The Industry In The Eyes Of Leaders
Friday, September 22nd, 2017 | 526 Views
The outlook is a common feature at the start of the year, but what exactly do the industry leaders have to say of 2016? Apfi offers a comprehensive outlook by leaders from the different sectors of the industry on the upcoming trends and challenges, and the buzz words for the year seem to be “food safety”, “traceability”, “sustainability”, “healthy”, and “natural”. By Michelle Cheong
Despite the speculation and apprehension regarding the impact of China’s economic slowdown, intra-Asian trade is growing, according to Mr Bracher. Together with the rising middle class in Asia to drive volume in their respective food industries, Asia’s food industry is expected to grow. In fact, according to a report by Economist Intelligence Unit, food consumption is expected to rise in every country in Asia, with the exception of Japan, a mature market.
There will therefore be a corresponding increase in food safety awareness and consequently food standards certification, according to Mr Chow. Predicting China to drive growth in analytical technology use for food, he also projects a development in new food testing methods and the rationalisation of old ones.
Sophisticated Technologies To Ensure Food Safety
In order to comply with more stringent food safety regulations, there will be a demand for more sensitive and productive analytical solutions, said Mr Chow. These include portable testing instruments, technologies that increase efficiency in the separation of components during food sample preparations, and technologies with food profiling capabilities to ‘fingerprint’ authentic foods and prevent food fraud.
In addition to these, Mr Chakornsiri pointed out that in demand too will be product inspection systems that can detect a range of contaminants such as x-ray inspection systems. These would enable detection of not only metal fragments, but also glass, stone, calcified bone, dense plastics, and rubber.
He also sees an expected in demand for integrated systems—those that can perform quality checks as well as contaminant detection. These quality checks include inspecting products for mass, fill level, correct placement within the package and missing components, and reject products with anomalies. This system would simplify the production line significantly and saves on valuable production floor space, on top of providing a better return on investment.
With the globalised nature of the food supply chain, food safety is fast becoming a key priority especially with the outbreak of foodborne diseases and recent food safety scares, shared Mr Chow. However, ensuring safe foods can prove difficult at times, because food sources within the food supply chain are becoming more complex and varied, and manufacturers are required to cater to an ever growing range of food commodities, contaminants and allergens.
On top of this, manufacturers also have to cater to the different regional and international food safety standards in China, Asia, US and Europe, for whichever markets they are involved in, said Mr Chakornsiri.
Manufacturers are under further pressure from the rise of social media in the world today, which compresses the timescales when a food business is responding to a food safety crisis, according to Mr Bracher. Food brands are therefore at risk of losing reputation and trust in the eyes of consumers, unless they have the capability to react quickly.
Warehouse & Storage
Automation Gaining Momentum
With the rise in food consumption and subsequently higher volumes of products going in and out of the warehouse, as well as the increasingly tight and expensive labour market, automation will be a justifiable and preferred alternative, according to Mr Miles. This would particularly include automation for case picking operations, such as those with automated storage of cases, robotic loading of pallets, or retrieval on demand, which would support zero-defect logistics processes and enable new levels of productivity.
Automation will also see more incorporation in the warehouse environment because of its ability to provide food and beverage manufacturers with traceability, as well as an assurance of food safety, shared Mr Couto. Both food safety and traceability are high priorities in the food and beverage industry, and manufacturers are increasingly coming under pressure to conduct thorough warehouse audits; automated warehousing technologies would be able to facilitate fast product recall when required.
Automation will also be able to alleviate a prevailing logistics concern in the industry—the First Expired, First Out (FEFO) process. Some food materials have a short shelflife, and automated warehousing solutions can improve the accuracy of the FEFO process, eliminating human errors and reducing losses from expired food, said Mr Couto.
Because of these advantages, over the last five years, more food and beverage manufacturers have made the switch from fully manual warehouse operations to partial warehouse automation, or some even to fully automated food warehouses.
Flexible Logistics Infrastructure And Evolving Warehouses
Mr Miles also pointed out that the rapidly changing consumer demands for the food and beverage industry would lead to stock keeping unit (SKU) proliferation, smaller order sizes and increased service level expectations. These would therefore require agile and flexible logistics infrastructure.
The e-commerce sector is set to boom, as online sales in Asia Pacific are expected to reach US$1.3 trillion by 2019, growing at a compound annual growth rate of 18.5 percent over the next five years. To cater to the rising online food shopping market, warehouses would need to cater to Just-In- Time deliveries and provide immediate inventory updates, said Mr Couto.
On top of these, other types of warehouses will also be needed. Changes to the Asian diet indicate a move towards more convenient and frozen foods, such as frozen pizza and poultry, which would therefore require manufacturers to make adjustments to their warehousing management needs and incorporate deep freeze storage warehouses. With rising emphasis placed on dietary considerations such as gluten-free or allergen-free, temperature-controlled warehouses will also continue to be in demand.
Automation would no doubt improve warehouse management, but as more sophisticated storage systems are introduced to the market, it is harder to find staff with the required skill sets to utilise these efficiently, according to Mr Miles.
