Bob Grote, Chief Executive Officer Grote Company Brand Family
What does 2024 hold for food processors? For many in the industry, business continues to be strong. Of course, there are also potential challenges emerging that could impact how the rest of the year plays out.
Let’s take a look at some of the trends the food processing industry should be watching.
Eating meals at home became a common practice
Food processors continue to benefit from the trend of eating at home, which many people dine at home during the pandemic because restaurants were closed and they had no choice, but the habit appears to be here to stay.
There are a variety of reasons for this change in behavior.
One is the rising price of eating out at restaurants. Menu prices have been steadily increasing. Food prices have also been rising. Restaurant prices rose 1.2% compared with a year ago, when prices rose 5.1%..
Additionally, restaurants continue to struggle to find enough employees to serve customers, and if customers have a bad experience, they may be less likely to return.
A decline in disposable income is also contributing to this, meaning consumers may have less money to spend on things like eating out.
The growing popularity of prepared meals
Prepared meals are booming because some people have never learned to cook but want to eat at home to save money. Consumers may not have the time or are too tired to cook, or they may want to spend that time on other hobbies.
For these reasons, pre-made meals, frozen pizzas and sandwiches are seeing record sales. For example, the frozen pizza business is expected to grow. Compound annual growth rate (CAGR) 6.9% from 2023 to 2030.
All of this will have a positive impact on food processors as they continue to strive to meet demand.
Economic uncertainty still lurks
Although the United States is not experiencing a recession, there are several factors that will influence the financial decisions of food processing companies.
Although GDP fell last quarter, growth remained positive, and second-quarter figures may help shed light on the true state of the economy.
Additionally, there was very little mergers and acquisitions (M&A) last year, the worst year since 2010. This metric can be an indicator of how the economy is doing: without money to spend, M&A activity stagnates. Meanwhile, the private equity market is on the rise, which is a positive sign.
Another bright spot is that Europe and the UK seem to be having a good year. After a period of turmoil, things seem to be turning around, with increased activity and optimism.
Processors should be wary of a summer slowdown, as most are accustomed to seeing slower activity during the summer when many decision makers are on vacation, coupled with an election cycle that could cause buyers to back off purchases, especially heading into the fall.
Adopting technology is a necessary but difficult task
Technology is rapidly evolving, but it’s important to determine how it will change your business.
When deciding which technology to invest in, processors need to consider what it will do for them. Will it help them increase sales? Will it help them sell more quickly? Will it help them produce goods more cost-effectively? Will it help them produce goods of higher quality?
It takes time to explore all your options and understand the real value to your company. If there’s no true ROI, it may not be a worthwhile investment.
Growth means change
If your business is growing, change is part of that growth. Expansion brings complexities to running a business.
To attract and retain great, talented team members, companies need to provide people with opportunities to grow, and so while growth brings these opportunities, it also brings growing pains.
Having the right talent in place is a key component to a growing business, and a growing business attracts more talented people.
For some companies, expansion involves acquisitions. When one company acquires another, it can provide more opportunities and better benefits for its employees. Additionally, it can focus on creating a great working environment for its employees. A larger brand gives the company more leverage to compete with more established companies. A growth philosophy allows an acquiring brand to show that it is committed to investing in the capital side of the business. There is often a need that has been unmet for many years. That investment makes the team’s job easier and better.
Recruiting young workers
Manufacturing companies need to remind young workers that they are attractive environments with guaranteed job security. As the workforce ages, companies need to emphasize job security and demonstrate opportunities for advancement when promoting the recruitment of younger talent.
Most jobs in manufacturing don’t require a college degree, and because people tend to drop out of college to gain work experience, manufacturing offers plenty of opportunities for younger workers. Providing training opportunities is part of this effort. For example, offering the opportunity to take classes at your company’s expense is one way to invest in your employees. You could also consider allowing them to change departments or roles within the company.
Food processors set for a strong year
Overall, 2024 is shaping up to be a strong year with many promising trends for the food processing industry.
Manufacturers must always be mindful of potential pitfalls, but with foresight and resilience they can weather any challenges that may arise along the way.
Bob Grote: Grote Corporation.aAn engineer by education, a natural salesman and a businessman by practice, he joined Grote Company in 2000, became CEO in 2008 and now spends his time building industry partnerships and pursuing the latest food technologies. During his tenure, Grote has overseen the acquisition of industry pillars including PFI, Vanmark, Pro-Fab, Advanced Food Technology, GME International and Pizzamatic. He serves on the board of directors for FPSA (Food Processing Suppliers Association) and serves on the boards of various industry and non-profit organizations.
