By Bob Grote, Chief Executive Officer, Grote Company
As incredible as it sounds, 2023 has nearly come to a close. As time marches along, those in the food processing business face new challenges, even as some obstacles they anticipated having to grapple with have gone by the wayside.
What might 2024 have in store for manufacturers in the food processing sector? Here are eight trends to keep an eye on.
1. Regardless of recession and inflation, the food processing industry remains robust
Despite all the talk about a possible recession – Were we in one? Is there still one coming? – food processing manufacturers seem to manage to find the silver lining. Even in the UK and Europe, where there were official recessions, spending in the food sector remained strong.
Maybe it’s because consumers have to eat – so buying food will always be a necessity. Whether they cook at home or dine out, food is a constant need for everyone.
Are there trends in the food industry that processors need to be aware of? Absolutely. But we can count on the fact that people will always spend money on food. That won’t change, regardless of the economic factors at play.
2. The way people consume food has changed
The trend of eating more meals at home that began during the pandemic continues. Consumers aren’t dining out as often. ALL food is more expensive; however, restaurant prices are rising faster than the cost of purchasing food and preparing it at home.
Regardless of where they eat, consumers are paying significantly more for their food and, in some cases, changing what they buy. As the packaged foods sector experiences growth, prestige brands may experience a decline in popularity as a result of higher grocery prices.
3. Inflation isn’t evening out anytime soon
As much as consumers wish inflation would level out, signs tell us that it will be sticking around for a while. Why? One major factor is the price of oil.
As demand for oil continues to grow, prices continue to rise. Meanwhile, there is less oil to be had, as supplies have decreased. This supply and demand trickles through everything. High oil prices dictate inflation.
Even as the energy sector gradually transitions to a greener approach, it will still take time for any changes to be felt industry-wide. This isn’t necessarily a negative for the industry, even if it may be for the consumer.
4. Automation helps food processors address the labor shortage
It has ALWAYS been challenging to find enough people to fill certain roles within food processing plants. Some jobs entail standing on your feet for hours in a less-than-desirable environment. The temperatures inside some of the plants must be kept cooler. The work is tedious. All of these factors make working conditions less than hospitable.
Another factor to consider here is that as workers age out and retire, finding replacements is next to impossible. As a whole, the manufacturing industry won’t be able to find the workers to fill these open roles.
Yet another consideration is the lack of technical, maintenance, and engineering resources that are available.
The labor shortage is an irreversible challenge. The demand for workers will only increase.
Enter automation. If you can’t find someone to hire, you may think, “How can I automate this process?”
Food processors are buying equipment that can do the jobs that go unfilled. As more automation enters the picture, other jobs will be created for human workers, upskilled jobs that will be less mundane.
Automation helps food processors remain competitive. Finding partners that have the capability to provide the technological advances to make it faster and easier to produce is at the top of many processors’ priority lists.
5. Technological advances help processors stay ahead
The industry is notoriously slow when it comes to embracing technology advancements. Technology is proven first in other sectors and is then adopted by processors.
We’re now at a time when supply and demand dictate the need to adopt more technology. Once the industry gets on board with a technological trend, it can quickly pick up steam. For example, robotics has now been integrated into most processors’ facilities on the packaging side, and it’s starting to ramp up on the high-care processing side.
Processors are looking for cradle-to-grave support for their equipment. Forming alliances with partners they trust can help them maintain their equipment and ensure it lasts as long as it possibly can.
They want support through the entire lifecycle of the product line, such as:
Help with maintenance
Troubleshooting when problems arise
Equipment optimization when a need arises
Preventive maintenance to get ahead of potential issues
Maintenance personnel who can work on-site or remotely
Technological trends on the horizon include more on the data acquisition and analysis front. Equipment must integrate technology that enables this. The more processors can learn by analyzing the data collected by the equipment, the more efficiency they can build into their plants.
6. Continued focus on operational optimization
As processing plants are tasked with maximizing production as efficiently, cheaply, and safely as possible to keep margins high, they’re looking to optimize operations.
Processors’ primary focus is to sell more of whatever they’re producing, so partners who can help them do that by removing hurdles for them as they continue to grow are invaluable.
One way to ensure uptime is by leveraging automation (for example, if a worker is out ill, that can hold up the line). There’s also less chance of contamination when using a machine versus a human. Of course, maintaining a sanitary environment and rigid cleaning practices are of the utmost importance in any food processing facility.
7. Consolidation within the industry continues
The major players in the industry will keep acquiring the smaller ones, leaving fewer and fewer independents. Food is recession-resistant, so expect this trend to continue.
One challenge here will be that there are fewer viable brands for the more prominent players to scoop up. On that note, while acquisition is often the goal for startup brands, those entering the market now may need more time to build a brand big enough to be of interest to a larger processor.
8. Equipment suppliers who provide development will be in demand
Processors also require continued development. They’re always thinking about what’s on the horizon, even three or four years out. Equipment suppliers are anticipating those needs and working on the developments that will help them get there.
Much of the expertise needed to keep technologically advanced equipment up and running isn’t available in-house. If those who serve these processors can fill those gaps, they’ll strengthen that relationship.
Look for food processors to continue to perform well in 2024
In spite of any challenges food processors may face, business continues to move forward. Overall, the sentiment seems to be that processors and their suppliers will continue to perform well.
The industry is resilient, even in the face of changing consumer behavior, economic challenges, the pains of labor versus automation, and rapidly changing technology. Evolve or be left behind is a phrase we must all adhere to.
Bob Grote is the chief executive officer of Grote Company. An engineer by schooling, a salesman by nature, and a businessman by practice, he joined Grote Company in 2000, became CEO in 2008, and now spends his time developing industry partnerships and seeking the latest food technologies. During his tenure, Grote has overseen the acquisition of industry pillars, including PFI, Vanmark, Advanced Food Technology, GME International, and Pizzamatic. He serves as Director at Large of the FPSA (Food Processing Suppliers Association) and sits on various industry and non-profit boards.
