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Behind scenes of FMCG: Realities of processing challenges
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Thursday, 02 January, 2025, 08 : 00 AM [IST]
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Salloni Ghodawat
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The food processing industry is a vital component of the Fast-Moving Consumer Goods (FMCG) sector. This industry focuses on turning raw agricultural products into food that people can easily consume. Food processing makes it possible to offer a wide range of items, from quick snacks to milk and ready-to-eat meals, all delivered safely and conveniently to customers. This industry is worth millions and is crucial for linking farmers with consumers. However, it faces challenges that affect its efficiency and sustainability. Like other industries, the global food processing sector is influenced by changing customer preferences, which evolve as the population grows.
Supply Chain Disruptions––An Issue of Global Dimensions
Like many other sectors, the food industry depends on global supply chains for input resource acquisition and the marketing of finished products. In stark contrast to this perspective, a number of factors make these supply chains extremely susceptible. Disturbances on a global scale, such as the ‘Covid-19’ pandemic, have exposed the flaws in food transport mechanisms.
In addition, climate change effects in the form of floods, hurricanes, and droughts have become more frequent in their occurrence interfering with food production in the quest for food security. The number of over 9 billion mouths to feed will act as pressure on food supplies.
Increased food production will need to be 60% greater by 2050. This increases the stress on the supply chain to be resilient to climate change and many other pressures. Such trends have led to companies employing multiple sourcing approaches, clustering production in numerous regions, and researching new protein substitutes, such as plant-based meat. However, for the majority, the effective management of such intricate supply chains is an ongoing struggle, increasing production expenses and causing uncertainty in the availability of food.
Safety of Food: A Key Concern
Food enforcers view food security as the most important part of human life. Foodborne diseases affect millions of people yearly. As most processed foods have ingredients from different sources, the blanket approach toward food safety and quality is becoming increasingly difficult.
In response, tamper-proof control and food safety standards have shaped the food industry. These intentions are commendable; however, there are still frequent reports of recalls. To counteract these sorts of events, manufacturers are increasingly seeking solutions such as blockchain, which provides traceability, and using AI for timely detection of contamination situations. These technologies boost food safety as they facilitate the quicker resolution of potential problems, thereby reducing the need for recalls and upholding the safety of consumers to a greater extent.
High Operational Costs and High Returns
These constraints, however, do not appear to be a deterrent, as food processors are willing to invest in technology with a view to reaping returns in the future. Revolutionising the industry is possible with automation, robotics, and artificial intelligence (AI), all of which will increase efficiencies, reduce waste, and ensure that the quality of products is maintained. A McKinsey analysis claims that due to automation, operational efficiency may improve by as much as 30%, and labour expenses may reduce by 15–20%. Consistency during production is another advantage, as automation ensures that each product is guaranteed to be of the same high calibre.
New technology, however, has its costs. The start-up investment in automation and AI may be a challenge for many food processors, especially smaller ones. Many other barriers, such as financial constraints, security concerns, and operational capabilities, also limit the use of growing technology and more advanced systems.
Technological innovation, however, is vital for the future of food processing. It emerges in the face of many challenges. New technologies are met with little resistance to adoption in the face of increasing global consumer appetites for more secure, healthy, and environmentally friendly products.
Sustainability: The Push for Greener Practices
The current trend of appealing to the end-users as well as adherence to new biomaterials regulations, has allowed food processors to increase their interest in sustainability and eco-friendliness. Approximately one-fourth of fertile greenhouse gas emissions arise from the food processing industry. It is becoming more and more clear that manufacturers need to reduce their negative effects on nature and tighten their sourcing, production, and packaging standards.
Many businesses are using safe materials for their packaging and focusing on waste reduction as part of their overall strategy. Several popular food brands, for example, announced plans to have all their packaging recyclable or reusable by 2025. This drive for change in practice emerged from the new European Union's Farm to Fork strategy, which aims to lessen the environmental impact of the food supply chain while improving food often lost along the way.
The general public also bolsters this change. Nielsen Company conducted a global survey of consumers and found that 73% would be willing to pay more for products that are sustainably produced and come from sustainable sources. Food producers are, therefore, forced to develop new technologies to meet the growing demand for sustainability. However, it also brings about certain hurdles. Sourcing and producing sustainably can be costly, particularly for smaller companies. However, as the market for sustainable food products expands, these expenditures could pay off in terms of increased brand loyalty and reduced operational costs in the future.
Government Regulations and Support
There are also government regulations and assistance measures that should be considered when analysing the development of the food processing industry. In India, Prime Minister Kisan Sampada Yojana is modernising food processing units and facilities, as well as reducing post-harvest losses.
In conclusion, it can be said that the food processing industry stands to suffer numerous setbacks, including vulnerabilities in supply chains and food safety concerns, while there is also immense pressure on the industry for innovation and sustainability. With the population growing and the need for food increasing, food processors are attempting to design and meet certain standards regarding safety, quality, and cost-effectiveness. By embracing new technologies, sustainable development, and complying with laws, key players in food manufacturing are working toward achieving a more robust and modern food processing sector. The advancement of food processing will rely on the ability of the industry to grow and work together while addressing the demands of an ever-growing constituency.
The current food policies should be able to provide support for change within the sector in a way that affordable food can be delivered while addressing climate change, as the future generation will be the greatest consumers of food.
(The author is director & COO, Ghodawat Consumer Ltd)
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