Food Industry Faces Technology And Global Challenges In 1999

Electronic commerce, "functional foods", and global growth are among the most challenging issues facing the food and consumer products industry in 1999, says Grocery Manufacturers of America (GMA) President and CEO C. Manly Molpus. In the GMA's annual state of the union message, Molpus identified electronic commerce as a tool that will change the way business is conducted in the new millennium. In the shorter term, he says "look for the development of the first-ever industry extranet in 1999, which will allow us to move from the current system of one-on-one communication between trading partners to an open and interactive environment among manufacturers, distributors, and consumers." And expect the impact of Web-enabled technologies to extend to consumers' shopping habits, the GMA president added, estimating that the on-line or "consumer direct" channel will comprise 8% to 12% of the market by 2005. Other predictions:

  • "Functional foods will find a solid place in the supermarket aisles in 1999, to the tune of some $15 billion in sales," Molpus says. He calls functional foods -- nutritionally enhanced products designed to provide health benefits beyond basic nutrition -- the biggest innovation by the food industry in decades. Molpus cited cholesterol-lowering margarine as one example of a functional food.
  • The saturation of U.S. markets will prompt food and consumer product manufacturers to increasingly look to global markets for growth, says the GMA president.
  • Barring unexpected disasters, don't expect big increases in food prices. "Competition will continue to flourish, and raising prices will not be a viable option for most manufacturers," Molpus says. Instead, companies will look for new ways to drive costs out of their supply chain and streamline their own systems, he added.
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