Gathering progressive ideas from the world of future foods and food innovations, it has been two intense days, diving deep into the recent conclusions regarding the future of our food.
Is there a space for innovation in the face of current global issues such as the pandemic, the war in Ukraine and the consequent supply chain disruptions? The answer is most definitely yes, but it might be somewhat different from how we imagined it a few years ago, with innovation focused on the processes more than on new innovative products themselves.
Over the last 5 years there has been an exponential growth in the value of businesses of the main players across the entire value chain, particularly those involved in the food-tech sector. The food industry has begun to adopt innovative models that are similar to those used in the tech industry.
Eatable Adventures food accelerator has named six factors that are currently putting our food system under pressure. Starting with Covid-19, that was followed by the Ukrainian conflict that brings risk to the supply of basic food commodities. Then there is global warming, with the food system being one of the leading factors for GHG emissions, mostly through centralised production, long complex supply chains, petrol-based fertiliser use and industrial farming. The recent energy crisis has also had an impact, with energy usually being the second largest cost in food production. Power concentration in the light of the increased presence of large economies such as the US and China into the global food supply chain. Corporations are entering the technology race and acquiring technology rights. Finally, the population increase, a growing population will of course lead to a global increase in the consumption of food and proteins in particular.
According to Eatable Adventures, the agrifood industry response to these pressuring forces is still very limited. In our society, the agrifood market is lagging behind in adopting technology across the board. A leading reason is the fragmentation of the market and the small operational margins of much of the industry. R&D expenditure is significantly lower than other industries based on technology, both in core IT as well as Biotech. We should also not forget about the startups that are fueled by savvy investors looking to benefit from the need for this emerging agrifood market. Disruption in the food system is currently ongoing, so what can be done about it?
The answer lies in technology, as a driver for evolution. A technological revolution is now entering the agrifood space, introducing applied technologies that will transform it, creating more sustainable supply chains that will reduce greenhouse gas emissions, introducing new ingredients and protein sources with reduced carbon footprints, evolving agriculture, regenerating soil and promoting biodiversity. Increasing convenience and facilitating access to food, and ultimately, ensuring affordable healthy food and quality nutrition for everyone.
Looking at the new opportunities there is a focus on «new proteins». Eatable Adventures predicts the future of the food system will be reliant on bioreactors and fermentation, pointing out a need to build up a vast industrial complex to serve the protein needs of the future of food.
McKinsey estimates that reaching 1% of biosynthetic protein requires an industry 22x the size of the current fermentation complex for pharma. According to the food accelerator, building fermentation and final products based on these technologies is a huge market opportunity.
There was also mention of the creation of novel ingredients thanks to biomanufacturing and biosynthesis. A host of new food ingredients is appearing that promise to change many aspects of food production. From natural colorants, derived from fungal processes, to structured sugar replacements and flavour enhancers, there has been much research into these new types of ingredients, and into fermentation, which is key to the production of all these novel products.
In light of these insights there was some relevant input from Rani Saab, the business manager for Dairy Beyond the Core at Nestlé, who led us on the «Journey of Disruption». He talked about the latest innovation by Nestlé, that has entered the dairy-free milk market with the launch of the pea-alternative brand Wunda. The product that has ticked all the boxes, on nutrition, sensory and sustainability levels.
"We were trying to create a product that is completely different from what's on the market. Our target market is millennials. Even the cues of the colours are quite unique for us. We wanted to really stand out and break some norms. We were aiming to disrupt the disruptors.» - stated Rani Saab.
Following Bloomberg predictions, plant-based dairy could reach 10% of the total dairy market by 2030. Bloomberg Intelligence projects the alternative meat market, currently at $4.2 billion, could reach $74 billion in the next 10 years if it follows a similar growth pattern to that of plant-based milk alternatives. A major part of the summit this year was dedicated to the innovations with plant-based products.
New Roots vegan creamery CEO Freddy Hunziker, presented the company’s mission to offer top quality and tasty plant-based cheese and yogurt alternatives that are respectful of animals, our planet, and our health. Considering its home country Switzerland and its time-honored techniques of cheesemaking, the company pays attention to the local, centuries-old craftsmanship of Swiss cheese production. New Roots has a wide range, from alternative fondue to crème fraîche and yogurts. Applied methods of fermentation and ripening are the same as in conventional cheese-making but are combined with innovative and future-oriented ingredients that usually include cashew drink (water and pasteurized cashews).
