Potential Solutions for CPGs

The previous several years have demonstrated how sensitive food supply systems are to the impact of climate change. CPGs must make efforts now to future-proof their ingredient supply chains, in particular, or they will be left scrambling and forced to suspend production.

Fremont, CA: Throughout history, people have experienced food shortages due to global catastrophes such as war, drought, and famine and due to shipping interruptions during World Wars I and II, sugar was rationed, and agricultural output shifted to other crops. In the early 2000s, Russia's wheat export embargo caused world prices to rise. More recently, the COVID-19 epidemic caused people to stay indoors, resulting in a lack of fresh fruit, grains, and dairy.

These agricultural supply networks are not about to collapse, but astute food makers see the writing on the wall. Looking ahead, CPGs recognize that if these issues are not addressed today, they will become significant. However, we cannot just wait until a catastrophic failure point; many of the most promising solutions to these challenges must be implemented now.  

CPGs have begun researching solutions, such as:

Vertical Integration

Vertical integration gives CPGs greater control over ingredient production and quality and the ability to operate in places where climate change poses less of a danger. CPGs may own raw material production, supply chain tracks, processing, manufacturing, marketing, and retail.

Technology Investments

AI-powered solutions can help maximize production and forecast climate change dangers. PepsiCo uses satellite imaging and machine learning to increase potato harvests for its Lay's crisps. Other technologies, such as plant cell cultivation, which produces plant substances in stainless steel tanks rather than fields, can enable alternate means of ingredient production that circumvent traditional agriculture's limits.

Supplier Diversification Program

A supply chain diversification program enables CPGs to reduce the risks related to overreliance on a single source. Instead, CPGs can include a mix of small and medium-sized firms from various areas and nations to ensure that crops thrive constantly.

Alternative Ingredients

CPGs can investigate and produce replacement components to keep on hand in case the availability of the original ingredients is constrained due to climate change impacts.

The previous several years have demonstrated how sensitive food supply systems are to the impact of climate change. CPGs must make efforts now to future-proof their ingredient supply chains, in particular, or they will be left scrambling and forced to suspend production.