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In the food processing industry, the name of the game isn’t necessarily doing more with less, although that’s a powerful goal. For many companies, it comes down to getting the most out of their raw materials. To do that, it’s all about yield.
It can be a slightly confusing term to those outside the industry, but yield is generally defined as “the amount of usable product AFTER processing raw materials.” There’s a popular meme on the internet right now with the theme of: “How it started. How it ended.” Essentially, it’s “before and after” photos. When you’re talking about yield, the “before” photos might be a side of beef hanging in a cooler, while the “after” photos would be a pound of hamburger packaged and ready to ship to the grocery store. In that case, how it started isn’t necessarily going to be how it ended. In other words, a pound of beef isn’t always going to end up being a pound of burger. The difference is your yield.
Yield is affected by a wide range of variables, and low yield numbers can mean trouble for a company’s bottom line. It’s a common problem, one USC Consulting Group helps our clients with regularly. Let’s look a little deeper at yield, how and why it can bedevil companies, and what they can do about it.
The challenge with yield
Improving yield is the end goal. But let’s start at the beginning. Staying with the beef industry as an example, when companies start with a pound of beef and end up with .8 pounds of burger, that’s an 80% yield. The reasons for that gap become the problem.
Loss of moisture or weight. In processing beef, moisture is lost. It’s just the nature of the beast. That’s why, when you start out with one pound of raw materials you don’t always get one pound of finished product.
MAV. Government regulations give the food industry a little wiggle room between the expected quantity of any given item and the actual quantity. That’s the Maximum Allowance Variance (MAV). No product should weigh less than the MAV, nor should it weigh more than 100% of the MAV. That’s the gray area, or wiggle room. However…
Label weight. Due to government regulations (and good sense) the actual weight of a product — say, that pound of packaged ground beef in a grocery store — should not be lower than the label weight. End users, in this case, grocery store customers, can’t be told they’re buying a pound of burger when they’re really getting .8 pounds or less. Nor should grocery store owners be told by their suppliers they’re buying 100 pounds of ground beef when they’re getting 80. So to hit that MAV sweet spot and comply with label weights, food processing companies commonly…
Compensate. In the case of the beef industry, it means adding a little more ground beef into each unit. To not take the risk of going below the MAV, companies often prefer to run the process at a higher weight than the label. It’s what the industry calls “the giveaway.” They are essentially giving away beef to compensate for the loss of moisture.
Just a little more? How big a problem is this? If a company is processing, say, 30,000 pounds of ground beef into burger every day, adding a smidge into each package can be a very big problem. One recent client of USC came to us when they realized they were giving away over 1.5 million pounds of beef yearly.
This isn’t unique to the beef processing industry. Produce companies can overbag. Companies that process shelf-stable foods can use too much water. The list goes on. But no matter the type of food industry, maximizing yield is about achieving the right balance, hitting the right numbers. Not too little, not too much. Here are a few ways we help our clients do that. Hint: It’s all about efficiency and managing by the numbers.
Operations. Efficiency is the key in any operation, and at USC, we are always looking for opportunities for our clients to improve their processes. Scheduling, the sequence of how the job gets done, and even shift changes can play into efficiency. Creating a solid management operating system that allows you to “manage by the numbers” is vital in evaluating these processes for maximum efficiency.
Equipment. We don’t always recommend the latest and greatest technology. In many cases, it’s not necessary to upgrade. Maintenance? That’s another issue. Machines used to process raw materials into batches need to be at their optimal best. Regular maintenance and monitoring are key. Something as simple as build-up on a machine can lead to overfilling. A processing arm that slows down just a bit can hamper production.
Throughput. One reason for loss of moisture in beef processing is speed, so you need fast, efficient processing. But not too fast, or you can risk issues like bottlenecks in packaging, errors and ultimately waste. The Lean Six Sigma methodology helps companies maximize throughput and eliminate waste while preserving quality.
Yield is a key element to a company’s bottom line. The more efficient, streamlined and effective the operation, the more it allows companies to wrangle yield so it adds to, not drags down, profits.
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The manufacturing industry is foundational to today’s modern global economy. Without an efficient, high-performing manufacturing sector, life would not be the same today.
