To help food and beverage manufacturers in New York and New Jersey assess the state of their industry and benchmark their companies against their peers, Grassi’s Manufacturing & Distribution group partnered with the New Jersey Food Processors Association to field a comprehensive benchmarking survey of the region’s industry professionals.
This year’s survey elicited candid feedback on industry trends and outlooks from every sector of the food and beverage industry in New York and New Jersey. Fielded in January 2022, the survey identified the biggest industry trends over the previous 12 months and uncovered key industry opportunities and challenges for 2022.
Most indicators show an industry adapting effectively to the many COVID-related and economic challenges it is facing. Companies saw success across multiple areas in 2021, and industry outlooks were predominantly positive. These key takeaways provide a glimpse into how high-growth food and beverage companies are responding to challenges with innovation and impactful change.
Building on a Strong Foundation
With the majority of survey respondents (53%) reporting increased revenues in 2021, the industry had positive momentum going into the new year. Even with increased costs, 51% saw profits rise in 2021 (up 25% from the previous year), suggesting that the industry was able to not only adapt but also, in many cases, thrive during the second year of the pandemic.
Nearly every company that responded to the survey experienced success or opportunity in one or more areas, most frequently by improving customer relationships, enhancing workplace safety, and increasing focus on online/digital platforms. The majority also cited development of innovative service lines, streamlined processes and supply chain progress as keys to their success in 2021.
Trending Upward in 2022
To keep these positive trends going, most respondents are planning to increase capital spending and open or add new lines and/or plants, and the majority expect production levels to be higher in 2022. Most are targeting new distribution channels; just under half are improving customer service and increasing use of analytics. Automation and cloud-based technology are common and will see continued growth as industry technology drivers.
Remarkably, it is not only growing companies making these plans. A third of companies with flat or declining revenues plan to grow revenues this year with plant and/or line expansion. In addition, more than half of these companies (51%), plan to target new distribution channels as a growth strategy, not far behind the 57% of companies with rising revenues that will do the same.
As the already-growing companies take steps to increase their revenue momentum, the fact that so many revenue-challenged companies are also expanding lines and targeting new distribution channels bodes well for industry-wide success in 2022.
Key Differentiators of High-Growth Companies
Of course, there were clear differentiators between the high-growth and no-growth companies. While a third of companies with stable or declining revenues are planning to add lines or open new plants, a much higher number (63%) of growing companies are planning the same.
Meanwhile 23% of companies with flat or falling revenues plan to merge and/or close lines or plants – nearly four times the 6% of companies with rising revenues that plan to do so.
Persistent Challenges Present New Opportunities
Lingering challenges exacerbated by the COVID-19 pandemic and economic downturn are still the top challenges of 2022, according to respondents. But two years into the crisis, the food and beverage sector has found innovative ways to address them.
Practically all organizations surveyed reported experiencing an increase in raw materials pricing. Companies are softening the blow by finding new suppliers, renegotiating with vendors, and passing along some increases to customers.
Staffing remains a stubborn challenge. In response, companies are allowing flexible work schedules and increasing salaries, among other tactics.
Logistics and inventory scarcity issues also persist in 2022. Companies are combatting this by increasing customer communication, expanding the number of suppliers, and purchasing inventory in bulk.
From all appearances, the trajectory of the region’s food and beverage industry is trending in a positive direction and leading to an even better 2022. Companies that seize the many opportunities to adapt, improve and grow will keep this momentum alive.
Download a copy of the full survey benchmarking report or contact a Grassi advisor to learn more.