Food and Beverage manufacturers common issues

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  • September 14, 2015

High pressure for food & beverage businessHigh pressure for food & beverage business

F&B manufacturers are under a lot of pressure from consumers, retailers, suppliers and regulators.

From consumers

Consumers want more variety, as well as healthier and better tasting foods, and they want these higher-value products for the same price.

Demand for increasingly healthy diets is also driving consumers to pay more attention to food labels. Almost 70% of consumers said they would choose a healthier option in a supermarket, especially if it was clearly labeled as such.

 From retailers

Retailers also want F&B companies to deliver more for less. Feeling squeezed by consumers and competitors alike, retailers want lower wholesale prices and faster delivery of products. They also want to transfer as much risk to their F&B suppliers as possible, as well as gain efficiencies by reducing the number of vendors supplying a given product. This leads to even more pressure on a food and beverage company to outperform its competitors.

Retailers are also putting margin and price pressure on F&B companies by creating more private label products. Indeed, sales of private label products have increased 40% in supermarkets and 96% in drugstore chains in the past decade.

From suppliers

Suppliers add to the pressure on manufacturers with higher prices and fluctuations in quality and substance of the ingredients they deliver. This is a result of issues such as weather conditions, changes in business cycles , conflicts, price speculation, dumping, exchange rates, etc.

From governments and regulators

Regulators are responding to food product safety concerns and environmental concerns with greater oversight and tighter regulations. In recent years, there have been numerous high-profile food recalls, consumer illnesses, and deaths caused by contaminated foods. One in six Americans gets sick from foodborne illnesses each year. In response, the Food Safety Modernization Act was passed by the US Congress in 2011. Considered by the US Food and Drug Administration as the most sweeping reform of food safety in 70 years, the act aims to ensure the US food supply is safe by shifting the focus from responding to contamination to preventing it.

How F&B companies can respond.

With this added pressure from key stakeholders, Food & Beverage companies can only succeed if they find a way to deliver more value, faster, and for less cost. A successful response to the current business environment will invariably include more effective management of operational constraints made possible in part by an improved formulation strategy. Food and beverage companies can meet their operational challenges if they:

  • Deliver products with more nutritional value and fewer allergens.

With consumers more focused on quality, including caloric content and allergens like wheat gluten, F&B companies have to reformulate many of their products to increase nutritional value or eliminate undesirable ingredients. Doing this while maintaining existing product attributes for flavor and price can be a formulation challenge.

Lascom offers a robust and flexible formulation tool to innovate faster. It stimulates innovation and accelerates new products development. The product formulation tool is able to create new formula from scratch or from an existing formula.  This is very useful when formulating  product ranges. R&D professionals can formulate a product and calculate costs, nutritional values and weight. They can also manage claims, allergens and ingredients in real time. It ensures the accuracy and consistency of specifications from the RFP to the shelves and all along the product lifecycle, including modification traceability.

  • Continually drive down costs.

With the upward trends of food commodity, production, and distribution costs and the downward pressure on pricing from retailers, food manufacturers can turn to formulation to produce greater efficiency and lower costs.

  • Improve quality management.

Lascom offers a unique repository, to benefit from a “single version of the truth”. All data and documents such as certification are stored on the platform. Searches and audit, whether as part of an operating procedure or in emergency situations such as product recalls and health alerts, are considerably easier.

To learn more about our solutions, visit www.lascom.com 

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