Trends and challenges for the food & drink industry in 2023
Leeann Nash January 11th 2023 - 4 minute read
After a difficult few years in which the Covid-19 pandemic and the war in Ukraine have shaped the way the food and drink industry operates, 2023 offers little respite for those who work in the sector. Although lockdown restrictions have largely eased, hangovers from disrupted supply chains and pressured economies continue to weigh upon food costs and availability of ingredients.
According to analysts and industry experts, the defining struggles of 2023 will include supply chain restrictions and inflation, while possible growth areas include a return to eating out and a wave of demand for healthier and specialist-diet foods. Just Food’s US columnist Victor Martino predicts that the popularity of plant-based meat will fade, while Aptean software solutions foresees ongoing expansion in food and beverage items with immunity- and mood-boosting effects.
This article will explore the trends forecast for 2023, suggesting how businesses in the food and drink industry might adapt to meet demand.
Supply chain disruption
Supply chain disruption remains a major concern for those in the food production sector, as labour shortages persist and complications over new business relations arise.
Aptean’s 2022 whitepaper confirms that supply chain struggles are front-and-centre for food industry leaders, as the authors note:
‘Supply chain resiliency (visibility and adaptability) is still ranked as the largest gap F&B companies need to address for long-term success.’
The company specifically cites limited flexibility and a lack of digital tools as compounding factors for the supply chain difficulties facing businesses. While this represents a key concern on the face of things, it also presents an opportunity for growth.
In a section titled ‘Digital transformation impact on business performance’, the IDC whitepaper suggests that a transition to modern digital technologies can help alleviate the stresses of supply chain management as well as increasing business profitability.
The authors of the paper affirm that the ability to analyse larger data sets and make use of advanced reporting capabilities enabled by cloud systems allows employees to make better decisions on stock levels, shelf life, and product quality.
Food inflation has had a significant effect upon sales within the food and drink industry, as customers’ spending power decreases and prices continue to climb.
Research from the Bureau of Labor Statistics reports that food-at-home in the U.S. is 13.1% more expensive compared to last year, while the Office of National Statistics found that UK prices are up 14.6% since January 2022. Surveys have confirmed that inflation is the top external pressure concerning food industry professionals at the start of 2023.
While inflation is starting to ease in some global economies, Victor Martino warns that we won’t be rid of it completely for some time. The analyst writes:
‘Expect to see continued moderation in the rate of growth of food-at-home inflation into [this] year… don’t expect to see a serious drop until at best the end of the second quarter of 2023.’
The wished-for scenario for many in the food and beverage sector is that as prices remain high, consumer spending power will increase. However, ongoing strike action across the UK and beyond highlights the discrepancy between price rises and average incomes.
A return to eating out
One area enjoying a much-needed rebound is the restaurant industry. Many consumers remained cautious after initial lockdown restrictions were eased, but as diners, pubs and restaurants showed they were taking precautions, customers began to return to their former haunts.
In the US, ‘Just Food’ journalists observe that food-at-home sales continued to dominate trading in 2022, with UK Vogue touting meal-kit delivery services such as HelloFresh and Detox Kitchen. Such services are still expected to grow: indeed, revenue in the meal kit delivery segment is projected to reach €1.58bn this year and expand at a compound annual growth rate of almost 13%.
Nevertheless, experts predict a ‘food-away-from-home’ comeback alongside the growing popularity of meal kits, with surveys showing that 2 in 3 UK adults would ‘struggle to stop eating and drinking out [despite] the cost-of-living crisis’.
Increased demand for specialist foods
2023 will also be the year that specialist foods peak in popularity, according to multiple industry leaders. Aptean highlights a focus on sustainability and changing tastes this year, reporting an increase in demand for products with perceived health benefits.
The software solutions provider identifies rising demand for foods suited to specific diets (like keto and gluten-free) as well as those with more general immunity- and mood-boosting effects.
Market intelligence agency Mintel echoes Aptean’s findings, going a step further in linking an interest in health foods to an increased awareness of overall health as a result of the pandemic. Consumer data found that food value was determined in August 2022 by ‘nutritional benefits’ as well as ‘natural ingredients’.
While some believe that plant-based foods are likely to weaken in popularity, there is contradicting evidence to show that veganism may be included in 2023’s growth trajectory.
In reference to the annual ‘Veganuary’ campaign, The Independent newspaper observes ‘2022 became Veganuary’s biggest year yet – and 2023 could turn out to be just as successful.’
Managing rising costs
In order to meet rising demand for alfresco dining and health foods while managing inflation, food producers and suppliers will have to keep on top of managing relations along the supply chain. It’s more important than ever that those in the industry work together to keep costs low for themselves, their partners and the customers.
Nailing efficient business processes will also help in both minimising unnecessary spending and streamlining new practices. Using digital technology may be one solution to saving time on calculations and tracking records, meaning more time to develop new products and strategies.
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