Super Sizing Technology to Improve the Food Industry

How technology is transforming the way food and beverages are produced, delivered, and consumed globally.

Together, the food and agriculture sector encompasses one of the biggest industries globally, with more than 7 billion customers that need to be constantly served. To meet the growing demand, the industry has seen a surge of advanced technologies (e.g. Artificial Intelligence or AI) usage in recent years.

COVID-19 has revealed the need for using technologies to sustain our global food chains. Consequently, companies are investing in automating their processes and are relying more and more on AI-based technologies.

The FoodTech ecosystem comprises all the food and beverages entrepreneurs as well as start-ups, which harness the capability of technology for the manufacturing, processing, packaging, delivery, and marketing of food products.

According to Emergen Research, the FoodTech market is estimated to reach a valuation of $342.5 billion by 2027, with a CAGR (annual growth rate) of 5.7%. Сompanies have come to incorporate and rely on a range of technologies to streamline their operations and boost output.

These include the widespread use of Advanced Analytics, Big Data, E-Commerce, IoT, Machine Learning, Robotics, Smart Waste Disposal and Recycling, Supply Chain Management, Sustainability Solutions, Artificial Intelligence, and Blockchain. However, to meet the growing and, more importantly, the changing demand of a growing population, the industry needs to further cultivate innovation by using state-of-the-art technologies in all its enterprises.

The industry currently faces significant challenges from consumers who are demanding healthier, sustainable, and more personalized food products. Moreover, the effects of climate change and the slow recovery from the COVID-19 pandemic continue to disrupt this already unstable industry.

Factors changing the face of the FoodTech industry

Food is no longer just a means of sustenance. People today have a unique perception and demand for the kind of food products they would like to include in their lifestyle. This is based on the following trends:

1. Demand for healthy food with better quality Increasing awareness among health-conscious consumers has led to strong demand for healthy food products. In 2021, 67% of consumers seek more in-depth information about the food they consume. With new insights into our health and nutrition requirements, people want personalised products to meet their individual needs.

   
   

   With new insights into our health and nutrition requirements, people want products that are personalised to meet their individual needs. Quality of the food products also becomes more critical than ever as people are willing to pay more for higher quality. The increasing use of the internet globally has resulted in consumers’ access to almost unlimited sources of information about any item or ingredient in a matter of seconds.

   
   

2. Responsible drinking as the nearest future It is worth noting that people are paying more and more attention to their health, and taking care of themselves has become one of the highest values. In recent years, more and more individuals have given up drinking alcoholic beverages. Some of them choose natural alternatives to their drinks such as water or juice.

   However, the beverage industry has not been left out, and now more and more companies are starting to produce what is known as “no-abv” and “low-abv” products. No-alcohol, as well as low-alcohol versions of popular spirits and wines, are now common, and more and more people prefer these options.

   
   

   Some tremendous progress will be seen in education on responsible drinking for people who prefer alcoholic beverages. This is moving fast into the category of social sustainability, becoming an inherent pillar of all forward-thinking beverage producers. A wide range of companies provide their customers with the information to ensure they understand the impact of alcohol on their health.

   
   

   One of such organisations is the Association of Alcohol Responsibility and Education that invests in and implements evidence-based harm reduction programmes, sustainable interventions, education, and awareness to address the harmful consumption of alcohol across areas of focus. However, the most impactful progress is to be made when AI technologies will be actively implemented in this area.

   
   

   Because, in addition to education, it is all about identifying individuals who are moving in the wrong direction and being able to intervene earlier. What is required is data and information analytics to be able to identify this. We will soon see the creation of a tool for validating information and implementing it on the consumer level in a consumer-friendly way.

   
   

3. Development of new technologies The FoodTech industry is rapidly moving towards higher digitalisation of the different systems to improve customers’ experience. Technology is shaping new ways of how products are manufactured, packaged, and delivered, how they taste and ,finally, how they are discarded. In addition, reduced availability of staff members and a higher wage demand are propelling many companies to invest in the declining cost of technology.

