A food revolution unfolding
Over the past 20 years, diet has emerged as key in our societies' quest for a healthier lifestyle.
As a sub-theme of this general trend, healthy nutrition is attracting a greater number not just of consumers, but also of investors. Feeding a population that is growing by the day is a real challenge especially as resources are scarce and climate change is accelerating.
There is no doubt that production, distribution, and consumption need to adapt. And fast. Like any major change, this food revolution will be a mix of new challenges and opportunities for companies and investors.
Agricultural revolution ahead
After World War II, agriculture had to adapt to demographic growth and the population's changing needs. Over the decades that followed, pesticides, fertilizers, and mechanization boosted agricultural yields significantly.
Today is the dawn of a new agricultural revolution. We face similar swelling demand but with additional constraints. The entire food chain is vastly inefficient right now. This endangers our health and our planet, but also our economy.
Several reasons speak for sustainable consumption
The most direct and immediate impact of this is on our health. Worldwide, close to two billion people face food insecurity, while 1.8 billion people are overweight or obese. Diets too rich in calories, sugar, and animal products are the main causes of obesity. These bad eating habits have a real economic cost. The resulting diseases cost USD 50 billion a year in the United States alone.
This is also a challenge for our planet, because it is vital that we reduce our food's environmental footprint. Our food system generates 26% of greenhouse gas emissions. Half of this is generated by livestock. It is as striking as it is alarming that 90% of the world's fresh water use is tied to food production and consumption.
Finally, our consumption patterns feed through to our economies. For example, USD 408 billion of food produced in 2019 went unsold or uneaten. This waste is mainly fruit and vegetables.
Implementing highly complex solutions
Solutions exist to tackle pollution, health risks and waste as the population continues to grow. We need to radically transform how we think about food, from production to consumption. And we need to do it now. There are three dimensions to reflection and action here.
First, we need to rethink production. It should be both more environmentally friendly, and more efficient. For instance, yields from vertical farming are estimated to far exceed those of traditional agriculture. This shift will also limit pesticide run-off and produce crops closer to where consumers live.
Second, promoting sustainable nutrition will be key to better production controls and better packaging. And, it will cut waste by more closely meeting the needs of consumers. For example, several companies are already using blockchain to improve cold chain management and food traceability.
The third dimension concerns what we actually put on the table. We need to rethink consumption by sourcing healthier, more nutritious, more sustainable food. Not all consumers are ready to fill their plates with insects or laboratory-grown meat, despite the anticipated benefits. Even so, a shift is taking shape toward new products that are healthier and more nutritious.
A study by Global Industry Trends estimates that the market for organic and naturally healthy food could reach USD 570 billion by 2030. And the market for plant-based milk could grow to USD 38.9 billion between now and 2027.
Innovative companies attract investors
But how realistic is such a change in habits? UN Sustainable Development Goal 2 clearly states the global aim to end hunger, ensure food security, and promote sustainable agriculture. Yet investors who want to be part of this movement may find it hard to put this principle into practice. The fact is that the agri-food industry is dominated by a small number of giants. Their position and revenues rely on the products and production methods threatened by the food revolution.
These mammoth enterprises are seeing the arrival of innovative companies. They are the pioneers and key players in the food transformation so essential to us and to our planet. Investors will have to pay attention to these newcomers as they increasingly include pure players, which generate at least 50% of their revenues or business from food. This will help them avoid the dilution risk inherent in acquisitions by large and mega-cap companies, even though some well-established players are doing well by positioning themselves as leaders in the food transition.
The food revolution is still in its infancy
Clearly, developments in this sector are still in their infancy. But they portend a supertrend, so we need to understand today what is at stake in this long-term societal evolution.
We must radically transform how we think about food, from production to consumption. This will be critical to meet our growing global population's ever-changing needs for nutritious, healthy meals. Our planet will thank us.