The food and beverage industry is one of most critical industries globally, supplying food and drinks to millions of consumers worldwide. The industry is huge with many sub-industries and product categories which include alcoholic & non-alcoholic beverages, grain products, dairy food, meat, poultry, seasoning, oils, and so many more. This already huge industry is expected to keep growing, having grown from $5.94 trillion in 2019 to $6.11 trillion in 2020 at a compound annual growth rate (CAGR) of 2.9%. Furthermore, the CAGR is expected to rise to 7% from 2021 as economies continue to recover from the COVID-19 pandemic.
To drive this growth though, players in the food and beverage industry must be willing to adopt new and innovative strategies to improve the efficiency of their operations and offer more competitive products. This article examines the current trends and obstacles in the industry, and how digital solutions can offer solutions to the challenges common to the food and beverage market.
Current trends and challenges in the food and beverage industry
In recent years, there has been an increase in the availability of clean-label, organic, and non-GMO products due to increased demand as more consumers are educated about their potential benefits. The consumption of alcohol beverages, including beers, spirits and wines has also increased significantly.
On the economic side, there is strong economic growth from emerging markets as 70% of all FMCG sales and profit is expected to come from emerging and developing markets. As of 2020, 60% of the top 600 cities were in developing markets, which represents 735 million households and 1.3 billion consumers that will belong to the new middle class that can afford to consume more products from manufacturers in the food and beverage industry. We have also seen the rise of organized retail brands providing more value-based services to consumers, as well as the increased influence of digital marketing and social media on consumers’ buying habits.
On the other hand, negative trends in the food and beverage market include changing regulatory requirements, especially in emerging markets, which introduced a level of instability to the market, a lack of sufficiently skilled workforce to take advantage of new innovation and technologies available. The complexity of acceptance and purchase intentions of consumers is also a potential problem that players in the food and beverage industry face, in addition to dealing with the coronavirus pandemic and how it affects consumption patterns.
Adopting digital solutions to solve the challenges in the food & beverages sector
One of the biggest challenges that face the food and beverages industry, especially in emerging markets is the inability of manufacturers to detect changes in consumption patterns across customer segments and product categories due to their inability to receive and process real-time market data from industry partners, distributors and merchants.
The distribution network is the livewire of the entire industry, connecting manufacturers to distributors, distributors to wholesalers, retailers and eventually the end consumer. However, the traditional distribution network in emerging markets is slow, inefficient and still underdeveloped. For example, in many developing markets, almost all transactions are cash based, with merchants paying cash to distributors, and distributors doing the same to manufacturers. This means there’s a risk of mismanagement, fraud and theft, leading to avoidable losses. To solve this problem, players across the food and beverage industry must adopt digital solutions. By digitalizing the distribution network and their operations, efficiency is increased, and losses are avoided.
Manufacturers, distributors and merchants in the CPG industry in general and the food & beverage industry need a solution that allows them to buy better, sell smarter and pay simpler. This solution should provide players in the industry with the data and intelligence needed to make strategic decisions. This is where RedConnect from RedCloud comes in.
RedCloud is a digital ecosystem that solves most of the problems already identified, allowing businesses in the food and beverage sector to sell smarter, buy better and sell simpler. With this digital solution, the value of the entire distribution network is unlocked. Now, brands have access to real time consumption data, so they know what product is being sold, how fast it’s sold and who is buying them. This is done by transforming every industry connection into a potential source of data, providing valuable insights that they need to make strategic decisions. With access to the data that RedCloud provides, marketing teams can design user-specific campaigns, and identify new avenues for upselling and cross-selling their products.
RedConnect also provides real time visibility of order and inventory management. Rather than having to create and comb through tons of spreadsheet data, our digital platform provides all the information needed in a simple, clear and easy-to-understand manner. Distributors and retailers can also do away with cash-based transactions, as the platform comes with a secure and easy-to-use payment system. Now, instead of drivers or delivery personnel collecting cash, which is risky, they can simply make payments on the app, even if they don’t have a bank account.
In conclusion, there is tremendous potential for growth in the food and beverage industry, and by adopting RedConnect, players at all levels can increase efficiency, streamline operations and drive sustainable growth.
To find out more about how RedConnect can help your brand, please get in touch via this contact form.