ORLANDO, Fla., May 9, 2023

How Climate Impacts Are Negatively Affecting Food and Beverage Supply Chains

Q&A with Claudia Clemens

Today’s climate changes continue to challenge core commodities, including those in favorite snack foods. For example, the drought has put stress on many of the core ingredients, such as corn, soy and cocoa.

While Chief Supply Chain Officers (CSCOs) are generally aware that climate change could impact their strategies, fewer supply chain leaders have strategies in place that acknowledge outright risks to supply, and how this can impact the availability of their most popular brands.

During Gartner Supply Chain Symposium/Xpo™, which is taking place this week in Orlando, we sat down with Claudia Clemens, Senior Director Analyst with the Gartner Supply Chain Practice, after her session, “A World Without Doritos? How Climate Change Is Impacting Food and Beverage Supply Chains.” She explained the relationship between climate and food supply, why some of the world’s most iconic consumer packaged goods (CPG) food brands are at risk, and actions for supply chain leaders. 

Members of the media who would like to speak with Claudia further regarding this topic can contact Justin Lavelle to schedule an interview. 

Q: Why are popular consumer food and beverage brands acutely at risk of shortages?

A: When you look at the back of a label of your favorite brand of chips or cookies, there may appear to be more than a dozen ingredients, but typically those ingredients can be reduced to a few essential commodities, without which the product could not exist.

These core commodities include corn, wheat, salt, cocoa, dairy, soy and plant-derived oils such as sunflower oil. All of these commodities face similar constraints from climate volatility, particularly ongoing drought conditions in much of the growing world. A great example today is corn. There have been reports that one third of global corn is currently listed in a drought zone that extends from the US to China, through Europe and South America. The problem is truly global, and it is a similar story for many other commodities where rising global demand is meeting with an inconsistent supply.

Gartner Senior Director Analyst Claudia Clemens highlighted climate-related risks facing consumer food and beverage brands at the Gartner Supply Chain Symposium/Xpo 2023™ in Orlando, FL.

Q: How can CSCOs concerned about maintaining availability of their most popular consumable brands monitor the risks associated with key commodities?

A: The first place to start is educating themselves, and the organization, on the full extent of the actual risks. Last year when we polled CSCOs on these issues about three quarters of them anticipated climate change could impact their strategies, but less than half acknowledged how climate change could create outright shortages in key areas of supply.

CSCOs should ensure they have identified the key climate risks that will impact their most important commodities, such as a dislocation of available labor. Gartner predicts that by 2026, climate change impacts will cause three times as many supply chain disruptions because of labor shortages, compared with today. Grasping the likely sources of major disruptions, and then how they can be mitigated through effective scenario planning and certainty metrics will be key here.

Q: What are some longer-term solutions for food and beverage companies in coping with a constrained commodities environment?

A: We increasingly see brands moving towards rationalizing their portfolios, reformulating recipes and thinking more carefully about segmentation. Supply chain leaders are seeking out alternative sources and pushing towards more sustainable ingredients.

These are all necessary changes, although they must think bigger to keep their products relevant and available in a commodity constrained environment.

CSCOs have to engage their broader organizational ecosystems, including suppliers, customers and internal stakeholders to problem solve and innovate in this environment. Data sharing with suppliers, continuing to move supply chains towards real-time decision execution, and proactively shaping customer demand will all be essential tools to engage with a problem that is not going away.

Gartner clients can read more in CSCOs: Embed Climate Change Into Supply Chain Decision Making to Respond to Risk. Nonclients can read more in Supply Chain Sustainability Trends.

About Gartner Supply Chain Symposium/Xpo™
Gartner experts will continue to discuss supply chain sustainability issues at the Gartner Supply Chain Symposium/Xpo™, taking place through May 10 in Orlando, FL and June 5-7 in Barcelona, Spain.  

If you are a member of the media who would like to speak further on these issues with Claudia, please contact Justin Lavelle. Members of the media can reference this material in their articles with proper attribution to Gartner. 

About Gartner

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