Posted onJune 24, 2016
Food companies that anticipate change will be the leaders in tomorrow’s market.
We live in a world where change is accelerating. Global megatrends, such as population growth and climate change, are colliding together and causing profound impacts on the food we produce, sell and eat.
It’s a world without borders, where a threat anywhere can rapidly have significant consequences for everyone. Food risks are increasing and trust is getting harder to maintain.
Our view is we need to prepare for more of the same food concerns. Staying on-top of supply chain challenges means adapting faster and innovating sooner to the changes facing business and society.
Globalisation of food supply chains
More food is being traded across borders than ever before. Businesses are hungry for growth and are looking to grow revenue in foreign markets. Faced with razor-thin margins, companies are sourcing from low-cost suppliers around the world. Globalisation is increasing food safety and quality risks and is making traceability and control over supply chains more challenging.
Integration of supply chains
As global food trade becomes subject to more regulations, food companies are spending millions on the integration of their supply chains to improve safety and traceability. At the same time, governments are issuing policy and strategic announcements to encourage the integration of supply chains to assist in making improvements.
Scandals and increasing scrutiny
High-profile food safety and fraud scandals are triggering public health concerns and damaging consumer trust in the industry and governments around the world. With the ubiquity of social media and increasing public interest, a single lapse in quality control can quickly become a brand damaging global scandal.
Rising regulatory standards
Governments, such as China and the US, are adopting more stringent food safety regulations in terms of quality standards, supervision and sanctions. This creates unprecedented compliance risk and additional costs for companies with operations, suppliers or customers in multiple jurisdictions.
Shift in global economic power
The growth of maturing economies is creating huge consumer markets where none existed before. Consumption power is shifting to wealthier and newly urbanised middle classes across Asia. Tastes are changing and the demand for food choice and quality is increasing. More economies are moving up the value chain and becoming core consumer markets – no longer core producers of cheap labour.
Changing food demand
Economic development and population growth are driving increases in overall food consumption, while a growing middle class is demanding better quality and more variety. Greater purchasing power has resulted in a significant increase in consumption of resource-intensive protein products, with significant implications for the environment and agriculture. Demand for certain standards, such as organic or halal, is growing strongly.