Supply-chain resilience: Overview
- Consumers increasingly prioritise dependable brands amid food system uncertainty
- Product reformulations and supply disruptions are driving consumer caution
- Companies are diversifying suppliers and nearshoring operations against disruptions
- North American businesses are adapting supply chains following COVID-19
- Greater resilience strategies aim to maintain supply and affordability
In the food industry today, instability comes from many directions.
Food companies are facing fluctuating commodity prices, unstable supply chains due to geopolitical conflict, and a shifting regulatory landscape that continues to exert pressure on ingredients.
For consumers, a steady fear of empty shelves, surprise reformulations, and spiking costs makes buying food a daily source of uncertainty.
According to the Global Consumer Trends 2027 report from Euromonitor International, both consumers and companies are becoming increasingly aware of their vulnerability to shocks in the food system, and are taking measures to protect themselves.
Consumers want brands to be dependable
Dependability is a quality that consumers are increasingly looking for from brands, according to Euromonitor’s report, which explores trends affecting FMCG companies including food.
Being dependable can be a win for brands, the report suggests. By contrast, one misstep, such as a stockout or unexpected reformulation, can ruin this trust.
Consumers want to know about the products they are buying – around 56% of consumers research products before purchase. On the flip side, they often avoid switching products once their trust has been earned, as switching can come with a “mental load”.
Consumers are not only being impacted by the availability of products, but alterations to them, explains Alison Angus, head of innovation at Euromonitor International.
For example, products might not taste the same due to reformulation; they might be a different size due to shrinkflation; or they might have higher prices due to pressures on the supply chain.
At the same time, transparency is important for consumers, stresses Angus. “If you really have to reformulate, be upfront about it,” she advises. Consumers are more likely to forgive reformulation if it is done in this way.
Food companies are aiming to reduce exposure to shocks
Like consumers, businesses are aiming to reduce their exposure to supply-chain shocks.
Many are diversifying, reducing dependence on any single source. According to Euromonitor, around 36% of professionals said that their company invested in supply chain diversification in response to instability.
Companies are also nearshoring, the practice of moving business operations closer to home.
This, explains Angus, shields them from the impacts of far-flung events, such as geopolitical conflict. Localised supply also protects companies from tariffs, as well as the closures of trade chokepoints like the Strait of Hormuz.
Sometimes this also means reformulating products to include more local ingredients.
Companies’ efforts to protect themselves vary by region. In North America, many have learned from COVID-19 how to restructure supply chains in order to navigate US tariffs, ensuring continuity of supply through diversified suppliers.
Companies still face affordability concerns and lack of trust from consumers themselves, of course.
In Latin America, only 20% of companies have enhanced supply chain risk monitoring, which is the lowest in any region. This is down in part to infrastructure, according to Euromonitor; investment in fixed capital is low and declining.
However, companies are aiming to respond to consumer concerns around prices. About 63% of professionals there report that their companies aim to cut costs through operational efficiency, and 55% have renegotiated supplier or partner contracts.
In Africa and the Middle East, businesses are quickly diversifying supply, aiming to prioritise dependability and target a young, digitally connected consumer base that demands such things.
The world is an increasingly chaotic place, and this is affecting food. Both companies and consumers are increasingly wise to the risks and disruptions resulting from this, and are taking steps to guard against it.