According to a survey of global food companies conducted by IT provider CSB-System, improved product quality and value are increasing their significance, while “high price segments” are also “gaining importance”.
In total, 56% of food companies included in the survey said that “product leadership” is the basis for success. This can be achieved through quality, freshness and innovations, all of which were identified as a “preferred business strategy”.
“The fusion of cutting-edge technologies and traditional crafts produces a new quality of foodstuffs that are elaborately manufactured, prepared and consumed. At least, this is what the responding decision-makers consider a likely scenario,” CSB-System revealed.
In contrast, only 29% of respondents view their customer relations as the primary success factor, while just one in eight sees cost leadership as a favourable business strategy approach.
Pricing pressure remains
While food companies stressed that “high-price segments” are becoming increasingly important to their businesses, pressure on pricing was also evident in the results of the survey, which was conducted in June and July this year.
Price was identified as the biggest challenge faced by the companies included in the survey. Two out of three decision-makers said they are sensing a “big” or “very big" downward pressure on prices.
Hermann Schalk, head of sales at CSB-System, said that this means food makers should focus on cutting costs in order to deliver high-quality products at competitive price points.
“We still expect the downward pressure on prices to persist so cost reductions are necessary. This must not adversely affect product quality, and it will not necessarily do so. Our experience is that there is plenty of optimization potential in the processes,” he noted.
In particular, Schalk suggested digitalisation can provide a useful tool for food companies working to manage costs and complexity.
“According to the respondents, IT can help to reduce the costs, but what is more important is its contribution to managing the complexity, controlling the operations and improving the responsiveness,” CSB-System noted.
However, the majority of food companies included in the online survey revealed that their IT budget is under 1% of sales. Only one in four companies claimed to spend more than 1% of group revenue on IT.
Nevertheless, CSB-System concluded that food makers view digitalisation as a “critical success factor”.
“The value-adding processes of the food and beverage industry will be digitised further. Decision makers would, therefore, be well advised to manage digitisation actively, to increase product quality and to improve customer experience in order to succeed now and in future."