SYDNEY, June 27, 2024 – Almost half of food and beverage companies (48%) said that business interruption was the biggest internal risk to their success, closely followed by supply chain risk (40%). That’s according to the 2024 Global Food and Beverage Risk Outlook, published by WTW, (NASDAQ: WTW), a leading global advisory, broking and solutions company.
Navigating turbulence and potential disruption has become the new normal in the sector, against a backdrop of global instability, conflicts, climate change and the cost-of-living crisis.
Companies are understandably cautious in their outlook. More than 4 in 10 (41%) food and beverage companies feel the need to increase liquidity among their top strategic objectives for the next two years, giving them the financial firepower to manage through any further shocks. Other priorities include reducing costs (38%) and stabilising the business (35%).
Additionally, companies are growing doubtful over their ability to keep pace with the rapid change of consumer tastes and preferences, named as a risk by a third of companies (36%). But this is also an area of opportunity, as firms pivot to take advantage of latest consumer trends.
More than half of businesses (53%) said embracing sustainability and health and wellness was a leading opportunity. In comparison to 2022, there is less enthusiasm for plant-based meat substitutes and increased interest in gut health, nutrition and sustainable production among consumers.
Despite challenges, food and beverage businesses are taking action to build resilience, with 47% reviewing their business continuity plans every six months and 31% quarterly. However, more than a quarter of businesses (29%) said their insurance includes damage to property only in the event of extreme weather, with no cover for business interruption, which is a key factor in recovery and resilience.
Ian Poustie, Food and Beverage Industry Lead, Australasia, at WTW said: “The food and agriculture industry is one of the most important sectors in Australia and contributes significantly to the country’s economic growth. It has an international reputation for producing, safe high-quality products and is a strong exporter of products across various categories to global markets. However, the industry is exposed to a widening range of disruptive forces, from droughts and natural disasters to trade disputes and regulatory changes, as well as perennial risks such as product recalls, factory and warehouse fires.
“Our findings reveal that escalating external threats are heightening instability risks across companies, spanning from political, climate, cyber and workforce domains.”
Ian Poustie | Food and Beverage Industry Lead, Australasaia, WTW
“Many of the challenges food and beverage firms face today are of a different order from those they have overcome before. Our findings reveal that escalating external threats are heightening instability risks across companies, spanning from political, climate, climatic, cyber and workforce domains.
“While our survey results show that businesses are taking steps to become more resilient in the face of these challenges, as part of the process it’s a good idea to reassess the critical issues in the business, areas of focus, how they can manage the key risks they face, and where they might need more protection. That way, businesses are prepared for almost every outcome and operations can keep moving forward.”
WTW’s Global Food and Beverage Risk Report 2024 was conducted among 400 global senior decision makers of risk management in leading food and beverage companies, including those in Asia Pacific, in January 2024.
400 global senior decision makers of risk management in leading food and beverage companies took part in WTW’s Global food and beverage risk outlook 2024 in November 2023.
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