However, manufacturing, among other industries, is subject to the natural market cycle, which includes economic downturns and recessions. Manufacturing tends to experience severe consequences during these instances, making it challenging to stay afloat and reach a recovery point once the scale tips in the other direction.
The country may face an economic downturn and a potential recession. How can manufacturers navigate this environment?
The State of the U.S. Economy and the Possibility of a Recession
Inflation is soaring to unprecedented levels, and the stock market is not performing well. As a result, many financial experts believe that a recession or economic downturn could be on the horizon. A recession may not be likely, but rather inevitable.
A country enters a recession when the gross domestic product (GDP) drops in two consecutive quarters. In the first three months of 2022, the U.S. GDP reportedly declined by 1.4%. Later this month, the National Bureau of Economic Research (NBER) will meet to determine if the economy is officially in a recession.
In a recent European Bank Forum, Jerome Powell, Federal Reserve Chairman, addressed the potential risk of the country facing a recession. According to a recent CNET article, Powell also said that a recession shouldn’t be considered the biggest economic risk. Instead, he believes that failure to restore price stability could be worse.
Fears of a recession are ramping up nonetheless. In response, U.S. industries must begin planning for a potential slowdown. However, some companies may feel overwhelmed with a looming recession and have questions about navigating one.
How Manufacturers Can Build Resilience During an Economic Downturn
One positive thing manufacturers can look forward to if there is a recession is that manufacturing often bounces back quicker than the overall economy. According to Deloitte, the durable goods sector is highly sensitive to recessions but is usually followed by relatively quick recoveries during post-recession periods.
Every recession in history varies in length, severity, and consequences. For example, it’s typical to see layoff rates skyrocket and upticks in unemployment during recessions. It’s also common to see an increase in entrepreneurship, as seen in 2009 during the Great Recession.
If the country does enter a recession in the next few months, it’s expected that companies will recover more rapidly due to the anticipated technology boom. Considering these factors, what can manufacturers do to prepare?
First, it’s important to understand that planning and preparation must occur before the economy officially enters a recession. A manufacturing company that is ill-prepared may face more challenges during recovery or may not be able to come back at all.
Here are some tips to help manufacturers build resilience during an economic downturn or recession.
1. Analyze Costs and Identify Assets to Protect
Some manufacturers will have a knee-jerk reaction if a recession hits. Instead of taking a reactive approach, they should be proactive and look at their costs and assets ahead of time.
Many companies believe an economic downturn requires them to cut back on everything, from research and development (R&D) to sales and marketing. However, it’s better to take a hard look at what assets must be protected and determine which costs can be reduced if a recession occurs. In other words, break down flexible and fixed expenses to decide what is necessary to run the business — then take time to cut out the rest.
2. Manage Liquidity and Balance Sheets
Manufacturers should be mindful of liquidity and managing balance sheets before the economy enters a recession. Being aware of cash flow is more than just thinking about profit and loss.
The goal right now is to increase cash flow and identify which types of investments will offer the highest returns. Any significant investments should be aligned with the company’s strategic vision and desired outcomes.
3. Invest in New and Emerging Technologies
It’s commonly understood that a recession eventually ends and the economy can recover. Because of this trend, manufacturing companies should consider investing in critical technologies that could transform their future operations.
Identify which technologies will be indispensable for the business in the next three to five years. Making these investments before a recession or downturn allows manufacturers to accelerate their recovery and fuel growth on the backend of the recession.
4. Consider Researching Potential Mergers and Acquisitions (M&A)
Another way for manufacturers to swiftly navigate a tough economic situation in the future is to research potential merger and acquisition (M&A) opportunities.
Recessions often lead to lower company valuations, which makes M&A look more advantageous for all parties involved. Suppose manufacturing companies have the chance to take part in a merger or acquisition. In that case, it’s worth analyzing the market now to identify which new opportunities they can dive into.
No company can stop a recession or avoid operating in a poor economic state, but they must prepare well in advance. A recession may be in the country’s future, so now is a great time for manufacturers to plan and strategize.
Manufacturers: Plan and Adapt for a Potentially Challenging Economic Environment
Determining when a recession will occur is challenging because recessions, by nature, come with various uncertainties. Manufacturers often fear an economic downturn or recession because they can have devastating consequences. Avoid facing those adverse effects by taking time now to plan for a potential slowdown and keep it top of mind.
