8 Manufacturing Trends identified for the Food & Beverage Industry
For the first 5 months of 2020, China’s food industry saw stable growth despite the ongoing pandemic, according to latest statistics released by the Ministry of Industry and Information Technology.
Retail sales of grain, oil and food from January to May grew by 13.4% from a year ago to Rmb 620.59 billion (US$88.65 billion). Sales of beverages grew 8.5% in the same period to reach Rmb 81.93 billion (US$11.7 billion).
In May alone, value-added industrial output of food manufacturers saw an increase of 6.3% in the same period, while beverage and refined tea manufacturers registered a 0.6% growth.
Meanwhile, profits of food companies with annual operating revenue of more than Rmb 20 million (US$2.86 million) came in flat compared to the same period last year, hitting a combined Rmb 210.27 billion (US$30.1 billion) in the first 5 months of 2020.
Separate findings from The Business Research Community (TBRC) Global Market Model showed that China food and beverages segment grew from US$831 billion in 2015 to US$1.27 trillion in 2019 with a strong CAGR of 11.3%. It also highlighted that this market is projected to grow to US$1.347 trillion by 2020 despite the pandemic which has slowed economic activities in the country and globally.
China accounted for 21.5% of the global food and beverages market followed by the US (18.6%) and Japan (6.2%). For the Asia Pacific region, China accounted for an impressive 51% share. In China, the meat, poultry and seafood represented the largest segment with 26.2% share followed by bakery and confectionery segment with 14.5% share. The syrup, seasonings, oils and general food is the fastest growing segment in the country with a CAGR of 13.7%. For the forecast period till 2023, it is expected to remain the fastest growing segment (11%) followed by meat, poultry and seafood (10.7%) and non-alcoholic beverages (9.5%). (See Table 1.0 for more details)
According to TBRC, India is expected to be the fastest growing country within the food and beverages market at a CAGR of 13.2% followed by Indonesia at 10.6% and Vietnam at 10% over the forecast period from 2019 to 2023.
The TBRC report has also identified major manufacturing trends in China and global food and beverages market in recent years. We have summarised them into 8 major manufacturing trends as follows:
(1) Shift to natural ingredients – growing use of natural ingredients replacing artificial colors and flavors. Growing consumer health awareness has led to the growth of this trend.
(2) Functional Drinks for hydration/nutritional benefits – consumers look for drinks to stay hydrated and to maintain nutritional balance resulting in NPDs of fortified beverages such as functional juices, functional water with health benefits such as water balance, weight management and improved digestion.
(3) Rise in micro distilled/artisan spirits – growing popularity of micro-distilled and artisan spirits in developed and developing countries. These are liquors that use local ingredients that give alcohol a unique flavor. Major alcohol companies are expected to purchase craft distillers, wineries, breweries and brands to capitalise on the demand for artisan spirits.
(4) Rise of alcoholic beverage sales through e-commerce– alcoholic beverage manufacturers are seeking to expand their market through e-commerce platforms, without heavy investments on distribution channels. China was the leader in alcohol e-commerce with 27% of consumers buying alcohol over the internet in 2017, according to Rabobank.
(5) High Pressure Pasteurisation (HPP) of fruits/vegetables– HPP is increasingly employed to preserve nutrients and eliminate harmful microorganisms in canned, pickled or dried fruits and vegetables. (for more information on HPP, go to page 32)
(6) Growing demand for Clean Label products– with rising health awareness, consumers seek clean label dairy products that do not contain additives, artificial flavor enhancers, dyes or artificial preservatives. We could see a growing number of food services and retail grocery store chains demanding lists of ingredients that cannot be present in food items in their stores or restaurants.
(7) Growing use of Individual Quick Freezing (IQF) Technology– frozen food manufacturers are using IQF to improve yield and quality of frozen foods. The IQF method involves transferring the individual food items on a conveyor belt into a blast freezer that quickly freezes the items. With IQF method, every individual piece of food is frozen separately, as opposed to bulk or block freezing. This method boosts yield by 1.5-3% and results in better quality products with high nutritional value and less wastage. Examples of IQF foods include fruits such as blueberries, strawberries and peaches, and vegetables such as corn, peas and green beans. The global IQF vegetable market is expected to reach US$2 billion by 2026.
(8) Use of Robotics and Automation in Meat Processing– growing number of meat processing companies are adopting robotics and automation technology to maximise production efficiency. Robotic systems automate deboning, cutting, butchering, and monitoring processes in meat production. This decreases cycle times and increases throughput. Automation also enables meat processing companies to improve plant conditions, reduce contamination, and makes meat processing safer for workers as well as consumers especially during the current pandemic period.
Robots can help manufacturers in transferring a wide range of meat and sausages from conveyor belts to trays at a rate of up to 240 cycles per minute.
