Key Challenges Facing Middle Market Food and Beverage Companies

The supply chain of raw materials for food manufacturers is facing increasing pressure due to a complex mix of global, environmental, economic, and logistical challenges. Here’s a breakdown of the key problems: ⸻ 🔑 Key Supply Chain Problems for Food Manufacturers 1. Raw Material Shortages • Causes: Climate change (droughts, floods), geopolitical instability (wars, trade restrictions), declining yields. • Impact: Price volatility, inconsistent supply of essential ingredients like sesame seeds, oils, grains, etc. 2. Transportation & Logistics Disruptions • Examples: Port congestion, trucker shortages, container availability, Suez Canal or Panama Canal slowdowns. • Impact: Delivery delays, increased freight costs, difficulty meeting demand timelines. 3. Geopolitical & Trade Barriers • Examples: Tariffs (e.g., US tariffs on imports from around the world), sanctions, new regulations (FSMA, EU border controls). • Impact: Higher import costs, need for compliance systems, sourcing alternatives. 4. Quality Control & Traceability • Issue: Inconsistent quality of raw materials from different origins or brokers. • Need: More robust supplier vetting, in-house lab testing, traceability from farm to factory. 5. Price Volatility • Examples: Spikes in costs of sesame and packing materials • Cause: Currency fluctuations, speculation, crop failures. • Impact: Eroded margins, need for long-term contracts or hedging strategies. 6. Supplier Reliability • Issues: Over-dependence on single-source suppliers or countries. • Example: 70% of sesame coming from Africa creates exposure to Ethiopian or Sudanese unrest. • Solution: Diversification, co-investment in local processing, forward buying. 7. Sustainability & Ethical Sourcing • Increasing Demand For: Non-GMO, organic, ethically sourced materials. • Challenge: Certification costs, monitoring, lower yields of sustainable options. ⸻ 🛠️ Solutions and Mitigation Strategies Strategy : Shortages Contract farming, dual sourcing, vertical integration Logistics Partner with local or regional distributors, increase buffer stock. Trade Risk : Establish backup suppliers in different trade regions Quality Issues In-house QC lab, blockchain traceability systems Price Fluctuation Futures contracts, long-term deals with producers. Reliability : Build strategic alliances with key suppliers. Sustainability : Partner with certification bodies, transparent storytelling for brand value As someone with experience in sesame processing: • Problem: African sesame supply is vulnerable (Sudan conflict, Ethiopia unrest). • Opportunity: Encourage sesame farming in Latin America or USA (Texas, Oklahoma pilot projects). • Solution: Support growers, buy forward, co-pack or partner with local producers.

The Mars–Kellanova deal just sent a warning signal to every mid-sized executive. The ink is dry on the $36B deal between Mars and Kellanova. Most headlines are focused on Pringles and Snickers under one roof. If you are an EVP at a $5B–$10B CPG company, you should be reading the subtext instead. The middle has officially become the kill zone. As we move into 2026, the market is bifurcating fast. On one end, you have the Titans like PepsiCo. They win on distribution, procurement power, and balance sheet strength. They can outlast cycles and absorb margin pressure longer than anyone else. On the other end, you have the insurgents like Mid-Day Squares and poppi. They win on speed, cultural relevance, and focus. They do not need to be everything to everyone. They just need to matter deeply to someone. If you are an $8B company sitting in the middle, you have a problem. You are too small to fight Mars on price and scale. You are too slow to fight Poppi on trends and experimentation. That makes you distressed inventory. From an executive search perspective, the signal is already clear. I am seeing a real talent migration underway. Strong leaders are quietly exiting the middle tier of CPG. Not because they lack loyalty or skill, but because they can read the direction of travel. They are moving up to the Titans for safety, structure, and longevity. Or they are moving down to PE-backed challengers for equity, scope, and real influence. Very few are choosing to stay parked in the middle anymore. For C-suite candidates, this matters more than ever. The “safe” role at a heritage, mid-sized brand is not as safe as it looks. In many cases, it is just a slow acquisition target with limited upside and shrinking decision autonomy. Career strategy in 2026 is about positioning, not comfort. My advice to senior leaders is simple. Do not get stuck in the middle. Be honest about where your company sits in the ecosystem and what that means for your trajectory. #FMCG #Mars #Kellanova #M&A #CareerStrategy #ExecutiveSearch

