Higher ingredient prices have altered the way almost 90% of manufacturers surveyed by TraceGains do business today. For many, this requires changing or constructing whole new formulae.
TraceGains surveyed more than 300 food and beverage manufacturers for its “2022 State of Supply Chain Disruption” report about the impact of macroeconomic conditions like ingredient availability and the pandemic on innovation, product development, and the trickle-down effect on consumer prices and availability. The networked ingredient sourcing platform also solicited feedback from new product development specialists from organisations with annual revenues in excess of $500 million.
In terms of the influence on innovation, the research revealed mixed outcomes. Respondents were evenly divided between CPGs (consumer packaged goods) that continue to develop and those who are cutting back on R&D.
“As customers, we experience the agony of supply chain difficulties every time we walk out of a grocery store,” said TraceGains CEO Gary Nowacki. “This poll shines light on the issue directly from the standpoint of a CPG company and helps other food and beverage companies know they’re not alone in this struggle.” Forward-thinking brands have exploited this sad period to upgrade archaic operations, and those who have already done so are considerably better positioned to handle interruptions with as little effect as possible.”
According to the research, new product development and formula tweaks have been crucial in compensating for rising ingredient prices. 37 percent of firms admitted to changing more than 20 product formulae. One-quarter acknowledged to altering between the ages of 6 and 20.
In the previous two years, two-thirds of businesses have been obliged to hike prices. Almost half of the goods were suspended in manufacturing. Another 46% stated they were unable to keep up with customer demand.
TraceGains also questioned respondents about potential lessons learned. The most crucial strategy adjustment was increasing supplier diversification, which was followed by utilising contract manufacturers. Almost seven out of ten businesses stated they intend to grow their supplier networks in the next 24 months. To deal with ongoing insecurity, a quarter of companies aim to reshore their supply base, and 41% plan to modify or discontinue product offerings entirely.