The food and beverage industry has undergone many changes due to rapidly changing consumer behaviors. For example, the COVID-19 pandemic has increased consumer demand for immunity-boosting food products, which some food businesses quickly addressed by including ingredients such as elderberries, probiotics, and turmeric in their goods.
Based on the above mentioned example, new industry participants must also be aware of significant trends and challenges to navigate the market successfully. Staying abreast of industry changes can help new food businesses rise above their competition and reach potential key markets.
If you want to learn more about or are planning to enter the industry, this infographic will provide an overview of how it came to be, as well as the trends, challenges, and opportunities you need to know to survive and thrive in the long run.
What Makes Up the Food and Beverage Industry?
The food and beverage industry comprises companies and establishments that process, package, distribute, and serve food and alcoholic and non-alcoholic drinks to end customers. This industry includes restaurants, cafeterias, delis, food manufacturers, catering businesses, and food transportation service providers.
Contrary to popular belief, raw food production isn’t included in this industry. Instead, it falls under the agriculture industry, which involves farming, breeding, and fishing.
The History of Food and Beverage
The food and beverage industry has undergone many changes since the dawn of time. Here's a brief history of the food and beverage industry to help you understand how certain food systems and technologies came to be.
- Ancient civilizations
Before someone invented microwavable food and canned goods, humans sustained themselves by cooking meats, seeds, and vegetables. When early civilizations such as Mesopotamia and ancient Egypt formed, humans discovered new food processing and preservation methods.
They learned how to roast meat over cookfires, brew beer and make wine, and use yeast to make bread. They also smoked, salted, and pickled meats to preserve them for long periods. Salt preservation was common in the diet of sailors and soldiers.
- The Industrial Revolution
Fast forward to the late 1700s to mid-1800s, the food and beverage industry started to take form as new technologies and food systems developed. In particular, 1809 was the year that Nicolas Appert invented canning to initially preserve food for army and navy use.
Pasteurization was also invented in the 19th century by Louis Pasteur. This method helped make food susceptible to bacterial growth safer for consumption.
- Wartime period
Food was scarce during the first and second World Wars, so people often sold them in rations and regulated prices. The rising middle-class population also increased the demand for ready-to-eat meals with a long shelf life.
Because of the factors above, food enhancers such as coloring, concentrates, artificial sweeteners, and preservatives became popular to make ready-to-eat meals more presentable and palatable. Spray drying, evaporation, and freeze drying also became some primary methods for preserving food.
- Post-war period
Ready-to-eat meals became more popular after World War II as more women started working and did less domestic labor. TV dinners, fast food, and instant oatmeal were especially attractive to consumers. Kitchen appliances such as refrigerators and microwave ovens also became commonplace in many homes worldwide.
As commercial food production picked up, food processors used cheaper ingredients to keep costs low while making the supply chain more efficient. Food distribution also became easier thanks to the availability of railroads and new highway systems.
- The 21st century
Due to new technologies and systems, the food and beverage industry is at its most sophisticated phase yet. Food manufacturers are adding more nutritional value to their products as consumers become more health-conscious.
Food eCommerce also emerged as more people relied on the internet to purchase their needs and wants. Anyone can buy from grocery stores or restaurants without leaving their homes.
Key Trends in the Food and Beverage Industry
Joining the food and beverage industry doesn’t stop at establishing a restaurant or food manufacturing business. Here are some food and beverage industry trends that change how businesses distribute their products and customers consume food.
- Greater focus on sustainability
Sustainability has become a buzzword in many markets as new consumers such as Millennials and Gen Zs adopt practical and eco-friendly purchasing habits. For instance, biodegradable food packaging is popular today as many consumers order more takeouts but still want to lower their carbon footprint.
Consumers now also expect food businesses to be transparent with the origins of their food and beverages. It leads them to use renewable food sources, such as grains, legumes, algae, and seaweed. Around 80% of consumers also said they would consider purchasing upcycled ingredients once educated about the topic.
- Cashless operations
Food establishments are now adopting cashless operations as digital payments continue to be on the rise. Even small to medium-sized enterprises (SMEs) in the Philippines are adopting digital payment solutions to provide contactless services.
