It's critical for businesses now to have clear labeling.

3 organic trends in the food and beverage supply chain

 

The food and beverage supply chain is constantly transforming. Industry regulations, fad diets and traceability concerns are all various reasons that companies within this vertical need to develop better strategies for managing their supply chains and getting products from point A to point B while simultaneously maintaining compliance with continually evolving standards. One of the biggest trends impacting the food and beverage supply chain in recent years has been the natural foods phenomenon.

Let’s take a look at three ways this industry has been impacted by increased demand for natural, organic and local foods:

1. Millennials

The younger generation is creating an interesting dynamic for food and beverage companies around the world, according to Forbes contributor Eve Turow Paul. Parents who fall in the category of 18 to 34 years old are the largest consumers of organic food now, driving demand for locally produced goods and quite literally changing how organizations within this vertical think about their supply chains.

“[T]hey’re challenged to supply customers with organic, fair trade, vegan, gluten-free and just plain nutritious foods at a price point that’s manageable,” Paul wrote. “And it turns out that’s not what the food supply chain is set up for. Slowly but surely, millennial demands are putting pressure on an archaic food system set in its ways.”

The jury is still out on what this means for the supply chain of global food companies, but it looks like these organizations are going to have to adapt in the coming years to accommodate the next generation’s desires. One thing is for certain, however: Demand management activities are going to become even more important as consumers within this age bracket mature and begin to impact the supply chain.

2. ‘Clear’ labeling

The demand for natural foods extends into how companies label their foods, as well. Labeling trends are always critical to watch, and Innova Market Insights found recently that in 2017, clean and clear labels will be important in terms of what consumers want to see in their products. The interest in natural goods and clean living is still a key trend as we move into the new year, and consumers want to make sure their trusted food companies are giving them everything they need in terms of clean labels. According to Convenience Store Decisions, the supply chain claim “environmentally friendly” has shown a compound annual growth rate of 72 percent from 2011 to 2015.

“The rules have been rewritten, and clean and clear label is the new global standard,” the Convenience Store Decisions article stated. “The demand for total transparency now incorporates the entire supply chain, as a clean label positioning becomes more holistic.”

People are striving to be healthier - and the supply chain has to adapt.People are striving to be healthier – and the supply chain has to adapt.

 

3. Packing industry

The need for better labels will impact the packing industry, as well. The Association for Packing and Processing Technologies recently released its 2016 State of the Industry U.S. Packaging Machinery Report, and the outlook on domestic shipments of packing machinery looks positive. In fact, these kinds of shipments will grow to $8.5 billion by 2020 thanks to the compound annual growth rate of 3.5 percent enjoyed by the labeling, decorating and coding sector.

The food and beverage industry’s involvement in this vertical will be clear as well, due to the 2.4 percent annual growth rate in machinery use. All of this means that the packing industry will need to be more transparent and traceable.

The general trend toward consumers wanting more organic, local and traceable food products has an important impact on manufacturers, and enterprises need to incorporate technology in the supply chain in order to strengthen visibility from sourcing to distribution. In addition, these kinds of tools can help organizations ensure they have proper placement of inventory at their distribution centers, a critical aspect of logistics management that will become even more important thanks to increased demand for clear labeling.

This is where cloud-based supply chain and logistics management tools come into play. Demand forecasting, traceability and inventory management are all key parts of running a successful operation. Inspirage consultants can help your organization plan for all of these changes coming to the food and beverage industry and can ensure that your supply chain is ready.

For more information about how Inspirage’s solutions can improve supply chain visibility and traceability, get in touch today.

Tom Jurgens

Key Contributor: Tom Jurgens

Tom Jurgens is an experienced Sr. Manager at Inspirage. Tom has lead numerous supply chain application implementations with world class leading companies. Tom and his experienced Inspirage team have helped multiple organizations develop solid design solutions with leading practices and Oracle applications.