Industry Survey Provides Food For Thought

It seems nothing can hold back the innovation and sheer drive of the global food and drinks industry. An extensive survey by ICD Research, part of foodprocessing-technology.com's owner Progressive Digital Media, recently proved that by collating the views of 450 senior global industry buyers and suppliers, including C-levels, directors, managers and technical and professional staff.

The survey also examined buyers' and suppliers' growth, mergers and acquisitions and investment expectations, and the results provided plenty of food for thought. Respondents were carefully selected from the ICD Research Industry insight panel, which includes 500,000 business professionals worldwide.

In terms of key findings, the report showed 53% of respondents expected the economy to recover in 2010, 50% were optimistic about revenue growth next year and that cost containment was considered one of the most important factors when making business decisions.

Recovery position

Optimism was strong among manufacturers, with 27% of respondents believing the economy will recover in the first half of 2010 and 26% believing recovery will occur in the second half of 2010.

A significant number of senior level executives said the food and drinks manufacturing industry would be shielded against recessionary pressures due to its essential role in the economic world.

The survey also showed that buyers were more optimistic about future revenue growth than suppliers. Some 50% of respondents were optimistic about revenue growth next year, believing they were well-positioned to benefit from competitors weakened by the recession, and from the recovery of the economy.

Some 55% of food manufacturers expected revenue to grow next year and 53% of drink manufacturers agreed. Some 44% of suppliers had a positive outlook regarding revenues over the next 12 months. These findings suggest healthy future demand and supply.

Expenditure forecasts also suggested a healthy future for the sector. The majority of food and drinks manufacturers expected to increase products and services expenditure over the next 12 months. Some 48% of food manufacturers anticipated spending more on products and services, while 19% anticipated spending less. Some 44% of drink manufacturers expected an increase in product and services spend, while 24% expected a decrease.

Areas likely to experience investment in the next 12 months include processing, filling and packaging lines, ingredients and additives, packaging and labelling equipment and research and development.

Facing up to the challenge

Global food and drinks manufacturing industry executives still face significant challenges over coming months and years. The survey revealed the most pressing business concerns were responding to cost pressures, planning and investing around the uncertain market and cost containment.

Some 67% of food manufacturers and 57% of drinks manufacturers identified responding to pricing pressures as the most important business concern for 2009 to 2010. Cost containment also featured heavily, with 50% of food manufacturers and 45% of drinks manufacturers rating this issue the second-biggest concern.

For suppliers, the difficulty of forecasting, planning and investing due to market uncertainty and responding to pricing pressure were considered the most significant business challenges for 2009 to 2010.

Quality remains the key consideration for the industry when selecting suppliers. It was the unanimous choice among both buyers and suppliers, with other important factors being price, level of service and reliability. The possibility of privileged access to research and development, along with companies' environmental records, were considered less important.

All these factors should be considered important by companies and used to align capabilities with customer needs. Given the current exceptional market conditions, in which most companies are re-evaluating suppliers or renegotiating contracts, each factor can play a vital role. Significant discrepancies between supplier and buyer opinions reveal areas that require attention.