Geopolitics can impact the nutrition industry in several different ways. Through conflict, trade wars, vested interests, and domestic politics, price inflation, limited crop supply, trade tariffs increases, and food insecurity can occur instantaneously, leaving brands unequipped to deal with the consequences.
And while much of the geopolitical landscape appears all too distant from the plant-based sector, the war in Ukraine has amplified the need for geopolitical monitoring to mitigate the harsh realities of such events. Not only does the war have catastrophic effects for those directly involved, but many businesses and individuals around the world too, including the plant-based sector.
For example, the war has majorly disrupted supply chains: 14% of global corn exports, 15% of barley exports, 14% of rapeseed exports, and 51% of sunflower-based vegetable exports come out of Ukraine. This means brands are lacking fundamental ingredients for products, forcing them to slow production or substitute ingredients at a higher cost.
De Monclin says that the current geopolitical environment and probable recessionary period will have extremely negative effects, primarily due to costs going up, rather than down, in a sector already plagued by a “high-cost” stigma.
Likewise, Gafsen says it has negatively impacted Pep & Lekker, forcing it to swap rice flour for chickpea flour due to issues with flour supply chains generally. And even then, chickpea flour is also experiencing heavy delays.
Consequently, this has a knock-on effect for manufacturers, placing pressure on other departments such as labelling which are then required to change ingredient lists and nutritional values.
To contextualise, ProVeg International recently published a survey stating that 61% of respondents were experiencing a shortage of ingredients along with higher prices for those they can access. Further, 69% said it was also harder to recruit skilled workers, impacting capacity and increasing delays.
The war in Ukraine has highlighted our dependency on global supply chains. Accordingly, brands should monitor global events more closely while increasing visibility within supply chains – particularly those more complex – and consistently evaluate areas of sensitivity to prepare for worst-case scenarios. Increasing supply of local resources may also benefit companies in terms of both stability and sustainability.