Facts & Challenges
The main players in the food industry include farmers, food manufacturers, wholesalers, retailers, online retailers, restaurants and hotels, suppliers and logistics companies, food and agricultural research institutes, regulatory authorities, consumer associations and non-profit organisations, food technology companies and specialist companies in the packaging industry. According to the German Food Association, the agricultural sector is home to the largest number of businesses. More than 5 million people work in the entire sector. At around 250 billion euros a year, food wholesalers generate the highest turnover in the food industry.
The business of food wholesalers is the distribution of food to retailers, restaurants, catering companies and other commercial customers. Companies buy food in large quantities directly from manufacturers, farmers or other wholesalers and then sell it on to their customers. Food wholesaling is strongly influenced by changes in demand, consumer habits, the availability of agricultural products and trends in the food industry. Technological advances, such as the introduction of online ordering systems and automated warehousing systems, are also having a major impact on food wholesalers.
The pandemic led to enormous disruptions in the food industry, but also resulted in e-commerce gaining strength, in accelerating digitisation and in the use of artificial intelligence (AI). Fluctuations in demand and disruptions in the supply chain led to significant price volatility and limited supply. Some products experienced significant price increases. Food safety and hygiene also became increasingly important.
The food industry is characterised by various megatrends. Customers are becoming increasingly nutrition-conscious, a trend that the industry needs to adapt to by offering healthy, vegetarian, vegan, gluten-free, lactose-free and personalised food and beverages. The demand for environmentally friendly and sustainably produced food is growing. Consumers are interested in organic farming methods, the use of renewable energy, regional products and reducing food waste. Companies are increasingly focussing on sustainable packaging and looking for ways to reduce their ecological footprint.
Trends in the food wholesale sector
The COVID-19 pandemic has had a profound impact:
15% of the jobs covered by social security and numerous mini-jobs have been lost while online retail has gained strength. Meanwhile, the situation is normalising again.
Accelerated digital transformation and growth of e-commerce businesses:
Companies in the food industry have increasingly introduced online shops and delivery services to offer customers a safe and convenient shopping experience.
Technologies such as automated inventory management systems and AI-powered demand forecasting have become increasingly important for improving efficiency in the supply chain.
Coordination and cooperation:
During the pandemic, food wholesalers, suppliers and retailers have increasingly joined forces to overcome shortages and maintain food availability.
Supply chains have been adapted to minimise supply bottlenecks and maintain continuity of supply. This includes working with alternative suppliers and switching to local or more regional sources of supply for the product range.
Many companies have developed new products and packaging solutions to meet the changing needs of consumers. Sustainability in the supply chain is being improved and alternative delivery methods such as the use of drones or autonomous vehicles are being researched.
There are more and more food and beverage products on the market. Healthy, personalised, vegetarian and vegan products as well as convenience foods are in demand. More and more emphasis is being placed on proof of origin, ingredients and production methods.
Food manufacturers and wholesalers are facing many challenges such an increasing width and depth of product ranges, volatile demand, limited logistics and retail space and an increasing degree of urbanisation.
As more and more single households exist, the market for frozen products is growing very quickly. This means that more energy-intensive storage facilities for chilled and frozen foods are needed. As a result, energy-efficient storage technology, proper building design and construction and alternative energy generation are needed. Appropriate cool boxes and temperature-controlled vehicles are required for the transport of foods in order to not to interrupt cold chains.
What are the requirements for logistics?
Logistics in the food sector is particularly demanding, as it must comply with strict hygiene regulations, quality standards and expiry dates, observe cold chain requirements and specific storage conditions, offer a wide variety of products and also meet sustainability requirements. Good Distribution Practice (GDP) is a quality management system designed to ensure the safe distribution of food. This includes controlling temperature, humidity, exposure to light and other environmental factors that could have an impact on food quality. Hygiene and traceability, for example through using blockchain technology, are further challenges. Food wholesalers require chilled storage facilities. Especially in the frozen foods industry, there is a strong price pressure on merchandise due to high energy costs. Storage and picking equipment must be refrigeration-proof and maximum use must be made of the energy-intensive storage space.
The food industry is characterised by many fast-moving items and a wide range of products. Growing e-commerce is also increasing the demands placed on order processing, delivery speed and delivery quality. The omnichannel strategy, which integrates online and offline channels, requires appropriate omnichannel logistics. In general, the enormous variety of products coupled with the permanent availability of goods increases the complexity of storage and order picking.
Live storage systems are particularly suitable for fast-moving food and beverage products. Stored items automatically move to the picking face. The first-in-first-out (FIFO) principle ensures that best-before dates are adhered to. Another advantage is that the storage and retrieval sides of live storage systems are separate from each other so that replenishers and order pickers do not get in each other's way. Live storage installations are often combined with pallet buffer levels on top to store palletised food and beverages for continuous replenishment of the picking levels underneath. For fresh foods such as salads from regional producers that usually leave warehouses on the day of delivery, physical storage is usually not worthwhile. It is better to temporarily store these goods in a separate picking area, cross dock them with other products stored in the warehouse and then ship them off together. Furthermore, B2B and B2C stocks should be kept separate, as pallets or larger storage units are usually handled with forklift trucks in the B2B area. B2C stocks, on the other hand, are kept in smaller quantities that tend to be handled by pickers with picking trolleys.
In the food wholesale sector, too, the future belongs to digitisation to increase efficiency and reduce costs. The use of inventory management systems (IMS) or warehouse management systems (WMS) enables full or partial automation of warehouse processes, supported by automated guided vehicles (AGVs) and robots. By networking all machines and systems, big data and by analysing them with AI, warehouse operations are becoming even more efficient.
In addition to high-bay racking and live storage systems, BITO also offers the MB Food & Delivery Box which can be ordered in several sizes and complete with modular insulating inserts, cold packs and dividers.