State of Food Manufacturing in New York & New Jersey 2022 - PRESENTED BY IN ASSOCIATION WITH
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State of Food Manufacturing in New York & New Jersey 2022 PRESENTED BY IN ASSOCIATION WITH
OBJECTIVES & METHODOLOGY
OBJECTIVES
1 Assess the state of the food manufacturing industry in New York and New Jersey at the beginning of 2022
2 Look back at industry trends in 2021
3 Collect a view of key industry opportunities and challenges in the year ahead
4 Use these snapshots to help industry leaders understand where their organization stands in comparison to their
peers and provide useful strategic insights to drive business growth
5 Begin creating a longitudinal benchmark of industry health in these two states
METHODOLOGY
• 9-minute online survey conducted January 12-31, 2022
• 148 survey respondents
2KEY FINDINGS: The industry experienced a positive 2021 and most are
highly optimistic for 2022 though COVID challenges remain
OPPORTUNITIES IN 2021 CHALLENGES IN 2021
Overall, 2021 was a good year for the industry compared with Despite the overall successes of 2021, COVID and related
2020, as companies adjusted to pandemic realities and focused issues provided the industry with significant challenges
on growth strategies • The majority dealt with COVID outbreaks among the
• Revenues increased for the majority workforce
• Profits also increased for the majority • Most experienced disruptions in the supply
• Practically all organizations experienced successes and chain/delivery and logistics/transportation
opportunities, especially: • Many also cited staffing challenges
• Improved customer relationships • Costs increased for many, including costs associated with
• Safer workplaces workplace health/safety, labor, and volatility in
• An increase in digital transformation ingredient pricing
OPPORTUNITIES IN 2022 CHALLENGES IN 2022
Most are highly optimistic about business in 2022 and expect COVID pain points remain but the industry continues to adapt
an even better year than 2021 • Practically all organizations are experiencing an increase in
• Three-quarters expect revenue to grow raw materials pricing
• Most are increasing capital spend and opening or adding • Companies are softening the blow by finding new
new lines and/or plants suppliers, renegotiating with vendors, and passing
• The majority expect production levels to be higher than in along some increases to customers
2021 • Staffing remains a stubborn challenge
• Most are targeting new distribution channels; just under • Companies are allowing flexible work schedules and
half are improving customer service and increasing use of increasing salaries, among other tactics
analytics • Logistics and inventory scarcity issues persist
• Cloud computing is common and will see continued • Companies are increasing customer communication,
growth, an industry technology driver increasing the number of suppliers, and purchasing
inventory in bulk 3Respondent Profile
4The typical respondent is a C-level executive or higher at a food
manufacturing or processing company
JOB LEVELS
55% Owners, Presidents/CEOs and C-Level executives
23% 8% 24% 12% 24% 9%
C-Level Director
Owner
Executive
President/CEO Senior manager/
Vice President manager
INDUSTRY SEGMENTS
45% 17% 10% 9% 11%
Other
Food Processor/Manufacturer Distribution/Logistics/ Co-Packer/ Retail
Warehousing Contract
Manufacturer
5%
Packaging Equipment
Manufacturing
3%
Wholesale/Broker
Q2: Which category best describes your food manufacturing business? n=148; Q3: Which best describes your current job level? n=148 5Most organizations surveyed are privately held and nearly all serve the
Northeast
OWNERSHIP STRUCTURE REGIONS SERVED
Northeast 86%
Privately held/Family Owned 62%
Midwest 36%
Private equity 23%
The average
South 30%
company
serves 1.9
Publicly traded 10% regions
West 27%
ESOP 1%
International 16%
Other: 4% Other: 2%
Q31: What is your ownership structure? n=135; Q32: Which regions does your business serve? n=135 6Most companies operate in multiple sectors, most commonly retail and
direct-to-consumer
SECTORS ACTIVE IN
RETAIL DIRECT TO INSTITUTIONAL
CONSUMER
The average
company is
involved in 1.8
sectors
41%
59%
78% Higher in older
companies
