Leading players from the food and beverage sector have realised that the modern market is continuously changing and this change is characterised by certain elements like the global economic landscape, consumer expectation and the earth itself. The business strategies implemented by B&F companies are deeply influenced by some of the hard-hitting issues that currently exist in the world. Some of the longstanding issues such as food insecurity, poverty, resource depletion and water scarcity are being more complicated with by climate change, changing lifestyle and population outpour.
More than 1 billion people are reportedly engaged in agriculture across the globe, a large portion of which do not have a secure access to sufficient quantity of affordable and nutritious food. Therefore, it has become now become crucial more than ever before for consumers and investor to choose companies that will adopt a system that emphasises suitability. Long-term investors now expected companies to disclose and manage environmental, social and governance (ESG) and environmental impacts in order to formulate an effective corporate policy. In addition, investors are showing a specific interest in how the F&B industry is tackling the challenges in managing the agricultural supply chain.
While extreme weather, drought, land disputes, poor working conditions continue to pose severe threats to the business, factors such as inconsistent in the supply of ingredients, legal sanctions, lack of quality and price volatility add more to the concerns. These business risks not only affect a company’s bottom lines but can lead to lower returns and stranded assets in investor portfolios. In the years to come, the importance of supply chain transparency and sustainable sourcing strategies is likely to be more in the food and beverage sector.
Investors are slowly beginning to realise and evaluate, how many of these challenges can be difficult to respond from a company’s point of view as each of them are faced with different types of the risks and hurdles. The focus remains on increasing the productivity and improving farmer livelihoods with the supply of a standard quality commodity. The future F&B sector will need a greater contribution from investors, brands and even from consumers. In order to address risks in an effective manner and pave way for further innovation, collaboration is of utmost importance. Hence, by active participation in multi-stakeholder associations, uniformly sharing information and encouraging bold action it possible to create a sustainable structure for food production.