Also, with the increasing emphasis on food safety and traceability, manufacturers face greater challenges in terms of meeting demands for product traceability, food storage, and shorter response times, said Mr Couto.
Processing & Packaging
Asia is likely to see an increased interest in automation, including robotics, in the mid-range segment, said Mr von Glinowiecki. In fact, the food and beverage industry is already seeing increasing levels of automation and robots—the International Federation of Robots reports that of the 178,000 industrial robots sold worldwide in 2013, 6,200 were destined for the food and beverage industry.
With automation, manufacturers can meet growing production demands without having to increase labour costs. It also allows them to be flexible as they can adapt quickly to recipe changeovers, as well as enables them to increase stock keeping units, said Mr Newell.
Further, automation enables manufacturers to ‘go green’, a concept that is growing in importance according to Mr Newell. This is as green manufacturing allows manufacturers to realise significant cost savings in the operation of their plants, creating profitable growth in harmony with environmental sustainability.
Other than automation and green manufacturing, manufacturers are increasingly looking for solutions to optimise their processes. For example, in that of light duty conveying systems, manufacturers are looking more toward engineered belt cleaning devices, according to Mr Loh. These devices optimise the maintenance processes on the conveyor belts and reduce the downtime that needs to be spent cleaning the belts.
In addition to reducing the chance of bacterial, allergen or cross contamination thereby ensuring food safety, manufacturers are also able to increase product throughput and belt life, and achieve increased operational efficiency with optimised maintenance processes. Furthermore, decreasing waste material and reducing the downtime required for cleaning will also lead to significant cost savings, added Mr Loh.
There is also a clear trend towards the need for complete line solutions, shared Mr von Glinowiecki. Being able to purchase a complete processing and packaging line from one manufacturer brings a great convenience benefit to customers, he said. This is as it gives them access to a ‘one stop shop’ for servicing the entire line, and also allows for users to operate the entire line on a singular control platform; this reduces the need for further training and minimises downtime.
Driving Asia’s growth is the rising incomes in the region, and a shift in consumer preferences towards process, packaged and value-added food and drink products, according to a recent report by PricewaterhouseCoopers. Of these, the industries showing the strongest potential in order of growth rates are: bakery, dairy, noodles, sweet and savoury snacks and baby food, shared Mr von Glinowiecki.
With regard to packaging itself, there is an increasing demand for different pack styles and formats, Mr von Glinowiecki said. This has resulted from consumer trends toward convenience, smaller sizes, single-portions and the upcoming and rising e-commerce activity.
According to Mr Watson, as the popularity of these products increase, so would the requirement for effective coding and marking solutions become increasingly necessary, especially those relating to track and trace, and labelling for ingredients and allergens. These would then help manufacturers protect their brands from counterfeiting and also secure the trust of their distribution channels.
Ways to ensure this are through overt coding—clear, visible and permanent codes that cannot be removed by unauthorised channels, and covert coding—codes created using invisible fluorescing inks that are concealed from consumers but visible to supply chain partners with specialised readers.
According to Mr von Glinowiecki, the slowdown in the Chinese market will likely slightly hinder the overall turnaround of the food industry in the region, as will the current state of the euro currency and unstable markets (e.g. Russia and Latin America) that might present more opportunities for and encourage more involvement by European manufacturers.
In Mr Newell’s opinion, the Association of Southeast Asian Nations (ASEAN) Free Trade Area, though meant to encourage intra-ASEAN trade, might make it a challenge for some countries to remain competitive against others that are stronger in certain food sectors. As a result, it may cause a slowdown for some countries, while benefiting others as they invest in new technology.
Also, traceability is key to ensuring food safety, there is thus a continual demand for high quality coding and marking solutions as the ability to track, trace and authenticate food products is of essence, said Mr Watson. However, as the requirements for traceability increase, with it comes a vast amount of data to be collected, stored and correctly assimilated—this can pose a challenge for manufacturers and their IT systems. Manufacturers would therefore require both sophisticated coding and making systems, as well as software packages to ensure they have the tools necessary to fully comply with legislation and satisfy consumer demands in the region.
Like with all segments of the industry, the growing middle class population of Asia is due to also benefit the beverage segments of the industry by driving up demands for beverage products. Developing countries in particular have a larger margin for economic and market growth potential, enabling brands greater opportunities to strengthen their product portfolio and increase revenue, noted Mr Salaerts. Also, emphasis by consumers will no longer be solely on cost, but also on food safety and quality, he added.
Regarding beverage packaging, Mr Salaerts also expects to see an increase in demand for unique and personalised packaging such as those that are attractive and engaging to capture consumers’ attention on store shelves. With the era of social media, the ripple effect of one consumer’s experience can be shared through the internet, positively influencing product marketing as well as brand awareness. This is precisely what Mintel has described as a ‘Good Enough to Tweet’ trend that will be seen in 2016, he said.
With regard to the material used for bottled packaging, Mr Schmitt expects to see a continued trend toward PET, away from returnable glass. Also, integrated machines such as those that serve for stretchblowing, filling and capping in one would continue to remain popular. Further, ‘new’ and economical labelling methods such as direct digital printing on bottles for labels will be the preferred alternative to conventional oriented polypropylene (OPP) films.