Higher in newer (20+ years old): 54%
Higher in older companies
companies (Top food categories include frozen, meat/poultry, foodservice and
beverage
FOOD CATEGORIES COVERED
52% The average
49% Retail is more company
likely to cover covers 4.2 food
Direct-to-consumer is more
bakery (44%)
43% 43% likely to cover fresh (38%) categories
33% 32% 32% 32% 31%
29%
22%
17%
Frozen Meat/ Foodservice Beverage Bakery Fresh Seafood Grains Dairy Prepared Candy/ Pet food
poultry food kits confectionery
Institutional is more likely to cover foodservice (63%) and prepared food kits (44%) Other: 4%
Q34: Which food categories does your business cover? n=134 8Companies surveyed are typically mid-sized and have operated for a
decade or more
NUMBER OF EMPLOYEES YEARS IN BUSINESS
2,500 or more 8% 30+ years 23%
1,000-2,499 12% 20-29 years 12%
500-999 26% 10-19 years 34%
100-499 20% 5-9 years 19%
50-99 11% 1-4 years 10%
49 or fewer 23% Less than 1 year 1%
Organizations surveyed …and have been in business
employ 720.4 people on 17.5 years on average, with more than
average (median of 300)… two-thirds operating for 10 years or more
Q30: How many people are employed by your company? N=135; Q33: How long has your company been in business? n=135 9Opportunities and
challenges experienced
in 2021
10Companies were more than 2X more likely to see revenues increase than
decrease in 2021
Don’t know
Decline to answer Revenues increased
3% for 63% of food
4%
manufacturers and
processors but only
REVENUES DECLINED 21% 53% REVENUES INCREASED for 45% of other
industries
2021
Those serving the
Only 1-in-5
saw a decrease,
REVENUE Most saw an
increase,
institutional sector
averaging
COMPARED averaging were more likely to
24% 27%
see an increase in
TO 2020 revenue (78%)
Those who have
expanded into
20% new channels were
most likely to see an
24%: 9% or less 8%: 9% or less increase in revenue
52%: 10% - 29% 59%: 10% - 29%
10%: 30% - 49% 20%: 30% - 49%
(67%) as well as those
3%: 50% - 74% Revenues stayed the same 7%: 50% - 74% who developed
7%: 75% or more 3%: 75% or more innovative new
3%: Don't know 1%: Decline to answer
1% Don't know
products/services
(62%)
Q13: Compared to 2020, how were revenues in 2021? n=140; Q14: How much did revenues decline in 2021? n=29; Q15: How much did revenues increase in 2021? n=74 11Similar to 2021 revenue, profits were nearly 3X more likely to increase
than decrease
Don’t know
Decline to answer
4%
5%
PROFITS DECLINED 18% 51% PROFITS INCREASED Companies with
higher revenue
2021 ($50+ million)
were more likely
Few saw a
decrease,
PROFIT Most saw an
increase,
to have
averaging
COMPARED averaging experienced an
25% 25%
increase in
TO 2020 profits (61%)
22%
28%: 9% or less 27%: 9% or less
44%: 10% - 29% 37%: 10% - 29%
12%: 30% - 49% 25%: 30% - 49%
4%: 50% - 74% Profits stayed the same 6%: 50% - 74%
8%: 75% or more 3%: 75% or more
4%: Decline to answer 3%: Don't know
Q16: Compared to 2020, how were profits in 2021? n=140; Q17: How much did profits decline in 2021? n=25; Q18: How much did profits increase in 2021? n=71 12Nearly every company experienced a success or opportunity in 2021,
most frequently by improving customer relationships
SUCCESSES AND OPPORTUNITIES IN 2021
Higher among
Improved customer relationships 68% institutional (84%)
Higher among those with higher revenues
Improved workplace safety 59% (74%), retail (69%) and institutional (69%)
Higher among
Increased focus on online/digital platforms 59% retail (71%)
Higher among those with higher revenue (67%),
Developed innovative new products/services 55% direct-to-consumer (68%), and institutional (69%)
Higher among food processors/
Streamlined processes to improve productivity 52% manufacturers (64%)
Higher among those with
Made progress on supply chain issues 51% higher revenues (61%)
Expanded sales into new channels 47%
None-experienced no successes or opportunities: 2%; Other: 1%
Q5: Which of these successes and opportunities did your business experience in the past 12 months? n=148; 13Companies saw bright spots in finding new customers, digital transformation
“Ability to attract new customers that are more willing
“To be able to make
to work with smaller family-owned business as
our online aspects a
opposed to the big guys.”
