Food sector must become more sustainable to keep supermarket prices affordable

'Food producers need to design their business processes even more efficiently to keep prices low,' says Dennis van Hattem - Partner Operations

Foodsector verduurzamen 2

Figures from the Central Bureau of Statistics show that food in particular was about 15 percent more expensive than a year ago. High prices for raw materials, energy costs, and rising labor costs are partly to blame.

Smaller food producers will have to design their business processes even more efficiently to keep supermarket prices affordable. That means automating and making them even more sustainable to further reduce operating costs. One problem can be that this involves investments that the companies don't have the money for.

You see consumer behavior changing. People are buying more price-consciously and increasingly looking to discounters to save on the cost of daily groceries. That means that service supermarkets' sales will come under more pressure and they will ask their suppliers to lower prices.

So that is only possible if the supplier is going to reduce costs, for example through automation and sustainability. Of course, sustainability has been an issue for years, but companies should accelerate this now.

Companies in the food sector must become a center of excellence. They should want to be leaders in their field and look at how they can make their production smarter, and more efficient to reduce operating costs and keep products affordable.

One way to do this is to listen to the company's employees, optimize processes and, most importantly, as management, roll up their own sleeves.
Supermarkets and suppliers can also join forces and look at chain optimization.

The pressure on all parties in the chain is increasing. By making an overall cost assessment, you can clearly see where margins can be improved. The processes must be geared to that. This requires mutual trust.

In all probability, there will be no end to price increases in the food sector for the time being.

Cause: Inflation in the Netherlands increased to 8 percent in February