It is no secret that the food and beverage industry has experienced a tumultuous couple of years, and unfortunately, strains from the pandemic still linger. With the new year, what are some of the trends seen in 2021, and what will be coming down the pipeline in the future?

As GHJ’s Food and Beverage Practice Leader, I recently had the opportunity to join industry experts in Ervin Cohen & Jessup’s “Food and Beverage Industry Roundtable: 2021 in Review” panel, where I discussed consumer trends, legal and regulatory developments, deal trends and what the industry can expect moving forward. The industry will continue to face challenges this year. Here are our predictions.


The obvious elephant in the room is the impact of the COVID-19 pandemic. Restaurants thought communities would be post-pandemic by now, but that is not the case. The experience of dining has shifted, and many establishments are now finding themselves on the front lines of enforcing health and safety rules.

The UCLA Labor Center’s Fast Food Frontline: COVID-19 and Working Conditions in Los Angeles report noted that 50 percent of fast food restaurant workers have experienced negative interactions with patrons or coworkers over safety protocols. Thirty-four percent have been yelled at, 13 percent have been threatened and four percent have been physically assaulted. Employees have also faced economic hardships: nearly half (44 percent) have not had enough money to pay for groceries, and 43 percent have missed rent or mortgage payments.

Some areas, such as California or New York City, are now implementing proof of vaccination mandates. Staff are forced to modify aspects of service, including menu prices or constrictions, hours, halting deliveries and more. Plus, they now must handle the added pressure of enforcing other public health mandates, such as masking requirements.


One of the biggest challenges the pandemic has caused is the tremendous disruption in the supply chain across all aspects of the industry — from farmers and other agricultural roles to food service distributors and producers to consumer packaging companies and grocery or retail. Such disruptions impact not only raw materials but also packaging, whether glass or plastics or metals. Freight costs have skyrocketed (up to 10 times more expensive than normal), and rail and truck deliveries are suffering from the lack of labor. Companies are being forced to reconfigure their spaces and recalibrate their equipment to deal with the new normal, and companies that do not address these issues will continue to run into bottlenecks and other related problems.

To combat this, companies should consider transitioning to a more decentralized approach. Establishing smaller-scale storage facilities closer to customers can help alleviate some of the freight and transportation challenges. It is also essential to invest in relationships with supply-chain partners. If companies do not have good relationships, they will not receive products as quickly. Instead, they should consider working with more regional partners instead of having one national supplier. According to Food Industry Executive, the unpredictability of the current supply chain environment may help explain why some processors are choosing to act as their own suppliers. As a result, vertical integration, which was prevalent a century ago, may see a resurgence.


To assess the ongoing economic impact of the pandemic, the National Restaurant Association released a survey of 4,000 restaurant operators in September 2021. According to 84 percent of operators, total labor costs (as a percent of sales) are higher than they were prior to the pandemic.

This is not limited to restaurants, however. On the operations side, the labor shortage has forced companies to use more overtime because they are unable to get the qualified employees that are needed to be working on the line — and a lack of qualified employees has led to bottlenecks in production. According to Food Industry Executive, a key to solving this issue could be to raise wages. However, this leads to businesses raising prices. According to Food Manufacturing, General Mills announced price increases of up to 20 percent — a growing trend seen in the food and beverage industry that is unlikely to stop soon. Alternatively, many businesses are investing more in innovation and automation.


Inflation, which impacts the entire economy, is also on the rise, and it is a trend likely to continue, potentially even for the next few years. The Washington Post reported in December 2021 that ongoing food supply problems have shown up in a variety of sectors, wreaking havoc on prices and contributing to the highest inflation in three decades. Additionally, prices rose 6.2 percent in October 2021 compared with a year ago, the largest annual increase in about 30 years. Fortune reported that in November 2021 that the U.S. Department of Agriculture’s food-at-home index, which includes grocery store or supermarket prices, rose 6.4 percent over the previous year. According to the index, the prices of meat, poultry, fish and eggs increased 12.8 percent and were driven up by strong domestic and international demand, labor shortages, supply chain disruptions and high feed and other input costs.

The increase in inflation is a result of labor shortages, supply chain backlogs and transportation costs, and it is unlikely to decrease until supply chains have time to clear. Backlogs have constrained auto manufacturing, housing construction and food production alike.

Looking ahead in 2022, inflation rates will continue to impact the food industry and cause prices to rise, especially at grocery stores.


A significant trend moving forward is the focus on environmental, social and corporate governance (ESG) as it relates to sustainability and social impact. Restaurants need to have more plant-based options beyond salads. Consumers are making healthier decisions when it comes to their diets and nutrition, and grocery stores and retailers must respond to consumer demands. Impossible Foods and Beyond Meat are now known names, but Hormel, Kellogg, Kraft and Tyson are also getting involved in the plant-based revolution. The Good Food Institute’s 2020 State of the Industry Report found that global plant-based meat retail sales rose to $4.2 billion, up from nearly a billion just one year prior.

Food Industry Executive reported that the meat alternatives market has benefited from these trends, growing 45 percent in 2020 (twice as fast as conventional meats). Consumers are interested in the transparency of products and want to know where their food comes from and how it is made. Clean labels, socially responsible corporations, immunity products and locally and ethically sourced products are all areas of consumer interest.

