As 2024 begins, the food and manufacturing industries are eager to start anew, putting the past three years of pandemic-induced uncertainty behind them. Consumer spending stayed strong through 2023. Inflation appears to be slowing. And creating resilient supply chains is still a top priority across companies.
At the same time, a tight labor market and ever-shifting consumer demand will keep food manufacturers on their toes in the months ahead. Growing interest in fresh and frozen foods, grab-and-go items and sustainable products will create tough competition for these segments in the coming year. And as more producers test the waters of AI, their primary short-term goal is to decode today’s buyers.
Here are four food manufacturing trends to watch this year.
The labor shortage continues to cut across food supply chains
“Everyone that I talk to, if I [ask], ‘What keeps you up at night?’ Almost always one of the top three things — if not the top thing — is labor and workforce,” said Tom Madrecki, vice president of campaigns and special projects at the Consumer Brands Association, a trade group representing manufacturers of consumer packaged goods.
As of November 2023, U.S. employers posted 100 job openings for every 72 available workers, according to U.S. Chamber of Commerce data. The same ratio fell to less than 50 available workers for every 100 open jobs in at least sixteen states, including Montana, Maine and Virginia.
Employer demand is persistent across industries, from manufacturing to construction. The challenge for food producers, Madrecki said, is that job seekers are drawn to household names like Amazon, while the local manufacturer needs additional publicity. To tackle this issue, some companies have partnered with local governments to get the word out, while others have hired younger workers and trained them on the job, he added.
At the federal level, the Biden administration distributed nearly $196 million in grants and loans in November 2023 to strengthen domestic food supply chains, targeting businesses in agriculture, food processing and regional food systems.
Continued supply disruptions will favor the prepared
If the pandemic underscored the importance of supply chain management, 2024 will bear the fruits of this time and investment.
Pending December data, 2023 was almost certainly the hottest year on record, according to the National Oceanic and Atmospheric Administration. It’s a searing example of the changing weather patterns that dried up the Panama Canal, stunted Georgia peaches and put Midwest soybean farmers on edge.
As if climate impacts weren’t enough, the war in Ukraine and attacks on shipping vessels in the Red Sea will continue to disrupt the flow of key ingredients from overseas.
David Ortega, associate professor of agriculture, food and resource economics at Michigan State University, noted how the conflict in Ukraine continues to impact grain prices and has discouraged farmers from planting.
“It’s going to be really important to keep an eye on what happens in terms of production there in the years to come,” Ortega said, “If we see a decrease in an area planted of certain crops, that's going to have an impact on commodity prices.”
Fresh, frozen and health foods are set to outshine other products
Market research firm Circana predicted that beverage and deli foods will outperform other retail categories this year. Among deli foods, the firm said grab-and-go options are likely to continue to be popular among consumers, while protein and energy drinks may be behind the rise in beverage sales.
Peggy Davies, president of the Private Label Manufacturers Association, also expects the selection of fresh and healthy food to expand across convenient stores, as brands seek out younger consumers.
American frozen food sales rose nearly 8% between July 2022 and 2023, but retailers are now struggling to reach shoppers who are navigating still-inflated prices.
Despite an overall spending increase, consumers remain unusually price-sensitive
Consumer mood doesn’t seem to match the economy’s more optimistic statistics. On the one hand, wages are arguably rising on par with inflation; on the other, consumers continue to shift toward private labels and other less expensive options as they keep their budgets tight.
Brands aren’t exactly cutting costs to meet these lower price points, Madrecki said, but they are trying to diversify their product mix. In response to generally strong demand, they’re also considering where to invest more to remain competitive.
“We're no longer in pandemic response; we are in forward-looking, wanting to grow, wanting to stay competitive and relevant in what is a shifting global economy,” Madrecki said. “Strategic reset maybe characterized a lot of 2023 and 2024 — and you're likely to see that continue.”