base priority and
“Since there were many
futurize ourselves.” -C-Level Executive, Wholesaler/Broker
suppliers out of commission,
I was able to slice off a -Vice President, Food
“Getting back on regular track after the pandemic of
whole new section of the Processor/Manufacturer
2020 and improving safety among our staff and also
market. I now work with
customers.”
clients that I would have
never dreamed of.” -Owner, Retail
-Owner, Wholesaler/Broker
“Assisting in customers' food safety and hygiene-
sanitation programs via GFSI, FSMA & FSIS
perspectives as well as COVID-19 issues and their
control besides typical pathogen control programs.”
-Vice President, Food Processor/Manufacturer
“Our opportunities in 2021
were meeting customer “The food company I work in is very serious about
demand when it was hard hygiene and got us workers through it.”
to get certain products.”
-Director, Distribution/Logistics/Warehousing
-Director, Food
Processor/Manufacturer “Accelerating our digital transformation initiatives
because of COVID restrictions.”
-Owner, Food Processor/Manufacturer
14Nearly all experienced challenges in 2021, with COVID and COVID-related
issues the most common. Older companies and those serving the
institutional sector experienced more challenges
BIGGEST BUSINESS CHALLENGES OF 2021
COVID outbreak among workforce 59% Higher among those with lower revenues (69%)
Higher among food processors/manufacturers (70%),
Disruptions in supply chain/delivery lags 53% older companies (72%), retail (65%) and institutional (69%)
Staff recruiting and retention challenges 47% Higher among older companies (64%)
Logistics/transportation disruptions 47% Higher among older companies (68%)
Increased costs associated with workforce health/safety 43% Higher among direct-to-consumer (57%) and institutional (56%)
Higher labor costs 42% Higher among older companies (60%)
Volatility in ingredient pricing 35% Higher among food processors/manufacturers (49%), retail (45%) and institutional (53%)
Stockouts/replenishment challenges 34% Higher among institutional (56%)
Technology/automation challenges 30%
Delayed or cancelled new product launches 24% Higher among
institutional (34%)
Difficulty maintaining adequate financial
liquidity/solvency to weather the economic storm
17%
SKU reductions, brand elimination 13%
None-experienced no challenges: 3%; Other: 2%
Q6: Which of these challenges did your business experience in the past 12 months? n=148 15Staffing, cost and supply chain issues topped the list of challenges
"Labor availability, unprecedented overtime
“The biggest
costs as a result of the labor shortage, and
challenges were the
“The rising costs of all rising material costs."
supply chain issues.”
our ingredients, and
the challenge of finding -C-Level Executive,
-President/CEO, Food
Food Processor/Manufacturer
technicians to make Processor/Manufacturer
repairs and updates to our
equipment and systems “We experienced reduction in our workforce
when needed.” and reduced food supplies.”
-Owner, Food -Director, Food Processor/Manufacturer
Processor/Manufacturer
“Having to deal with COVID issues. Whether
it be supply chain issues or having many
employees affected at the same time, it was
very challenging.”
“Battling through COVID
and keeping workers -Director, Food Processor/Manufacturer
happy and safe.”
"How to hold the line on costs in order to
-Director, Retail
minimize price increases."
