or an increase of 14 percent per year. Yet, the effort to build new temperature-controlled storage is being held back by rising costs and material shortages. Notably, the pandemic’s impact on cold chain storage cannot be understated. In the U.S. alone, facilities are running at a maximum capacity, according to JLL. Consequently, new construction is usually favored to support demand, but given the shortages and complexity of temperate-controlled storage facilities, many developers are looking at easier projects that need fewer materials, such as adding floors to existing facilities.
No matter the trends in the food and beverage industry, having a logistics resource, consultant, or expert is one way to stay ahead. Whatever phrase you want to use but ultimately, have support on your side for any complex situation. This is where a third-party logistics company (3PL), such as Trinity Logistics, can come in. We can help you find creative solutions to your logistics challenges.
Trinity Logistics has been serving cold chains for 40-plus years, in addition to our parent company, Burris Logistics, that was built on its expertise of handling temperature-controlled commodities. Whether you have a complex challenge or just need help with one shipment, we have the experience and quality carrier relationships to meet your needs.
We also stay knowledgeable on what’s going on in your industry and aim to keep you updated too. We know, even in times of disruption, your industry doesn’t stop, so neither do we.
And lastly, what makes Trinity unique from other 3PLs and what our customers praise the most is our exceptional People-Centric service. We’re a company built on a culture of family and servant leadership, and that culture shines through in our service to you. It’s our care, compassion, and communication that you’ll notice and appreciate.
If you’re ready to have Trinity Logistics on your side for logistics support and expertise, no matter the industry trends, then let’s get connected.
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