Bob Groat CEO grote company
Important points:
- Food safety is becoming increasingly important to processors, with an emphasis on sanitation design and thorough cleaning procedures to prevent outbreaks and costly recalls. Companies focus on equipment that is easy to clean and maintain.
- Industry consolidation and automation are major trends, driven by M&A activity (such as Mars’ acquisition of Keranova) and continued labor shortages. These changes are expected to accelerate further after the 2024 US presidential election.
- Consumer behavior is evolving, with continued demand for both take-home meals and prepared meals. Key trends include smaller portion sizes for one- to two-person households, meal kit services, and a bifurcation between wellness-focused products and more affordable processed foods, all while food prices remain high.
As we prepare for the new year and end 2024, what are the most pressing topics for food processing companies?
Although there are always challenges, the outlook remains positive for US-based processors. Let’s look at some takeaways from this year to help the industry prepare for 2025.
1. Food safety is our top priority
One of the major trends that has captured the attention of all processors is the increased focus on food safety. It’s not like plants weren’t already paying attention to this, but that awareness is growing as recent news headlines have captured consumer attention. Processors don’t want consumers to get sick, and recalls can be costly in many ways.
While there are established procedures for sanitizing equipment before, during, and after food processing, equipment design also makes a difference in keeping your processing facility clean and running smoothly.
Sanitation design should be an element of every processor’s plan. The goal is to make the entire factory sanitary. Processors and suppliers should work together to ensure equipment is designed for hygiene and is thoroughly trained on procedures. Reduce the risk of an outbreak occurring by taking all possible precautions.
Equipment designed with hygiene in mind increases productivity and reduces cleaning time. Machines designed with tool-free parts and open access are easier and faster to clean, require less labor, are more thorough, and require less consumables and water.
2. Economic uncertainty is smoothed out
Although there has been a lot of discussion this year about how the US presidential election will affect the economy, overall markets have been active.
As of this writing, we don’t yet know the outcome, but whatever it is, it will eliminate some of the uncertainty that appears to exist. Once the outcome is determined, the decision maker will feel ready to move forward with the plan. Activity in the first quarter is expected to be strong.
Looking at interest rates, further rate cuts appear to be on the horizon. It may take some time for these to trickle back into the system, but they could be useful to processors looking to purchase capital equipment.
3. Industry consolidation continues
Note that consolidation will continue to change the food processing sector as companies merge or acquire other companies.
M&A may be slow in other industries, but M&A is stable in our industry. Examples include: Mars get Keranova PepsiCo acquires Siete, JBT acquires Marel. The other is our own Grote Company family of brands, with two acquisitions in 2024: ProFab and SPI Automation.
It is expected that M&A will become more active after the election, leading to the promotion of economic activity.
4. The move toward automation is unabated.
It’s not new, but the trend towards automation isn’t going anywhere. Processors recognize that automation is necessary to maintain high production levels. Processing line automation will continue to be a trend as there are not enough workers to fill open positions.
5. Talent remains difficult to find
As mentioned earlier, the shift to automation is partly due to a shortage of human workers.
One trend that could impact employment is an increase in M&A activity. We are seeing major companies merging. Layoffs often accompany M&A. This means more talent may be available as those who are laid off look for new roles.
The job market seems to have calmed down a bit, and workers are less likely to leave secure jobs. However, parts of the workforce continue to age, and this remains a topic of discussion across the industry. Although the workforce is primarily made up of Gen Xers and Boomers, attracting younger employees is on leaders’ minds. Encouraging employees to return to the office can address this need, as in-person instruction is easier for less experienced workers.
6. The impact of the international situation continues to be felt
The ongoing turmoil in the Middle East and Ukraine is impacting European business. There seemed to be more optimism in the spring, but that has dissipated somewhat. Big elections here in the US tend to slow activity in Europe, so Europe’s economy feels stagnant, although we might see some changes after the election.
Additionally, oil prices may be affected by international disruptions. Although currently stable, prices could rise if any developments impact supply.
7. Dietary trends to watch
The trend of eating at home is increasing. At the same time, people are often too busy and tired to make meals from scratch, making prepared meals an attractive option.
Now that a large portion of the population is made up of one- or two-person households, smaller servings and portion sizes are required. Processors also need to cater to this market.
Meal kit services are becoming increasingly popular as they save time and help home cooks reduce waste by providing the right portions to prepare meals.
The growing focus on wellness is also driving the market for healthier options. At the same time, people who struggle to pay for groceries are likely to buy more processed foods. Both trends should capture the attention of processors.
8. Food prices remain high
Consumers seem to have adapted to the high prices, so don’t expect prices to come down. Even if inflation slows and prices stabilize, prices will remain higher than before.
In the near future, meat prices will become even higher. Natural disasters, such as Hurricane Helen, which devastated many poultry farms in Georgia, and the impact of various pathogens that affect livestock health can also impact consumers, at least in the short term. .
Food processors should face 2025 with confidence
If 2024 was strong, 2025 should be even better. We always expect difficulties along the way, but the need for people to eat will never change.
Food processors can anticipate demand for their products by continually reviewing future plans while monitoring industry trends and the economic outlook.