-Owner, Co-Packer/Contract Manufacturer
16COVID continues to have a net negative impact on most businesses,
though one-quarter did feel the impact was positive
• That 39% of respondents reported a positive or no effect from COVID underscores that the
pandemic presented significant opportunities for many businesses
OVERALL IMPACT OF COVID ON BUSINESS
61 %
Negative impact
23%
Positive impact
14% 47% 16% 19% 4%
Very negative Somewhat negative No impact Somewhat positive Very
positive
Those with higher revenue are more likely to cite a
positive/neutral COVID impact (49%) as are those
who experienced increased revenues (48%)
Q29: Overall, has the coronavirus pandemic had a positive or negative impact on your business? n=135 17Opportunities and
challenges ahead in 2022
18Organizations are highly optimistic revenue will grow in 2022, with
three-quarters expecting a revenue increase compared with 2021
REVENUE EXPECTATIONS FOR 2022 COMPARED TO 2021
75Expect a 2022
%
revenue increase
3%
3% 7% 2% 14% 65% 10%
Don’t Will remain Revenue will increase somewhat Revenue will
Will know the same increase
decrease Declined substantially
somewhat to answer
Those who experienced Those serving the
increasing revenues in institutional sector also much
2021 expect to see revenue more likely to expect an
growth in 2022 (89%) increase in revenues (91%)
Q27: What are your revenue expectations for 2022 compared to 2021? n=136 19Along with expecting 2022 revenue growth, most will increase capital spend
CAPITAL SPENDING PLANS FOR 2022 COMPARED TO 2021
61 %
16
Decreasing
%
Plan on
increasing capital
spending
4% 6% 6% 24% 30% 24% 7%
Decrease Decrease Capital spending will stay the same Increase 1%-4% Increase 5%-9% Increase
5%-9% 1%-4% 10% or
more
Decrease 10% or more
Those few companies 69% of companies Companies serving the Those planning to
planning to decrease with rising revenues direct-to-consumer sector increase capital
capital spending will increase capital are much more likely to be spending expect a
expect a 7% decrease, 5% increase, on
on average spend increasing capital spend (74%) average
Q28: What are your company's capital spending plans for 2022 compared to 2021? n=135; May not equal 100% due to rounding. 20With that increasing revenue and capital spend, most plan to expand
production as well
Don’t know Consolidate production Don’t know
Lower by closing or merging
1%
lines/ plants
5% 3%
Expand production
12%
by opening or
55% adding lines/plants
About the
same 42% ANTICIPATED PRODUCTION
PRODUCTION EXPANSION/
LEVEL FOR CONSOLIDATION
2022 PLANS FOR 2022
Stay the 31%
same
51%
Higher
Companies with increasing
Companies expecting higher production are more likely to be
revenues, older companies, and
expanding production (78%), though even companies those serving the institutional
anticipating the same amount of production are more likely sector all expect more production
to expand production (27%) than consolidate (15%) and expanding production
Q21: Compared to 2021, what do you anticipate your plant's production will be in 2022? n=73; Q22: In terms of production for 2022, is your company planning to: n=78 21
Asked if food processor/manufacturer or co-packer/contract manufacturer2022 holds opportunities for expanding operations and markets
BIGGEST OPPORTUNITIES
“Having supplies and costs return to normal will be a huge
“Expanding my business and opportunity for growth.”
increasing revenue while also
providing a higher salary for all my -Owner, Wholesaler/Broker
employees to assure that we are all
a team working together.”
“New customers, more employees and more productivity.”
-Owner, Retail
-Owner, Food Processor/Manufacturer
“Expanding and growing into new retailers and locations.”
“The acquisition of
“Contracting with new innovative technologies -Vice President, Food Processor/Manufacturer
suppliers, adding new items that allow improving
to our lists, online business operational processes.” “The biggest opportunities will be the adoption of digital
expansion and increasing transformation technologies.”
employee salaries.” -Director, Food
Processor/Manufacturer -C-Level Executive, Co-Packer/Contract Manufacturer
-Vice President,
Co-Packer/Contract Manufacturer
“The single biggest opportunity we have for the year is for
the country to calm down and let things go back to 2019.”
-Director, Distribution/Logistics/Warehousing
Q19: Looking forward, what do you expect will be your biggest opportunities in 2022? n=122 22However, COVID and related issues with supply chain, staffing and
beyond continue to be challenges
BIGGEST CHALLENGES
“I expect future waves of COVID to impact
“Deal with the high rise of prices business.”
and try to figure out how to keep
-Director, Food Processor/Manufacturer
the same quality of the product.”
-Owner, Distribution/Logistics/
Warehousing
“Product availability, logistics, passing on
higher costs to customers.”
“Continuing labor -President/CEO, Food Processor/Manufacturer
and cost issues related
to COVID, as well as
increasing government “Biggest challenge “Working more efficiently with less
regulations due to COVID.” is supply chain.” personnel.”
-President/CEO, Food -Vice President, Food -Vice President, Food Processor/Manufacturer
Processor/Manufacturer Processor/Manufacturer
Q20: What do you expect to be your biggest challenges in 2022? n=125 23Practically all are seeing raw materials costs rise, averaging 18%.
