Hayley Null, NetSuite’s Food and Beverage Industry Marketing Lead, recently sat down with John Bek, NetSuite’s Food and Beverage Industry Principal to discuss the major trends and keys to success in the food and beverage industry in 2019.
Hayley Null: What should food and beverage companies be paying attention to in 2019?
Based on my research and conversations with food and beverage customers, there are three main trends that will affect food and beverage companies in 2019.
- Big brands will continue to lose ground to smaller manufacturers
- Continuation of delivery driver shortages
- Consumerization of automation and artificial intelligence
Null: Can you speak a little bit more about what the business landscape looks like for food and beverage manufacturers in 2019?
Bek: One of the trends we've seen in recent years that will accelerate in 2019 is smaller, more nimble brand manufacturers successfully competing against the big brands. Food and beverage startups have raised $9.5 billion from PE firms since 2013, which has and will continue to fuel innovation in the industry. Many small, more innovative brands have been very effective at catering to consumer trends, particularly those related to ethics, sustainability and nutrition.
Null: What about food and beverage distributors? What key trends will affect their business in 2019?
Bek: On the distribution side, a delivery driver shortage will continue to affect food and beverage distributors. This shortage has occurred for a variety of reasons, including new population demographics, lifestyle expectations, pay rates and the explosion of competition resulting from increased B2C deliveries (i.e. Amazon). I visited with one of the key trade associations in the segment recently and they confirmed their distribution members are still struggling to find qualified drivers. The shortage negatively affects the segment with higher fulfillment costs and related margin erosion.
Null: The consumerization of automation and artificial intelligence has shaken up the industry during the past couple of years. How is this affecting the marketplace?
John Bek: From ordering food at kiosks, to ordering food online and via mobile, we're seeing automation used more and more in consumer environments. As AI and automation become more commonplace, and users’ expectations adjust to it, the resulting costs will come down and we'll see the technology being incorporated more into back office ERP and operational processes.
Null: The last piece I want to touch on is a legislative shift that will affect the industry this year. Can you explain how the National Bioengineered Food Disclosure Standard will affect food and beverage companies in 2019?
John Bek: The National Bioengineered Food Disclosure Standard, which was signed into law in 2016, has been brewing for a while now. Last month, the USDA issued their final ruling on the standard, confirming compliance dates, exclusions around refined ingredients, voluntary disclosures, a listing of bioengineered foods, genetically modified foods and more. With the compliance dates phasing in from 2020 to 2022, both small and large food manufacturers will be faced with meeting this requirement over the next year.