In every boardroom I’ve sat in this year, the same conversation surfaces: why are category leaders losing momentum and how are challenger brands stealing share? After spending several decades in big corporate environments, the uncomfortable truth is that many traditional FMCG models were built for a market that no longer exists. We engineered for distribution advantage, built brand equity on TV and designed innovation pipelines with long lead, linear innovation cycles. But the new rules of growth are different. And they’re being written, unapologetically, by challenger brands. Here’s what I’m observing: · Private labels and challenger brands are reshaping the game. · Challenger brands don’t just compete. They reframe the category narrative. · They prioritize speed, not polish. Connection, not campaigns. · Packaging is now a media channel. Your shelf presence is on an iPhone screen. · Challenger brands leveraging social-native marketing are achieving 2.5x engagement at ~35% lower CAC than traditional FMCG. So what’s the real challenge? · Incumbents are often playing defense with structures designed for scale, not speed. · Innovation and Go-to-Market are still linear. · Talent is optimized for predictability, not fluidity. · Leadership often lacks the mandate to disrupt the very models they’ve built their careers on. · Digital remains elusive. They are still operating with an old-world marketing model This is where strategic leadership must evolve. I’m not suggesting we throw out what works. But we must build ambidextrous organizations capable of defending core businesses while addressing challenger brands. Corporations must embrace the new marketing model to succeed: · Build brand equity through content-led marketing that is culturally relevant. · Create influencer partnerships that help build brand cachet and extend reach. Creators are not simply media buys; they are brand builders. · Build tribes. Consumers are no longer just audiences; they are co-creators. Smart brands involve them in product development and foster identity-driven communities. · Build capabilities for precision targeting. It’s not just about reaching more people; it’s about being relevant to the right people. · Design a turbo-charged innovation model. Shorten the feedback-to-launch cycle and innovate in rapid sprints rather than traditional stages. · Accelerate cultural cachet through bold, attention-grabbing strategic brand collaborations and partnerships. In my view, the winners in this next chapter of FMCG won’t be the ones who defend their legacy the hardest. They’ll be the ones who evolve the fastest without losing the core. It’s about building businesses that earn their next era of relevance with new capabilities, new talent models, and new definitions of brand value. Because at a time when every consumer decision is a referendum on purpose, accessibility, and authenticity…being big doesn’t make you safe anymore. It just means you have more to unlearn.

Del Monte’s Bankruptcy: A Wake-Up Call for FMCG Industry Leaders The recent bankruptcy of Del Monte Foods, a giant in the canned food sector, is more than a corporate event—it’s a crucial warning for leaders across the fast-moving consumer goods (FMCG) industry. While many point to shifting consumer habits and rising costs, I believe the underlying causes are deeper, rooted in leadership and structural missteps. The following views are my personal opinions, shaped by years of experience in this industry; a deeper analysis may reveal even more insights. Top Management’s Operational Overreach A growing issue in FMCG is top management and directors getting too involved in daily operations. While often done with good intentions for better governance, this approach can backfire when leaders lack industry-specific knowledge and fail to keep pace with rapid market changes. Decision-making becomes centralized and slow, disconnected from consumer realities. This insular leadership style stifles innovation and delays vital responses to evolving market demands. Short-Termism and Cost-Cutting Pressure to deliver constant growth often traps companies in a cycle of aggressive cost-cutting and outdated sales tactics. This focus on short-term profits leads to neglect of R&D and long-term strategy, undermining the company’s ability to innovate and adapt. Del Monte’s struggle with declining demand and surplus inventory is a clear result of this short-sightedness. Expansion Without Core Strengths—A Smarter Approach Rapid expansion into new territories without strong teams and infrastructure can create control issues and open the door to mismanagement. Instead of spreading resources thin by opening branches and regional offices, companies should consider partnering with experienced distributors. Distributors can provide local market control and valuable feedback to headquarters, allowing for more agile and informed decision-making without the heavy overhead. A Call to Action Del Monte’s downfall is a stark reminder: legacy FMCG brands must rethink their strategies. Leaders should empower operational experts, focus on sustainable growth and innovation, and leverage local distributors for expansion rather than overextending their own resources. Ignoring these lessons risks repeating history. The future belongs to those who adapt, innovate, and stay closely connected to their consumers—before it’s too late.

