Powders and bulk solids are part of Informa PLC’s Informa marketing division

This website is operated by one or more companies owned by Informa PLC, and all copyrights belong to them. The registered office of Informa PLC is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

View all safety and compliance »

As 2021 draws to a close, the food and beverage manufacturing industry is still in a highly turbulent environment. Inflation across the economy is accelerating, labor shortages are in short supply, transportation and transportation costs are soaring, and raw materials are becoming more expensive. All these have brought some serious troubles to consumers and suppliers.

Despite these disadvantages, the major players in the industry are planning their way forward, focusing on mitigating some of the risks that may arise in 2022. Methods to overcome these problems vary, but a review of some recent earnings statements and conference calls of some of the top food and beverage companies in the United States reveals three common pain points that the industry will address in the coming year.

According to the Consumer Brands Association's recent analysis of employment data from the US Bureau of Labor Statistics (BLS), as of October 2021, there are more than 130,000 job vacancies in the US consumer packaged goods industry (including food and beverage products). Jeff Freeman, the chief executive of the industry group, said this month that vaccine requirements that will go into effect in some US workplaces in early 2022 may hinder the food and beverage industry’s efforts to attract talent.

Freeman said in a statement: "We are experiencing a supply chain crisis that our industry has never seen before. Labor shortage is our biggest concern." "Although we fully support increasing the vaccination rate, we Hold your breath, the new vaccine requirements will not further erode the necessary labor force and require the Biden government to cooperate with the industry to track progress as we approach the January 4 deadline."

Although vaccination requirements may have played a role in the shortage, various other long-term factors that the industry has struggled with for decades are also at play, including slow growth in wages for production personnel, immigration issues, and a shortage of skilled workers. As such, the labor disruption caused by COVID-19 is unprecedented, and some observers believe that these problems will continue in the coming year.

Image courtesy of Joshua Roberts / Alamy Stock Photo Workers prepare chicken carcasses on a production line at a processing plant in Delaware, USA on March 1, 2013.

On March 1, 2013, workers prepare chicken carcasses on a production line at a processing plant in Delaware, USA.

"The workforce challenges we see are definitely more severe than I remember," Campbell Soup CEO and director Mark A. Krauss said in September. The company pointed out in its fourth quarter 2021 earnings conference call that it expects the availability of workers to "maintain high volatility" in fiscal year 2022.

In discussions with investors last month, Sean Connolly, President and CEO of Conagra Brands, the primary consideration was to attract new employees and strengthen relationships with existing employees. "This is a tight labor market that requires a lot of ingenuity, creativity and hard work to attract and retain employees as much as we can," the executive said. "Therefore, we obviously have been working hard to establish the strongest relationship with our employees so that they feel good at work every day."

The chocolate maker Hershey has stepped up its recruitment efforts in 2021 and has worked hard to identify and respond to the needs of existing employees. "We know that our salary rate is very competitive. We have good benefits, and we often benchmark all of them," Hershey's vice president of investor relations Melissa A. Poole said in the company's third quarter earnings conference call. “But we are also very concerned about the very important softer factors for our employees. These include, especially in the global supply chain challenges, work-life balance, stress management, working time flexibility, and the ability to obtain leave. period."

Strategies for dealing with labor dilemmas vary from company to company—increasing wages, increasing benefits, recruiting bonuses, etc.—but as labor shortages continue to spread throughout the consumer goods industry, the human resources teams of food manufacturers are likely to remain busy in 2022. .

Hostess Brands’s vice president of investor relations, Amit Sharma, said in a conference call with shareholders in early November: “Like our peers, we continue to face a challenging workforce environment that has led to rising overtime costs and increased recruitment and training costs.” "Our team has performed very well in the current workforce environment. We are taking additional measures to alleviate these challenges by investing in our workforce and employment. We expect this to have a long-term positive impact on our cost structure and production capacity."

Hostess's comments on labor conditions indicate that these dilemmas may persist, and it sees investment in employees as a strategy to achieve long-term success. Other food manufacturers may continue to adjust their compensation and benefit plans and other benefits next year.

These issues and other operational challenges (such as strikes) during the pandemic have caused some major food and beverage companies to turn to contract manufacturers to increase or maintain their production capacity in 2021.

According to the third-quarter results of the candy manufacturer, Mondelez International suffered a strike this year at three manufacturing plants and three distribution centers in the United States, resulting in a decrease in output in the third quarter. The company’s chairman and chief executive Dirk Van De Put said in a shareholder conference call on November 2 that the company has signed a contract that “gives us flexibility and releases more capacity to support us In addition, Mondelez stated that it is looking for opportunities to reduce the number of SKUs in its product portfolio in order to improve its service level and efficiency.