   
   

   Companies are also using extensive and readily available customer data to benefit their operations in the current information age. For instance, using Machine Learning to conduct deep profiling can allow producers to perform consumer segmentation driven by affordability. Similar uses of AI and other data-led approaches can help them address many prevalent health concerns like obesity and nutritional deficiency and provide solutions to those who need them.

   
   

4. Supply chain optimisation Technologies such as blockchain, AI, and the Internet of Things can only be used best if the supply chain is optimised, which leads to further improvements in the efficiency and productivity of the supply network. A well-established organisation’s supply chain is critical to quality customer service. A high-performing supply chain ensures high business productivity, so customers get what they want and where they want it on time.

   
   

   Moreover, supply chains have significant social and environmental impact. It is important for the modern consumer to know if products are produced in an environmentally friendly and ethical manner, using renewable or low-impact methods.

   
   

   However, after the COVID-19 crisis had shocked the world, people started to talk about the global supply chain crisis. All the problems are directly or indirectly related to the surge in consumer demand after the pandemic, but at the same time, they threaten what one leading economist calls a”stagflationary wind” that could knock the world economy off course.

   
   

   “The supply chain problems are much more persistent than most policymakers expected, although companies are less surprised,” said Mohamed El-Erian, and adviser to Allianz and president of Queens’ College, Cambridge. As of now, the worst is over.

   
   

5. Need for sustainability and higher efficiency It becomes critical for FoodTech companies to demonstrate their commitment to sustainability and environmental protection. This is being realised by many food packaging companies which were the first to turn it into an opportunity for brand identity.

   
   

   They achieved this through the widespread adoption of sustainable solutions for creating holistic products, which are healthier for the individual and the planet. Another sustainability-led target area is to provide convenient food preparation solutions that minimise food and packaging waste. Using innovative technologies to achieve these demands can help companies capitalise on important social trends.

   
   

   A wide range of brands is revolutionising how food is produced and taking steps to preserve human life on Earth. One of such brands is Organic Valley. To minimise the impact of grazing on air quality, reduce the need for antibiotics, and avoid negative effects on the soil, the company uses organic pastures and provides its livestock with natural food. Organic Valley farmers are committed to conserving their cows in pasture as much as possible and taking care of their land to support the lives of all members of the ecosystem.

   
   

   Additionally, many governments are adopting an extremely proactive approach to sustainability both environmental and social. For example, the Republic of Ireland, one of the leading territories in this field, has implemented a special programme called Origin Green, which is offered for participation to all Ireland-based businesses. The members benefit from extra government monetary and resource support in return for achieving the progressive annual goals. According to the Global Food Security Index, this allows Ireland to become the second (after Finland) most “food secure” country in the world.

   
   

Emerging technologies for the FoodTech sector

The traditional operating model is no longer sufficient for food and beverage market participants in a rapidly changing environment. Technology is transforming into a completely new industry with a new operating model, in which innovation, human health, and sustainability play a crucial role. What is more, technology has become an indispensable ingredient, proven by growing investment.

Artificial Intelligence and Machine Learning solutions aim to optimise and automate a range of processes in food manufacturing. This is especially convenient due to the food safety regulations that require transparency over the entire path of the food in supply chains. Using automated technologies, manufacturers can better monitor and regulate the quality of final food reaching the customers. AI-based chatbots installed in typical food-based mobile applications allow better connectivity between the providers and consumers.

For example, Coca-Cola offers its customers more than 3,500 different drinks, and, naturally, the question arises as to how the corporation chooses which flavours to create. Before the advent of AI, the company conducted surveys, and now Coca-Cola maintains several soda vending machines. These fixtures allow consumers to create their beverages by mixing different Coca-Cola liquids. Hundreds of consumers made their drinks in each of these fountains, and the results were further explored using AI.