* This article is written by Devin Partida. Devin is a tech writer with an interest in IIoT and manufacturing. She is also the Editor-in-Chief of ReHack.com.
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The food and beverage manufacturing industry is facing labor shortages. While labor challenges aren’t new to the industry, the reasons for this current situation are. The pandemic brought about a seismic shift and disruption for nearly every industry, F&B included. Many companies, like Smithfield Foods and Tyson Foods, saw closures of multiple facilities. Others stayed the course but laid off employees, and as the country begins emerging into a post-pandemic new reality, some of those employees simply aren’t returning to their jobs.
There’s also the matter of older workers retiring and not enough young workers entering the industry, leaving a skills gap as those veterans take their institutional knowledge out the door with them.
Together, they add up to a two-pronged labor shortage problem. You not only don’t have enough people to get the job done, the people you do have aren’t as skilled as the ones you lost.
Let’s look at both of those prongs in more detail.
Labor shortage challenges and questions
Like many industries, F&B is getting a handle on whether changes brought about by the pandemic will be permanent. Some challenges like supply chain disruptions can go away forever, please, but other aspects, like the adaptation of workflows, processes and procedures have proven to be positive changes.
Some questions F&B processors are grappling with now:
- Our staffing levels are down. Do we really need to staff up to pre-pandemic levels?
- Our demand is increasing. Can we meet rising demand with less staff?
- Will new configurations on the shop floor to accommodate social distancing continue if and when the entire workforce is vaccinated?
- How will companies deal with potential work stoppages in the future?
- Will we adapt to more regional, less centralized facilities?
- Should we change our forecasting model from yearly to quarterly or even monthly to be more agile?
Solution: Process improvements
The answer to all of these questions is: It depends on efficiency. Some companies, when aiming to do more with current assets and employees or, especially when they’re seeking to do more with fewer employees because of a labor shortage like the one we’re in now, turn immediately to automation, machinery upgrades, even artificial intelligence. The aim is to take the human element out of the equation or reduce it dramatically, with the goal of streamlining and speeding up operations.
But is all of that upfront expense worth it?
Time and time again, clients have come to us after trying to “buy their way to profitability” through large capital investments in technology and automation, only to see that profitability disappear because of high overhead costs of those upgrades.
A better solution to dealing with this labor shortage, keeping up with rising demand, and doing it all with fewer people is to optimize your processes first.
At USC Consulting Group, we’ve helped hundreds of businesses navigate operational challenges so they can get the job done efficiently and better meet the needs of their customers. The key to doing more with less, or even doing more with your current assets, is taking a deep dive into your operations to discover ways to be more efficient. That’s one of our specialties, and we’ve been doing it for more than 50 years.
In one example, we worked with a poultry processor that experienced just this situation, making huge capital investments only to see any gains eaten up by high overhead costs.
We created cross-functional teams to evaluate the operation, highlighted the non-value-added activities and conducted analysis. Based on those findings, the teams identified waste and process variations that were causing lower yields, created improvements in workstation layouts and material flow, and conducted training sessions designed to impact yield performance. All told, we identified 300 loss points within their operation. Results?
By the end of our six-month engagement, the company saw a financial gain of $100 million, all realized without capital investments. That’s not chicken feed! Read more about it in our case study, “Poultry Processor Gobbles up Savings From Process Automation.”
Skills gap challenges
The other prong to today’s labor shortages in food and beverage manufacturing has to do with older, veteran workers leaving their jobs and taking their knowledge with them.
If you’ve got a team filled with long-tenured employees, you know what this is like. It’s one thing to train someone new on the basics of the job. It’s something else to lose your best worker who spent a career doing that job. It’s the experiences, processes, deep understanding and “this comes naturally” abilities of your people to get the job done in an intuitive way. The hard-won, trial-and-error-gleaned instincts that your senior people have absorbed from years on your front lines. That’s your company’s institutional knowledge.
When older workers retire or are laid off, that’s what you’re losing.
Skills gap solutions
There are a few tactics you can use to help close the skills gap.
