Food Industry Trends for 2011

Everyone has an opinion on industry trends, and we are no different. Here are the things we are watching out for in 2011:

Food Safety
Food Safety is a hot topic and the feds have latched on to this one pretty well. The incoming Bill changes provide more legislative powers around recall as well as imposing food safety standards for imported goods, but in reality most food companies we have dealt with already have more stringent food safety programs and requirements that have been pushed down to them by their largest customers. But this is an important issue, and any attention is good. If anything, these changes will create a slightly bigger barrier to entry for our customer’s competition. This is a good thing.

Commodity Costs
Corn and Wheat commodities are likely to see price increases. This will obviously impact sub-segments that include large purchases of these raw materials, but in reality, a move on corn prices will push up all commodity prices as the agriculture industry reprioritizes crop growing to these commodities. This will have an impact on all food manufacturers and distributors. It may not be as disruptive as a few years ago, but the smart food company will have to be diligent in setting its prices. Same is true for energy prices, we know when we go to the pump that the prices seem only to go in one direction, up! Factor in commodity costs and energy costs and you basically have 50% or greater, the total costs incurred in food manufacturing. Now, these costs will rise faster than Consumer Price Index putting the squeeze on our dear friends who make and distribute food for a living. So, watch out! The best in class food companies will be those that have a strong handle on cost control.

Social Media
We have seen a lot of adoption in 2010 with mid-sized food companies looking to create loyalty with their consumers. Twitter, Facebook, Groupon, and other initiatives to connect consumer to producer. This will stay strong in the coming year, even stronger as there is more evidence and experience with these new marketing strategies. Food companies who create loyalties to their products may begin to enjoy more demand.

Ingredient Awareness: HFCS & Sodium
These are the new targets as consumers focus on healthy eating. HFCS has been a reliable substitute for sugar for a long time. A reliable and locally produced ingredient. It may not have much future as consumers begin to link it to obesity and like conditions. Sodium is the culprit for high blood pressure. Consumers may be willing to choose between two products based on the ingredient declaration and nutritional fact statements. This will force reformulation in a big way amongst food producers. Distributors may need to be more selective with their product placements. Of course this may force costs up, without much relief coming from retail prices squeezing our friends even more.

Watch out for the Brand Names
The big guys were slapped around a bit in the early part of the recession. As consumers focused their retail purchasing on value or extreme value based products, the big brands were not able to react as quickly. Consumers fell in love with private label products. Generally a good thing for the segment of companies that JustFoodERP does business with. But watch out, the Big Guys are back with aggressive promotion programs, generally lowering price points right across the board.

Marc is part tech geek and business guy. He has had the opportunity to manage the JustFoodERP team since helping conceive the product in 2004. Marc has a variety of experiences in the past 15 years including software implementation, sales, marketing, and product management. He is an avid runner, cyclist, and triathlete. Father of two boys.

 

Marc DiGiorgio

Marc DiGiorgio, VP, JustFoodERP, is part tech geek, part business guy. He has had the opportunity to manage the JustFoodERP team since helping conceive the product in 2004. Marc has a variety of experiences in the past 15 years including software implementation, sales, marketing, and product management. He is an avid runner, cyclist, and triathlete, and father of two boys and a girl. He can be reached at marc.digiorgio@justfooderp.com.