Food Industry Trends and Market Disruptors - 2018

Great panel discussions and top-tier speakers on-hand at last week's New Jersey Food Processors Association Annual Conference at the Crowne Plaza - Princeton. Key speakers included: Michael Coletti - NJ Office Managing Partner, Mazars... Einav Gefen - Corporate Executive Chef, Unilever Food Solutions... Tom Mastrobuoni - CFO, Tyson Ventures... Jeffrey Braverman - President, Nuts.com... Carmela Cugini - GM Grocery & Wholesale, WalMart US Commerce... Anne Strauss-Weider - Director of Freight Planning, North Jersey Transportation Planning Authority.

I was very interested in the insights shared by these key industry players with regards to both trends and market disruptors within products, customers & distribution channels, and the workforce. Some of my take-aways from the discussion are summarized below.

Changes at all levels now... E-Commerce acquisition, products, ingredients, distribution & warehousing, customers, and end-consumers. Multi-Cultural influence, rising costs of materials and supply-chain, and an aging population are the primary operating environment factors that feed the market disruption. Labor is a very hot topic... Wages, quality, training, and talent retention challenges... turn-over and employee churn continues to be a struggle. Technology is a huge disruptor within the food industry. Things like digital research, online ordering and real-time reviews and influence (LIVE THE EXPERIENCE, ENJOY IT, AND SPREAD THE WORD GOOD OR BAD - SOCIAL MEDIA IS A REAL-TIME MARKET DISRUPTOR... mechanical/automated labor replacement trends. FOCUS is on Enhanced Customer Experience: Speed, shelf-life, nutrition, sustainability, sales/marketing/data. SUSTAINABILITY IS NO LONGER A TREND... IT IS BECOMING A WAY OF LIVING.

Trends: Pricing "Premiumization"... More and more consumers are willing to pay higher prices for healthier, organic, sustainable food options. Healthy Eating Movement trend: From Healthy 1.0 "Lo-Carb" to Healthy 2.0 "Organic" to where we are today, Healthy 3.0 "Functional". This is evident with the rise of portion provided meal delivery options and businesses.

Core Sustainability Investment Trends include minimizing food waste; food security and tracking through supply chain; and alternative proteins. Internet & Digital Marketplace Trends include: Big Data; food supply chain logistics; direct-to-consumer focus; E-Commerce platforms and digital presence.

Food Operations Trends: Decisions to utilize co-packers versus manufacturing expansion... more focus on sales, strategy, and innovation. Infrastructure, Branding, Focus on Margin, Customer Diversification, SKU Rationalization, and Identifying Market Disruptions as they are happening. New Tax Laws and limitations on business deductions and write-offs is becoming an enormous industry disruptor. E-Commerce: Overall growth rates are stabilizing a bit, but the scales are immense. Within the Food Industry, E-Commerce growth rates are upwards of 20%.

Food Mega-Trends: "Food Integrity" - How produced & distributed... "Purposeful Eating" - What's in it... "Easy Eats" - On-the-go portioned meals... "Foodie Culture" - Unique Flavors, Customization, Gourmet/Specialty.

Store-Based Retail, Omni-Channel Club Stores, and Pure Plays like Jet.com... the industry is seeing shifts by retailers to more blended models, embracing digital presence. Brick and Mortar Retail Stores; Direct Ship: Distributors/E-Fulfillment; DSV Drop-Ship; and 3P Marketplace.

Challenges for Food Industry Supply-Chain Professionals: Managing an ever-changing and rapidly evolving environment... Just-in-Time is seemingly no longer fast enough... Maintain Ops through disruptive events and changes... Insufficient labor-force assets & capacity... AND A NEW GROWING LOGISTICS CONCERN: Decrease in availability of drivers and capacity with trucking and freight. The rising costs of this are a huge concern. Additionally, the future impact of Blockchain Technology remains to be seen.