Many industries were hit by the Covid-19 pandemic, and the food and beverage sector was not spared. The pandemic caused discrepancies within many supply chains and their associated networks causing a reduction in manufacturing and shipping lanes, a shortage of products, and a marketplace prioritization of goods deemed essential. Governments’ measures, including border shutdowns, travel restrictions, and transportation disruptions, put the food supply chains under increased pressure and led to a food security crisis. While businesses based on “wants” shutter down, vital businesses should confront risks, overcome evolutionary challenges, and grab opportunities accordingly.
In this midst of the pandemic, what is the impact of the appetite for change in the consumer food and beverage sector on startups and SMEs?
- A shift in customers’ expectations:
Consumers’ decisions are mainly based on three “traditional drivers”: taste, price, and convenience. Today, things are changing and consumers are weighing a new set of factors in their purchases, which creates new opportunities and challenges in the food industry. Manufacturing industries in the food and beverage sector are facing increased expectations around efficiency and performance, more customized products, faster time-to-market, and adoption of safety measures.
- User-friendly and customized ordering process:
- Flexible and cost-effective deliveries:
Customers tend to favor flexible and cost-effective deliveries. They expect the shipping of their goods to be free or to pay a fixed price regardless of seasonal capacity constraints faced by their shipper, except for paying a premium for additional services (ex. faster delivery) and any required surcharges for same day, overnight or expedited service. With the advent of the Internet of Things (IoT), manufacturing companies can redefine their processes from the way they interact with customers to how they structure supply chains. The integration of data analytics and smart warehouse solutions also helps in providing much better traceability and predictability in supply chains.
- Safety measures:
Today, of all the industries threatened by the novel coronavirus outbreak, the food industry is one sector that was deeply affected. Consumers are more concerned with the safety measures adopted by restaurants and sometimes prefer to stay and cook their meals for health reasons. Restaurants, boutiques, grocery stores, and department stores are encouraged to adopt food safety programs (including policies and procedures) that minimize potential liabilities and ensures that liability issues are resolved in the favor of the business.
- Technological advances:
The food and beverage sector is embracing change and evolving in terms of warehousing, customer demand, and technology. Indeed, technology helps businesses “improve quality control, increase the speed of staging or sorting of products and restock items efficiently”, which can increase the productivity in the food industry, and reduce errors.
There are currently many technologies that can improve performance and efficiency. For instance, to better respond to customers’ new expectations, logistics companies are implementing digitized processes and collaborative operating models, warehouse management systems, and automatic guided vehicles (ex. self-driving lockers, machine-to-machine parcel-station, and last-mile delivery). Companies are also considering flow-through systems to keep the food and beverages’ inventory stocked. By adopting automated storage and retrieval solutions, food and beverage businesses can ensure better scalability, modularity, and flexibility. Furthermore, businesses can ensure the delivery of truly dynamic channeling, as well as standardized and harmonized processes across the whole business by introducing machine learning and artificial intelligence techniques to data analytics.
- New entrants to the industry resulting in new collaborations
The demand for nutritious ingredients, product transparency, and environmentally-conscious sourcing, impacted product development, and challenged new participants in the food industry.
By forcing people to stay at home, the pandemic put e-commerce websites and food delivery mobile applications at the forefront of businesses, allowing consumers to order their food and products online at their convenience (where, when, whatever they require). These startups acquired an advantage over other companies thanks to their new business models based on data analytics, blockchain, and other technologies
To achieve market and innovation improvement, already established restaurants and food and beverage businesses should develop strategic collaborations with new businesses that focus on flexibility, quality, and delivery. With the upheaval of the coronavirus, a wave of last-mile delivery start-ups emerged most of them using technology to build last-mile partnerships while matching available capacity with delivery needs.
It is therefore important to draft proper Partnership or Joint Venture Agreements detailing the terms of the business relationship and ensure scalability. You can always Book a Consultation with a lawyer, to get a better understanding of what that would entail.
Businesses in the food and beverage industry should plan, create, and implement delivery services and a significant online retail presence to respond to new customers’ needs. Alternatively, they can choose to build effective partnerships and collaborations with startups and newcomers that already developed the needed technology. If you own a business in the food and beverage industry, book an online consultation with a lawyer on Lexyom to learn how to move your business online and prepare your documentation.