2018 looks like a pivotal year for the food and beverage industry. Will this be the year Big Food rediscovers growth?
From corporate tax breaks to a friendlier regulatory climate to the general economic robustness of this country, everything’s coming up roses for the food and beverage industry. But every rose has its thorn.
Some key regulatory/labeling requirements have been delayed in the Trump administration’s first year: GMOs, Nutrition Facts panel, restaurant calories. Some environmental regulations, too. Regulatory relief is good, right? Maybe your accountants and regulatory folks are cheering, but what do your marketing people and your chief consumer officer think? Regulatory delays are double-edged swords. They’re great for keeping costs down and maintaining the status quo, but they also undermine consumer trust and transparency, the tandem that should be your No. 1 focus in the new year.
A number of companies have made great strides in trust and transparency in the past year or two. We’ll see if those efforts start paying off this year in terms of greater sales and higher profits.
Speaking of payoffs, nearly every big food and beverage company in the past couple of years created a venture capital arm to invest in, nurture and learn from emerging food companies. It’s been two or three years for some of these investments; pehaps 2018 is the year they’ll start paying back, as well.
Big Food certainly needs some kind of shot in the arm. Nine of the industry’s 17 largest companies – PepsiCo, Coca-Cola, Kraft Heinz, Mondelez, General Mills, Kellogg, Conagra, Campbell Soup and Dean Foods – experienced two straight years of sales declines (based on full-year 2015 and 2016 figures), and two more – Tyson and Pilgrim’s Pride – lost sales between 2015 and 2016. To the credit of most of them, profits perked up in 2016, the result of cost-cutting. But you can’t cut costs for long and stay in business, especially since most of them have made significant acquisitions of late, which are supposed to be fueling growth.
It will be interesting to see how the full-year 2017 figures look when annual reports are issued in another month or two.
Every new year starts with hope. Optimism abounds in our annual Manufacturing Outlook Survey. 81 percent of respondents feel either “very optimistic” or “somewhat optimistic” going into this new year. We believe that’s the highest percentage since we started taking this survey 17 years ago. And 84 percent anticipate an appreciable increase in plant production, also probably a record.
Meanwhile, observers of the stock market and the general economy point out the positive U.S. business cycle is entering its ninth year, making it one of the longest cycles on record. Conventional wisdom says the longer it goes, the more likely it is to crash. But let’s take this one step at a time and hope we have at least one more year of good times.
A little help, please
We have a couple of projects coming up in the next few months for which we could use your help.
First up is our 47th annual R&D Survey. Before we can provide you with the big picture of product development priorities in this new year, we need you to provide us with responses to our survey, which should be emailed to you on Feb. 26. Please look for that email, click on the link and fill out the survey. The results will be reported in our May issue.
And concurrent with that are nominations for R&D Teams of the Year. If you think your product development group is worthy of recognition, nominate your team in one of three sizes of firms: small (less than $100 million in sales), medium ($100-$1 billion) and large (more than $1 billion in sales). Just drop me an email (firstname.lastname@example.org) and briefly explain why they’re worthy. Some time in mid-March we’ll post the finalists on a web-based poll and ask you to vote for whomever you think is best. The team with the most votes in each category wins, and all three will be profiled in our June issue.
For that matter, it’s not too early to think about a Green Plant of the Year. Same process: Email me a company and plant location with a note of explanation, and we’ll start that poll in June, with the winner announced in September.
Happy new year!