By Rob Starr, Big4.com Content Manager
WeiserMazars LLP, recently released its third annual U.S. Food & Beverage Industry Study. New customers, improving sales performance and new products are expected to boost sales an average of 18% in 2015. This compares with a 13% increase last year. Louis J. Biscotti, Partner & National Director of WeiserMazars’ Food & Beverage Practice, answered some questions via email for Big4.com.
1. Can you speak about the new customers cited as an influence of growth in the annual U.S. Food & Beverage Industry Study?
New customers were the single largest factor cited as influencing sales growth in both large companies (45% of respondents) and small companies (29%). It’s interesting because companies are focusing sales strategies on getting new customers (organic growth) rather than by acquisition (under 10% for all companies). This is clearly a less expensive way to grow, and with companies beginning to focus on customer profitability more than in the past, new customer acquisition has to be a top priority.
2. How did the focus on sales performance improvements and new products influence the findings?
Improved performance was rated as the second highest factor influencing sales growth for both large and small companies. Companies are learning that 20% of their customers produce 80% of their profits, 20% of their products produce 80% of their profits and 20% of their salesforce produces 80% of the sales. New products were only cited as accounting for 12% of increased sales by large companies and 9% by small companies. New product introductions continue to be troublesome for most companies, which is why we’re seeing this emphasis on improved performance.
3. What can you say about the food safety, traceability and quality assurance findings in the report?
Food safety, traceability and quality assurance (including government regulations) were clearly the leading external concerns for all companies. The recent release by Congress of the final FSMA regulations and the proposed labeling laws, which will be the focus of our CEO Forum on October 22, 2015 in New York, has heightened everyone’s awareness of this issue. Companies have to take appropriate actions now. The risks of non-compliance are severe. This is not a time to be reactive.
4. What’s important about the trend toward locally grown food?
This is truly one of the startling results in the survey. Organic has been the hot trend for the recent past but the new “organic” is “locally grown,” with consumers showing a preference for locally grown over organic. Experts are pointing out that this trend will continue and have a significant impact in the marketplace.
5. What are the other key takeaways?
Process improvement activities rated high as companies recognize efficiency will reduce costs. All too often, companies attempt to reduce overhead expenses when the emphasis should be on margins and cost of goods. That’s where it’s all happening and where the pencil should be sharpened. Also, succession planning is big. Not only for the CEO, but for every key position in a company.
6. What trends are developing on the horizon?
Healthy and nutritious, locally grown, organic, ethnic and private label will continue to dominate as growth trends. Snack foods are growing. Alternative selling channels are disrupting the status quo. The center of the store is dying as are processed foods. Fresh, convenient, and quick are the buzz words we’ll be hearing moving forward.