Most take a multi-pronged approach to address raw materials price
increases without absorbing all costs.
RAW MATERIAL STRATEGY TO ADDRESS RAW
COST INCREASE MATERIAL PRICE INCREASES
50% or more 5% Identifying additional/ 60%
new suppliers
30-49% 8%
Institutional (72%) and direct-
Absorbing a portion of
55% to-consumer (66%) more likely
20-29% 20% the costs to absorb a portion of costs
10-19% 36% Those with higher revenue
Renegotiating prices with
current vendors 54% more likely to renegotiate
with vendors (64%)
5-9% 23%
Passing along increased
costs to customer 52%
1-4% 4%
18% average
0% 1% raw materials Absorbing all cost
cost increase increases 21%
Not applicable: 3% Other: 1%
Q10: What percentage increase in cost are you experiencing on raw materials? n=138 24
Q11: What is your strategy to address raw material price increases? n=137The pandemic continues to heighten staffing and compliance issues
• 47% cited recruiting and retention as a challenge in 2021, while 58% cite it as a current pressing
challenge, suggesting staffing problems may be worsening
MOST PRESSING HR AND ORGANIZATIONAL CHALLENGES
Higher among food processors/
manufacturers (52%), direct-to-
consumer (53%) and institutional (53%)
58%
55%
Higher among institutional (53%)
Higher among
direct-to-
43% consumer (38%)
Higher among older
companies (38%)
38%
30% 28%
26%
17%
Recruiting and COVID and Ensuring competitive Cross training Compliance Identifying operational Succession Multi-state
retaining staff OSHA staff and executive and skills with state/ gaps in your planning payroll and
compliance compensation/ development federal accounting and/or regulatory
benefits regulations HR Department compliance
Other: 2%
Q6: Which of these challenges did your business experience in the past 12 months? n=148 25
Q12: What are your most pressing Human Resources and organizational challenges? n=141Companies are dealing with labor challenges in a variety of ways,
especially by allowing flexible work schedules and increasing salaries
HOW COMPANIES ARE HANDLING LABOR CHALLENGES
Flexible work schedules 59% Higher among Institutional (72%) and direct-to-consumer (70%)
Higher salaries 46% Higher among older companies (60%) and Institutional (56%)
Higher among companies with higher revenue (60%),
Improvements in work culture 42% institutional (56%), and direct-to-consumer (55%)
Investing in career development 41%
Investing more in the recruiting budget 39%
Sign-on bonuses 34%
Partnering with experienced staffing firms
30%
Removing some job requirements 16%
Other: 1%
Q12B: With the current labor challenges facing our industry, what practices or initiatives have you or will you be implementing to mitigate these challenges? n=140 26Companies are trying to keep communication with customers flowing,
increasing their number of suppliers and purchasing bulk inventory
HOW COMPANIES ARE HANDLING LOGISTICS
76%
AND INVENTORY SCARCITY ISSUES
Higher among those with higher
Increased communication with
of companies faced customers on disruptions 55% revenue (67%), older companies (64%),
retail (65%) and institutional *69%)
logistics/inventory
scarcity issues in
2021* Higher among younger companies
Increasing the number of suppliers 55% (64%), direct-to-consumer (68%), and
institutional (66%)
Purchasing inventory in bulk
for long-term storage 52%
Utilizing automation tools through supply Higher among those with
chain management software to assist with 43% higher revenue (59%)
tracking and managing inventory
Diversifying product sourcing from different 41%
geographic/international locations
Financing additional inventory purchases 30%
Not applicable-not facing logistics and inventory scarcity issues: 3%; Other: 4%
Q6: Which of these challenges did your business experience in the past 12 months? n=148; Q9: How is your company 27
handling the logistics and inventory scarcity issues? n=143
*Includes supply chain/logistics/transportation disruptions and stockouts/replenishment challengesMost companies will target new distribution channels in 2022, followed
closely by improving customer service and using analytics, underscoring an
overall pattern of focus on distribution, customer service and innovating
DISTRIBUTION STRATEGY CHANGES CONSIDERED FOR 2022
Higher among direct-to-consumer
Targeting new distribution channels 53% (66%) and institutional (66%)
Improving customer service 46%
Increasing use of analytics to optimize Higher among those with higher
production, distribution or customer service 43% revenue (53%), younger companies
(57%) and institutional (59%)
Increasing emphasis on remote selling 34%
Higher among older companies (43%)
Reprioritizing production runs 31% and institutional (47%)
Changing distribution partners 31%
Higher among those with higher revenue
Increasing international distribution 29% (39%) and direct-to-consumer (43%)
Reorganizing/retraining sales force 26%
Opening dark stores - micro fulfillment
centers in densely populated areas 18%
Q23: What changes in your distribution strategy are you considering in 2022? n=137 28Cloud computing is an industry technology driver, but companies are
expanding tech in many areas
PLAN TO INVEST IN OR EXPAND USE OF
60%
NEXT 18 MONTHS
Potential Future Growth Technology Driver ERP more common among those with
(used less often but strong (frequently used and high growth) higher revenues (64%) and institutional
growth potential) (63%)
Cloud computing Digital/remote/wireless more common
50% (data storage, among direct-to-consumer (45%)
software,
Digital sensors, analytics, etc.)
