The food & beverage industry comprises several segments such as oils & fats, functional food & beverages, alcoholic beverages, packaged foods, pet food, baby food, and food additives, among others. The industry is majorly driven by the growing demand for nutritious food products along with innovative packaging types. Developing nations such as China, India, and Brazil are the current frontrunners in the growth of the industry, as robust economic growth of these countries has greatly uplifted the middle-class population, thereby spurring demand for food & beverage products.
Customer behaviour has changed rapidly over the last decade and will continue to evolve in the coming years as well. The recent years have witnessed a shift in the preference of consumers for eating out at restaurants than cooking at home. Moreover, it has also been observed that a major chunk of the population is inclined towards functional food and beverages in order to lead a healthy and active lifestyle. Millennials seek a healthier lifestyle and their choices are mainly driven by the desire to consume different and new things, particularly inspired by social media. Therefore, the growing inclination towards functional foods has resulted in the introduction of new food products to specifically cater to this sector.
Manufacturers are also focusing on plant-based sources and products, and they have received a positive response for these products from consumers as well. The food & beverage sector is by far the largest retail category in the United States. However, this industry has not yet adopted e-commerce completely when compared to other sectors such as household products and electronic products. This is because food & beverage products are essential items and consumers do not like to rely on online platforms for them, mainly due to the turnaround time taken by online platforms to deliver these products.
In the case of food & beverage products, customers mainly rely on offline platforms such as supermarkets & hypermarkets, convenience stores, etc. However, this trend is set to change in the coming years, as technological advancements along with shopper sentiments have paved the way for the penetration of e-commerce in the food & beverage industry. At present, a meagre 15% consumers purchase groceries from online sources, while close to 60% consumers have shown an interest in purchasing groceries from online sources in the coming years.
In addition to this, customers have shown increased preference towards the consumption of on-the-go food products due to the convenience they offer. On-the-go products save time, as these items do not require extensive cooking and are thus advantageous for the working populace who find it difficult to dedicate enough time to cook meals. Beverage manufacturers are also focusing on health and wellness, as the consumer preference has witnessed a shift from carbonated beverages to healthier alternatives such as Kombucha. Further, factors such as premiumization, convenience, and direct-to-consumer offerings have shown a positive impact on the growth of the beverage industry across the globe.
Meanwhile, the growing population will keep driving the global agricultural output, for products such as feed, food and industrial purposes. The additional demand for food is expected to originate from highly populated regions such as South Asia, Middle East, North Africa and Sub-Saharan Africa. According to the OECD, agricultural output is expected to increase by approximately 15% over the next ten years. The increase in crop output can be attributed to higher production intensity, yield improvements, which is backed by technological innovation. In addition, global trade will remain imperative for maintaining food security in a rising number of foods importing nations. Latin America is expected to increase its presence in global agricultural exports in the coming years. Moreover, agriculture continues to be a vital contributor to greenhouse gas emissions across the globe.
Major players operating in the food & beverage industry include Nestle S.A., PepsiCo Inc., The Coca-Cola Company, Mondelez International, Anheuser-Busch InBev, Diageo Plc, and Groupe Danone S.A., and Archer Daniels Midlands Company, among others.
Major agricultural companies include BASF S.E., Bayer A.G., Monsanto Company, Syngenta A.G., Cargill Inc., and Archer Daniels Midlands Company, among others