Food & Beverages: Trends, Challenges and OpportunitiesPosted on August 20th, 2020 in Industry News
The new decade has already seen dramatic activity in the food and beverages (F&B) sector, with coronavirus restrictions having a devastating effect on many businesses while others prospered when certain product categories were highly in demand.
While the aftershocks of COVID-19 will continue to be felt for some time, manufacturers and retailers should also look to the longer term when future-proofing against anticipated threats and keeping up to speed with changing consumer demands.
Some of these expected challenges and opportunities were identified by technology firm ABB in their recent whitepaper, A taste of the future – understanding what’s driving food & beverage in 2020 and beyond.
Through conversations with industry experts, the report looks to both the big picture of emerging global mega-trends and the more personal world of evolving consumer tastes to give businesses an idea of what to expect on the road ahead.
1. Population and demographics
The world population is forecast to grow from approximately 7.3 billion today to at least 9 billion by 2050. With an estimated 800 million people experiencing hunger or severe under-nourishment, feeding the world would require food production to almost double in the next 30 years.
This growth is far from evenly distributed, with emerging markets such as India and Mexico set for the highest population growth while many developed nations will increasingly face the challenges of an ageing populace.
Continuing rural to urban migration means labour shortages in agriculture will get worse, pushing farms and food processing plants to embrace automation and other solutions to meet demands.
2. Sustainability and the circular economy
As food production increases, so do greenhouse gas emissions, use of natural resources and food waste. And as environmental concerns become increasingly prioritised by governments and industries, businesses of all sizes will be required to mitigate their impact at every stage of production, which requires accessible and affordable solutions.
Sustainability targets in Australia and other nations are aiming to achieve a circular economy where pollution is minimised and food, water and packaging waste can be put to use through reuse, recycling or composting.
Improving sustainability can boost profitability – not least for avoiding penalties as environmental laws grow tougher – but investing in these technologies can be expensive upfront for businesses that are already struggling to break even, so incentives may be needed to encourage greater uptake.
3. Data and technology
Digital technology will continue to play a greater role across the F&B supply chain from farming to processing and packing. Beyond automation equipment improving efficiency and production timelines, businesses will increasingly rely on Big Data to make smarter decisions about everything from scheduling maintenance and repairs to delivering personalised marketing messages to customers.
F&B retailers can also glean insights from what their customers are saying on social media, respond to changing trends and influence the conversation. New genetic technologies allowing consumers to analyse their allergies and food sensitivities are expected to increase demand for niche and specialised foods, which will increasingly be ordered online direct from brands rather than through traditional retailers.
1. Meat alternatives
Food retailers that want to keep pace with consumer demand need to start offering meat alternatives if they haven’t already. According to Euromonitor, the alternative (plant-based) meat market grew at 11 times the rate of the standard meat market in 2018, and is expected to account for 10 percent of all global meat sales by 2025.
There are a few reasons behind this growth, as consumers become more aware of the impact of livestock farming on the environment and the health effects of consuming red meat, along with the refinement and greater availability of products. Even stalwarts such as US meat producer Tyson Foods have begun offering alternative meat options in their ranges, along with all the major fast food chains.
2. Functional foods
Sales of whole foods, vitamin and mineral supplements and other wellness products rose during the COVID-19 pandemic, but consumer interest in health and wellbeing has been on the increase even before, leading to the creation of the functional foods category.
These products target the growing demand for certain ingredients (such as probiotics and prebiotics, stanols and sterols) that are celebrated for their effects on the body and mind.
More generally, healthy eating options to help people lose weight and avoid allergies and intolerance will continue to be highly in demand, especially with stricter regulations on sugar and salt content that brands need to monitor closely.
3. Authenticity and experience
With coronavirus lockdowns introducing more people to the convenience and wider choices offered by ecommerce, consumers are increasingly favouring brands they may consider to be more authentic than major retailers, for reasons such as location, ingredients or ethics.
This reflects a broader interest in supporting local businesses, which has been highlighted during the pandemic and may continue afterwards as consumers and businesses try to narrow their supply chains.
By highlighting their authenticity, offering the products their customers want and embracing innovation, local suppliers and retailers stand a better chance of competing against the big names than ever before.
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