Not only do cashless operations meet consumer demand, but it also helps businesses save time from going to the bank, avoid human errors, and offer better transparency and liquidity.
- Convenient delivery options
As many consumers continue to stay at home, food delivery services continue to be on the rise. Food delivery became one of the fastest-growing verticals in 2020. Food delivery apps also became the main reason the food delivery market gained momentum at the start of the pandemic.
Any type of food, from meals, drinks, to even grocery items require fast delivery. In the Philippines, for instance, web traffic for online groceries reached 1.4 million visits in August 2021, a 21% increase from the month before. Many restaurants are now delivering through online platforms to grow their revenue, especially with faster merchant deliveries now being made available for on-demand orders.
- Plant-based food
Because of the COVID-19 pandemic, consumers are now also turning to plant-based food to lead healthier lifestyles. For example, tofu became a good substitute for meat and fish and nuts for cheese and milk.
As more plant-based alternatives become available, the global plant-based foods market could reach over $162 billion by 2030.
- Better quality control
With eCommerce driving the industry forward, food businesses are now adopting better quality control over their products, services, and processes. It means streamlining how customers order online, disclosing their sourcing, delivery, and handling processes, and being transparent with service charges and delivery fees.
Providing quality products and services through secure eCommerce platforms helps food businesses give customers better value for their money and increase their brand image in the long run.
- Artisan home-cooking
The pandemic has also changed how people eat and prepare food, with some recreating restaurant experiences at home. For instance, at the start of the pandemic, famous restaurants such as Reyes Barbeque, Conti’s, and Mendokoro Ramenba sold read-to-cook meal kits that offer the same experience as eating in their establishments.
These meal kits will likely stay as more people prefer to remain indoors amidst increasing fuel and commodity prices.
- Increased visual marketing
Visual appeal has always been the key to success in the food and beverage industry. Food businesses must continue investing in food photography, high-end graphic design for food and beverage packaging, and engaging social media content to attract customers.
Food and Beverage Today: Impact and Challenges
- New technologies
Labor shortages in the food and beverage industry aren’t new, but they worsened due to the pandemic. Because of this, food businesses are investing in new technologies to keep their operations afloat. White-label solutions, for instance, allow brands to quickly and securely scale their business in many ways, from their offerings, costs, and to their revenue.
While helpful to all food businesses, technological upgrades are more challenging for SMEs with little to no funds for new resources. It can hinder them from growing and keeping up in this competitive landscape.
- Waste and pollution management
The food and beverage industry is one of the biggest contributors to pollution worldwide. Food manufacturing and packaging account for 20% to 30% of food-related greenhouse gas emissions. Manufacturing processes also dispose of over 7% of farmed food.
Many food businesses are reducing their carbon footprint using compostable but durable alternatives to plastic food packaging. They also adopt green practices in every supply chain step, reduce energy and water consumption, and recycle non-biodegradable goods.
- Rising health consciousness
The pandemic has greatly highlighted the need for people to stay healthy, which is why consumers demand healthier food options. Food businesses must ensure to remove artificial ingredients and produce more nutritious food to meet this growing demand.
- High transportation costs
High demand but low supply for crude oil pushes gas prices upward, driving transportation expenses. Food distributors then have no choice but to raise their prices to meet consumer needs while covering supply chain costs.
As a result, consumers are taking fewer trips to restaurants and supermarkets and buying less food to save on costs. Not only do these factors hurt food businesses, but they also change the way food and beverage manufacturers distribute their products.
- Inventory management
Inventory management has become a challenge for many companies actively meeting the consumer demand for organic and healthier food. They’re constantly encouraged to employ refrigeration technologies and upkeep temperature-controlled warehouses to preserve the quality of their food products.
Scale Your Food Business Today
The food and beverage industry has changed so much over the last centuries. New technologies and food processes have allowed manufacturers and establishments to distribute and serve safer and healthier food.
To succeed in the long run, businesses aspiring to enter the food and beverage industry only need to stay updated with current trends such as those discussed above.
Learn more by booking a demo with us. We’re on a mission to bring you closer to your customers and provide you with the right tools to meet them at every stage of their journey—from discovery to delivery. Start growing your business with RUSH today!