remote machine PLM and RFID more common among
controls, wireless Artificial Intelligence those with higher revenues (37%, 31%)
plant networking (AI)/ predictive
supply chain
40% management
Digital/remote/wireless expanding
TECHNOLOGIES IN
Robotics/ among those with higher revenues
automation (50%) and direct-to-consumer (49%)
Enterprise resource
planning (ERP) to AI/predictive supply chain management
RFID technology expanding among younger companies
30% manage procurement,
for product
Product lifecycle
GPS to track production, supply chain (48%)
tracking workers,
management
vehicles, tools
(PLM) Robotics/automation expanding among
Slower Adoption Common, Slowing Down institutional (56%)
(used less often and less growth) (frequently used but lower future growth)
20% ERP and PLM expanding among those
20% 30% 40% 50% 60% with higher revenues (43%, 37%)
TECHNOLOGIES CURRENTLY USED
Q24: Which technologies are used by your firm? n=137 29
Q25: In the next 18 months, does your company plan to invest in or expand the use of any of the following technologies? n=136KEY FINDINGS: The industry experienced a positive 2021 and most are
highly optimistic for 2022 though COVID challenges remain
OPPORTUNITIES IN 2021 CHALLENGES IN 2021
Overall, 2021 was a good year for the industry compared with Despite the overall successes of 2021, COVID and related
2020, as companies adjusted to pandemic realities and focused issues provided the industry with significant challenges
on growth strategies • The majority dealt with COVID outbreaks among the
• Revenues increased for the majority workforce
• Profits also increased for the majority • Most experienced disruptions in the supply
• Practically all organizations experienced successes and chain/delivery and logistics/transportation
opportunities, especially: • Many also cited staffing challenges
• Improved customer relationships • Costs increased for many, including costs associated with
• Safer workplaces workplace health/safety, labor, and volatility in
• An increase in digital transformation ingredient pricing
OPPORTUNITIES IN 2022 CHALLENGES IN 2022
Most are highly optimistic about business in 2022 and expect COVID pain points remain but the industry continues to adapt
an even better year than 2021 • Practically all organizations are experiencing an increase in
• Three-quarters expect revenue to grow raw materials pricing
• Most are increasing capital spend and opening or adding • Companies are softening the blow by finding new
new lines and/or plants suppliers, renegotiating with vendors, and passing
• The majority expect production levels to be higher than in along some increases to customers
2021 • Staffing remains a stubborn challenge
• Most are targeting new distribution channels; just under • Companies are allowing flexible work schedules and
half are improving customer service and increasing use of increasing salaries, among other tactics
analytics • Logistics and inventory scarcity issues persist
• Cloud computing is common and will see continued • Companies are increasing customer communication,
growth, an industry technology driver increasing the number of suppliers, and purchasing
inventory in bulk 30If you have additional questions, please contact
Wes Patterson Frank Sennett
Senior Director, Director of Research
Research & Insights Crain's New York Business
Crain Communications fsennett@crain.com
wes.patterson@crain.com 312.649.5278
914.443.7546
Thank you
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