Millennials and sustainable food. A long-term investment theme.
Millennials' demand for sustainable food are revolutionizing the food industry, making way for new groundbreaking companies. Credit Suisse has identified Millennials' Values as one of the six long-term investment themes known as Supertrends.
Millennials are mindful of the negative impact their consumption patterns have on the environment and society. Most notably, their commitment to search and pay for sustainable alternatives has opened the door for mission-driven entrepreneurs.
Millennials want sustainable food and prioritize the environment and health
Traditional agricultural and food production methods are major agents of environmental devastation and climate change. According to the United Nations Food and Agriculture Organization (UN FAO) agriculture currently:
- Totals 70% of global fresh water usage
- Causes 80% of tropical deforestation
- Accelerates ocean deoxygenation and soil degradation
Taking into account the current population growth, these devastating effects are expected to intensify: The World Resource Institute estimates that agricultural output will need to increase by more than 50% in order to cover food demand in the coming decades.
Millennials have been quick to understand that traditional production and consumption patterns must change in order to avoid further destructive consequences. They are therefore more likely to adopt a vegetarian or fully plant-based diet in order to stay true to their values.
This behavior has led to an overall decrease in the consumption of animal sourced products worldwide: Millennials are shaping broader society by influencing other generations' preferences and consequently disrupting the food industry.
The increasing consumer demand for alternative and sustainable food sources is giving rise to new companies that use innovative methods in the creation of healthy foods.
The new generation has started the consumption change and has influenced the buying behavior of their parents. They are convincing the older consumers to buy and try new products, who also end up adopting them.
Matías Muchnik, founder of NotCo
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Credibility and social currency: Key success factors in developing new sustainable food products
Companies need to be transparent and honest in order to deliver credible products offering a positive environmental and social purpose. Additionally, new sustainable food products also need to be nutritious, and made from high quality and unprocessed plant-based ingredients.
The newer players in the food industry have been quick to recognize the social currency as a key factor into their business plans: A product that is "cool" and a source of conversation invites people to put it on the table and talk about it, prompting the trend to continue growing.
The world is looking for quality. For product tracing. Or the story. And we believe there is a great experience for the end-user with the products and sources that innovative players are bringing to the food industry.
Roy Ben Yami, founder of Bean & Co.
No need to compromise: Taste is part of the value proposition
These industry developments allow consumers to stay true to their principles without compromising on taste. They are not only considering the new food categories as an integral part of their diet, but they are also willing to pay for the value these products offer.
The established players in the food industry are feeling the pinch: In an effort to lessen their own market share losses, traditional food companies are responding to the new trend and competition in the sustainable food sector by partnering with these progressive new suppliers.
Investors see a bright future in this Supertrend. Millennials' mindful consumption has triggered a broad awareness for the need to act consciously.