Mentorship. Do you have a mentorship program in place? It can be an invaluable (and very low cost) way to transfer knowledge from your seasoned pros to your newbies.
Recorded interviews. Talk to your older employees about lessons learned on the job, hard-won experience and mistakes that taught them the right way to do things. Record those interviews for new hires to watch as part of their onboarding process.
Involve employees in process improvements. We’ve found that one of the most critical parts of enacting process improvements to create greater efficiency in our clients’ operations is getting buy-in from the front lines. Without it, we can find all the hidden opportunities for efficiency in the world but putting them into practice will be a challenge without your team on board. Getting your employees invested in process improvements from the get-go also has the added benefit of creating institutional knowledge. The younger workers were there when the process was changed, they contributed to it and they’ll carry that knowledge with them as long as they work for you.
Like many of the challenges we’ve experienced over the past couple years, silver linings can emerge from food manufacturing labor shortages and skills gaps. You can find better, more efficient operations without making huge capital improvements, and through that process, you can create institutional knowledge in your employees and close that skills gap for good.
At USC Consulting Group, we’re subject matter experts in helping companies find more efficiency out of their current assets. Learn more about doing more with the same or less resources in our white paper “Strategies for Meeting Increasing Customer Demand.”
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The food and beverage industry is vast, with both online and offline supply chains. This industry includes companies that work in processing raw food materials, those involved in packaging and distributing prepared foods, organizations that manufacture and distribute alcoholic and non-alcoholic beverages, restaurants and cafes, and general retailers — amongst many others.
Apart from dine-in restaurants and bars, a lot of food-related businesses are categorized as essential services, which means that they have to keep running even during a global pandemic such as the one we face today. However, to do so effectively, stringent safety measures must be followed, thereby limiting the exposure of customers and employees at all stages of production, distribution, and consumption.
Present Conditions in the Food and Beverage Sector
With the COVID-19 outbreak, most restaurants and cafes across the world are shut down. Small eateries and local diners are struggling to stay economically afloat in these tough times. To put things in perspective, recent statistics released by the Bureau of Labor Statistics found that “Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places.” At the same time, both grocery stores and food manufacturing companies like Coca-Cola, Dominos, and McDonald’s are facing disruptions in their supply chains, resulting in delays in the supply of raw materials. This is especially true for organizations that have suppliers in China.
On the other hand, online food sales and related-services are still up and running, in an ever-increased capacity. Due to this, large corporations that provide food delivery services like Amazon, Walmart, and Kroger are expected to reap huge profits. In fact, this article by S&PGlobal estimates that online buying of food and beverages in the US is expected to reach $38.16 billion by 2023! These trends are seen in other parts of the world, too. For instance, in February, South Korea saw an increase of 92.5% in the online sale of food products. This was the month in which COVID-19 infections were at their peak in the country. Similarly, there is a surge in online buying of non-perishable food items in Singapore — one that is expected to last even after the pandemic subsides.
These uncertain and ever-changing conditions have forced restaurant owners to get creative in order to stay afloat. In addition to options such as deliveries and takeouts, restaurants are turning their dining halls into grocery stores, steakhouses are being turned into butcher shops, and many fancy restaurants are hosting online cocktail-making tutorials.
Government Regulations and Legal Requirements
Price gouging is a common feature during emergency situations such as a global pandemic. Price gouging involves charging inordinate prices for necessities that see a high demand during such times. Most state and federal governments have declared this illegal and have implemented policies to protect customers and small retailers. State laws against price gouging also make provisions to ensure that consumers’ and suppliers’ needs are met.
Food and beverage businesses should also consider asking for subsidies to keep up the supply of essentials during a pandemic. For instance, the flour industry in Pakistan has requested the government to cut taxes or issue subsidies for items required to run the mills.
Businesses in the food and beverage sector need to be aware of the new local and federal requirements to protect themselves from litigation charges and/or bankruptcy. Gloves.com provides guidance procedures to help protect you and your employees and maintain a healthy and safe work environment. In order to ensure maximum safety, employees must be asked about their health before each shift, and all protocols regarding food handling and food safety must be strictly followed. Other important safety measures include maintaining safe distance at takeaways, non-contact delivery of eatables, and covering employment claims.
