Retail & CPG
Food & Beverage Distribution: Trends, Challenges, and Tech
Sep 2, 2021
6 mins read
Since the onset of the COVID-19 crisis, the global food and beverage (F&B) industry has seen some massive highs and lows. Unlike some industries, this one has grown significantly amidst the pandemic. The market, which includes the production, processing, packaging, and distribution of fresh, prepared foods, packaged foods, as well as alcoholic and non-alcoholic beverages, is expected to reach $8,638.2 billion in 2025 and $11,979.9 billion in 2030.
At the same time, the food and beverage supply chain has seen significant disruptions too. These dynamics are a result of changing consumer expectations, uncertainties, emerging market trends, and a steady pace of digitization in the industry.
As we gradually recover from the pandemic and move towards the ‘new normal’, it is important for players in the food and beverage market to closely analyze the trends that are shaping up the industry, the changing game of F&B logistics, and the role of technology in optimizing the supply chain.
Top Trends in the Food and Beverage Market
Shopping habits are changing —
Due to the pandemic, there have been several shifts in shopping habits. 78% of consumers have made a change in where they shop for food. As dining out still poses a health threat, the demand for home delivery of restaurant food, prepped meal kits and fast food remains. Furthermore, as most people continue to work from home and stay at home, buying groceries, fresh fruits, vegetables, meat as well as alcohol is another trend that is here to stay.
A McKinsey report indicates that 10% of Americans now shop for groceries at least three times a week. There is also more consciousness among consumers towards buying more healthy and hygienic foods, and 40% of U.S. consumers are becoming more mindful of where they spend their money.
Omnichannel distribution is the new normal —
For brands in the food and beverage space, omnichannel distribution is now an inevitable strategy to keep up with customer expectations. Customers are looking not just for restaurants and food joints to have an online presence; they also want convenient delivery options such as time-slot-based deliveries, curbside pick-up options, and contactless doorstep deliveries. Brands that sell packaged foods and beverages are also exploring different ways to build an omnichannel presence by listing their products on online delivery platforms or selling directly to customers.
Subscription boxes are gaining popularity —
Since ordering food online has become such a regular event in most households, food subscription boxes are becoming popular, especially among urban customers with busy lifestyles. Food subscription boxes can range from ready-to-eat foods, prepped meal boxes, or fresh ingredients to cook a meal. 8% of Americans have at least one subscription to a meal-kit delivery service. These subscription services offer convenience by offering curated ingredients or customized meal boxes. Mosaic foods, Gobble, Dinnerly, and Daily Harvest are some popular food subscriptions in the US.
Customer experience is being defined by speed —
Around 63% of customers prefer the convenience of delivery over dining out with their family, and with hundreds of food delivery options available, speed, efficiency and safety of delivery become the differentiating factor among brands. Nearly 30% of diners say they would pay more for food delivery if it’s fast, indicating that brands need to focus on speeding up their last-mile operations and optimize their logistics to keep customers satisfied.
Post-pandemic recovery will be led by digitization —
The pandemic has well and truly reinforced the need for digitization and technology in managing businesses efficiently. In a post-pandemic world, brands in the food and beverage market will leverage technology to streamline multiple facets of their supply chain including demand prediction, inventory management, delivery planning, and last-mile optimization.
Most brands are now recognizing the importance of staying abreast with the latest market trends and are refocusing their efforts to improve their supply chain performance. But it goes without saying that the food industry faces some typical supply chain challenges that must be addressed effectively to grow in the market.
Logistical Complexities in Food and Beverage Distribution
- Perishable nature of goods — The food distribution supply chain is tricky because the very nature of food and beverages is perishable. Any damage to the products, delays in transportation, or negligence on the ground could adversely affect the quality of food, leading to a risk of poor customer satisfaction.
- Short delivery timelines — Food delivery businesses run on a very crunched time frame. Whether it is restaurant food, alcoholic beverages, meal kits, or groceries, the customer expects every order to reach within an hour. In this short period of time, food must be prepped, packaged, and delivered safely. This puts a lot of pressure on brands to finetune their last-mile logistics to meet delivery SLAs.
- Inefficient logistics planning — Many food distribution businesses still struggle with manual logistics planning and order management. In a time-sensitive space, manual processes tend to be error-prone and inefficient.
- Lack of on-ground visibility — There is also a problem of foggy visibility in the food and beverage supply chain that restricts managers from monitoring delivery operations in real-time or taking preventive measures to avoid unnecessary delays. Lack of visibility also limits businesses from sharing order updates promptly with customers.
The Role of Tech in Optimizing F&B Logistics
Without a doubt, logistics is a critical touchpoint in the food and beverage supply chain and a key differentiator among brands in a highly competitive and constantly changing environment. Technology advances in Artificial Intelligence, location intelligence, automation, and data sciences are now transforming logistics for supply chains across the globe.
F&B players can plan day-to-day delivery tasks error-free within a few minutes, with automated logistics planning and dispatch scheduling. It saves a great deal of time and effort that otherwise goes into manual logistics planning.
Similarly, location intelligence tools such as geocoding and delivery route optimization software provide accurate delivery addresses and plan the shortest delivery routes, thereby speeding up on-ground operations and meeting delivery SLAs.
Live visibility solutions provide businesses with a hawk-eye view of ongoing delivery tasks, along with predictive alerts to avoid any on-ground errors. Brands can also share real-time ETAs and order updates with customers for greater transparency.
Not just that, digitization of delivery confirmation with the help of an Electronic Proof of Delivery (ePOD) solution helps in further streamlining the delivery process and ensuring a contactless experience.
By leveraging tech in the right places, food and beverage brands can modernize their distribution operations and build a more resilient supply chain for the future while keeping the promise of speedy deliveries to their customers.
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ABOUT THE AUTHOR
Shweta is a seasoned business author and writes about logistics, supply chain management, and SaaS technologies. She occasionally writes on Quora and loves to take on baking experiments in her free time.Read other blogs by this author
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Food & Beverage Distribution: Trends, Challenges, and Tech