Spending increases in food and drink sector

24 July 2012

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24 July 2012 | Adam Leach

The global procurement spend for buyers in the food and drink industry is expected to increase to $184.4 million (£118 million) over the course of 2012.

Buyer Spend Activity and Procurement Behaviours and Strategies in the Food and Beverage Industry 2012-2013, published by Canadean, forecasts that the increase from $101.4 million (£64.9 million) in 2011, will be driven primarily by companies operating in the Asia Pacific market increasing their budgets. With European respondents predicting more modest increases.

The projected increase may well be strongly related to the expectation that suppliers will increase prices over the remainder of 2012, with inflated raw material costs and high oil prices driving the change. It found that 72 per cent of buyers expect an increase.

An executive from a Europe-based food manufacturer, who completed the survey, said: “With prices of raw materials such as sugar, fruits, vegetables, meat and various packaging materials increasing, we are deemed to increase our procurement expenditure.”

Some 3 per cent of respondents expect their spend to rise by at least 25 per cent, with 11 per cent predicting an increase between 10 to 25 per cent and 24 per cent predicting a rise of between 5 and 10 per cent. Just 12 per cent anticipate a decrease in procurement spend while just under a quarter - 24 per cent - expect no change.

Drink buyers reported that the main products driving increased spending include vodka, cider, and flavoured alcoholic beverages. The popularity of chilled and deli foods and savoury snacks was also identified as driving the growing spend.

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