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Supply Availability for Food and Beverage will Trump Price: Manage Your Supplier Relationships


A.T. Kearney

Beef, pork, lemons and limes – we can point to these products as recent examples of unavailability impacting the food and beverage industries. While each of these examples has its own unique explanation, the industry supply system is becoming more global, integrated and susceptible to shocks and changes.

Today, the world's seven billion consumers have more than 70 percent of their choices provided by 300 to 500 companies. More food categories such as vegetable oils, sugar, proteins and pasta are now controlled by fewer companies. In the future, farmers and producers are more likely to be corporations, and consumers will likely be serviced by large integrated retail and restaurant chains. In fact, future competition will not be between individual companies, but rather between integrated supply systems. As discussed in our last article, forward-thinking operators, distributors, and manufacturers are already reevaluating their sources of supply.

Industrialization is speeding up in the food system as new market demands emerge, and regulatory and resource constraints may limit the number of companies that have the internal resources to manage supply volatility, food safety and regulatory requirements. Access to approved suppliers will become more difficult; dedicated supply systems will be required to assure adequate supply and manage costs in a volatile environment. To win the competition between supply systems, successful companies will need to ensure that their sources of supply are robust; they’ll need to develop strategic partner­ships with suppliers that have the tools, resources, and agility to manage industry, climate and regulatory changes.


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