In 2018, a clear consensus is emerging that the beverage industry is on the edge of a paradigm shift. The grocery price wars continue to rage and margins on mainstream beverages are tighter than ever. Consumers are increasingly turning to innovative, premium products. To maintain market share, beverage producers must produce and market a wider range of products than ever, creating supply chain and marketing challenges. Let’s look at four trends that are expected to gain pace in 2018.
Less is More
The food industry has been experiencing a trend towards ingredient-free products over the past 5five years, with gluten-free and dairy-free products growing strongly. This trend is now accelerating in the beverage space; beverage producers are increasingly investing in low or no sugar beverages, while some manufacturers are also turning their attention to caffeine free products for all-day drinking. Waters, juices and flavoured milks are gaining market share from traditional sodas.
An interesting niche market is beginning to emerge with some beverage producers beginning to invest in innovative allergy and vegan-friendly products; plant protein or nut-based milks and drinks will continue to grow in 2018 and beyond. The shorter shelf life of many of these new ingredients coupled with the decreasing use of artificial preservatives is creating inventory manufacturing supply chain challenges for some beverage producers and retailers. Buying ingredients in bulk is not always an option, and getting finished product out the door quickly is vitally important to reduce wastage.
The typical consumer is adding ethical consumption to the shopping list, increasingly opting for beverages that are ‘ethically sourced’ over mainstream options. In particular, beverage producers are feeling the pressure to use fair trade or ethically sourced sugar, kola nut, coffee and fruit ingredients. Companies that have been operating in the ‘ethical’ beverage space for some time have the inventory manufacturing and supply chain challenges largely under control and have built up an enviable reputation with consumers. For companies that intend to offer free trade and regular product lines, ensuring accountability and traceability is particularly important; any failure to ensure that regular ingredients do not make it into ‘ethical’ products would be likely to harm consumer confidence. Food manufacturing software may be useful to keep track of different product lines and ingredients.
Although time tested flavour combinations continue to perform well with the typical consumer, manufacturers are seeing the importance of offering consumers a wide range of options. Mainstream and boutique beverage producers alike are experimenting with new product varieties, which often focus on natural fruit and botanical flavours. Giving greater prominence to seasonal ingredients offers manufacturers a new way to deal with supply chain volatility when certain flavours are out of season.
A Taste for Craft Beverages
Beverages have seen a significant push towards premium products; younger market segments and a growing middle class in many export markets have demonstrated a willingness to pay for small luxuries such as premium food and beverage options. From locally roasted coffee to craft beer, the craft beverages movement continues to gain momentum as it spreads from trend-setters to the mainstream consumer.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.