Not less insightful was the presentation from HowGood, a SaaS data platform with the world’s largest database on food and personal care product sustainability. The platform helps leading brands, retailers and restaurants improve their environmental and social impact. They have pinned three main trends to keep an eye on.
According to them, the number one trend is «Carbon is the new Calorie». This trend points at consumers who are becoming more concerned about climate change and their carbon footprint. According to the Spring 2021 Global Attitudes Survey, Pew Research Center, over 50% of consumers across North America, Europe and Asia-Pacific are concerned that climate change will harm them during their lifetimes and are willing to make changes to address it.
From the food companies’ side, we are seeing a greater commitment to reduce the greenhouse gas emissions across their owned operations, and their supply-system. Many have committed already to net zero ambitions.
Among 50 food companies (including Kellogg Co., Starbucks Corp., Kraft Heinz and Walmart inc.) benchmarked by CERES, 42% have launched carbon reduction goals that include their suppliers, that represent more than 80% of their total emissions. Other companies such as Nestle, Mars, Unilever and Mondelez, aim to become carbon neutral over the next couple of decades, either for their own operations, or across their entire supply system.
The second trend according to HowGood is «Sustainability claims are driving sales». It has been noted that the inclusion of keywords in advertising such as sustainable, carbon, plant-based and organic, grew 39% in the first five months of 2018 to 2022.
Over one third of US households are eco-driven, according to the Numerator Insights. In their survey research, respondents self-identified an «eco-friendly lifestyle» as «Purchasing and using products that have been manufactured using sustainable methods thereby protecting the environment. Being conscious of the products I purchase and use on a daily basis to do as little or no harm to myself and the planet. To leave as little trace of myself behind.
Sustainable, recyclable and reusable. Making the earth a cleaner and better place.»
Eco-driven shoppers are identified by the Numerator Insights presented during the HowGood speech, as ethnically diverse and well-educated urbanites, so these people tend to have high incomes, live in the cities and have had a higher education. They are likely to be active, artistic, volunteers, loving sports, the outdoors and choosing eco modes of transport.
Therefore, HowGood has shown that eco-driven and mainstream consumers would be more likely to buy a product from a company that makes an effort to take eco-friendly strides.
Sustainable products are, in fact, growing at a faster rate than other CPG products and enjoy a consistent price premium over conventionally marketed products.
The third trend from HowGood is «Transparency is unstoppable». Under this trend we see the sustainability ratings for grocers, such as Carrefour, Lidl, Co-op and Marks & Spencer that are testing sustainability rating systems such as the Eco-Score and the Eco-Impact Score, and rating foods according to their ecological impact. According to HowGood research, 85% of the Top 40 Grocers in the USA and Europe, are displaying sustainability attributes such as Organic, Vegan, Vegetarian, Fair Trade and GMO Free in their product information.
And finally, regulators in the EU and USA are stepping in to harmonise and mandate sustainability disclosures. What is today’s leadership opportunity, is tomorrow’s requirement to operate. We see that the European Commission has committed to propose a Sustainable Food Labeling Framework by the end of 2024 and the SEC has proposed new rules requiring all public companies to disclose extensive climate-related information, including greenhouse gas emissions from suppliers.
Regarding the social impact that the companies leave within their supply chain, Rachel Calomeri, Senior Vice President of Growth & Innovation at HowGood noted that it is in fact one of the metrics HowGood take into consideration, looking at where the product was sourced, how the suppliers are treated and the slave labour issues. HowGood is working with companies to raise visibility of such issues, and how to fix them, not by moving away from these issues but by improving working conditions and creating special program.
João Rafael Brites, Director of Growth & Innovation at HowGood added that, from the regulatory perspective we will have to track those issues, such as the UK with the modern slavery act or the EU with the new directive of the European commission that requires human rights disclosure across the supply system.
ProVeg presented the growing trend of the flexitarian diet and how global companies consequently adjust their approach. Flexitarians, who are more flexible in their diet, are actively reducing their consumption of animal-based foods and are more receptive to alternative options, often driven by health or environmental concerns are the main consumers of plant-based foods. The meaning of this niche for companies is more than important, as following a flexitarian diet, according to ProVeg, is the new normal, with 18.7% of the population following a flexitarian diet in France, 20.5% in Switzerland, and 29% in Germany. The flexitarian diet amounts to between 23 and 42% of all diets across the EU and UK. The trend is mostly seen among Gen Z and Millennials, as according to the ProVeg data, 65% of Gen Z consumers say they want a more "plant-forward" diet, 79% of Gen Z consumers choose to go meatless once or twice a week, 79% of millennials eat meat alternatives, with 30% eating meat alternatives every day and 50% eating meat alternatives a few times per week. And for the companies it’s all about emphasizing taste, familiarity, convenience, and health in their product marketing strategies.
