mcgladrey food and beverage industry survey - … are the opportunities and challenges in the food...

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McGladrey Food and Beverage Industry SurveyTop priorities among growers, manufacturers, processors, distributors and retailers

About the SurveyMcGladrey LLP is the leading U.S. provider of

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the middle market, with nearly 8,000 professionals

and associates in 80 cities nationwide. McGladrey

is a licensed CPA firm and serves clients around the

world through RSM International, a global network

of independent accounting, tax and consulting firms.

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Food and Beverage Industry Survey

What are the opportunities and challenges in the food and beverage industry?The food and beverage (F&B) industry continues to change dramatically, and businesses need to respond quickly to constantly evolving challenges and trends without losing focus on top-line growth and margin management. Likewise, industry leaders must be mindful of the many risks that impact their business. From growth strategies and exploring new trends to data security and compliance challenges, what’s top of mind for F&B executives? This survey examines their perceptions on these topics.

Survey methodologyThe McGladrey Food and Beverage Industry Survey was conducted using an online questionnaire, promoted by McGladrey and coordinated by an independent research firm, which also compiled the final survey results. Survey results were based on responses from 179 executives, owners and decision-makers at F&B companies with annual revenues between $10 million and $1 billion. Respondents held executive roles at F&B companies, including growers, manufacturers, processors, distributors and retailers. Respondents were asked about growth outlook, market trends, business conditions and capabilities. This report provides a summary of the survey findings.

Participation breakdown

0% 10% 20% 30% 40% 50% 60%

Grower

Distributor

Manufacturer/processor

Retailer 51.1%

34.8%

26.4%

6.7%

About the Survey


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Revenue and profit growth outpace employment increasesModest growth is expected for the food and beverage industry and according to survey results, smaller companies lag in growth.

0% 20% 40% 60% 80% 100% 120%

Decrease >10%

Decrease 1-10%

No change

Increase 1-10%

Increase >10%

Operating pro�t (or loss) before interest and taxes

Employment level

Revenues


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Strategic opportunities and focus areasIncreased competition and economic contraction erode profits. A majority of survey participants fear competition, economic conditions and their own sales and marketing effectiveness.

0% 20% 40% 60% 80% 100%

Don’t know/NA

Highly unlikely

Somewhat unlikely

Somewhat likely

Highly likely

Potential exposure to legal claims

Logistics/distribution issues

Access to funding

Ability to respond e�ectively to changing consumer demographics (e.g., millennials; baby boomers)

Availability of raw materials or ingredients

Availability of skilled workers

Retailer/food service distributor/operator requirements

Regulatory requirements

Economic conditions or pressures

Ability to respond e�ectively to changing consumer trends

Operations/production e�ciency

Brand recognition and positioning

Competitive environment

Sales and marketing e�ectiveness


6


New products and line extensions are most likely to drive growthNew products typically have higher margins. Three-fourths of the survey’s participants look to new products and line extensions to drive growth.

0% 20% 40% 60% 80% 100%

Don’t know/NA

Highly unlikely

Somewhat unlikely

Somewhat likely

Highly likely

Other (please specify)

Mergers and acquisitions

New IT infrastructure and business systems

Acquisition of a brand or product

Improved access to funding

Supply chain optimization

New facilities and equipment

New geographical markets for existing products

New customer segments for existing products

New/improved business practices

New marketing and sales campaign(s)

New product/line extensions (e.g., new �avors, packaging or reformulated product or brand)

New product introductions


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F&B companies are chasing a variety of trendsManufacturers, processors, distributors and retailers are all leveraging four or more trends to stay competitive in the marketplace. Selling products like health and wellness foods and utilizing social media to promote theses products lead the strategic choices of survey participants.

0% 20% 40% 60% 80% 100%

Don't know/NA

Not planning to address

Evaluating the trend

Planning to address/sell products

Selling products

Sustainability/environmental considerations

Ethnic food/beverages

Private-label

Locally sourced food/beverages

Natural and organic(e.g., non-GMO)

Convenience/simplicity (easy to prepare, ready to eat)

Social media

Healthy and wellness (e.g., gluten-free)


8


Employment regulations pose problemsAccording to survey participants, potential problems for companies in the next 12 months include minimum wage concerns and the impact of the Affordable Care Act.