Forbes notes that an IBM survey found 80 percent of consumers believe sustainability is important, and nearly 60 percent would change shopping habits to reduce environmental impact. The survey also found that about 64 percent of shoppers follow a diet- or health-related wellness program, up from 49 percent in 2018.

Investors are embracing the trend. The Good Food Institute’s 2020 State of the Industry Report claims companies and investors interested in plant-based innovation recognize its transformative potential to achieve a carbon-neutral food system, and they are positioning themselves to lead this transition. This motivation, in addition to the clear opportunity presented by growing consumer demand, made 2020 a record-breaking year for plant-based sales and investment. More capital was raised during 2020 than any single year in the industry’s history — a healthy $2.2 billion was invested in the plant-based space.

While this outlook is fantastic, there are still barriers, most notably price and quality concerns from consumers. This will be something to keep an eye on as this industry continues to boom.


Food and beverage technology has been robust over the past few years. PitchBook’s Emerging Tech Research report found that venture capital funding in food tech startups leapt in the first quarter of 2021 to over $10 billion across 241 deals, a quarter-on-quarter jump of over 120 percent. The spike was largely due to investments in e-commerce platforms, but there is also growing interest in equipment, automation and robotics — from the production lines to the picking fields on the agricultural side. Think along the lines of e-commerce, smart warehousing, artificial intelligence, self-service counters or fostering sustainability, just to name a few examples. Restaurants are also investing in technology to increase operational efficiencies.

Despite this robust increase, some still wonder how long this trend can continue and whether there will be a slowdown. For 2022, at least, it is unlikely to stall. Food Industry Executive points to automation being at the forefront in the near future, with the lack of available labor pushing automation as a prioritized solution to enable more output. From an agricultural standpoint, farmers have been leveraging satellites to farm 50 times the acreage with fewer laborers. Likewise, delivery services must leverage automation as much as possible. The naysayers and doubters may be out there, but their voices do not seem to drown out the idea that tech, and investment in it, is here to stay. Forbes reports that technology will continue to accelerate at a feverish pace in the food and beverage industry and permeate every sector and process — and that food and beverage has become the new tech industry.


The Biden administration has also been on everyone’s radar, and many wonder what the new year will have in store. Perhaps the most top of mind and much- debated point of interest is the president’s proposed legislation: Build Back Better. Although the plan is currently stalled, Politico reports that White House officials insist they are far from giving up on passing the package.

When it comes to the food and beverage industry, there are a few key areas to monitor. The National Restaurant Association raised concerns about the potential impact the plan would have in an open letter sent in September 2021, primarily citing concerns that parts of the bill would be too expensive for small businesses. According to the association, the increase in variant cases of the coronavirus accounted for 78 percent of operators seeing a decline in customer demand for indoor dining. Further, 91 percent of operators were paying more for their food, and 78 percent felt they were understaffed. The Hill reports that the U.S. has lost more than 90,000 restaurants since the start of the pandemic, and groups are pushing Congress to authorize more federal aid after the $28.6 billion rescue fund quickly ran out of money; two-thirds of restaurants that applied never received funding.

On the flip side, the proposed framework has a fair amount of green energy tax credits that could provide opportunities for companies investing in energy-efficiency improvements. The proposed plan would also provide resources and incentives to farmers, ranchers and other owners to reduce carbon emissions. The plan, or a version of it, will be something to watch in the future.


The Food and Beverage Services Global Market Report for 2022 claims the global market is expected to grow from $3.2 trillion in 2021 to $3.7 trillion in 2022 at a compound annual growth rate (CAGR) of 13.8 percent. This is mainly due to companies rethinking their operations and recovering from the pandemic. It remains to be seen what impact new variants will have on the industry this year, but the report states that the industry is expected to benefit from rising digitization of food services, as consumers are increasingly ordering online for home deliveries. Hylant’s “Food and Beverage Industry Outlook: Winter 2022” noted that food prices remain above pre-pandemic levels, but consumers will still spend on food even with the changing behaviors from the pandemic. The outlook echoes the sentiments of prices, labor issues and distribution challenges, and Hylant even claims that logistics costs for food and beverage companies will be a permanent challenge for the sector.

However, investment in food and beverage remains strong. Investors who are still bidding are incredibly interested in making deals despite the labor, supply chain and inflationary price challenges. Valuations continue to be robust; although there are fewer bidders, the ones who remain are more serious. From a venture capital perspective, the biggest challenge is identifying the sustainable earnings of a company due to the pandemic. There is also a growing venture capital interest in ingredients and supplying other food manufacturers.

The good news is that challenges present opportunities and innovation — and everyone needs to eat. How things will pan out, especially as the food and beverage industry continues to feel the impact of the pandemic, remains to be seen.

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Donald Snyder

Donald Snyder, CPA, has more than 30 years of experience in public accounting. He provides audit, accounting and advisory services to clients in numerous industries, including food and beverage, restaurant, manufacturing, wholesale/distribution and technology. Donald is a well-known business…Learn More