View of a brewery plant production line.

How to grow your food and beverage business through uncertainty

How to grow your food and beverage business through uncertainty

4 Minute Read

Food and beverage businesses are facing a labour shortage, rising costs, and inventory losses during the post-covid recovery period.

While these challenges are worrisome, especially with the threat of an economic downturn on the horizon, there are practical steps you can take to navigate the current economic headwinds, including:

  • investing in a dynamic pricing plan,
  • investing in your people, processes, and systems,
  • and improve inventory management to reduce costs and increase performance.

While many food and beverage businesses experienced unprecedented growth through the pandemic, others have struggled to remain profitable and competitive. Now business owners are facing supply chain disruptions, labour shortages, increased inflation, and the threat of a recession — and many are wondering how to navigate through uncertainty.

Let’s review the current challenges facing your industry and the steps you can take to overcome obstacles and increase the performance of your business.

What changes has the industry experienced?

The food and beverage industry has experienced many shifts throughout the post-COVID recovery period. Manufacturers, distributors, restaurants, craft breweries, distilleries and dispensaries are all facing new and unique challenges such as:

Inventory management and supply chain disruptions

Freight charges skyrocketed during the COVID-19 pandemic and have only recently started to normalize, leaving distributors stranded with high-value inventory. With competitors now bringing in the same inventory at a lower price, many distributors may not be able to pass down heightened costs to customers without risking losing market share to competition or substitute products — resulting in margin reduction or erosion.

Uncontrolled spending

Many businesses experienced growth in the past three years — and that necessarily came with increased spending to scale operations and bring more products to market. Now businesses are struggling to bring costs under control in a stagnating and costlier environment, and as a recession looms on the horizon.

Labour shortage

Experienced workers left the food and beverage industry during the COVID-19 pandemic and have not returned at the same rate — leaving business owners struggling to find replacements and retain talent.

For many, this new labour shortage has affected production capacity, impacted quality control, and caused delays or disruptions throughout the business. Additionally, the cost to find and retain new talent have compounded cost increases due to inflation.

Inflated costs

A static plan is no longer enough to calculate the costs to produce and deliver products to market. As costs rise due to inflation, many suppliers are increasing prices to continue to make a profit. Businesses that don’t anticipate those changes may wait too long to request a price increase from retailers — and risk selling at a loss.

How businesses can drive growth

While the current food and beverage manufacturing landscape poses many challenges, there are steps you can take to increase performance and drive the growth of your business, such as:

Improve operations

Many companies are reviewing how to improve operations to overcome the current labour shortage. Some are investing in immigration to increase the workforce, but still need an immediate solution to improve productivity.

Review your workflow to identify any changes you can make to increase the productivity of your employees. Consider automating parts of your workflow to streamline processes, reduce time spent on menial tasks, and increase the productivity of your workforce.

Embrace dynamic pricing

Prices change quickly in the food and beverage industry. As inflation increases, the cost of materials to make your products also rises — and you risk a loss of profit if you make you purchasing decisions from a static lens that does not react quickly to changing market conditions.

An advisor can help you create a dynamic pricing strategy for your products. Start by reviewing the bill of materials required for each product line and build a plan for each product model that adapts to current market conditions to give you the right tools to manage your costs. 

Re-assess your infrastructure and business architecture

While your business may have experienced rapid growth over the past three years, the people, tools, and systems that support your success may not have scaled accordingly.

An advisor can help you review both the infrastructure that supports your business — both physically through warehousing, shipping, and store locations, and intellectually through your operations. They can help you determine what you need to support your growth and adapt it for the specific needs of your business.

For example, if one of your products sells at a higher rate, an advisor can help you review what infrastructure you currently have in place to support production and consider what infrastructure you’ll need in the future to create more of that product and deliver it to your customers efficiently.

Improve inventory management

As interest rates continue to rise, so does the cost to store the materials and products you need to run your business. Inventory management is essential in the food and beverage industry as the food products you sell are perishable and need to be shipped quickly and efficiently.

Consider how you can reorganize or reduce the amount of inventory stored in your warehouse. Inventory reorganization or reduction enable your business to save money on storage and handling expenses as well as decrease the risk of product spoilage. Additionally, improving your inventory management can free up your cash flow to pay off debt or invest in new initiatives to support the growth of your business.

Analyze your purchasing patterns, review the flow of inventory, and create long-term projections to explore where you can improve your inventory management — and by extent, your margins.

Inventory Management Health Check

Take our Inventory Management Health Check to see how your organization measures up against the industry’s best practices.

Take the next steps to grow your business

While today’s business landscape poses unique challenges for those in the food and beverage industry, you can continue to optimize the performance of your business by creating a dynamic pricing place to stay on top of current market conditions, re-assessing your business infrastructure to support the growth of your operations, and reviewing your inventory management to explore where you can save costs.

Contact us

If you need support to improve the performance of your business, contact a member of MNP’s Consulting Services team. We can help provide the insight you need to help you grow your business through uncertainty towards success.


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