Higher costs are leading CPG companies to revise their products and their operations, according to TraceGains’ 2022 State of Supply Chain Disruption Report. The survey of over 300 food, beverage, and dietary supplement professionals found that companies are not only changing their current products but also adjusting their approach to new product development in the face of higher ingredient costs.
Key findings from the survey:
- Almost 9 in 10 respondents said higher prices have changed the way they do business. Nearly two-thirds have modified six or more recipes or product formulas, while almost half have completely halted production on some products.
- CPG companies are taking different approaches to innovation in response to supply chain disruption – 35% of respondents said their organizations have cut back on R&D, while an almost equal proportion said that they’ve accelerated innovation.
- To prepare for the future, CPG companies are increasing their supplier diversity. More than two-thirds plan to expand their supplier networks, while one-quarter plan to reshore their supply base.
“As consumers, we feel the pain of supply chain issues each time we walk out of a grocery store,” TraceGains CEO Gary Nowacki said in a press release. “This survey sheds light on the problem directly from a CPG brand’s perspective, and lets other food and beverage companies know they’re not alone in this fight. Forward-thinking brands have used this unfortunate time as a wake-up call to modernize antiquated operations and those who already have are much better positioned to mitigate disruptions with as little impact as possible.”