Capex Confidential: Food & Beverage

Inflation. Product personalization. And of course, AI. These are just some of the forces food and beverage leaders are grappling with.

In this “Capex Confidential” series, we’ll go beyond the headlines and provide an unfiltered look inside the minds (and budgets) of capital allocators.


Food and beverage companies entered 2023 with big Capex plans. A group surveyed by Food Processing “collectively planned to spend 21.4% more on capital expenditures in 2023 than they actually spent in 2022.” While Capex spending did increase significantly versus 2022, it came in well short of those lofty expectations.

That left plenty of dry powder to be deployed in 2024. Food Processing notes that, “Perhaps because much of that money was left on the table, 2024 appears to be setting up as the year to address 2023’s unfinished business.”

Here are some of the top opportunities capital allocators have their eyes on:

More personalized offerings

From tailored online shopping experiences to targeted product recommendations, consumers increasingly expect brands to cater to their unique tastes at every touchpoint.

F&B leaders recognize this shift and are looking to AI as a way to deliver the personalization consumers crave. Nielsen highlights how “AI platforms can analyze user data like taste preferences, dietary restrictions, and health goals to create unique flavor profiles. Coffee and tea are two areas where these tools are seeing more utilization, but energy drinks and other functional beverages may also offer some opportunity for personalization.”

Capital allocators are investing in the infrastructure needed to support this shift towards hyper-personalization, such as data centers with the requisite GPUs to run AI-powered recommendation engines and customized product lines.

The key is to align these investments with the company’s strengths and mission while achieving a positive ROI. For instance, Starbucks has made AI-powered personalization a cornerstone of its reinvention plan. Its Deep Brew platform leverages the company’s wealth of customer data to create specific marketing messages and customized menu recommendations that encourage “frequent visits and higher spending among members.”

Swiss food conglomerate Nestlé has taken a similar approach, leveraging the power of AI to develop personalized nutrition plans. Nestlé’s efforts are focused on using generative AI and consumer data to develop “personalized nutrition [plans] for those with special considerations, like diabetes.”

AI-powered predictive analytics

Along with consumer-facing applications, AI can help food and beverage leaders drastically improve their forecasting accuracy. EHL highlights several use cases: there’s “the possibility of using weather, finance, and population data to forecast beef prices up to 24 months in advance or buy cattle futures to hedge the market.” Furthermore, “social media analysis could be used along with demographic data to predict wine trends which could then result in contracts with local producers.”

F&B leaders are using these precise forecasts to make smarter decisions about everything from ingredient sourcing to product launches. RSM emphasizes the stakes of this shift, stating that “the success of food companies hinges on adapting to shifting consumer preferences and establishing efficient operations.”

Singapore-based tech firm Ai Palette demonstrates these cutting-edge capabilities in action. They’ve developed a tool called FoodGPT that uses generative AI and natural language processing to analyze vast amounts of consumer data from 24 countries in 16 languages. This enables precise and accurate product innovation tailored to local tastes. They’ve said that “several prominent global snack brands” have adopted FoodGPT to shorten the product development cycle and improve customer satisfaction.

As companies evaluate their capital allocation strategies to meet these challenges and opportunities, tools like Finario Predict can help ensure that forecasts are built on insights resident in the data of past projects with obvious, and often not so obvious, correlation to the ones in question. This eliminates inherent bias and helps allocators move with greater agility and confidence.


Industry insiders we speak with are optimistic about their sector’s short and medium-term prospects, but they’re not blind to the challenges ahead. Let’s unpack a few of the key concerns that are keeping them up at night.

Regulatory Changes

In the U.S., the industry is keeping a close eye on the looming presidential election in November. An administration change could kick off a wave of regulatory changes, particularly around climate policy, trade agreements, and food and agriculture regulations. All of which could significantly reshape investment priorities across the industry.

In Europe, new regulations such as the European Green Deal are pushing food and beverage companies to invest in sustainability and carbon neutrality initiatives. For instance, the EU’s Farm to Fork Strategy aims to make food systems fair, healthy, and environmentally friendly. Businesses will need to respond by making investments that promote sustainability and reduce their carbon footprints.

Moreover, the UK is implementing stricter food safety standards post-Brexit, impacting how companies source and label their products. Producers are concerned that initiatives like the “Not for EU” label will increase operational complexity and costs, potentially leading to higher prices for consumers and making investment in UK food and drink producers less attractive​.

Savvy capital allocators are already preparing their portfolios for a range of scenarios, from investing in infrastructure upgrades to meet stricter emissions standards to navigating potential disruptions in global supply chains due to trade policy changes. Moreover, making ESG considerations part of the budgeting and approval processes ensures that proper consideration is being given when warranted. Finario’s dynamic routing and other features make this seamless.

