Tariffs and Shifting Tastes: Building Resilient F&B Operations in a Volatile Market

A few years ago, most of the food manufacturers I spoke with were focused on labor shortages.

Today, the conversation feels different.

Many companies are still struggling to hire, but now they're also dealing with cost increases coming from every direction. Ingredients, packaging, transportation, utilities, and equipment all seem to cost more than they did a few years ago. The uncertainty around tariffs has only added another variable for companies trying to forecast costs and protect already thin margins.

What I've noticed is that manufacturers aren't necessarily looking for dramatic changes. They're looking for ways to eliminate waste, improve visibility, and avoid preventable mistakes. When margins get tighter, small operational problems suddenly become expensive ones.

As a result, the F&B sector, like other industries, is facing significant challenges, with tariffs impacting multiple operational aspects, from raw material sourcing and packaging to supplier management.

As Joe Camberato, CEO of NationalBusinessCapital.com, told The Food Institute, “If you’re bringing in ingredients or products from overseas, you’re already feeling it in your margins.”

Well-laid-out manufacturing timelines have shifted overnight, resulting int disruptions to operational processes. The lack of clarity and transparency regarding tariffs has also led several manufacturers to import goods in large volumes and warehouse them before tariffs become steeper or before policies change.

Tariffs, however, aren’t the only issue.

Consumer expectations and attitudes toward eating habits have also changed, as people prefers more sustainable, farm-to-table experiences over highly processed foods. Simultaneously, GLP-1 drugs have brought on a whole new wave of consumption habits. Together with tariffs, they have created a perfect storm for food manufacturers and distributors.

That said, experts believe that a knee-jerk reaction to tariffs and consumption shifts won’t help; instead, now is the time for F&B manufacturers to make strategic decisions by relying on live consumer intelligence and exploring market gaps for opportunities for product development.

In this article, we’ll discuss how the F&B sector can remain resilient and innovative in the face of shifting tariffs and consumer tastes.

Impact of Food Tariffs on Manufacturing Margins and Global Supply Chains

The cost structure of the F&B industry bears the brunt of the recent tariff spike. With the U.S. raising tariffs on everyday food items, like produce and dairy, importers have to pay higher costs, which results in tighter margins for restaurants and supermarkets. Ultimately, consumers end up paying more while dining out or shopping for everyday items.

The U.S.-China trade war is one more example that demonstrates the effect of tariffs across the F&B industry. Soybean tariffs are hurting American farmers while raising prices for many food manufacturers that vastly rely on soybean oil.

Even a modest increase in tariffs can lead to major disruptions. For example, a 10% dairy tariff might seem like a minor adjustment, but for a bakery that uses large quantities of butter and cream in its production process, this increase can cut into profits. Not just that, it can also upend procurement planning for manufacturers, which now need to scramble for cheaper alternatives. They might also need to reformulate recipes and portion sizes to maintain margins. As a result, food producers are stuck in a dilemma, as they can neither absorb these costs nor raise prices without risking reduced sales.    

Mitigating Risk in Supplier Management and Procurement Planning

Aside from the obvious changes in pricing, tariffs also affect supplier partnerships and disrupt supplier networks built over the years. For example, a fine foods factory whose production depends on Italian olive oil or French wines can find itself dealing with strained supplier partnerships due to higher tariffs. As a result, they may have to dissolve long-term contracts, which may compromise their supplier pipelines. Businesses may also have to secure last-minute substitutes, which can affect food quality and deliveries.

Adapting to GLP-1 Trends and Sustainable Consumer Demands

Tariffs determine whether certain ingredients are available, but customer tastes dictate what sells (and doesn’t). Recent years have shown how customers have become more value-driven and health-conscious. For example, the demand for plant-based food has increased globally, with worldwide sales projected to triple by 2035. New generations also prefer ethically sourced food products.

For manufacturers, it’s important to stay ahead of these food trends and also manage business costs with proper procurement planning. For example, a snack manufacturer planning to introduce plant-based protein bars in accordance with consumer trends will need to source high-quality pea protein and organic nuts. It will also need to invest in eco-friendly packaging and storytelling-led labeling, which could bring up production costs by at least 15%.

The trade-off between innovation and profitability feels like walking a tightrope for many F&B manufacturers. As a result, they need to strike a strategic balance while navigating tariff changes and consumer tastes using practical steps.

Strategic Framework for F&B Operational Resilience

Here are some practical steps that F&B manufacturers can take to thrive amid rising tariffs and shifting consumer preferences:

Intelligent Sourcing

When food manufacturers rely on a single supplier or country for their key ingredients, their operations are highly vulnerable to disruptions. To better manage their supply chains, F&B producers should diversify their supply sources across regions and ingredient types. That way, they can hedge some of the risk that geopolitical concerns—from trade restrictions to global shortages—bring about. They can also use their diversified supply chain as leverage during price negotiations, as they are not reliant on a single supplier.

For example, a protein bar manufacturer that has been consistently sourcing almonds from the U.S. can simultaneously tap into alternative protein sources (pea protein) from other regions, such as Europe or India. If high almond tariffs come into the picture, the company can switch to its alternative supplier without halting production or risking downtime.

Local Reliance

The farm-to-table movement is a clear-cut sign that customers prefer more local and sustainably sourced food. So why not use this opportunity to build strong local partnerships? F&B players with established relations with local farmers and producers will dodge the effects of trade policy changes, as they don’t rely on volatile imports.

Plus, they also fulfil the growing customer demand for local ingredients. What’s more, they have lower transportation costs and lead times, potentially saving more from operational delays and related costs.

Data-Based Forecasting

More F&B companies, including major players such as Mondelez International and PepsiCo, are investing in analytical tools to optimize flavors and tap into customer preferences. Analytical tools can also make procurement decisions easier, as they collect and maintain key data about ingredient requirements and inventories that help prevent tariff-led shortages.

With key trends and customer insights, manufacturers can adjust their procurement and production schedules in advance, before a new tariff policy disrupts production. Doing this can help them be one step ahead of tariff-led shortages and reduce their reliance on imports while meeting market demand.

R&D and Innovation

Instead of focusing on uncertainties in the F&B market, why not adopt an innovative mindset if it leads to creative alternatives and more consumer-centric product lines? An excellent example is Biena Snacks, a brand originally known for its range of roasted chickpea snacks.

By paying attention to the changing eating habits of younger consumers, it pivoted its production to include more innovative formats. For instance, it launched Biena Crispy Edamame, a high-protein plant-based snack made with 100% avocado oil.

Optimizing F&B Operations with No-Code Technology Solutions

Software solutions from Alpha Software are a must if companies want to flourish in an uncertain atmosphere riddled with rising tariffs and changing market demands. Alpha Software’s no-code app builder helps you develop a centralized dashboard for your F&B operations that can aid in:

• Tracking live inventory for imported ingredients so that you proactively avoid stockouts
• Monitoring supply chain pipelines to track issues in quality and potential changes in pricing—helping your team avoid any disruptions in production
• Minimizing manual errors by setting up procurement workflows that can help you swiftly respond to pricing fluctuations or sudden shortages

One thing is clear: the future belongs to F&B operators that respond smartly and quickly to disruptions brought on by tariff policy changes and local market shifts. To be able to do this, you need a reliable partner who can help you absorb operational shocks and keep you not just afloat—but also profitable. Let us help you build stronger and more resilient F&B operations.