As the labor crisis continues, more food and beverage companies may consider establishing joint manufacturing relationships.

Automation has been a part of food and beverage manufacturing for some time, but the impact of the COVID-19 pandemic on labor and operations has prompted several top industry players to accelerate their efforts to implement the technology. Three-fifths of the food industry executives surveyed by Deloitte this year said they are actively looking for opportunities to automate their work in the company.

Snack food manufacturer Utz Brands Inc. is focused on enhancing the automation capabilities of its production facilities in 2021 to reduce costs and increase profit margins. Utz CEO Dylan Lissette said on the earnings call: “We are working hard to develop our productivity plans. These plans this year focus on continuous improvement of the automation of key manufacturing processes. We are still expected to achieve about 2% productivity this year.”. "As we increase investment in projects with higher return on investment, productivity will continue to increase."

Hormel Foods, a producer of spam and other packaged foods, plans to increase the use of automation in 2022 to address some of the continuing challenges faced by all food processors in the United States. "We have always incorporated automation into our annual capital planning process," Mark A. Coffey, vice president of Hormel Supply Chain Group, said at an investor conference in October. "Due to labor uncertainty and tight labor supply, we are increasing investment in automation."

Image courtesy of rapisan satangphon / Alamy Stock Photo Manager inspects and controls automated canned food on conveyor belt in distribution warehouse. Package transportation system concept.

The manager inspects and controls the automated canned food on the conveyor belt of the distribution warehouse. Package transportation system concept.

Tyson Foods announced a new productivity plan last month that aims to use digital technologies such as artificial intelligence and predictive analytics to save $1 billion in operations, supply chain, planning, logistics and warehousing, and the implementation of automation and robotics.

"We will use automation and robotics to automate difficult and higher turnover positions," President and CEO Donnie King explained on the company's 2021 fourth quarter earnings conference call. "For example, we have plenty of opportunities to combine third-party and proprietary technologies to automate the deboning process in our poultry harvesting facilities."

The $48 million expansion project of Tyson's Pine Bluff poultry plant in AR announced in April includes the addition of automated processes to the plant's product packaging line.

The protein product manufacturer also intends to make substantial investments in the next few months to improve its operational capabilities to cope with the expected growth in demand over the next decade. “In terms of capital loans, we expect to invest US$2 billion in FY22, of which a disproportionate share will be focused on new capacity and automation targets,” Jin told shareholders.

Many large food and beverage companies’ recent earnings reports list high transportation costs as one of the challenges they face in 2021 and list this issue as a factor in deciding to increase product prices.

Van De Put of Mondelez pointed out in a conference call this month that “there is a huge gap between trucking capacity and container supply and demand in places such as the United States and the United Kingdom,” causing turbulence in its supply chain.

In fact, according to the American Trucking Association, approximately 80,000 drivers are currently needed to alleviate ongoing supply chain problems and offset labor losses in the trucking industry in the United States.

Robert J. Gamgort, chairman and CEO of beverage manufacturer Keurig Dr Pepper Inc., said at a conference in September this year: "Our bigger challenge, I think it is in line with the industry, which is actually transportation now. "Customer pick-ups and transportation that we do not use our own fleet are facing increasing challenges because pick-ups cannot be carried out as planned, transportation is unreliable, and the cost is unbelievably high."

In response to these difficult times, some companies are expanding their internal truck fleets, while others are turning to third-party companies to meet their transportation needs. Johnsonville, a Wisconsin-based sausage producer, has established a new logistics company, Johnson Transport & Logistics LLC, to provide refrigerated truck transportation services for food and beverage manufacturers. The company plans to add more drivers and increase its truck inventory from 29 refrigerated trucks to 50 by next summer.

Treehouse Foods, a private label food and beverage manufacturer, is using multiple strategies to solve its transportation problems. "We have completed additional freight RFPs. In some cases, we will use the spot market to ensure that we can import and complete products to the right place at the right time. We will further utilize lean and continuous improvement throughout the process. Learning network,” said Steven Oakland, the company’s president and chief executive officer, during a shareholder conference call this month.

In the coming year, labor fluctuations, high transportation costs, and the implementation of automation and other technologies may seriously affect the ideas of executives in the food and beverage industry.

Major food and beverage companies are taking active steps to reduce or alleviate these pressures and improve their overall agility and flexibility. Although no one knows whether the challenges posed by COVID-19 will continue to exist, it is clear that the food and beverage supply chain and food production operations are in a state of constant change as companies strive to meet the needs and guarantees of consumers. Their bottom line.

Powder & Bulk Solids predicts that food and beverage companies will deploy a variety of strategies and measures in 2022 to increase efficiency, build and maintain staff numbers, and meet growing demand.

More information about text format