The real and potential impact of mega-trends including population growth and sustainability, together with uncertainties created by global lockdowns on economies and supply chains worldwide, are combining with longer-term changes to consumer tastes and demand, to shape the future for the food and beverage industry (F&B). With challenges and opportunities less easy to predict than ever before, cutting-edge technologies such as AI and automation promise essential elements of the continuity and flexibility needed to navigate the future, while F&B balances industry challenges with the huge potential created by evolving trends.
This is one of the core messages of a new White Paper researched and produced by ABB. ‘A taste of the future: Understanding what’s driving Food & Beverage in 2020 and beyond’ binds together a lightning tour of global mega-trends, above and beyond industry specifics, with more general consumer trends. It goes on to extrapolate a few key industry drivers, highlighting them as potential recipes for creating opportunity and minimizing risk.
Three top-level mega-trends
The first global trend to be identified from an initial ‘shortlist’ of some 350 brings together the twin influences of population growth and urbanization. For businesses based in Western Europe, it is sometimes easy to downplay the significance of this international phenomenon. But, whatever our interpretation of how ingredient markets may remain globalized or become more localized in future, it is difficult to imagine population shifts not exerting pressure on the availability of food resources in the near- and longer-term.
A second trend operating at a global level is the pursuit of a Circular Economy. Various jurisdictions around the world are approaching this issue in different ways and at differing speeds. But in all markets, fundamental variables, from how food is produced to how it is transported and packaged, are being reassessed.
Equally international in its scope is the third trend: digitalization. Big Data may exert huge fascination at the production stage of the supply chain, but in the end, this is all to do with how it extends up and down that chain. It has to be about how brand-owners and retailers, in particular, can connect consumer data and upstream intelligence, and leverage both for greater manufacturing efficiency – as well as better-targeted marketing.
What’s driving the consumer?
The consumer side of the futurology equation is, of course, of critical importance. Three prime trends from the consumer perspective, again sifted from among many more contenders, include the move away from meat and towards meat alternatives; the ‘rich-in’ revolution, where functional foods offer consumers an additional nutritional boost; and finally, the hot property of authenticity and experience.
Addressing the first of these, Euromonitor has reported that, in 2018, the market for meat alternatives grew at 11 times the rate of the market for meat itself. Looking forward, Barclays forecasts that revenues from meat alternatives will equal no less than 10 per cent of the global meat market.
Meanwhile, supplementary nutrition looming large in the functional food segment includes prebiotics, probiotics, omega-3 and fiber. While protein-enrichment may no longer be in the driving seat of dairy and other category innovation as it was just a few years ago, this, too, remains important.
It is worth noting that, while ‘rich-in’ and fortified foods are gaining more traction, ‘free-from’ alternatives remain a strong sub-category in their own right. So, to give some examples here, a single dairy plant may be manufacturing products with different fat content, as well as organic, high-protein and lactose-free variants on top of a range of flavors, of course!
A meat-and-poultry plant may diversify into meat-free protein and will need to be sure that the two sides of the business are kept separate. It may have tiered brands, some with more appeal to tradition and authenticity than others and may well provide own-label product for retailers, or else contract-pack for third parties.
Combining these levels of complexity with high output speeds has major implications for automation at all stages of the operation. This is partly because only machine intelligence and real-time data transfer are likely to match the required speeds. But in part this is also to do with meeting levels of accuracy, reliability and quality-control which avoid costly returns from retailers – and which human intervention is unable to guarantee.
The story around authenticity and consumer experience is multi-faceted, overlapping concerns about the origins, healthiness and quality of ingredients with ethical considerations and a widespread distrust of ‘Big Food’.
These consumer priorities will often favor start-ups and small-to-medium-sized enterprises (SMEs), sometimes triggering viral online excitement about brands which may not be large enough to cope with the sudden surge in demand.
In order to increase output, UK marshmallow specialist Boomf, which prints its products with messages for gifting, supplemented its all-manual production with a robot arm equipped with ultrasonic cutting and a vision system. This automation also reduced wastage and improved safety. Following the installation, Boomf reported 600 per cent growth over a single year.
But SMEs are not alone in feeding the consumer hunger for authenticity and experience. Today, these diverse issues are being addressed by, for example, dense codes which can effectively cover a pack and are barely visible to the naked eye. The fact that they are machine-readable, however, means that smartphone-enabled brand-interaction and content for point-of-sale and the home, including recycling information can co-exist with production-line signposting, faster retail checkouts and more detailed sorting in a recycling plant, for example, distinguishing food-grade from non-food-grade polymers.
Major brands such as Procter & Gamble, Danone, Nestlé and PepsiCo are part of a European consortium developing this tagging technology.
Springboards for innovation
Having identified the key challenges, the White Paper singles out four industry drivers: novelty; sustainability; transparency; and convenience that could present future opportunities for F&B manufacturers.
At its simplest level, novelty can be seen as embracing the opportunity of greater complexity outlined above. Many brands like to be associated with innovation, and some have made a name for themselves with ‘limited editions’, for instance.
But novelty can also mean pursuing unfamiliar business models, as healthy-snack brand Graze did a few years ago with direct-to-consumer online sales. Interestingly, the last couple of years have seen the brand turn to traditional retail, too, via the major multiples.
Brands can bridge the gap between manufacturing and bricks-and-mortar retailing in other ways. Australian ice-cream brand Niska opened a Melbourne store ‘staffed’ by robots. This is the type of novelty which ties into a more complete consumer experience rather than simple product innovation.
As we have seen with marshmallow brand Boomf, personalization is also an increasingly important element within novelty. For larger-scale manufacturers, the advent of adaptive machinery, with its small batch-size capabilities down to the hypothetical ‘batch-size one’, makes high-level product customization equally feasible.
When it comes to sustainability, new opportunities for bulk instore dispensing may open up, as is already the case with food-service drinks dispensing, as consumers turn increasingly against pre-packed food and drink, especially where this involves plastics. This will also dictate new filling and logistics needs in the factory. Refills in general will take on greater importance.
But digitalization on the consumer side means that brands with a great carbon-footprint or packaging sustainability story to tell can increasingly get their message across.
For larger businesses and multinationals, sustainability themes can mesh with wider transparency. In this way, Big Data can help to restore trust in Big Food, where that trust has been eroded. Blockchain is just one of the pieces within this jigsaw, verifiably monitoring food at every stage in the chain and contributing to a picture of increased consumer confidence and reassurance.
Naturally, however appealing the story that a brand tells about itself, and however transparent it appears to consumers, this counts for nothing if it cannot deliver convenience. This means supplying the right range of product, in the right sizes and formats, in the right types of palletized loads, for the right sales channels – at the right time.
Whether the shift towards shopping in smaller city-center convenience-style stores will continue is debatable, but the surge in online sales is likely have a more permanent impact, and brands and retailers will need to adapt to this. F&B companies which do this, and particularly those which establish their own direct routes to the consumer, could reap rich rewards.
Futureproofing is never easy, especially when that future takes the completely unforeseeable shape of our current present, for example. But AI, automation and robotics can maximize flexibility at a range of pinch-points in the production and distribution process, opening up opportunities and minimizing risks to security of supply. As we have shown, there are plenty of ways in which F&B businesses and the consumer will benefit from the speeding up of this process.
