Food Business Rejuvenation During COVID-19: Opportunity to Innovate
May 28, 2020
Food manufacturers are financially reporting record quarters during the pandemic, but this success does not necessarily translate to a continuance as states and other countries reopen for business. Consumers are facing unusual challenges during the current pandemic as food manufacturers scramble to maintain fulfilling supply chain demand.
What does this pandemic mean for manufacturers, consumers, and future innovation? In the financial crisis of 2009, we observed many companies who positioned themselves for near-term survival and did little future planning while dealing with the crisis. However, now is a good time for both entrepreneurs and established companies to plan how to position themselves once COVID-19 has subsided.
Time to Rethink Business Strategies
Large companies have learned a Business Continuity Plan (BCP) is an exceptional set of documents when faced with a crisis of any sort. Business Recovery Plans are a subset of the documents in a BCP, and every company, large and small, should be presently reviewing these documents before they are allowed to reopen. If written before they are needed, these plans are much like food safety recall plans that contain a detailed game plan. Mock crisis training is also invaluable when a problem arises.
Food entrepreneurs and probably established food companies should be rethinking their business strategies. The world’s culture has changed, and many business strategies written pre-pandemic may have less impact in the new dynamic situations we all will face as business rejuvenation occurs. It’s early yet to predict how consumers will react to a post-pandemic future. We are only a week or two into some businesses reopening, but indications are that consumers are still concerned about safety in many instances, and the economy may be slow to recover.
Ingenuity Running High
Human ingenuity has been running very high during this pandemic. We’ve seen entrepreneurs and companies innovate by developing COVID-19 test kits, converting manufacturing capability to produce ventilators and personal protective equipment, and working toward a vaccine. The food industry has pivoted their supply chain from providing massive quantities to food service to providing for retail outlets. The pandemic has urged food companies to protect their employees and provide social distancing like never before, and yet maintain process efficiencies to meet consumer demand. The consequences of not taking these actions are profound.
Start-up companies should be studying, and in some cases, redeveloping their business and processing plans. Regulatory agencies have been lenient during this crisis to mitigate further consumer panic and to keep everyone fed, but after this passes, agencies will resume close examination to prevent this from happening again. More regulations and a strengthening of the Food Safety Modernization Act are likely.
Personnel Safety the Best Way to Profit
Food processing manufacturing steps should be reviewed now by all food manufacturers. Whereas efficiency used to be the way to economically profit in manufacturing, personnel safety will move to the forefront. Businesses will need to improve efficiency with less people, utilize simpler methods, and invest wisely as margins tighten.
Food manufacturers are content with sales volumes during the pandemic, but to rejuvenate to a new normal will test all industries, not just food manufacturers. Innovation will have many faces as a global culture adapts to a new future and puts the problems of the past behind them.
Disruption Beneficial to Food Manufacturers?
We have experienced a major disruption that could be beneficial to food manufacturers. Not offering innovative new products and processes would be a mistake as people will not be returning to familiarity, and opportunities will be missed. As industry leaders, we must innovate before fully coming out of this pandemic. Company leaders must review their growth plans with a perspective of what should we do now and by what means can we do it. Those who make these moves will be the growth companies in the near future because many companies will not boldly move forward.
Both entrepreneurs and established companies must use every business tool within their means to innovate and grow businesses post-pandemic. It will not be easy, and a mistake would be to not understand the human traits of judgement, decision-making and behavior. Customers will want, and demand, integrated solutions to complex needs and problems. A successful strategy to cope with this situation is to proactively engage different partners that can provide fresh capabilities and competencies to fuel your innovation program.
Will Financing Be Available for Start-Ups?
Will start-up companies be able to find financing after we take the world off pause? AgTech and FoodTech are key elements of interest to society. Even in the worst economic downturns, people must eat, and crops will be planted to meet that need. We expect these sectors to be of interest to investors because at the beginning of the pandemic, there was no indication of interest waning. The economy was excellent, and investments in this sector were seeing returns.
The coronavirus has globally impacted nearly all industries, but recovery from this short-term recession will not necessarily follow historical precedence of other recessions. In fact, the prevalence of globalization and digitization will influence the recovery rate of this recession in ways never before witnessed. The economy will come back, and investors will place their bets. The food industry will be redesigned after this pandemic. Rejuvenation will occur because companies must innovate and build resilience into their business planning processes. Change was rapidly occurring pre-pandemic, and it’s doubtful the speed of change will falter following it.
Focus on Rejuvenation
Which areas should start-ups investigate as they plan their courses for rejuvenation?
- In general, foods as medicine, specifically focused on maintaining health, boosting immunity, and offering stress relief, will have consumer interest following the pandemic.
- The pandemic also revealed the food industry has several susceptible weak points. Poor crisis planning and a lack of supply chain mapping exposed challenges in shifting from food service to retail. This ultimately led to the waste of crops and products because they could not be mobilized in the supply chain.
- Personnel safety will be analyzed and addressed extensively after the pandemic. Inventive means to accomplish tasks while mobilizing personnel to sustain social distancing will be attractive to investors. Couple this with improving process efficiencies to maintain cost-effective means to feed consumers.
- Decentralized food distribution and the rise in ecommerce can be further addressed by the industry, especially start-ups.
One cautionary note to entrepreneurs—consumer’s attitudes about want vs. need have changed during the pandemic. This may influence where investors allocate money and what consumers purchase. Consumers will cautiously spend disposable income in the future after millions experienced staff furloughs or reductions. New products will need to address this shift.
NCFIL is Ready to Help
The North Carolina Food Innovation Lab offers services to assist both start-up and established food companies move toward the future. A plant-based facility, we’re staffed with industry-experienced professionals familiar with developing deep knowledge in market sectors and design thinking to advance new business strategies and products. Our cGMP Pilot Plant offers companies interested in plant-based foods a venue to produce products that can be test marketed.
For more information, visit www.NCFoodInnovationLab.org.