A slightly more controversial question was brought up by Luis Carlos Chacon. Will the most natural food go to the wealthier groups of society and the rest to the majority? As we heard, by 2040 the planet must increase global food production by one-third in order to meet demand due to population increase. Right now, around 59% of survey respondents are willing to eat farm-raised meat while 33.3% argue that cell-cultured meat is better. However, as notes Luis Carlos Chacon, some habits must be created or replaced, taking into consideration the 10,000 year heritage.
Planet Farms has presented vertical farming, as one of the solutions to the global challenges.
Vertical farming is an indoor agricultural production system that allows the cultivation of plants in many layers, one above the other. The company has built the largest and most advanced vertical farm in Europe, near Milan, in Cavenago di Brianza. The company offers a variety of green leaves and salads grown in their farm, grown in a controlled environment using pure water and air, without any pesticides, independent of external weather conditions, 365 days a year, saving 95% of water consumption and 90% of land consumption.
Switzerland-based alt-protein startup Planted makes meat alternatives from plant-based ingredients such as yellow peas, oats and sunflower using a biostructuring approach. The company studies the physical and chemical properties and interactions of raw materials in depth, to tailor and optimise the texture of their meat alternatives, which mimics the mouthfeel of traditional animal meat. Planted has become the first company in the world to introduce the plant-based kebab skewer, indeed their bioinspired product range technology allows them to create large cuts of meat of any shape or size.
Vegan fast food chain Neat Burger, presented its three-stage omnichannel business model during the Summit, with a new approach as they intend to expand into the retail market. The company plans to distribute burgers, fish fillets, and nuggets, amongst other items, in retail outlets by the end of 2022, and act as a CPG supplier alongside their restaurant.
Matteo Gori, Global Marketing Director at Barilla Group gives us some of his key takeaways from this 2022 edition of the Food Innovate Summit. The need for cooperating between big companies and innovative startups, the need for a cross-functional approach; the new ways of working and seeing innovation not always as a new product but as a new way of improving that which already exists. The improvement in the plant-based meat offering and the growing demand for it, the food inflation and the increasing food prices, where it sometimes makes sense, where until now some prices were too low for the quality offered, and finally the increasingly evident engagement of the Gen Z and younger generations that leads to the right product marketing and communication.
Edward Bergen, Senior Analyst at FutureBridge, mentioned that innovation must be exciting and most importantly taste good. The future of innovation has to think about the end consumer. "The consumer understands what specific ingredients they need, and we are going to a place in the future where we will be able to design our food more, using 3D printers at home, and in the restaurants. If we take into account the cell-based meat innovations, one could just order the meat features of one’s choice, steak or chop, any level of fat and other features.»
Most importantly, according to Edward Bergen, «the meat industry will not be replaced by the alternative newcomers, the farmers’ techniques will become more sustainable and transparent, there will be better breeding, and the consumers will demand more clarity with regards to sustainability. Nevertheless, the growing population will require the complex approach and the combination of both».
The innovation comes in different shapes and forms and in response to current events such as the pandemic, the Ukrainian conflict, global warming etc. The world requires less in the way of ground breaking inventions, but rather more with regards to improvement of the processes to deliver a higher performing product. As noted by Eatable Adventures, it is evident that the food industry has begun to adopt innovation models similar to those that are seen within the tech industry. We see the application of technologies from biotech or biomedical to the development of foods that are pushing forward a positive disruption of the food system; transforming the way foods are produced with the final products becoming more sustainable and nutritious.
As a part of the disruption trend across the value chain, we observe novel farming technologies such as those seen with Planet Farms. Supply chain transformation including proximity sourcing and advanced tech brings about precision farming and productivity increase. For example, Mutti has shown an innovative approach and changed the rules of the game by bringing the technology of a factory directly to the farm field to ensure the freshest tomatoes. We can also see a clear example within the food value chain disruption driven by the protein revolution, where companies offer consumers products similar to those that are of animal origin that already exist in the market.