Frost & Sullivan's findings can serve as guidance for manufacturers, suppliers, distributors, food-service operators, product developers, and investors interested in the future potential and performance of food and beverage ingredients.
According to the firm's findings, the food service industry has been hit the hardest, as more people opt to dine in. While shopping at the grocery store, Frost & Sullivan believes that more consumers will resort to clipping coupons and trade down towards choosing store or private label brands, as nationally branded food items will be considered a less attractive option. As such, premium, gourmet, and organic foods are expected to witness sales declines.
"Overall, the U.S. food industry has been one of the best industry segments to weather the economic downturn," explains Shomik Majumdar, Vice President Consulting at Frost & Sullivan. "While all industry segments have been affected by the economic downturn, food processing has only lost 5.1 percent of its value in one year, compared to the S&P 500, which is down 36.5 percent."
Some of the catalysts to the turnaround will be new product introductions with a greater push towards health and wellness, along with increased functional food and beverage sales.
Frost & Sullivan also finds that an investment in marketing strategies focused on core product offerings will likely help with the turnaround. In addition, food companies need to aggressively seek consumer feedback to match specific needs, and establish partnerships with other suppliers in order to create complementary synergies.
