2024 Outlook: Opportunities Outweigh Pitfalls for Food Processors

How is 2024 going for food processors? For many in the industry, business continues to boom. Of course, potential challenges may affect how the rest of the year plays out.

Let’s look at some trends that, from my perspective, those in the food processing industry should be watching.

Eating at home has become the norm

Food processors continue to benefit from the eat-at-home trend. While more people dined at home during the pandemic because restaurants were closed and they had no choice, the habit seems to be sticking.

There are many reasons I can cite for this change in behavior.

One is the rise in prices when it comes to eating out in restaurants. Menu prices have been going up steadily. Grocery prices are up 1.2% yearly versus restaurant prices, which have risen by 5.1%.

In addition, restaurants continue to struggle to find enough workers to serve customers. If diners have had a bad experience, they may be less likely to return.

The drop in disposable income also contributes to this, as consumers may have less money to spend on expenses like eating out.

The rise in popularity of prepared foods

Because some consumers haven’t learned to cook but want to eat at home to save money, we see prepared foods experiencing a boom. People may be too busy or tired to cook or may want to spend that time pursuing other interests.

Therefore, pre-made meals, frozen pizzas, and sandwiches are setting sales records. For example, the frozen pizza market is projected to grow at a compound annual growth rate (CAGR) of 6.9% from 2023 to 2030.

All of this positively impacts food processors who continue to try to keep up with demand. At Grote Company, we’re working with our customers to ensure they can fill the growing need for prepared food items.

Economic uncertainty still lurks

While the U.S. isn’t seeing a recession, several factors seem to impact food processing companies' financial decisions.

Although the GDP (gross domestic product) dipped last quarter, growth remained positive. Q2 numbers may help shed light on the economy's actual status.

Further, mergers and acquisitions (M&A) were very low last year, experiencing their worst year since 2010. This measure can be an indicator of how the economy is performing. If the money isn’t there to spend, it hurts M&A activity. 

Meanwhile, the private equity market is up, which is a positive sign.

Another encouraging sign? Europe and the U.K. seem to be having a better year. I recently visited Europe to attend a trade show and was pleased to see the optimism. It’s good to see an uptick in activity, indicating they may turn a corner after a tough couple of years. 

While economic news is mixed, with summer now here, processors should watch for a potential slowdown. Most are accustomed to seeing activity slow in the summer, with many decision-makers on vacation. Add to that the election cycle, which means buyers may hold off on purchases, especially as we head toward the fall. Don’t be surprised if this happens, but know if it does, things should stabilize once we head toward 2025. 

Technology adoption is a necessary but challenging exercise

Technology is moving fast – but it’s all about determining what difference it will make in your business.

When deciding which technology to invest in, processors should consider its benefits. Does the technology help them sell more? Sell faster? Produce goods more cost-effectively? Produce higher quality goods?

Wading through ALL the options to figure out their actual value to your company can be time-consuming. Our leadership team evaluates new technology investments and considers whether we’ll see true ROI. If not, it may not be a worthwhile expenditure for us.

With growth comes change

If your business is growing, change is part of that growth. When it comes to running the business, expansion brings with it complexity. Companies must provide people with opportunities to grow to attract and retain strong, qualified
team members. While growth creates these opportunities, it also has growing pains.

For some, growing their business involves acquisition, as for the Grote Company Family of Brands. In April, we acquired ProFab, a food industry conveyor manufacturer, millwright, and process piping supplier and installer based in Springdale, Arkansas. 

When one company buys another, it can offer workers more opportunities and better benefits. Beyond that, it can focus on creating a better environment for workers to work in. A more prominent brand can bring extra energy to help that company compete against more notable players. With a growth philosophy, the acquiring brand can show they’re committed to investing in the capital side of the business. Often, long-standing needs haven’t been fulfilled. That investment makes the team’s work easier and better.

Recruiting younger workers

Manufacturing needs to remind younger workers that it’s an attractive environment offering job security. As workers continue to age out, the push to recruit younger talent should include highlighting the stability of the workplace and showing them there’s an opportunity to progress. 

At Grote Company, we encourage employees to continue their education, try new roles, and contribute ideas. We pay for training, conduct onsite training sessions, and offer tuition reimbursement. 

Most manufacturing jobs don’t require a college degree, and with the trend of skipping college in favor of gaining work experience, manufacturers offer many opportunities for younger workers to excel. Offering training opportunities is part of this effort. For example, allowing workers to take classes at the company’s expense is one way to invest in your workforce. Another might be allowing them to change departments or roles within the company.

Food Processors Are Poised to Have a Strong Year

I’m happy to say that 2024 is shaping up to be a robust year in the food processing industry, with many promising trends.

Manufacturers always need to be aware of potential pitfalls, but with foresight and resilience, they can navigate any challenges that may come up along the way.

Grote Company looks forward to helping our customers meet their challenges. Our goal is always their success. 

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