CHICAGO — Supply chain disruptions, like a supplier going out of business, affect food and beverage companies in various ways. Labeling, packaging and labor all may increase in costs, and consumer product testing may be required, too, forcing companies to raise the price of its product, said Dolores Oreskovich, PhD, director, global head consumer sensory insight product technology center for Nestle Health Science.
Last year’s infant formula shortage was one example, Dr. Oreskovich said in a July 17 session at IFT FIRST, the Institute of Food Technologists’ annual meeting and expo going on in Chicago.
Inflation has led some suppliers to go out of business recently, she said. When that happens, food and beverage companies must find new suppliers who can supply enough volume to meet demand as well as meet quality and regulatory requirements. The ingredient from the new supplier ideally should have the same functional and nutritional qualities as the old ingredient.
“Once we find a supplier and identify they can meet our specifications, then the last step is to validate,” Dr. Oreskovich said.
Consumer testing will show if the product has the same flavor and other sensory characteristics despite the ingredient change. If the new ingredient has different nutritional profiles or if it changes the order of the ingredient list, the product will need new labeling.
Last year a manufacturer of infant formula had to shut down a plant for food safety reasons. That plant supplied about 40% of the infant formula in the United States, Dr. Oreskovich said. The Biden administration called on infant formula manufacturers to help with the crisis. An 18% tariff rate temporarily was suspended. Nestle SA shipped 42 million 8-oz bottles of formula into the United States, she said.
“For a company to be able to do that, we had to go into full capacity with all manufacturers globally who have FDA-approved manufacturing,” she said.
Nestle in the United States also accelerated shipping of its products to all retailers and online customers.
“For us to be able to do that, it increased material costs,” Dr. Oreskovich said. “It increased wage costs. It increased distribution costs.”
Supply chain disruptions hit the meat industry as well when workers at processing plants became ill during COVID-19, said Roxi Beck, consumer engagement director for the Center for Food Integrity.
“We have an incredible supply chain that is also incredibly fragile,” she said.
Meat processors, especially in pork, work in a “just-in-time” system, she said. After processing, meat goes into the market or into storage. Processing appointments are key.
“If you miss your appointment, it doesn’t exist anymore,” Ms. Beck said.
Innovation such as biotechnology and gene-editing should help steady the supply of raw materials like crops in that the innovation will find ways to battle floods and droughts that reduce supply, Ms. Beck said.
Innovation, such as fermentation, should have a positive impact in areas like carbohydrates, packaging and protein, Dr. Oreskovich said.“It’s just unbelievable the growth that you’re going to be seeing in the future to really have a more sustainable planet,” she said.