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Food & beverage is booming – just as expectations are changing

Food manufacturing is the biggest non-government industry in the United States. In fact, it is an $850 billion industry – no wonder there’s a cooking show on every network! Not only is this industry a source of pride for Wisconsin, but there is incredible capacity for growth and innovation for food and beverage manufacturers.

This is great news for our economy in terms of employment (one in nine jobs in Wisconsin is related to agriculture) and impact, but for business owners in this space to take advantage of the growth potential, it is essential to understand how consumer habits are transforming the industry.

Changes in demographic and consumer behavior

You may be expecting to read a paragraph about the impact millennials have had on the food and beverage industry. While that is real, other factors like lifestyle and culture are adding to a diverse mix of consumer preferences and expectations. For example, consider the steady increase in eating alone, which comprises almost half of all dining occasions. Food companies have responded by creating products that cater to convenience and faster speed-to-table.

Immigration and changing tastes also play a role here. For example, broader audience appeal of foods from different cultures has led to expanded production of Mexican and Asian cuisine. (By the way, millennials are leading this charge along with more culinary adventurous baby boomers.) Have you assessed how these changing behaviors may impact your product line? Just as they say in investing that past performance does not guarantee future returns, relying on your tried-and-true segments to continue their traditional purchasing habits may not lead to future growth.

Food safety

According to research by Deloitte, consumers have an expanded definition of “safety” to include greater transparency and health and wellness attributes. The attributes identified as important measures of safety include:

  • Free of harmful elements
  • Clear and accurate labeling
  • Clear information about ingredients and sourcing
  • Fewer ingredients, less processing and nothing artificial
  • Nutritional content

This illustrates a shift in perspective from near-term safety issues like toxins or contaminants to a more holistic, longer-term view. That doesn’t mean those short-term considerations have gone out the window. To the contrary – 42 percent of consumers surveyed rely on retailers to assume a greater role in managing food safety. I suspect there’s overlap in expectations of food manufacturers as well. Is safety a message you considered important only to your employees? It’s on the minds of consumers, so spreading the word about your own standards and practices could show how your product meets their expectations.

Healthy eating

What started as a trend with millennials who wanted healthier, organic options has also caught on with baby boomers who see better eating habits as a way to stay healthy for longer and improve overall quality of life. Nutrition isn’t focused on just one aspect of health, according to Deloitte, but instead focuses on multiple factors like nutritional content and lack of preservatives or artificial ingredients that contribute to a healthy lifestyle.

Different groups of buyers place each of these factors at varying priority levels. But what’s similar across these groups is their “willingness to pay a premium for ‘healthier’ products, particularly younger buyers, more affluent buyers, buyers with children, and those with a recent lifestyle change.” If the market is willing to pay for options they perceive as healthier, are there investments you can make to change your recipe, for example? Will you need to retrofit your facility to accommodate variations for special diets, such as gluten-free? Are there disclosures you’ll need to add to packaging as a result? Assess the cost versus benefit as you consider any changes.

Market fragmentation

The above opportunities highlight that there is no longer a single, dominant driver of consumption impacting the food and beverage industry, but many. Add to this the availability of information via social and other digital media, and you have a more informed, selective consumer. The traditional means of sourcing, production and packaging must all evolve to answer several shifts at once. Perhaps as a manufacturer, it makes sense to target one aspect where you can dominate. If that’s your strategy, you may not need to produce at a mass volume, requiring less labor, storage and equipment. Or, you can diversify your product mix to target several segments according to their preferences with niche offerings.

Wisconsin’s agricultural strength has provided a solid foundation for food and beverage manufacturers to leverage as you innovate and grow in an evolving market. Keeping your eye on opportunities resulting from changes in demographics and consumer behavior, food safety, healthy eating and market fragmentation will allow you to expand your business for a sustainable future.

 What do these changes mean for your business? Contact me to discuss what’s on the horizon and how I can help at


  1. FaB Wisconsin, “Food Strength in Wisconsin,” 2016.
  2. Lauren R. Hartman, “What the New Food Demographics Mean for Food and Beverage,” Food Processing November 7, 2016.
  3. Barb Renner & Jack Ringquist, “Capitalizing on the shifting consumer food value equation,” Deloitte, 2016.

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