Technavio analysts forecast the global food and beverage cold chain logistics market to grow at a CAGR of more than 11% during the forecast period, according to their latest report.
The research study covers the present scenario and growth prospects of the global food and beverage cold chain logistics market for 2016-2020. The report includes market segmentation based on the types of end-user markets and geography.
Technavio transportation and logistics analysts highlight the following four factors that are contributing to the growth of the global food and beverage cold chain logistics market:
- Need to reduce food wastage
- Growth of chilled and frozen food industry
- Growth of organized retail sector
- Increased demand from agricultural industry
Need to reduce food wastage
According to the United Nations Environment Programme (UNEP) and World Resources Institute (WRI), about one-third of the food produced every year is wasted. Fruits and vegetables are products that are wasted the most with approximately 25% wasted at the production level. In addition, perishable food products are often exposed to fluctuating temperatures during transit and handling, which adds to the wastage.
The global population is expected to increase at a rapid pace in the future, which is expected to increase the demand for food products. Based on statistics, in 2015 the number of people suffering from malnutrition or starvation was about 956 million worldwide. “Therefore, the increase in the global population makes it necessary to reduce food wastage, which in turn drives the need for effective cold chains in the future. Thus, the increased need to reduce food wastage is one of the key drivers that is contributing to the substantial growth of the market,” says Sharan Raj, a lead analyst at Technavio for logistics research.
Growth of chilled and frozen food industry
Increased need for convenience in food preparation, convenient food, and increase in leisure time are propelling the demand for frozen food in China. Consumers are also increasingly seeking out frozen food with functional benefits that would contribute to their health and well-being. These frozen foods require an effective cold storage system and need to be transported using refrigerated transport to ensure the chemical composition of the frozen food remains intact.
Cold chain service providers are currently focusing on improving their supply chain efficiency and improving the technology used in cold storage to deliver high-quality food to the end-users. Therefore, the developments in technology and the increase in demand for frozen food are contributing to the high demand for cold chains.
Growth of organized retail sector
Organized retail refers to modern retailing wherein a licensed retailer sells several goods belonging to different categories. It is the modern form of retail or chain stores that are owned or franchised by a central store or entity. The stores are organized and use better store systems technology, including better refrigeration than traditional/unorganized retail stores and thus, provide consumers with convenience and foods that are safe to consume. The various organized retail formats include supermarkets, hypermarkets, forecourt retailers, discounters, and convenience stores.
Nowadays, an increasing number of consumers are purchasing grocery items including frozen and chilled food from organized retail stores. APAC is witnessing a steady increase in the number of modern retail stores. With the growth of the organized retail sector and the increased consumer demand for frozen and chilled food, demand for cold chains has increased and is expected to further increase during the forecast period.
Increased demand from agricultural industry
The agricultural industry is the major end-user in the global food and beverage cold chain logistics market. Perishable items like vegetables and fruits require effective cold chain management to reduce wastage. Most agricultural products are transported using refrigerated trucks and trailers. 82% of the transportation used in the food and beverage cold chain market in the US is used to transport fruits and vegetables across various states in the country.
The increased demand for food because of the rapid growth in the global population is resulting in an increase in the demand for effective cold chain logistics to assist in the storage of perishable food products for longer periods of time. “The increase in the production of agricultural goods is also increasing the demand for efficient cold chain management,” says Sharan.