0% 20% 40% 60% 80% 100%

Don't know/NA

Not a problem

Minor problem

Moderate problem

Major problem

Immigration reform

OSHA requirements

FDA requirements, including Food and Safety Modernization Act

Labeling/packaging/lot traceability regulations

Tax requirements

A�ordable Care Act

Minimum wage legislation


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Quality, cost and speed are major areas of focusSurvey participants indicated there will be an emphasis placed on operational factors within their companies.

0% 20% 40% 60% 80% 100%

Don't know/NA

Not a focus

Minor focus

Moderate focus

Major focus

Product recall capabilities

Ingredient/lot tracking and traceability

Timing/availability of raw materials

Supply chain product monitoring and tracking

Production scheduling

Vendor relations management

Product innovation

Distribution speed and accuracy

Operations cost management/e�ciency

Product quality


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Product quality is a major risk area

Ability to respond to reputation risksMany executives are less confident in their company’s ability to address fraud and IT security risks, according to survey responses.

0% 20% 40% 60% 80% 100%

Don't know/NA

Not a risk

Minor risk

Moderate risk

Major risk

Fraud

Information security and privacy

Employee conduct

Product contamination/recall

Product quality

0% 20% 40% 60% 80% 100%

Don't know/NA

Not very con�dent

Somewhat not con�dent

Somewhat con�dent

Very con�dent


Fraud

Employee conduct


Product quality

0% 20% 40% 60% 80% 100%

Don't know/NA

Not a risk

Minor risk

Moderate risk

Major risk

Fraud


Employee conduct


Product quality

0% 20% 40% 60% 80% 100%

Don't know/NA

Not very con�dent

Somewhat not con�dent

Somewhat con�dent

Very con�dent


Fraud

Employee conduct


Product quality


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Wage and labor issues challenge executivesSurvey results revealed that at larger companies, increased labor costs and attracting technical talent are the biggest worries, while at smaller firms, minimum wage legislation, labor costs and retaining skilled labor for the shop floor lead the areas of concern.

0% 20% 40% 60% 80% 100%

Don't know/NA

Not a problem

Minor problem

Moderate problem

Major problem

OSHA compliance

Employee conduct/codes of conduct

Worker training/retraining

Veri�cation of employee status to be legally employed in the United States (immigration)

Corporate leadership/vision

Worker safety/maintaining a safe working environment

Retaining technical talent

Union issues

Workers compensation

Attracting technical talent

Corporate succession planning

Competitiveness of your company’s compensation and bene�ts package

Retaining skilled labor for the shop �oor

Attracting skilled labor for the shop �oor

Minimum wage legislation

Increased labor costs


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Majority of F&B companies should increase data and systems securityAccording to survey participants, top data security tactics include employee security, updated protocols, employee training, upgraded software and hardware and engaging data security consultants.

0%

20%

40%

60%

80%

100%Not at all con�dent

Not very con�dent

Somewhat con�dent

Very con�dent

41.6%

50.6%

7.9%

No actions

Other actions

Forensic analysis of previous breaches

Outside review of systems

Testing of system strength

Updated privacy policies

Added data security sta�

Vendor data security due diligence

Engaged data security consultants

Purchased new or upgraded hardware

Purchased new or upgraded software

Employee training with respect to data security

Updated security protocols

Enhanced employee security protocols (e.g., passwords) 41.6%

37.6%

34.8%

29.8%

25.3%

21.9%

20.8%

15.7%

3.9%

7.9%

20.8%

30.3%

21.4%

14.6%

Confident that data and systems secure from unauthorized access

Actions to enhance IT and data security

This document contains general information, may be based on authorities that are subject to change, and is not a substitute for professional advice or services. This document does not constitute assurance, tax, consulting, business, financial, investment, legal or other professional advice, and you should consult a qualified professional advisor before taking any action based on the information herein. McGladrey LLP, its affiliates and related entities are not responsible for any loss resulting from or relating to reliance on this document by any person.

McGladrey LLP is an Iowa limited liability partnership and the U.S. member firm of RSM International, a global network of independent accounting, tax and consulting firms. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. McGladrey®, the McGladrey logo, the McGladrey Classic logo, The power of being understood®, Power comes from being understood®, and Experience the power of being understood® are registered trademarks of McGladrey LLP. © 2015 McGladrey LLP. All Rights Reserved.


For more information, contact us at 800.274.3978, visit us at www.mcgladrey.com, join our Facebook fan page at McGladrey News, follow us on Twitter @McGladrey and connect with us on LinkedIn and YouTube.

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mcgladrey food and beverage industry survey - … are the opportunities and challenges in the food...

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