What are key Fresh Food Industry Trends for 2019? Based on the current trajectory, what can we predict for the year ahead?
If we thought the last two years in the fresh food industry were tumultuous, they may pale in comparison to 2019. Certainly, the last couple of months have been chaotic in terms of the stock market and various public policy initiatives and has led to talks of a recession, despite many healthy economic indicators.
What does this mean for fresh food industry trends in 2019? Here are three trends or predictions along with some recommendations.
Fresh Food Industry Trend 2019 #1: Grocery Margin Pressures Increase
When Amazon purchased Whole Foods in 2017, it sent shock waves throughout the industry. It also set off a battle between the “big boys” of retail, each with their complement of strengths, be it in brick-and-mortar storefronts or online merchandising. Price cuts led to price wars – something that can perhaps be sustained by the largest companies but one that often inflicts collateral damage on the smaller and regional grocers. As noted by one venture capitalist, the big boys are in this for the long haul – thinking in terms of decades, not just 2019.
Because of this, we predict that a big fresh food industry trend in 2019 will be that margin and business model pressures will continue to increase due to the growing presence of discounters like Amazon, Aldi and Lidl, competition among the other large retailers and the growth of new online and home delivery shopping models.
With margins being squeezed, grocers will need to accelerate projects that reduce costs while maintaining competitive differentiation. Reducing fresh food waste is an area ripe for improvement (pardon the pun). According to the NRDC, retailers waste 12 percent of fresh fruit and 10 percent of fresh vegetables each year. That’s a huge hit to the bottom line and one that can be rectified by applying fresh food supply chain management solutions like Zest Fresh. Providing customers with high quality perimeter items like fresh meats and produce are competitive differentiators for national and regional grocers alike.
2019 Fresh Food Industry Trend #2: Growers and Suppliers Will Increasingly Feel the Squeeze
When retailers look for ways to reduce costs they start with their suppliers. Unfortunately, growers and shippers are all too familiar with this tactic, but there’s not much left for them to give. Increased labor costs coupled with a shortfall in workers will only get worse in 2019. And, while energy and related transportation costs may decrease if the economy slows, costs for water will likely continue to increase. How can growers and suppliers respond?
In an interview with The Snack, Vic Smith, President and CEO of JV Smith Companies discusses the impact of labor and sees increasing consolidation across the industry. A typically conservative business, growers and suppliers will look for ways to minimize risk and reduce costs by seeking proven solutions that can improve operational efficiency, optimize labor usage and reduce waste. Zest Fresh has been demonstrated to help suppliers improve operations and ensure delivered freshness to their customers. By providing data and insights from the time produce is harvested through processing and shipment, we can save growers money and help them better manage the post-harvest supply chain.
2019 Fresh Food Industry Trend #3: Blockchain and Food Safety Face a Bumpy Road
Early in 2018, blockchain was the darling of all fresh food industry trends and was going to solve the food safety and traceability problem. But this early hype faded by the middle of the year amidst various food safety outbreaks that went unresolved. In August, Gartner moved the technology to its “trough of disillusionment” though it predicts that the technology may reach the “plateau of productivity” within the next decade.
In a previous blog, Blockchain for Food Safety, Addressing the Challenges, we commented about whether blockchain will solve food safety issues facing the fresh food industry. We expect that blockchain trials will continue in 2019 and, in fact, at least one retailer is mandating its use starting in January. But, while blockchain has shown promise in terms of being a secure and immutable database or ledger, the question comes down to the data about the produce that is entered into the blockchain. How is that data collected? How is it audited? How is it entered? Bad, inaccurate or incomplete data makes blockchain relatively useless. We need to automate data collection by utilizing IoT sensors that can autonomously collect the data and simultaneously enter it into the blockchain record. This not only improves data integrity, but it also greatly simplifies the process for growers, suppliers and grocers. Zest Fresh provides an excellent solution for simplifying the collection and integration of blockchain into your supply chain.
2019 Fresh Food Industry Trends in a Nutshell
If rolled up into one overarching trend, expect 2019 to be a year of challenges across the fresh food industry. Nimble and agile businesses will survive – and perhaps thrive – in this environment. Cautious investment in technology is wise and prudent but growers and grocers should look for proven solutions that have documented their ability to improve operational efficiencies for labor and resources, and reduce waste and improve delivered freshness. This combination improves profitability and sustains competitive advantage across the fresh food supply chain.
We’ll keep an eye on fresh food industry trends throughout each year, so please to visit our blog page each week for the latest news, insights and observations.