Future uncertain as food industry braces for rapid change

Summary of food’s uncertain futureNearly half of CPG executives believe they won’t survive with their current structure AI is a popular strategy to streamline and cut costsProduct innovation is still seen as a key growth driver, but CPGs are looking to be more sparing with launches Sustainability has moved from compliance exercise to predicted growth driverCategories may converge, meaning businesses must serve consumers holistically The world of food is changing, with GLP-1s, health trends and overall cultural shifts pushing it in a different direction.

In the face of tariffs and ever-present price increases, food and beverage businesses are prioritising new technology and simplification to thrive in the current environment.

An uncertain future Many businesses are not confident in the future. A survey by PwC found that 49% of consumer packaged goods (CPG) executives do not believe that their current business structure will hold for another decade. This is compared to 42% overall.

Issues are coming not only from consumers pushing back against price rises, but also from practices internally, the survey suggests. For example, many believe that financial reporting does not align with how their business is structured.

However, of those who are sceptical about the resilience of their business model, 29% are not planning to restructure a single function within their business.

Businesses embrace AI to cut costsNevertheless, many businesses, according to the survey, are keenly aware of the need to change. Embracing AI is a popular strategy to deal with this.

Over half of CPG executives are planning to utilise AI to optimise costs. AI is a more popular strategy than portfolio optimisation, automation or the reconfiguring of organisational structure.

In terms of forecasts for the future, around 59% believe that AI agents will play a key role in the consumer relationship within five years.

Focusing portfolios Instead of focusing on launching loads of new products, many businesses are taking a look at their portfolios and trying to simplify.

Fifty three per cent of those asked still put NPD in their top three predicted drivers of growth, and 22% put it at the absolute top.

These two things are not necessarily contradictory. CPGs still want to innovative, but exercise focus and caution rather than throw everything at the wall and see what sticks. In short, quality rather than quantity is the name of the game.

Sustainability treated as ‘core business strategy’Sustainability has become more controversial of late. With both lawmakers and consumers themselves cooling on many aspects of the trend, the push for greener practices has seen better days. However, many businesses remain committed.

According to the PwC survey, CPGs are moving from seeing sustainability as a compliance exercise to a ‘core business strategy’.

Furthermore, many businesses see sustainability as linked to ROI and overall growth.

In fact, 34% of businesses predict an above average growth plan to invest in sustainability, compared to only 20% of those growing more slowly.

Category? What category?Changes may be coming from a different place as well. As consumers demand that food reflects not only health but lifestyle and values, and as GLP-1 weight-loss drugs become more popular, boundaries between categories may begin to blur.

This means that companies may be able to serve consumers more holistically, rather than sticking hard and fast to separate categories.