The COVID-19 pandemic has had a significant effect on the food and beverage industry. Businesses can better prepare for 2022 if they understand several trends, opportunities, and challenges that are likely to endure.

Major Food and Beverage Industry Trends

Several trends that emerged during the pandemic are likely to influence the industry into 2022.

• Retail presence. Food and beverage companies have largely been successful through the COVID-19 pandemic, especially those with a large direct-to-consumer, retail, or club store presence.
• Transactions. Strong operating results in the industry, along with concerns over future increases in capital gains rates, drove business owners to explore selling their companies.
• Funding for innovation. Larger food conglomerates are establishing their own venture capital funds to acquire new, innovative food companies to stay current with evolving food trends, such as plant-based foods.
• Going public. More businesses are likely to go public via a special purpose acquisition company (SPAC) or initial public offering (IPO).
• Sustainability. Sustainability has become an increased consideration in how to manufacture current products and new products that enter the market.
• Healthy eating index (HEI). The HEI, a tool that evaluates how a diet compares with the Dietary Guidelines for Americans, is expected to become more popular. This may increase the importance of organic and unprocessed foods.
• Disposable income. Per capita disposable income is anticipated to rise, which could lead to more consumers trading up to premium goods and result in greater industry revenue.
• Environmental, social, governance (ESG) initiatives. ESG is a continued focus within the food and beverage industry. Businesses could consider implementing an ESG strategy to increase value propositions and engage a larger audience.

Future Opportunities and Challenges

Based on the above trends, there are several challenges and opportunities that businesses could face over the next two to three years.

Challenges

• Supply chain. Supply chain-related challenges include receiving raw materials and packaging that are manufactured overseas as well as paying higher costs for cargo shipping, domestic freight, and warehousing due to the labor shortage.
• Technology. With a reduced workforce, businesses will need to continue automating their manufacturing processes to increase efficiency.
• Margins. Increased pressure on margins will require better forecasting and budgeting.

Opportunities

• Increased food options. The ascent of meat-free and plant-based foods could be an opportunity for businesses looking to expand their offerings.
• Cannabis. There could be growth potential for cannabidiol, commonly referred to as CBD and cannabis-based services.
• Retail. Food and beverage products are increasingly sold on e-commerce and direct-to-consumer platforms. Businesses could consider how to adapt to these changes and prepare for related cybersecurity implications.
• Funding. Companies looking to raise capital through an IPO or SPAC could consider working with a Public Company Accounting Oversight Board.

We’re Here to Help

For guidance on how to grow your business or address challenges, contact your Moss Adams professional.

You can also learn more about our Food & Beverage Practice and find additional information affecting your industry.