The state of fast-moving consumer goods (FMCG) has never been more frantic, with the food and beverage industry feeling this most acutely. The industry landscape sits in a consistent state of change driving an increasing number of varied and complex supply chain hurdles for retailers and manufacturers to navigate at an ever-increasing speed. Businesses are constantly having to evolve and adapt by making smarter, faster and more accurate decisions.  

The food and beverage industry is uniquely affected by unpredictable factors such as climate change. A poor crop harvest or geopolitical crisis in a previously reliable region can throw food supply chains into chaos, sending prices higher and leaving manufacturers scrambling to source ingredients elsewhere. While food price inflation for certain products is set to slow through 2024 consumers will still feel the pinch while global instability and labor shortages continue to squeeze margins. 

This increasingly unstable environment highlights the crucial need across the food and beverage space for businesses to ensure they are in the optimal position to tackle each and every supply chain challenge head on. 

Take 5 minutes to explore this three-part article and learn more about the current industry obstacles, as well as how to set your business up to successfully traverse not only the immediate challenges but to future-proof your supply chain capabilities for the longer-term too.  
 

Part 1 - Diminishing raw ingredients, rising costs and continued uncertainty:
Current key issues facing the industry
 

Supply chain management is one of the most demanding challenges facing food and beverage businesses right now. Why? Supply chain woes are being driven by a number of factors including inflation, geopolitical tensions, raw material shortages that are being worsened by the impacts of climate change, the uncertainty of being in a key election year not just for the US but globally, and many more. This all paints a not only bleak but also fairly abstract picture as to how exactly supply chains are being disrupted. So, here are some current real-world challenges impacting food and beverage supply chains right now. 
 

Olive oil goes down the pan 

The summer of 2023 was one of the hottest on record worldwide. With Europe seeing temperatures soar to over 40ºC/104ºF with droughts and even wildfires, the largest olive oil producers, Italy, Greece and Spain saw damaged harvests that the International Olive Council predicts will contribute to a 2.4m ton fall in global olive oil production. The damaged harvests lead to olive oil prices skyrocketing globally with shortages in some regions and the biggest olive oil producer shipping in raw materials from South America to try and cope with the deficit.  

To make matters worse, the sector is also battling counterfeit products. Where genuine producers have been struggling to meet market demand, the Mediterranean regions have seen the “agri mafia” illegally marketing fake olive oil as a genuine product. According to Europol, consumer-grade olive oil is being diluted with lower-grade alternatives which is both a public health risk and a risk to consumer trust that brands and retailers need to uphold.  

The cost of cocoa has gone loco 

The price of cocoa has skyrocketed since 2022, due to droughts in West Africa which grows 80% of the world’s cocoa supply. A record drop in cocoa production has caused major cost increases and supply chain headaches with production predicted to fall short of demand by nearly 375,000 tons in 2024.  

In addition, there has been mounting pressure from consumers and ethical brands such as Dutch chocolate brand Tony’s Chocolonely to improve supply chain transparency and eradicate exploitation within chocolate production. 

Rerouting and re-rooting for coffee 

According to Food & Beverage Insider, coffee drinking is on the rise with two-thirds of Americans drinking coffee every day. Already facing backlash from consumers over both the environmental impact of coffee farming because of deforestation, and from the use of child labor and other exploitative practices found in some coffee supply chains driving businesses’ need to bolster their traceability and supply chain transparency. Coffee is yet another crop that’s being impacted by climate change, with shortages putting everyone’s daily cup of Joe on the line and causing supply chain chaos across the sector. Euronews shared that research found the areas where coffee can be grown could be cut by 50% with rising temperatures, meaning a potential end to coffee-growing regions as we know them.  

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