What Is Changing. The middle is collapsing and most manufacturers are still pretending it is not. For the last decades, mainstream CPG was the engine, products priced between value and premium with broad appeal. Predictable volume, consistent margin. The middle was not just a strategy, it was the entire business model and that model is now under siege from both sides simultaneously. From below, private label has changed the value equation permanently; Store brand sales have increased by $10.1 billion since 2022, an all-time high. Walmart, Kroger, Costco Wholesale, ALDI USA and Lidl in Germany are building brand portfolios that compete directly with the manufacturers they carry, and nearly 70% of consumers now believe private label is equal in quality to national brands. From above, challengers are redefining premium faster than legacy players can respond. According to McKinsey & Company, disruptors now drive more than 50% of total growth in bath and body, performance nutrition and pest control. Brands like fairlife, LLC, Alani Nutrition, Liquid Death and Rao's Specialty Foods, Inc. are not emerging anymore. They are setting the pace while PepsiCo, Kraft Heinz, General Mills, Conagra Brands and The Campbell's Company defend mainstream SKUs with promotional tools that are losing effectiveness by the quarter. Mondelēz International, Kellanova, Nestlé, Danone and The Hershey Company have significant mainstream exposure in snacking and dairy. Colgate-Palmolive, Kenvue and Procter & Gamble are living the same compression in personal care. The pressure is category-agnostic. Why this matters for CPG The mainstream segment is not experiencing a temporary dip. It is structurally eroding. Annual campaigns set positioning in stone for 12 months while competitive dynamics shift monthly. That mismatch is becoming dangerous. The Better Peer take The response is not to defend the middle. It is to exit it deliberately and rebuild at the edges. Unilever is already making this call. Nestlé is doing it with its portfolio reset. Grupo Bimbo, The Kerry Group, LLC, Tyson Foods and Hormel Foods are all facing the same inflection point. The brands that survive this decade will not be the biggest. They will be the clearest about what they stand for. The question is: which of your mainstream SKUs are you defending out of conviction, and which ones are you holding because no one has had the courage to walk away. #CPG #TheBetterPeer #CPGConsulting #BrandStrategy #ConsumerGoods #Innovation #Retail #FoodAndBeverage

Supply chains are increasingly complex, spanning upstream suppliers, midstream manufacturers, and downstream distributors and retailers. In such interconnected networks, smooth throughput — the rate at which materials, products, capital and information flow — is critical to business performance. Yet real-world disruptions often lead to throughput compression, where flow slows. One of the less visible challenges in orchestrating throughput under compression is the variability in demand patterns across multiple SKUs. In many consumer goods sectors, demand follows a long-tail distribution: a few SKUs drive the bulk of volume, while a large number of niche SKUs contribute marginally but are critical for market coverage and customer satisfaction. The coefficient of variation (CV) — the ratio of standard deviation to mean demand — differs widely across SKUs. Core, high-volume products often show low variability, making them easier to plan and schedule. In contrast, niche SKUs exhibit very high variability, with unpredictable order cycles and small batch requirements. To serve this diversity, manufacturers are often forced to run very short production runs, sometimes as little as a single pallet lot. This introduces significant complexity: frequent changeovers, increased downtime, higher waste, and fragmented throughput. The constraint is not only in machine time but also in the ability to sequence runs so that the next batch is available just in time for demand — a concept known as “days before next run” (DBNR). DBNR reflects the balancing act between service and efficiency. If a SKU is run too frequently, capacity is consumed by setups. If it is run too infrequently, stockouts occur given the high variability of demand. When throughput compression sets in — whether from upstream shortages or midstream bottlenecks — managing DBNR across dozens or hundreds of SKUs becomes even harder. This is where synchronization across partners is essential. Suppliers must align raw material deliveries with compressed production windows; manufacturers must optimize sequencing across SKUs under constraint; and distributors must accept rationalized availability of niche SKUs during compression periods. In this essay I have tried to look at all three dimensions of the compression: 1.  Upstream (Suppliers and Raw Materials) - Throughput compression upstream often stems from shortages of key inputs, delayed shipments, or price volatility. 2.  Midstream (Manufacturing and Processing) - Midstream compression typically arises from plant shutdowns, labor shortages, or process inefficiencies. A paint manufacturer facing a resin shortage may operate below capacity, producing fewer SKUs and delaying delivery schedules. 3.  Downstream (Distribution and Retail) - Downstream compression manifests as logistics bottlenecks, dealer stockouts, or last-mile inefficiencies. Read my paper to understand the inter-dependencies.   #supplychain #demandvariability #DBNR #throughput

