2017 Food and Beverage Industry Outlook

Uncertainties you'll face in 2017 include reformulating for 2018 label changes, looking for growth and any changes implemented by the new commander in chief.

By Dave Fusaro, Editor in Chief

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American FlagThis year, perhaps for the first time in history, the fortunes of the U.S. food and beverage industry may depend upon the president of the United States.

There is as much uncertainty as there is optimism in the inauguration of Donald Trump as the 45th chief executive. On the positive side, will he loosen various regulations, dial back the FDA and overall cultivate a pro-business climate? Or will his critical statements about free trade harm the export-heavy food industry? Will his stance on immigration drive up labor costs and create job shortages? Could he create a climate for unsafe foods?

Tangentially, will any company that criticizes his initiatives or supports liberal causes face a boycott from his very vocal supporters, Breitbart.com at the forefront?

When we surveyed our Editorial Advisory Board about their outlook for the new year, with no prompting from us most mentioned the new administration. "What effect will the Trump administration have on USDA/FDA? And thus the food industry?" asked one of our board members. "Although he may have bigger agencies to go after."

"Certainly the incoming administration has to be potentially the biggest scary/disruptive thing on the horizon – such an unknown," said a second.
Still another, with a degree in food science, offered this psychological analysis:

"After the election, the country isn't merely polarized, it is affectively polarized: a social science term meaning people don't merely disagree with each other (opposing views). They now actively dislike each other. This sentiment exceeds discrimination of race or religion. This self expression has given rise to more boycotting and protests and we see this in branded products, e.g.: Kellogg's Frosted Flakes [or all of PepsiCo]. Look at web sites and see products as being identified as liberal vs. conservative for no logical reason."

Another of our industry advisors provided a laundry list of new-administration worries:

  • Will some regulations be targeted for repeal or significant decrease in enforcement, such as menu labeling?
  • Will upcoming compliance dates be further extended?
  • Will FDA and state funding for certain regulatory programs be scaled back substantially, including inspections of food facilities? (It could be unpopular to scale back FSMA requirements, however, if that is perceived by the public as decreasing the safety of our food supply.)
  • Will there be efforts to repeal right-to-know laws such as GMO labeling as burdensome to industry without a commensurate public health benefit?
  • The pendulum may swing more in the direction of commercial free speech with respect to health-related claims for products, even if there is just preliminary evidence in support of a structure/function claim.

A lot will depend on which Donald Trump takes the oath of office on Jan. 20: the candidate who promised to "drain the swamp" in Washington and scale back the size and reach of government, or the post-election president-elect who made conciliatory and reassuring remarks that there would be at least some continuity.

One thing is certain, or at least obvious: Trump is a businessman, not a career politician, and his most consistent statements have been about improving the business climate in this country. That should bode well for all companies.

Three 2018 milestones

Big government and burdensome regulations are one thing (two things?), but food safety is quite another. Even a presidential change-agent must be wary of creating a situation that could kill people.

Assuming the new president doesn't effect some of the changes discussed above, the food & beverage industry will spend 2017 preparing for regulatory changes that will take effect in 2018. Next year will see three very big ingredient and labeling-related related changes that need to be worked on this year.

GMO labeling is one of the most polarizing issues ever to affect the industry. Big Food hates the idea; Little Food loves it. The consuming public appears to be about evenly divided on the issue.

When Congress and federal agencies couldn't come up with a labeling plan, a handful of states, with Vermont in the lead, took the initiative. The Vermont legislature passed a law in 2013 that required labeling by July 2016, with several adjoining states planning to join in. Congress used that as a deadline to create a compromise, mandatory (although with options), national law that would pre-empt Vermont's and any other state laws.

Under the National Bioengineered Food Disclosure Standard, food and beverage companies can select from among three options: add "contains genetically modified organisms" to their labels, use a GMO label to be created by USDA or use the SmartLabel QR code, which the food industry itself created.

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  • Few things are as disheartening as the ever increasing disconnect between corporations and consumers. Twenty years ago I began warning my industrial clients that they would soon become dependent upon maintaining their customer base via their online status. In a matter of months before the dot com bubble burst, I had witnessed a little online message board grow from less than two dozen registered users, to over four-hundred thousand. There was no denying the fact the consumers had gained a collective voice that was heard around the world. Now, two decades later, social media has grown exponentially throughout society, yet I see an ever widening disconnect between corporate America and consumer America. Please take it as constructive criticism when I point this article out as being a prime example of that growing level of detrimental disconnect. I wasn't in the least surprised to read, "we surveyed our Editorial Advisory Board", but I have to ask why you're doing an internal survey when there is a plethora of consumer information available from social media. Case point is this: "This self expression has given rise to more boycotting and protests and we see this in branded products, e.g.: Kellogg's Frosted Flakes [or all of PepsiCo]. Look at web sites and see products as being identified as liberal vs. conservative for no logical reason." Well, there is a very 'logical reason' for the way consumers feel, and that's because you're witnessing the re-birth of Americanism. I don't have time to dissect the entire article, but the above statement combined with, "GMO labeling is one of the most polarizing issues ever to affect the industry. Big Food hates the idea; Little Food loves it. The consuming public appears to be about evenly divided on the issue." clearly show the widening disconnect between corporate America and consumer America. If you really think that there is a fifty-fifty split amongst consumers concerning GMO/GE products, then you are not paying attention to the consumer voice via social media. It's the same concerning the exceedingly polarizing statements of the PepsiCo CEO; one should not be so disconnected as to shoot themselves in both feet then wonder why they are bleeding and can't walk. InBev chose to take a very public sociopolitical stand, and so also will they suffer the consequences of turning on consumer America. I hate to break the news, but the majority of consumer America is rapidly distancing itself from media propaganda and the indoctrination of liberal academia. Does anyone really believe that Kellogg's, InBev or PepsiCo are going to survive by taking sociopolitical positions that alienate themselves from majority of consumer America?

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