According to Mr Salaerts, food safety and sustainability would be among the major concerns and challenges for beverage manufacturers. Solutions would need to be found and adopted to ensure 100 percent and infinitely recyclable, but safe, materials to be used in beverages, as well as solutions to cut energy usage and carbon dioxide emissions in logistics and refrigeration. Meanwhile, cutting costs on raw materials and looking for ways to provide even lighter weight bottles would also be another challenge for beverage manufacturers, shared Mr Schmitt.
For ingredients, the general consensus among the contributors is that consumers will trend towards natural and healthy products. According to Mr Philippsen, the growing prevalence of non-communicable diseases such as diabetes, cardiovascular diseases and obesity is driving consumers to search for products that support healthy nutrition and weight management. Ms Low believes that there is good potential for categories whose relevance and benefit are increasing for consumers today. These include products catering to infant nutrition, medical food, functional foods, as well as dietary supplements.
On the chocolate side, Mr Boone expects 2016 to be another challenging year for the chocolate and cocoa industry around the world, including Asia. He reasons that the historically low combined cocoa ratio—triggered by grinding over-capacity— and low demand for cocoa products projects this.
Going In Depth
'Natural’ has already been a popular trend in 2015, but this is likely to continue through 2016. According to Mr Philippsen, a consumer research study revealed consumers are likely to shift to all natural food, as these are perceived as healthier by Indonesian and Thai respondents (94 and 91 percent respectively), and majority (70-80 percent) actively look for natural products when making food purchase decisions.
Also, fresh foods are deemed healthier by nearly nine in 10 adults, and 78 percent of consumers are making strong efforts to eat more fresh rather than processed foods.
Consumers are also looking for foods that are ‘clean’, said Mr Boot. In fact, particularly with label, he observes a rise in clean-label claims across multiple categories not only in the other parts of the world, but also in Asia.
According to reports from Innova Market Insights, 2013 saw nearly 25 percent of all new products launched around the world positioned with a clean label. Southeast Asia in particular also has high levels of clean label penetration, at over 20 percent in Thailand, Malaysia, the Philippines and Singapore, said Mr Boot.
Clean label products will likely continue to be on consumer radars come 2016 said Mr Kokke, and food manufacturers will have to respond to increasing consumer demand for natural food by removing artificial ingredients or reformulating their product recipes to include more familiar, less processed ingredients that consumers can identify with.
Also, Mr Kokke expects to see an adaptation of products to be easier and more convenient to consume to suit the increasingly fast-paced lifestyles of consumers, yet still fresh, authentic, nourishing and tasty.
Besides the aforementioned trends, consumers will also veer towards reasonable snacking, shared Mr Philippsen, as snacking can play an important role in a nutritionally balanced and healthy diet. According to him, almost half of consumers are looking for snacks that go beyond basic nutrition, and food manufacturers can play a significant role in this area by offering healthier options of convenient snack foods, tapping on functional food ingredients.
These snacks could also be those that help with weight management or provide health benefits such as improving the digestive system. Agreeing with this is Mr Boot, who shared that consumers around the world are not getting enough fibre in their diets; this therefore represents a major opportunity for food and beverage manufacturers to respond by providing great-tasting fibre-fortified products.
Consumers are also looking for ingredients that are able to deliver healthy whole food nutrition—products that are healthier, yet taste and give the same mouthfeel or sensory experience. This includes products that are equally sweet but provide half the amount of calories, or taste the same yet has half the amount of fat, shared Mr Philippsen. Consumers are however still open to and do look for food and drink products with novel tastes and textures, said Mr Kokke.
Besides products with innovative delivery formats for better sensorial experiences, or those that increase bioavailability and efficacy, Ms Low also expects to see consumers trending towards products that target specific groups of consumers, for example gummies enriched with health ingredients for elderly consumers. Food and beverage manufacturers would therefore be able to leverage upon this trend with group-specifi c products.
Asia is a complex and highly diversified region where each local market has its own characteristics and challenges, said Mr Boot. Meeting these different needs and expectations of consumers in different countries in Asia would be a challenge for manufacturers in 2016, said Mr Kokke.
Balancing texture and taste will also continue to be a challenge, and manufacturers need continually develop new and unexpected product experiences to ensure their brand stands out from the crowd, he adds. However, cost optimisation will remain a key aspect in driving recipe formulation.
Also, consumers are becoming increasingly educated and sophisticated with regards to preventative health, and are more aware of the role that food plays in maintaining their health. Manufacturers would therefore have to accommodate to this increasing base of information-savvy consumers that are looking for not only healthy solutions, but high-efficacy choices that are convenient and can fit into their lifestyles, said Ms Low.
Traceability is also becoming an increasingly important component for monitoring compliance with quality, environmental and other product and process attributes, said Mr Boone. With food production and distribution systems becoming more interdependent, integrated, and globalised, it is essential that all parties along the supply chain, such as even small-scale cocoa farmers, have the resources to comply with increasingly strict food safety standards, particularly traceability requirements.
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