Over the past 6 months the FMCG food/beverage sector has unfortunately undergone extensive restructuring resulting in a lot of redundancies across all levels (mainly mid to senior positions) in supply chain. The common theme contributing to the restructuring is Food Service, the sector is still well down across the board (20-30% for most businesses). Even though their grocery retail divisions are performing well, it’s exposed to much lower margins. This leads to the other contributing factor, private label. The rapid growth of private label products (low margin) on grocery shelves is causing a lot of stress on the current operating cost base with many attempting to right size as the private label trend won’t be slowing down over the mid term. Redundancies are varied in size from 100’s to just a few roles depending on the size of the business and what exposure they have to the food service sector Vs retail. Will it continue into 2026? With nearly all the major FMCG’s having gone through some form of restructuring I feel they have now entered a phase of optimization – ie do more with less. Selective hiring will occur but won’t be aggressive within the sector, it will be a steady state until consumer spend (non-grocery retail) starts to tick back up. 

𝗧𝗵𝗲 𝘂𝗽𝗰𝗼𝗺𝗶𝗻𝗴 𝗙𝗠𝗖𝗚 𝗽𝗹𝗮𝘆𝗯𝗼𝗼𝗸 𝗶𝘀 𝗻𝗼𝘁𝗵𝗶𝗻𝗴 𝗹𝗶𝗸𝗲 𝘁𝗵𝗲 𝗼𝗹𝗱 𝗼𝗻𝗲... 𝗙𝗼𝗿 𝘀𝘁𝗮𝗿𝘁𝗲𝗿𝘀, 𝗽𝗿𝗶𝗰𝗲 𝗵𝗶𝗸𝗲𝘀 𝘄𝗼𝗻’𝘁 𝘀𝗮𝘃𝗲 𝘆𝗼𝘂. → Volume is shrinking. → Private label waiting at the gate. → Consumers are under a lot of pressure. 𝟭. 𝗠𝗼𝘃𝗲 𝗯𝗲𝘆𝗼𝗻𝗱 𝗽𝗿𝗶𝗰𝗲 𝗵𝗶𝗸𝗲𝘀. →Volume is falling. Price won’t save you. →Can your product mix be the solution? ↳Coca-Cola is focusing on PET to offset tariffs →Untangle any supply chain exposure 𝟮. 𝗗𝗼𝘂𝗯𝗹𝗲 𝗱𝗼𝘄𝗻 𝗼𝗻 𝗯𝗿𝗮𝗻𝗱 𝗯𝘂𝗶𝗹𝗱𝗶𝗻𝗴. →Shoppers trade down →But they still pick familiar brands: for now! →Keep innovating. →Improve quality/ value propositions. 𝟯. 𝗣𝗿𝗼𝘁𝗲𝗰𝘁 𝗮𝗴𝗮𝗶𝗻𝘀𝘁 𝗽𝗿𝗶𝘃𝗮𝘁𝗲 𝗹𝗮𝗯𝗲𝗹. →PL share is steady, but cuts open the door. →Stay visible. ↳Pull back too far, and you lose. 𝟰. 𝗗𝗲𝗲𝗽 𝗗𝗶𝘃𝗲 𝗼𝗻 𝘁𝗿𝗮𝗱𝗲 𝗽𝗿𝗼𝗺𝗼𝘁𝗶𝗼𝗻. →Standard discounts no longer lift volume. →Consumers are delaying purchases ↳Waiting for promo pricing →Assess mechanics for incremental volume. →Double down on the ones that work 𝟱. 𝗠𝗮𝗻𝗮𝗴𝗲 𝗮 𝗱𝘂𝗮𝗹-𝘁𝗶𝗲𝗿 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆. →Premium tier grows, but value tiers drive scale. →The 1st is not going to be profitable w/o the 2nd. 𝟲. 𝗧𝗶𝗴𝗵𝘁𝗲𝗻 𝘁𝗵𝗲 𝗽𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝘄𝗶𝘁𝗵 𝗰𝗮𝗿𝗲. →Focus, but don’t over-prune. ↳Mind mid-term competitive gaps →Exit low-return SKUs, categories →Map demand spaces first. 𝟳. 𝗧𝗵𝗶𝗻𝗸 𝗼𝗳 𝗽𝗮𝗿𝘁𝗻𝗲𝗿𝘀𝗵𝗶𝗽𝘀 𝗼𝘃𝗲𝗿 𝗠&𝗔. →M&A is slow. Partnerships scale fast. →Vet incentives early. Dilution risk is real. 