Stubborn inflation & interest rates

The consensus among F&B capital allocators in the U.S. is that interest rates have peaked, and the Fed will start cutting in late 2024. However, inflation remains a persistent concern, with many predicting that it will remain above the Fed’s 2% target through 2025. 

While an expected decline in interest rates may encourage companies to take on debt for growth initiatives, the path forward for inflation complicates matters. RSM observes that, “as inflation decreases, manufacturers face pressure to cut prices, challenging profitability.”

While Europe is also facing inflationary pressures, they’re eager to make interest rates less restrictive. The European Central Bank (ECB) recently announced a 25 basis point rate cut, and experts predict that more are on the way in 2024. If these cuts trigger a renewed spike in inflation, it could dent consumer spending on certain food and beverage products.

In this environment, F&B leaders “have shifted away from placing greater importance on growth to now prioritizing profitability.” Many are doubling down on automation and efficiency improvements to offset rising input costs. Food Industry Executive notes that these technologies can be “instrumental in maintaining and boosting productivity in the face of disruption from labor shortages, inflation, material scarcity, severe weather, and supply chain bottlenecks.” 

The Finance Perspective

For F&B finance professionals, the current economic landscape is a mixed bag. While the easing of supply chain disruptions and the prospect of lower interest rates are promising indicators, persistent inflation and a laser focus on profitability are tempering optimism.

Food Processing highlights that, as interest rates begin to fall, companies are reevaluating projects that wouldn’t have previously made the cut. At the same time, the industry’s mindset has undeniably shifted from unbridled growth to a renewed emphasis on the bottom line. In the words of one expert in Food Navigator, “For the longest period of time, it was all about top-line growth…I don’t want to say growth at all costs, but that was certainly the priority. Then this light switch went off, and then all of a sudden, it was a path to profitability.”

This shift in priorities has led to a reevaluation of spending across the board. While some companies have resorted to layoffs and budget cuts, discerning F&B leaders are finding a more strategic path forward. They’re investing in initiatives that improve efficiency in the short term and pave the way for sustainable growth down the line. Or, put another way, ensuring that if they make cuts they are trimming fat, not “muscle.”

The Operations Perspective

From an operational standpoint, the F&B industry is grappling with how to rework supply chains to adapt to shifting consumer preferences, particularly around plant-based alternatives. Nielsen reports that “even though consumers faced inflationary pressures throughout 2023, the alternative milk beverage industry experienced remarkable growth,” reaching $3.1 billion in U.S. sales. Coconut water and lemonade also saw notable growth, while dairy-based drinks experienced a decline.

The growing demand for plant-based products opens doors for expansion, but it also necessitates a significant rethinking of supply chains. As Nielsen observes, this may require creating entirely new product lines or adapting existing ones to meet these evolving preferences.

Consumers are also developing more globally-minded tastes. EHL highlights the trend towards “traditional heritage foods crafted by small producers globally” and the “growing awareness and appreciation for obscure regional ingredients and culinary traditions.”

The surge in demand for global food products is putting F&B operations teams in a bind, as the industry’s move towards near-shoring production is making sourcing these ingredients more complex. This calls for strategic investments in supply chain resilience and flexibility to ensure the availability of international ingredients.

The IT Perspective

For IT professionals in the F&B industry, there’s no bigger priority than shoring up digital security. A spate of cyberattacks have rocked the industry in the past several years, including ransom attacks on JBS Foods and Ferrera that led to millions in losses.

Attacks on Manufacturing Execution Systems (MES) are particularly insidious. Food Engineering Magazine explains that the interconnected nature of MES “means that an attack on one system can have cascading effects throughout an entire plant, potentially resulting in substantial financial losses. Additionally, any downstream operations that rely on the affected systems are also at risk, amplifying the impact of a cyber incident.”

The rise of AI and automation adds another layer of complexity. While these technologies offer immense potential, they also expand the attack surface, creating new vulnerabilities that hackers can exploit. The vast amounts of data often used by AI systems, including sensitive customer information, make them particularly attractive targets.

Even though it presents plenty of challenges, ignoring new technologies like AI isn’t an option. IT leaders and capital allocators will have to work hand in hand to make investments that embrace innovation while ensuring robust security.

Navigate the next chapter of food and beverage with Finario

If there’s one common denominator across all our conversations with food and beverage executives, it’s that change is and will continue to be a constant. The stakes are high, but the rewards for those who get it right are substantial.

As F&B companies adapt to changing business conditions, they’ll need the right tools to pounce on opportunities as they arise and pivot when necessary. Finario is the purpose-built Capex platform that can help you make strategically-aligned, high ROI investments. To see how it works with your data, request a demo today.

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