Unlocking the Potential of Advanced Analytics Solutions: Navigating Global Price Turbulence

The food and beverage industry is a major contributor to the global economy, with a market size estimated to reach over $15 trillion (about $46,000 per person in the US) (about $46,000 per person in the US) by 2024. In recent years, the industry has experienced significant fluctuations in the cost of raw materials, production, and transportation, leading to an increase in prices for consumers. Different factors like pandemics, increased demand for certain goods, and recession fears lead to a dynamic shift in the food industry.

Supply chain disruptions, climate events, the COVID-19 pandemic, and labor and skills shortages have posed a looming threat to protecting profit margins and maintaining growth across the food industry. The Russia-Ukraine war has caused historic volatility in the trading of food futures contracts, hurting food prices everywhere.

The Global Food Price Index (FPI), according to the Food and Agriculture Organization of the United Nations (FAO), increased by 17.9 points (12.6%) from February to an average of 159.3 points in March 2022. Since the program's beginning in 1990, this is the highest level. The most recent increase highlights the direct harm caused by the conflict by reflecting new all-time highs for cereals (170.1 points) and vegetable oils (248.6 points).

All such distinct factors lead to an overall procurement cost for a food processing company, passed to the end customers who are seeking their favorite food options through the lowest price channels. In 2022, the US witnessed soaring food prices, outpacing consumer prices.

According to the United Nations Food Price Index, Even though food inflation has decreased over the past few weeks, global food costs are still 25% higher than they were before the COVID-19 pandemic struck in early 2020.

It is evident that supply chain disruptions and other factors have led to price turbulence and tested the resilience and ingenuity of industry leaders. And very soon, retailers will have to find a way from the whiplash effects of the food supply chain to be able to maximize their margins without losing their loyal customers to peers who have streamlined their supply chain operations at reduced costs.

When the pressure’s on, keeping pace with consumer demands while optimizing supply chain data and maintaining sustainable growth becomes critical. But how can your business achieve this in the face of dynamic trading conditions?

Jason Silva quoted, “Technology is, of course, a double-edged sword. Fire can cook our food but also burn us.” But a tech-first strategy used in the right way at the right time can be a game-changer for businesses.

A McKinsey study of Euromonitor market data reveals that the total amount spent on fresh and packaged foods globally is estimated to be $4.1 trillion. The recently published farm-to-table e-book by Google Cloud helps you discover the unmatched potential of data and analytics; how it helps food companies to maintain sustainable growth in a rapidly changing environment.

Leaders in the food and beverage industry have already realized that data analytics has the potential to revolutionize business operations. Also, big data and analytics ranked as the technology with great potential over the next five years in IDC's Global Food and Beverage Industry. It lays emphasis on how decision-makers can leverage advanced technologies in business functions to drive growth and profitability.

With data and analytics, you can ensure operational efficiency and scrutinize the performance metrics of your manufacturing lines to achieve better outcomes. Nothing compares to an industry-specific enterprise resource planning (ERP) system or the use of business intelligence (BI) tools for preserving a "single source of truth" for your whole organization and turning data into actionable insights.

As new shopping trends emerge, changing consumer habits are here to stay. Advanced technologies like digital twins, IoT, artificial intelligence, machine learning, etc., make bold bets to cater to evolving business needs. Artificial intelligence (AI) is turning the tables for businesses by automating tasks and enabling more efficient processes. AI significantly impacts day-to-day operations, reduces production costs, and better serves customer needs.

Artificial intelligence (AI) aligned with sensor-embedded smart machines helps businesses better match products to consumer preferences, decrease plant energy expenditures, minimize equipment maintenance, and reduce waste. The use of AI and the Internet of Things (IoT) results in the industry’s increased bottom line. To improve supply chain management transparency, new food safety rules are constantly being developed.

A latest survey depicts that the Global Artificial Intelligence (AI) in Food and Beverages Market is likely to mark US$ 29.45 Bn. by 2026, at a CAGR of 45.7% during the forecast period. Artificial neural networks are used by AI algorithms to track food shipments at every point in the supply chain. This ensures that the food industry caters to all safety requirements.

The role of AI in the food industry largely focuses on creating accurate forecasts for inventory management and pricing. That way, businesses will be one step in front of current trends, allowing them to plan shipments ahead of time. This approach leads to less waste and lower shipping costs.

Most food industry businesses ship products all over the world, making it increasingly hard to track shipments. However, AI provides a 360-degree of business functions, allowing businesses to cut unnecessary costs and maximize their margins.

Food & Beverage firms can employ analytics to improve the speed and quality of service as more and more start to offer delivery.

They can also extract insights from the data and get a better picture of customer shopping preferences. Big data analytics and food and beverage industry predictive analytics can be used to adjust staffing schedules in accordance with the busiest days that restaurant experiences.

For example, supply chains can analyze data to reduce the waiting time for customers and enhance the speed & quality of service.

Price Forecasting: Price forecasting is a key practice to control price turbulence in the food and beverage industry. Companies can use historical data and trends to predict future prices of raw materials, commodities, and other factors that affect production costs. This allows companies to make informed decisions about procurement, production, and pricing, helping them to stay ahead of price fluctuations.

Market Analysis: Market analysis is another important practice that helps companies control price turbulence in the food and beverage industry. By analyzing market data, companies can understand consumer trends, buying patterns, and competitor strategies. This helps companies to stay ahead of the curve and make informed decisions about product development, marketing, and pricing.

Predictive Analytics: Predictive analytics is a powerful tool that helps companies control price turbulence by providing actionable insights into future trends. Companies can use predictive analytics to identify trends in consumer behavior, market conditions, and other key factors that affect prices. This allows companies to make informed decisions about pricing, production, and marketing, helping them to stay ahead of price fluctuations.

Supply Chain Monitoring: Supply chain monitoring is another important practice that helps companies control price turbulence. By using data analytics, companies can monitor the supply chain from end-to-end including supplier performance, shipping times, and product quality. This helps companies to quickly identify any bottlenecks that could lead to price spikes and take appropriate action to minimize the impact.

Data-Driven Decision-Making: Data-driven decision-making is an important practice that helps companies control price turbulence by using data to inform business decisions. Companies can use data analytics to make informed decisions about pricing, production, and marketing, helping them to stay ahead of price fluctuations.

In conclusion, the global food and beverage industry is facing significant challenges in the form of price turbulence. However, companies that are able to navigate these challenges and adapt to changing market conditions will be well-positioned for success in the future. Whether through innovation, sustainability, or a focus on the needs of consumers, the food and beverage industry will continue to play a crucial role in the global economy for many years to come.

It is certain that profit pools will continue to remain on dynamic grounds, demanding highly efficient and resilient supply chains. At Polestar Solutions, we consider a tech-first strategy for food and beverage businesses to extract actionable insights from data and keep results trending upward.

Keeping in mind that supply chain disruptions and other factors are beyond our control, we help F&B organizations leverage analytical and AI capabilities to mitigate potential losses and implement a risk management framework.

Our team of professionals bring years of food and beverage industry expertise aligned with dedicated IT support and advanced custom-tailored solutions.

Speak to Experts at Polestar Solutions to discover how we help you derive competitive readiness, market excellence, and success.