- The vast majority of industry leaders and decision makers — 84% — expect sales growth in 2020, according to the 2019 Mazars Food & Beverage Industry Outlook. While this is a high amount, it is 6% less than last year. Respondents to the online survey said they thought new customers, sales channels and products will influence that growth.
- The largest trends respondents expect to enhance sales are healthy and nutritious, private label and free-from — meaning no allergens, gluten or GMOs. Participants said boosting sales and improving operations were their top internal concerns. Top external issues were food marketing and advertising effectiveness, food safety and traceability, and quality assurance.
- Respondents are expecting less profit growth this year compared to 2018 — 68% versus 84%, respectively — but their expectations for more employment growth increased by 4% — 73% this year compared to 69% last year, the survey found.
In Mazars' annual online survey of executives, which takes the pulse of what's to come in the industry, not many surprises were revealed. This year's respondents represented a wide range of businesses. Just above half work at manufacturing companies, and 22% were wholesalers or distributors. Nearly three-quarters had sales of $50 million, though 9% have sales of more than $500 million.
Besides healthier, private-label and free-from foods, other industry trends respondents expect to grow sales in the coming year include plant-based options, locally grown and produced foods, organics, ethnic and international foods and CBD infusions.
But since food marketing effectiveness was the top external concern for the industry leaders, they may be stumped on how to adequately advertise products that were designed to meet consumer trends.
While survey respondents ranked increased competition about in the middle of a list of external concerns, additional questions drilled down more into what type of competition concerned them the most. Other producers and retailers were the top worry for 78% of them. Many of the rest — 18% — said online competition was a major concern. But most were not overly concerned about Amazon's impact; 58% didn't think there would be any.
Executives said health and wellness was the top motivator for new product launches, followed by sustainability and convenience. This fits with recent SPINS data showing natural product sales growth is outpacing the total food and beverage retail market. Such products hit $47.2 billion in dollar volume for the year ending in May, a 5% jump from the previous year-long period.
Many CPG companies have been frantically working to pull up their bottom lines, and it's apparent from their plans. Most execs said they are working on process improvement actions, digital marketing and new product introductions. Compliance deadlines for GMO labeling and the revamped Nutrition Facts panel are coming up in 2020, and 41% said updates have already been implemented. There are 20% who said they are planning to do so.
While 2019 seemed fairly quiet in terms of food and beverage M&A, executives said 2020 may be similar. Six in 10 said they were not considering selling their companies. Only 9% said they were looking at the possibility in the next two years. Almost a fifth said perhaps they will sell in more than five years.
Acquisitive growth also seems unlikely. More than two-thirds — 69% — said they weren't considering buying any other companies. About 20% said they planned to make an acquisition within the next two years.
Since cannabis is an up-and-coming area in the food and beverage space, Mazars added a set of questions to this year's survey about how cannabis might impact the food and beverage industry. About one-quarter of respondents said they planned to introduce or extend CBD product lines. Just more than half said they would personally try products with CBD in products. But about 45% said regulation of the substance won't really be caught up until the federal government clarifies its stance and legalizes CBD.