𝟴. 𝗦𝗰𝗮𝗹𝗲 𝗘𝗠𝘀 𝘄𝗶𝘁𝗵 𝗲𝗺𝗯𝗲𝗱𝗱𝗲𝗱 𝘁𝗲𝗮𝗺𝘀. →India, China, LatAm = growth. →Accept thinner margins. →Build embedded teams. Short-term wins won’t protect tomorrow. Without volume, brand equity fades fast. Prioritise execution that sustains: 𝘯𝘰𝘵 𝘫𝘶𝘴𝘵 𝘵𝘩𝘪𝘴 𝘲𝘶𝘢𝘳𝘵𝘦𝘳. What else should you focus on? What priorities are missing? ___________ 👋 Hi, I am Filiberto. Follow me for sharp FMCG strategic insights. 👍 Like, Share, Comment, Save, Send this post ☎️ Schedule an advisory call: https://lnkd.in/dAVcHJ2P 📖 Follow my Substack https://lnkd.in/dQPHZ4w4

Financial engineering won’t save F&B manufacturers. Kraft Heinz is splitting apart. Unilever and Nestlé are selling off underperforming businesses. But the downward pressures on margins and topline growth will continue... Unless COOs start to take a leadership role and rapidly execute an intelligent supply network strategy that enables agility at scale.   The industry is facing multiple, once in a generation, challenges.   ~Legacy brands are declining in revenue as tik tok brands steal share.   ~Existing formulations are becoming a political and regulatory liability, as consumers check each product in Yuka before making purchase decisions.   ~Supplier relationships are shifting as risks need to be mitigated across uncertain global trade policies.   ~Margins are being squeezed as input prices rise faster than finished product prices.   Splitting apart companies won’t change the fact that these companies need to fundamentally transform the way they innovate, source, make, and deliver new products for consumers.

Energy shocks are no longer theoretical. The Strait of Hormuz, a narrow trade corridor that moves roughly 20% of the world's traded oil along with a significant share of the global fertilizer exports, was effectively closed for more than a month. The closure pushed up energy prices and forced carriers to take different routes. Even with the announcement of a ceasefire on April 7 and the promise to reopen the strait, consumer businesses have felt the brunt of the closure. Higher fuel costs flow into transportation, food inputs and packaging, with food inflation expected to follow within the next 60 days. The window to act is narrow. Key considerations for middle market leaders: • Lock in fuel and transportation costs • Consider energy-efficient upgrades • Diversify food and ingredient suppliers • Selectively increase strategic inventory • Adjust pricing early • Prepare for demand weakness Businesses that move first will absorb the shock. Those who wait will absorb the loss. Read more in my latest RSM US LLP article: https://rsm.us/3OgE3ih