Unlocking the Potential of Advanced Analytics Solutions: Navigating Global Price Turbulence

The food and beverage industry is a major contributor to the global economy, with a market size estimated to reach over $15 trillion (about $46,000 per person in the US) (about $46,000 per person in the US) by 2024. In recent years, the industry has experienced significant fluctuations in the cost of raw materials, production, and transportation, leading to an increase in prices for consumers. Different factors like pandemics, increased demand for certain goods, and recession fears lead to a dynamic shift in the food industry.

Global Food Industry: In the eye of the storm

Supply chain disruptions, climate events, the COVID-19 pandemic, and labor and skills shortages have posed a looming threat to protecting profit margins and maintaining growth across the food industry. The Russia-Ukraine war has caused historic volatility in the trading of food futures contracts, hurting food prices everywhere.

The Global Food Price Index (FPI), according to the Food and Agriculture Organization of the United Nations (FAO), increased by 17.9 points (12.6%) from February to an average of 159.3 points in March 2022. Since the program's beginning in 1990, this is the highest level. The most recent increase highlights the direct harm caused by the conflict by reflecting new all-time highs for cereals (170.1 points) and vegetable oils (248.6 points).

All such distinct factors lead to an overall procurement cost for a food processing company, passed to the end customers who are seeking their favorite food options through the lowest price channels. In 2022, the US witnessed soaring food prices, outpacing consumer prices

According to the United Nations Food Price Index, Even though food inflation has decreased over the past few weeks, global food costs are still 25% higher than they were before the COVID-19 pandemic struck in early 2020.

It is evident that supply chain disruptions and other factors have led to price turbulence and tested the resilience and ingenuity of industry leaders. And very soon, retailers will have to find a way from the whiplash effects of the food supply chain to be able to maximize their margins without losing their loyal customers to peers who have streamlined their supply chain operations at reduced costs.

Supply Chain Disruption

Key Challenges

 Food or raw material shortage

 Logistic capacity constraints; rising logistic and labor costs

 Food packaging material demand

 Food contamination and health risk

 Cross-border and domestic logistic provision and supply chain disruptions

Recommendations

 Diversify sources/suppliers locally and internationally.

 Find suppliers with better terms.

 Build relationships and trust with new suppliers

 Expand customer base for better business continuity

 Explore possible new market segments

When the pressure’s on, keeping pace with consumer demands while optimizing supply chain data and maintaining sustainable growth becomes critical. But how can your business achieve this in the face of dynamic trading conditions?