Driving growth and value creation amid high food prices

Food prices globally are at the highest they have been in a decade. Pandemic-induced challenges such as labour shortages and high shipping costs, as well as climate change and the increased frequency of extreme weather events are to blame. In light of such volatility, food businesses are being forced to limit the impact on their production, supply chain, and own financial performance. These challenges provide an enormous opportunity for businesses to strengthen their core and take advantage of new growth opportunities. Creating value for all stakeholders should be a priority for long-term success.

Food industry trends

Food prices are at an all time high

High commodity prices - Global food commodity prices have soared since mid-2020, reaching a record high in October 2021.
Supply disruption - Pandemic-induced labour shortages, factory closures and poor harvests have impacted food supplies significantly.
Supply chain issues - Stakeholders across the entire food ecosystem have also been negatively affected by high shipping costs and delays resulting from the pandemic.

Disruption across the food sector

High food costs - High commodity prices and disruption to supply has inevitably resulted in higher food costs for consumers.
Food shortages - Food security concerns, accelerated by high prices, shortages and climate change, are increasingly becoming top of mind for governments.
Food wastage - The pandemic has exposed additional shortcomings in global supply chains. Many food producers and retailers have encountered difficulties transporting products due to labour shortages, and aviation, port and border disruptions.

These issues are driving other global challenges

The poor are generally hit the hardest - Lower income households and poorer countries will be most impacted by rising food prices due to their inability to absorb such increases.
Inflation - Food prices have been climbing steadily in most Southeast Asian countries in recent years.
Political issues and unrest - Factors such as rising food and energy prices, food shortages, and extreme weather can cause great social and political unrest amongst a country’s people.

A challenging business environment

Significant volatility - Frequent price fluctuations of raw materials have had a knock-on impact on the financial performance of food businesses.
Supply chain issues - Labour, truck and food packaging shortages are delaying food distribution and driving additional costs for businesses.
Production and supply chain issues - Pandemic-induced challenges and increasing frequency of extreme weather events are causing uncertainty around future food supply.

Alleviating issues and driving value in the food industry

Increased focus on new technologies

Consolidation across the value chain

Increased diversification

Improved financial resilience

Creating value for all stakeholders

“Corporates, investors, and governments are facing huge pressures across the food industry with high food prices, covid impacts, and climate change. However, by applying value creation and looking holistically at your business, we believe you can overcome these challenges and emerge even stronger.”

Richard SkinnerAsia Pacific Deals Strategy and Operations Leader, PwC Singapore

PwC Strategy& approach to value creation

Our PwC Strategy& approach to helping businesses with value creation typically consists of four key steps:

Performing a business diagnostic: The diagnostic step involves a full review of the business to understand how it is positioned in its market to identify areas of differentiation and weaknesses vs. peers. Key areas we examine include financial performance, operational and strategic capabilities, and benchmarking of competitors.
Defining the winning aspiration: Defining the winning aspiration sets the scene for what the business wants to achieve. It involves deep discussions with leadership to solidify financial targets and broader strategic goals for the business.
Identifying where to play: Identifying where to play allows the business to prioritise the most attractive and accessible opportunities to pursue. Market opportunities are reviewed across sectors and geographies, as well as key strategies around sustainability and digitalisation.
Identifying how to win: How to win involves identifying what is required by the business in order to achieve its new objectives. We provide a full review of internal and external capabilities required and how these might be built in-house, or obtained inorganically through M&A.

Find our more about how our value creation approach has achieved proven results with major international businesses.

Value creation