As the food and beverage sector becomes ever more competitive and heavily scrutinised, companies are faced with new challenges.

Globalisation and the development of new markets and suppliers, as well as global sourcing of raw materials, have lead to extended and more complex supply chains which affects the way global food players operate. This causes consumers to become more cautious when choosing food products for their table.

In addition to increased consumer consciousness, national and international food-related incidents have created difficulties for many players in the food and beverage industry. Guaranteeing quality and safety at every step of the production chain has consequently become crucial to gain a competitive advantage in the global marketplace.
In response to globalisation, cost-effective production and reliable supply chain management have become increasingly important criteria for market success. Today’s mergers, acquisitions and alliances have clear motives – the main ones being to increase cost efficiency through synergy, to gain new market opportunities and to obtain and strengthen brands. Increasingly, these consolidation activities are cross-border and even cross-continental.

Managing risk has become a central requirement for those operating along the food production chain, from farmers, fishermen and growers to food processors, retailers, distributors, storage and transport companies as well as brand owners.

Increased consumer awareness
Consumers are increasingly aware of the quality, hygiene and safety issues surrounding what they eat or drink. While the knowledge of food risks is increasing, people are also becoming more aware of the relationship between food and well-being. Self-gratification, nutritional value and safety are all labels of quality that consumers focus on. This awareness covers the whole range of issues around food and beverages – from the raw materials and the conditions in which they are grown or raised – to the reliability of the technologies used during manufacturing and processing, systems for storage and transport.

The food concept involves personal feelings, and despite the global food sourcing, the consumer perception of the food value is a mix of items suffering cultural and local influences, but it’s always related to safety, confidence and sustainability. When we add the growing number of food scandals and food scares it’s easy to understand the current climate of consumer concern, fuelled as always by media attention.

Profit no longer the sole mission
Due to the globalisation of the food and beverage industry the distance a food travels from the origin of production to the point of sale, called "food miles", is steadily increasing. Around the world, societies and consumer concerns are growing about the environmental and ethical impact of food and beverage production. The sustainable development of the world’s natural resources has become a prerequisite. This is a clear message to the industry that the environmental aspect is a significant trend to acknowledge.

Information about the safety of foods is undoubtedly important but it is not enough to change perceptions and to win back the public’s full confidence. An essential condition is the integrity of producers, processors and distributors. In this constellation a company is compelled to be accountable for its consideration and care of consumers and public concerns. Profit is no longer the sole mission of a company in today’s global food and beverage market. Doing business needs to include people and the planet.

Corporate reputation emerging issue
A key issue for food and beverage companies is branding. A strong brand generates added value and strengthens market position. But building and sustaining a brand takes enormous investment without any promise of guaranteed success. In today’s market, complex supply chains and outsourcing of the manufacturing of branded products means less control over sourcing and processing.

The supply chain management, and related costs, make the food industry prone to incidents which can have destructive impact. The product recall/withdrawal is a frequent event (one per day, according to US FDA, several thousands per year, according to the EU Rapid Alarm System), often due to poor supplier’s performance. The cost related to food product recalls can be several million USD. But an insurance policy is not enough to recover all the damages: there is no insurance against the “brand injury”.

With thousands of ingredients as well as thousands of suppliers/manufacturers along a production chain, it is evident that managing risk has become a central requirement for food and beverage industry players. Failures in the supply chain, which often leads to recalls, can not only be dangerous to public health and safety but are also costly in terms of company reputation, financial penalties and shareholder value.

A question of trust
Consumers and other stakeholders’ expectations impose effectiveness, transparency and sustainability through the entire supply chain. The lack of trust in the food and beverage value chain is related to extended supply chains and an increasing number of global players/suppliers. The result is inefficiencies and an increasing impact of legislation based on performance standards.
The first issue involving the food industry, which is a basic tool to manage any other issue, is traceability. An effective (and efficient) tracing and tracking system is needed to face food safety crises and to guarantee the product identity, which in turn is the basic tool to guarantee any quality claim and to control the supply chain.

The complex food network is why businesses and consumers look to trustworthy companies to meet their demands for guarantees. Companies can earn this trust by being able to demonstrate that they are diligent and vigilant and that they have an effective, rigorously maintained management system across all their processes. Such companies have a wide-reaching risk management approach and the certification to prove it.

Certification to recognised national or international standards ensures implementation of best practices and communicates this to the business and consumer segment. Building and maintaining efficient and sustainable supply chains is a must to maintain a competitive presence in the market and indeed the survival of brands as well as food and beverage players.