Nearly half of food and beverage execs feel unprepared for a future pandemic, report finds

Dive Brief:

  • Nearly eight in 10 food and beverage executives (78%) are already preparing for the next global pandemic, according to a new survey from AIB International, with 50% anticipating an event within the next decade, and 30% within the next four years. The survey polled 325 senior-level executives at food and beverage manufacturing companies, retailers, distributors and other supply chain partners throughout North America.
  • Sixty-two percent of respondents said they were not “very prepared” to deal with the challenges of the COVID-19 pandemic, including 57% of manufacturers and processors. Also, 62% reported incurring higher operating costs, with an average increase of 20%. 
  • Nearly half (45%) of the respondents reported feeling unprepared for a future pandemic. COVID-19 has already created permanent changes throughout the food system including adjustments in consumer purchasing behaviors, greater e-commerce adoption and shifting supply chain logistics.

Dive Insight:

As the dust begins to settle, many food industry players are considering what they might have done differently to address the COVID-19 pandemic and how they would better prepare for the next event. With nearly two-thirds of survey respondents feeling like the pandemic caught them by surprise, they are likely keen to develop a plan that addresses some of the biggest pain points they endured: labor shortages, supply chain delays, increased manufacturing costs and potential closures due to quarantine orders.

But a company’s resources may tie into how well it is able to prepare for another event. Companies with less than $250 million in revenue felt less prepared to address the impacts of COVID-19, according to the AIB International survey. With fewer resources at their disposal and lacking the same economies of scale as larger companies, smaller companies likely had fewer options to address the pandemic’s challenges such as labor shortages. 

Meanwhile, 76% of companies with annual revenue of $1 billion or more reported increases in operating costs, compared to 62% of businesses overall. According to AIB International’s data, the two leading causes of workplace increases were the need for personal protection equipment and increased sanitation costs. One third of companies reported a drop in revenue, with an average decrease of 27%.

Labor was at the forefront of many companies’ pandemic-related issues. The meat industry faced serious challenges with high rates of COVID-19 infections and absenteeism among employees and serious shortages at the supermarket. According to the AIB survey, employee health and food safety were the top two areas that participants identified for future education and preparedness.

Prior to the pandemic, many companies were focused on the consumer-facing aspects of their business and driving growth. COVID-19 forced many to consider supply chain and manufacturing capabilities, which included streamlining logistics and adopting technology to improve efficiency and gain deeper insight into their operations.

Having alternative sourcing channels in mind, as well as alternative supply chain logistic routes, could also go a long way towards preventing production delays. Consolidation and centralization of the supply chain led to many sourcing headaches for food companies, according to Whole Brain Consulting. Companies that were able to keep up with production during the early days of the pandemic were better positioned to take advantage of surges in purchasing as consumers stockpiled various goods. 

The pandemic also spurred new growth in sluggish segments like canned goods and frozen foods, offering manufacturers new channels and opportunities. Being able to pivot quickly, reformulate products or speed up R&D on new products are a few ways that brands can stay afloat during another pandemic.

One of the biggest impacts of COVID-19 was a sudden increase in e-commerce adoption among consumers. Over 60% of consumers increased their online grocery shopping, according to a survey from PowerReviews. Adoption will likely stick post-pandemic, too, given that many consumers have grown to appreciate the service for its time-saving capabilities and the ability to avoid impulse purchases. For brands that haven’t already done so, adding an e-commerce channel can provide a lifeline to their target consumers should another pandemic hit.

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