26 Dec These are the challenges that 2024 holds in store for the food industry
After a year of uncertainty due to inflation, drought, legislative changes and rising energy, raw material and ancillary material costs, the food industry heads into 2024 with various challenges ahead. Over the next 12 months, food manufacturers are to face a number of obstacles which they will have to overcome with more resilience than ever before.
Demand management, innovation, sustainability and changing consumer preferences are some of the many challenges that will define the future of an industry that looks to adapt to and prosper in a tough economic context.
Some challenges for the food industry in 2024 will be more decisive than others: the rise of private label, the increasing popularity of plant-based products, the heightening interest in organic products, the effects of inflation and rising costs, and the importance of food safety.
All these challenges are to shape the food industry in the months to come and every company should take them into account when writing a business plan for 2024.
The rise of private label
Private labels, also known as white labels, have been on a growth tear in the food sector for the past 30 years and during times of inflation, such as now, this trend accelerates. So much so that the sales value exceeds 40% across most of Europe. In Spain, the value currently stands at 43% and its share is already higher than in the UK or Germany. Meanwhile, in the Netherlands and Switzerland it accounts for 44.9% and 51.8%, respectively.
Consequently, we must acknowledge the growth of private labels and it is clear that their market share is set to increase in 2024. These labels have gained ground with the growing consumer preference for quality products at reasonable prices and with support from supermarkets and retailers as an affordable, varied and high quality shopping option. This is leading consumers to view them as equally trusted options, thereby contributing to their growth in the competitive food industry.
In such context, many companies are choosing to create their own brand. The creation process must consider two factors: on the one hand, devising a good pricing strategy; and on the other hand, knowing how to choose the right private label manufacturer.
At the same time, just as the private label is trumping the manufacturer’s brand, large supermarkets are gaining market share over small supermarkets. This is something that food companies will have to keep in mind when marketing their products in 2024.
The growing popularity of plant-based products
A plant-based diet is a diet comprising mostly foods of plant origin. This trend is enjoying steady growth and is to expand significantly into the food sector by 2024, thereby signalling a revolution in consumer preferences.
The growing demand reflects a cultural shift towards healthier and more environmentally friendly options, which drive the presence and innovation of plant-based products in the food industry.
With greater awareness of sustainability, health and ethics, plant-based products have paved the way for the emergence of vegetarian and vegan substitutes, resulting in a more diversified and accessible offer. They have also brought to the fore products that have been on supermarket shelves for decades, such as canned vegetables and pre-cooked pulses.
The heightening interest in organic products
Organic products are enjoying exponential growth worldwide, especially in the food industry in sectors such as plant-based drinks or canned organic pulses. Demand is on the rise and ever more companies are interested in their production.
This is due to a growing consumer preference for healthier and more sustainable options, which is why organic foodstuffs have gained in popularity. Heightened demand has prompted an expansion of the range of organic products, from fruit and vegetables to processed foods.
This is supported by a steady increase in the amount of land allocated to organic farming in recent years, as well as by the farms being handed off to the next generation. The successors are more conscious of the impact of their activities and more committed to reducing their footprint.
The same is true for consumers, who are no longer only looking for quality products, but also require the companies that produce them to be socially responsible and committed to values they support, such as gender equality or the Sustainable Development Goals (SDGs).
Inflation and rising costs
Resilience is one of the food industry’s great strengths. The last few years have been particularly tough as it had to face challenges resulting from the COVID-19 pandemic and the impact of the war in Ukraine, not to mention drought, inflation and rising costs of raw and auxiliary materials and energy, which will continue to shape trends in 2024.
All of this translates into lower margins for producers and additional costs for consumers. Likewise, inflation can affect spending behaviour and lead to shifts in consumption patterns. This is a situation that is conducive to an upward trend in demand for private label products.
If the food industry is not to be hindered by this context, it will have to adapt to changing consumption patterns, implement efficient supply chain management and source diversification, control profit margins, review cost strategies and improve operational efficiency.
The importance of food safety
Food safety is a constant concern for food companies because it is a determining factor in their reputation. It is more than a regulatory obligation; it is an indispensable pillar of maintaining customer trust and the long-term viability of any business in this sector. Ensuring that products are safe preserves brand integrity and protects public health.
This is why health authorities monitor compliance with the legislation in force from the beginning of the production chain to consumption by means of certifications. Some of these certifications are mandatory for all food manufacturers. Others are voluntary and their holding gives companies greater prestige and a better positioning with respect to their competitors.
In an increasingly connected and conscious world, consumers demand transparency and traceability in the food they consume. For companies in the food industry, investing in food safety systems and protocols is a strategic way to build and preserve consumer trust and ensure business continuity.