Tips to Adapt
Food manufacturers need to adapt to the current situation and meet new patterns of demand. Tips to do so include:
- Risk awareness: Grocery stores are places of high risk, yet, frequenting them is necessary. It is thus important to make customers aware of the potential risks of shopping at stores, as well as demonstrate what is being done to combat these risks. This is essential to retain customer trust, as well as reduce the spread of panic.
- Clear and constant communication: Organizations in the food and beverage sector should keep all involved employees up-to-date about operational challenges as a result of COVID-19. Doing so helps manage employee expectations, and being in-the-know helps employees retain some peace-of-mind through this uncertain time. Even though workers cannot interact face-to-face, staying abreast of organizational activities helps employees feel involved and is likely to boost morale.
- Stringent in-store sanitation policies: This goes without saying, but any in-person food and beverage related business must implement strict sanitation measures. Grocery stores are one of the most common places one can get sick, even during normal non-pandemic times. With this in mind, all in-store workers must be encouraged to wash or sanitize their hands frequently and refrain from touching their face during work hours. They can also wear latex gloves to decrease the chances of contagion. Shelves, knobs, switches, handles, refrigerator doors, computer hardware, and countertops must be regularly disinfected. The various parts of shopping carts can also contain germs passed from one customer to another and must be disinfected after each use. To ensure this is done, grocery stores can provide out anti-bacterial wipes to wipe down carts before customers use them and instruct them to maintain a safe distance from the checkout counters.
There is much uncertainty with regards to the food and beverage industry in the time of COVID-19. One thing, however, is for sure: there is a strong need to meet consumers’ demand for quality and convenience. With a global crisis that is wreaking havoc in many countries, consumers are increasingly cautious about the quality of their food. Food manufacturers and organizations involved in retail and supply are thus obliged to adhere to sanitary measures to protect customers and employees, and at the same time invent creative ways to stay in business.
As the food and beverage sector evolves everyday to the changing demands, having a partner to adapt processes in operations and the supply chain could be the difference in survival or demise. USC Consulting Group can assist in enabling rapid acceleration of performance to meet demand. Learn more about USC’s capabilities in the eBook: Understanding the Challenges Facing Modern Food & Beverage Producers.
This article is written by guest author Beau Peters. View more of Beau’s articles here.
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If there’s one certain thing about the food and beverage industry, it’s the fact that nothing is certain – not when it comes to trends, anyway. Take nutrition as a classic example. At one time, low fat was all the rage; now it’s high fat, combined with low carbs. In the late 1990s and early 2000s, the all-protein diet from lean meat sources was popular. Today, plant-based protein is on more and more dinner menus.
But there is one constant in the food and beverage business: consumers’ demand for top quality, originality and convenience. Thus, the heat is always on for manufacturers to deliver on Americans’ high expectations.
The best way to come through is to understand what’s on the menu, in terms of food manufacturing challenges facing producers and developing strategies for how to overcome them. Our ebook “Understanding the Challenges Facing Modern Food and Beverage Producers” details some of the potential obstacles producers face and offers suggestions that can help turn sour situations into sweet solutions.
Download our ebook today to learn more about current food manufacturing challenges and discover solutions to key areas including:
- Product quality
- Leveraging technology
- Product variation
- Formalized workflows
- Throughput rates
- Takt time
Contact us today for help fine-tuning your workflows or improving yield and productivity.
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It’s the food and beverage industry’s job to appeal to consumer tastes by keeping tabs on what’s hot and what’s not. In the 1990s, for instance, “fat free” or “reduced fat” was all the rage, evidenced by the variety of products with such descriptions featured in bold typeface on cartons, cardboard and boxes. Fast forward to today, thanks in part to advancements in nutrition science, fat is back and is recommended in low-carb diets such as Atkins and Keto.
What are the major food and beverage manufacturing trends on tap for 2020? One thing the food and beverage industry is fairly certain about is 2020 ending in the black, with earnings expected to top 2019. Aside from that, what’s hot and what’s not will be fueled by health.
