The New Jersey Food Processors Association and accounting firm Grassi — which has a heavy presence in New Jersey — recently released the 2023 State of Food Manufacturing survey, which showed the New York and New Jersey food manufacturing industry has had a continuing post-lockdown rebound despite inflation, supply chain disruptions and higher labor costs.
The positive report was spread almost completely across the board: Two-thirds of those surveyed said their revenues increased (compared with 53% the previous year) and a mere 7% saw revenues decline. And this wasn’t merely growth at the margins — the average increase was a sturdy 27%, according to the survey findings.
And, while inflation took a bite, profits stayed strong, with 58% of respondents increasing their profits over the previous year (compared with 51% in 2021), with an average increase in profits of 22%.
Those surveyed (60% of whom were C-level or above) credited this success to improved employee productivity — thanks partly to more streamlined processes and automation.
Improvements in customer relations, marketing/sales strategies and workplace safety were also cited as crucial to the success they attained in 2022. A lesser, but still significant number also noted product innovation and expanded sales into new channels. The companies that increased revenue in 2022 most commonly reported improved productivity and worker safety.
Supply chain woes ranked highest of the year’s challenges (especially for smaller companies), with inflation and increased labor costs ranking second and third.
Companies are facing an average increase of 17% in raw material costs. When asked what strategies they are employing to combat rising costs, absorbing a portion of the costs ranked highest, followed closely by renegotiating costs with vendors and passing some of the costs on to consumers.
While challenges remain, optimism reigns throughout the sector. A strong majority, 82%, of those food manufacturers surveyed were confident that revenues would continue to climb in 2023, even stronger than last year. Confidence was highest among those who had experienced growth in 2022 and among larger companies with more than 500 employees.
Ultimately, food manufacturers said resiliency and innovation, which enable diversification and opens new revenue sources, are crucial to continued growth. The pandemic forced companies to innovate to survive. Now is the time to innovate in order to thrive.
The 11-minute online survey was conducted by Crain’s Content Studio – New York from Jan. 3-24 and a 90-minute focus group session was conducted on Jan. 25, 26 and Feb 2.