European food and beverage makers face some choppy economic waters in 2023, with energy market dynamics likely to remain just as challenging as in 2022. Accelerating price pressures have propelled inflation, we are seeing early signs of dropping demand, and higher input costs from energy to eggs are placing producer margins under pressure.
Despite this difficult environment, food science expert Karim-Franck Khinouche – the founder and chief executive of France-based food safety and quality scale-up Novolyze – believes that food and beverage makers will continue to invest in strengthening their food safety and traceability systems through increased automation and digitalisation.
He expects to see amplified efforts to digitalise production systems in 2023 – but rather than sudden, transformational change, Khinouche believes a step-by-step approach will remain evident. “As a whole, the food safety industry is taking its time to adopt AI and digitize as many different areas as possible. Today, roughly half of the food safety industry utilizes AI in some way. Many industry folks fantasize about a massive digitization product that results in a full overhaul of the industry, when in fact it’s better practice to use AI and machine learning to solve specific problems bit by bit. Food plants are becoming more and more digitally focused. And next year, I expect an even bigger digitization push in the food industry,” Khinouche predicted.
Digitalisation must pay dividends
This reflects the increase in business caution seen across the European food and beverage space, meaning that spending on digital projects needs to pay dividends and return-on-investment is front-of-mind for many. “Most importantly, there will be a need for shorter, less risky return on investment, low complexity, more reduced costs, and hard ROI. For example, many food and beverage companies know they must digitise, but where they may find it challenging is that it doesn’t cost a fixed price to get started. Instead, you must prioritise and choose a problem to solve, starting with a hard ROI. Then build a technology foundation and continue to add to it,” the digital innovator told FoodNavigator.
Nevertheless, Khinouche stressed, he does not believe that prioritising returns must necessarily come at the expense of a long-term view of food safety investment decisions. “For most food and beverage processors, I don’t think it’s a longer-term or shorter-term ROI conversation. If focusing on the long term, they’re missing out on near-term successes and the ROI they can have now. The better-capitalized companies will take advantage of playing a longer game. Other large companies may go out of business due to their business model if they don't invest heavily in revamping their current business models to fit today's competition, and finding the resources needed to conduct change. The point is to take advantage of near-term successes that measure the positive return of investment companies can have now,” he elaborated.
Indeed, Khinouche argues, investing in automating and digitalising your food safety and quality processes isn’t a luxury – it is a necessity to remain competitive in evolving market conditions. In particular, the food safety innovator suggested, new food safety technologies can help address some of the rapidly emerging concerns around labour and skills that the food industry as a whole is grappling with.
“Over the past year, the labour shortage was a major story in a wide range of sectors, including food safety. The average age of today’s Quality Assurance manager is higher than ever. It has become difficult to find qualified people who want to work in this industry. Next year, I expect technology such as AI and machine learning to be a key factor in helping the industry make up for the labour shortage that’s currently taking place.”
‘Prepare for audits’ and 'keep your crisis manager near'
Addressing labour shortages and ensuring the seamless operation of production systems will be mission critical in 2023, a year in which the food safety sector expects safety audits to ramp up in Europe. Looking to the coming year, Khinouche advises: ‘Be better prepared for audits’.
“Now that there is a sense of normalcy in regards to the COVID-19 pandemic, food plant audits are increasingly taking place in-person and will continue to even more in the coming year. As a result, we can expect to see a higher number of recalls as auditors catch things that might have slipped by over the past several years of conducting audits virtually. With plants now fully functional, it’s critical to make sure everything is in order to ensure more seamless audits,” he suggested.
If more audits mean more recalls are likely, Khinouche warned it is also important to ‘keep your crisis manager near’ to manage any issues that may arise. “Social media will continue to play a big role in food-related crises. Today, the life of a food-related crisis is a roller coaster, thanks to the fast-paced and never-ending news cycle. Since there’s always another story around the corner, people often tend to move on quickly to the next story. While this is ultimately a good thing for food safety-related crises, it will be critical to have a crisis manager who knows how to handle the ins and outs of social media in the coming year.”
Sustainability and traceability to deliver 'real business value'
Elsewhere, Khinouche expects the food safety and quality landscape to be shaped by continued consumer demand for products that are traceable and sustainable.
The food safety expert reflected that food traceability has been at the forefront for some time now, but suggested it took off ‘even more’ since the beginning of the COVID-19 pandemic and accelerated ‘in particular’ over the past year. “Today, people care about their food perhaps more than ever before and want to know where it’s coming from – something the industry took for granted in the past. In the coming year, the industry can expect to see even more interest and emphasis on traceability,” he forecast.
With that, Khinouche continued, comes an increased focus on the sustainability of food and beverage products. In 2023, he expects the ‘real business value’ of sustainable food production to ‘come to light’ and deliver ‘real value for shareholders’. “We’ll see a shift where the industry realises the value in working more towards sustainable production,” he predicted, noting that digitalisation and big data have a role to play here as well. “As the industry continues to accept sustainability targets, data will be used to measure how brands are doing when it comes to sustainability. Those who don’t put sustainability front-and-centre in 2023 will be left behind,” he suggested.
But, given the inflationary environment, will concerns over sustainability continue to resonate with consumers? Or should such work focus on driving internal value from a production standpoint?
“Consumers are becoming more conscientious of what they buy and the effect it can have on sustainability as a whole for the environment. Whether inflation and an impending recession have taken their toll on sustainability remains to be seen. But for the most part, people will continue to take value-driven sustainable actions in their daily lives, such as saving energy and minimizing water consumption and waste products,” Khinouche responded.