Food Industry 2020 and Beyond

Blueberry is not forecasting next year.

The compounding speed of new value driving more new value means 2019 happened two years ago.

Next year’s trends are for transactional conversations with customers, but that’s about it.

Far from a complete list and unable to go deeper in email format, we share more meaningful information below.

The cost to food manufacturers ignoring the implications of this and other information and remaining in a fixed state is conservatively $49-50B in lost sales per year between now and 2021.

1. Rise in costs routinely cited in 2017/2018 quarterlies as reasons for underperformance should not have caught executives by surprise.

• Basic economics say that when unemployment is on the way down, it’s time to factor rising labor costs into financials and mitigate the effects sooner.
• Shortages of truck drivers, volatile fuel prices and regulatory requirements have increased distribution costs since 2013. Unclear why impacts have not been effectively forecasted or kept in check.
• Billions in investment dollars are pouring into food delivery companies servicing supermarkets, restaurants and everyone else. Rising costs associated with rapid fulfillment should not be a new revelation and will continue.

• Private label sales surge to 25% of all food purchases over the next two years. 
• Kroger Express, 2,500 new Aldi stores, Lidl not backing down and Amazon’s next shocking acquisition (in the works) means a) traffic cannibalized in usual sectors, and b) novelty moving to permanent adoption at a faster pace.
• Dollar stores in the US will grow from 29,000 to over 34,000 units by 2020 at grocery prices 20-40% lower than traditional grocers. Enough said.

3. Takeout is driving foodservice but at the expense of profits from add-ons like alcohol and desserts via in-house dining.

• Voice technology is a winner for restaurants but killing the effects of manufacturer advertising that optimize consumer decision loops.
• An on-demand food economy impacts use of selling resources that must be factored into plans now. 
• Operator remodeling to entice consumers traffic is a risk with far reaching impacts. McDonald’s franchisees say that remodeling’s failure to increase traffic could result in 40% unable to qualify for lease renewals.

4. The ways consumers live, work and play are changing everything.

• The highest forms of entrepreneurship the industry has ever seen is being supported by incubation platforms, food halls, crowd funding and private equity.
• With the global population online over the next three years, early stage food companies can scale overnight with a click of a button--without slotting fees, promo funds and billbacks.
• Behaviors, personal values and ethics aligned with rural, urban and suburban living is the new lens to understanding consumers and strategizing accordingly. 
• Never underestimate the lateral and twice-removed effects of global warming reports, Netflix, We Work, Uber, wearable technology, alternative ingredients, and low trust in doctors in shaping consumer food choices.
• Blueberry alliances and affiliations point to areas where the next waves of food industry innovation are grounded and underway.

Peter Drucker said that defining the Meaningful Outside of the organization is the CEO’s first task.

Second is to think through what Outside information is needed for the organization.

Third is getting it in useable form.

CEOs cannot discount, limit or delegate these essential tasks.

2018 marks the end of the food industry as we know it.

Acceleration is speeding up and 2019 is already well behind us.

It’s on to 2020 and beyond, starting now.