Here’s more on this and what other aspects of these food manufacturing trends that will be “in” as Americans shop for snacks, brunch, breakfast, and lunch:
1. Healthy and nutritious
Health and nutrition never goes out of style. You name the year or the poll, consuming better, more wholesome food is always a priority for most Americans, as a 2018 Gallup survey showed virtually all of the people polled said they at the very least “tried” to include fresh fruits and vegetables in their meals.
“The plant-based meat industry is presently valued at approximately $4.5 billion.”
However, in some ways, what’s considered good for you is in the eyes of the beholder, as health goals largely determine the items consumers buy for themselves and their loved ones. One of the more popular, “healthier” products of late are plant-based meat. In addition to restaurants offering these poultry and beef alternatives, so too are food manufacturers that distribute to delis, grocers’ freezers and meat sections. According to the Good Food Institute, the plant-based meat industry is presently valued at approximately $4.5 billion, up 11% from 2018 and 18% from 2017 at $3.4 billion. Household names like Perdue Farms and Tyson Foods are among the major meat suppliers and manufacturers who now offer plant-based options in lieu of chicken or beef, the Detroit Free Press reported.
Similarly, plant-based milks — like almond, flax and oat — are also anticipated to rank highly with health-conscious customers. The report found that plant-based milk revenues in 2019 reached $1.8 billion in 2019, well ahead of other plant-based dairy (cheese product, yogurt, etc.).
Aside from the fact that plant-based foods tend to be lower in calories than their traditional counterparts, they also usually are free from preservatives and ingredients like high fructose corn syrup, which have been linked to adverse health effects such as insulin resistance and high blood pressure.
2. CBD infusion
Few changes have been more widespread than the decriminalization of marijuana. As noted by the National Conference of State Legislatures, nearly a dozen states and the District of Columbia have legalized recreational usage, the latest being Illinois in May. Sales as a result have skyrocketed, as have the inclusion of cannabinoids or CBD, in various types of edibles.
Found more frequently in snacks, sweets, sodas and gummies, CBD derives from the hemp plant. It’s naturally occurring properties have been linked to a number of positive health benefits, both in humans as well as pets. For example, CBD oil products like Cannanine are used to treat dogs and cats with moderate joint pain and separation anxiety, among other quality of life issues. CBD oil is usually sold with the THC element eliminated or greatly reduced, so that the product doesn’t cause a “high” sensation.
However, legal experts caution food manufacturers to be sure they understand what laws are on the books before they start introducing CBD-infused offerings.
“So much of [the CBD market] is operating in the absence of regulation, and states take widely different approaches,” said Daniel Shortt, a Seattle-based attorney, in an interview with Quartz. “You have to know your local law.”
3. Less or no alcohol
While no industry is recession proof, the beer and wine industry rarely have to worry about profitability. However, perhaps in an effort to expand their customer base, more manufacturers are churning out drinks sans alcohol, according to the Detroit Free Press. Food science has enabled developers to mimic the flavor profile of martinis, bourbons, whiskeys and gin-and-tonic, without the intoxicating element. Some manufacturers have even begun producing non-alcoholic social tonics that claim to produce a buzz using botanical ingredients like hibiscus and licorice root.
4. Gluten free
Gastrointestinal discomfort is one of the primary symptoms of celiac disease, which affects an estimated 18 million Americans, according to Beyond Celiac. Gluten is a wheat protein that serves as a binding agent, typically found in cereals, bread, pastries and pasta. However, with more people allergic to gluten, food suppliers are expanding their offerings.
Some manufacturers already sell foods that are naturally gluten free. General Mills, for example, labels its variety of Cheerios options with a “gluten free” seal. Cheerios is consistently among the most sold cereal products among Americans. While high carbohydrate cereals aren’t as popular with the public as they used to be — sales have been flat for the past three years in a row for General Mills, according to the Wall Street Journal — manufacturers are using gluten-free labeling to entice buyers and provide greater clarity on ingredients for nutrition fact finders.
What food manufacturing trends will go away? What ones are here to stay? No one knows for certain, as the ultimate decider will be consumers; dining and grazing desires are always made apparent by their paying dollar. Regardless of what you make or the ingredients you need to put it all together, USC Consulting Group can provide you with the process efficiencies to more effectively produce a high quality product that can whet your customers’ appetites and satisfy their nutritional needs. Visit our Food & Beverage page to learn more about how we can help you succeed in an industry dominated by trends.
