In the spring of 2022, BDO conducted a survey with the goal of understanding the current challenges, initiatives, and overall outlook of food and drink manufacturing, particularly in the wake of economic headwinds and the impacts of geopolitical events after surviving Brexit and COVID-19.

What they find is that seven out of ten leaders polled in the BDO survey of April 2022, food and drink manufacturers survey felt positive and nearly eight of them about their business. It has been a tough few years for food and drink — and things are just as challenging, but businesses remain resilient in the face of adversity.

What I found enlightening is that through the survey we have learnt 53% expect to see an increase in orders over the coming year. The findings from the survey illustrate some of the investments that food and drink manufacturers are making to adapt their operations and transform for a productive tomorrow.

One key observation from the survey was an acceleration in digital-transformation initiatives. This marks a significant change in attitude toward digital transformation, which for many years remained low on company agendas.

From what BDO has found, the industry is also focusing on automation, digitalisation and new product development, with a third of companies planning capital expenditure in production this year. This is the industry’s top focus for growth, ahead of expansion into new markets and new product development. However, making these investments will not be easy as increasing costs eat into margins.

At the same time, a similar proportion of companies is seeking additional finance, and maybe one in four businesses are looking for cost savings that might come as part of a digital transformation journey.

However, a digital transformation strategy does not come without risk. Cyber risk is increasingly relevant to organisations, as the reliability of systems and data is critical to support the new way of doing business.

These manufacturers want to leverage real-time data to make proactive decisions to maximise production, respond to fluctuations in demand, ensure flexible operations, and even build resilience — all while maintaining high levels of product quality and safety. Further, they want anytime, anywhere, secure access to plant-floor information so they can make intelligent decisions remotely.

Food and drink manufacturers want to invest in not only the technologies, but also the talent. 

As BDO points out, this requires a very specific set of skills and experience. And those skills and experience are in short supply, research shows. Three fifths (61%) of respondents said they were having difficulties recruiting the people and skills their companies needed.

Perhaps the most telling finding is this: 79% of leaders surveyed said new product development,

R&D and innovation were key focus areas. These efforts are spread evenly across a range of fields, says BDO. Yet, one in five respondents listed new product development as a challenge. This comes second only to COVID-19 as a concern.

It’s a clear sign that manufacturers are apprehensive about growing regulations.

Current investments are not only short-term fixes to navigate the situation at hand, but also tactical steps for long-term flexibility. The trend for healthier lifestyles brings greater competition and more reason to be a differentiator in the market.

• Rodney Jack, editor, Food & Drink Technology.
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