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Food and beverage trends leave lasting marks on production best practices, but one recent development could very well transform operational standards across the food and beverage space.
In recent years, consumers worldwide have embraced free-from foods, which omit certain ingredients, additives, or contaminants, such as gluten, antibiotics, or pesticides, Bloomberg reported. Analysts at Euromonitor predict that free-from food sales in the U.S. will grow 15 percent between 2017 and 2022, creating $1.4 billion in revenue. Businesses in the food and beverage space certainly stand to benefit from this trend, but many have found that free-from food production requires significant changes to their shop floors. Even so, it appears this phenomenon is here to stay, meaning these companies must embrace free-from foods production or risk losing their footing in the marketplace.
Understanding the rise of free-from foods
The free-from food movement began in the late 2000s and early 2010s, as consumers embraced wholesome eating habits at the behest of public health officials and popular fitness and nutrition experts. Sales of packaged foods dropped significantly during this period, while interest in organic products soared. At the same time, food allergy awareness increased drastically, leading people of all ages to scour their diets for problematic ingredients.
By 2014, approximately 60 percent of Americans attested to eating larger quantities of fresh fruits and vegetables, while 46 percent said they were avoiding processed items containing artificial colors and flavors, according to researchers from Nielsen. By 2015, 51 percent of U.S. residents reported having an understanding of common food allergens, according to survey data from the American College of Allergy, Asthma and Immunology. Dairy, gluten, antibiotics, pesticides and other once-standard-issue additives became anathema to large numbers of consumers, forcing businesses in the food and beverage industry to rethink their processes and expand their product lines.
Grappling with ground-up change
Major companies in the food and beverage space have transformed their production workflows to meet the expectations of free-from advocates.
According to Bloomberg, General Mills recently put the finishing touches on an eight-story structure that sorts through oats destined to become Cheerios and remove any traces of gluten. It took five years to construct the facility, which can process 1 billion pounds of oats per year. Although Cheerios do not contain gluten, General Mills built the behemoth sorter anyway, ostensibly to ensure gluten particles from other farms near its oat-harvesting operations would not make their way into finished product. General Mills is likely to benefit from this move; almost one-quarter of U.S. consumers consider gluten-free alternatives necessary, Nielsen discovered. In 2018 alone, these individuals are expected to spend more than $4.4 billion on such products, according to MarketsandMarkets.
Poultry producer Butterball took similar steps back in 2017, rolling out an entire line of antibiotic-free turkey products, all of which are produced at a state-of-the-art facility in Mount Olive, North Carolina. Here, production teams carefully handle antibiotic-free poultry to ensure it does not come into contact with conventional items. While this has certainly complicated shop floor operations, the company’s embrace of antibiotic-free production and packaging methods has certainly paid off. Sales of Butterball antibiotic-free ground turkey saw a year-over-year increase of 71 percent in the third quarter of 2018, as free-from food devotees flocked to the new offerings, according to Bloomberg.
However, the steps these and other food and beverage producers have taken are not meant to meet the needs of consumers in a niche market. Free-from foods could become the norm. While not all eaters identify with this movement, a majority are embracing healthier eating habits and therefore becoming more discerning about their food choices, habits that might translate into an across-the-board embrace of items now associated with the free-from foods phenomenon.
Preparing for the free-from future
Food and beverage producers that have yet to develop products catering to the growing slice of free-from consumers would be wise to take action quickly or risk surrendering serious ground in the marketplace.
Process evaluation and improvement are, of course, critical to managing change of this kind, especially around raw material acquisition, an essential variable in the creation of shop floor processes capable of producing free-from food products at scale. But production changes constitute only half the equation. Not only do consumers want food and beverage makers to provide free-from products, they also demand that companies outfit such offerings with labels featuring complete ingredient lists for total transparency, according to Food Processing. In the end, firms that take these steps can effectively prepare for the future of food and beverage production and find success in the years to come.
Here at USCCG, we’ve been working with businesses across numerous industries for more than 50 years, including the food and beverage industry, helping them as they adapt to marketplace transformations of all kinds. Connect with us today to learn more about our work.