The adoption of IoT technology in the FoodTech industry further complements the regulation activities by helping to control maintenance systems and conduct error-free operations. This also allows the remote management of these facilities with trickle-down effects seen in higher yield and lower food waste.

Big Data is useful when conducting analytics to boost business, reduce expenses, and research new market trends. When implementing Big Data, the right tools have allowed restaurant owners to gather customer data in real time and implement timely solutions. Knowing which products are making the most sales, what price range is accepted for the customers, and how the staff performance varies across departments — are some of the questions that can be answered through the use of Big Data technology. Some other housekeeping functions of Big-Data-powered software and hardware can allow producers to quickly correct potentially costly mistakes like replacing damaged products during transportation.

The group of companies is actively applying solutions based on Big Data with different goals. One is the Cheesecake Factory, which uses Big-Data software to process and analyse huge datasets from more than 170 locations all around the USA. In contrast, FreshDirect uses sensors, processing and analysing data to monitor product and environmental conditions during transportation.

The use of Blockchain technology in tracing the journey of food products can also aid in reducing food wastage. Starting from inventory management and to the final shipment of products, one can find out where exactly a problem lies, if any.

One of the companies implementing this emerging technology is retail giant Walmart, which has used blockchain to track and trace lettuce supply chains, considered the next-generation food safety solution. The Walmart blockchain could track food delivery to the manufacturer in just 2.2 seconds.

Usage of creative food images has become less important due to the introduction of Augmented and Virtual Reality (AR and VR) in the food industry. This is replaced by a higher significance on the matter of transparency. Customers want to know what exactly goes into making their food products and how it will affect their health. Another aspect of this is cultural education. AR and VR-based technologies can help customers embrace new dishes.

A wide range of FoodTech companies are using Non-Fungible Token (NFT) technology for marketing purposes and sales to increase their brand awareness. These are the new tools that can help producers further build their brand awareness campaigns and increase sales by introducing the digital product. The idea is to offer ownership over limited merchandise. On the one hand, the act of participating in digital auctions for an NFT can create excitement and generate buzz for the brand. On the other hand, NFT is bound to replace traditional merchandise with digital items coming ahead of physical goods. For example, Pringles announced the release of a new limited-edition flavour called “CryptoCrisp”. According to Food & Wine, only 50 “packages” of the new flavour were made, and they exist in the form of NFT artwork.

In addition to these emerging technologies, direct distribution of food items is also a growing trend in the FoodTech industry. It leads to operational efficiency by providing a direct channel for brands to reach their customers.

From mass-produced to specially made: the rise of personalization in the FoodTech sector

Another big trend sweeping the FoodTech industry currently is the move towards personalisation. Several CPGs like Nestle and Mars are actively working on innovating their business models to facilitate the delivery of personalised food products. There is a growing demand for more personalised experiences in several leading world industries. Data collected by Forbes magazine suggests that 80% of consumers are more likely to purchase from a brand that provides personalised experiences. In comparison, 63% of consumers will stop buying from brands that use poor personalisation tactics.

Although several companies have incorporated personalisation tactics into their brand identity, one area where this can be seen is the meal delivery kit offered primarily for the busy modern urbanites and tailored to meet their values.

However, there are several roadblocks currently preventing the industry from implementing personalised solutions. For established corporations as well as start-ups, this requires a change in their business model and operations. Industrialisation means that facilities are geared up for low-cost mass-production, making it challenging to accommodate tailored offerings. Finding large-scale ways to meet these demands is a work in progress. Production and distribution facilities will need to be better adapted. After all, it is worth remembering that companies using innovative technological solutions will soon find themselves at the forefront of a lucrative multimillion dollar industry.

What lies ahead: future industry landscape

The way food is produced, delivered, and consumed all over the world is evolving rapidly. Adoption of new technologies and the emphasis on staying ahead of the changing times is key for transforming the FoodTech sector. Those brands that can find ways to leverage technology and move forward based on scientific, consumer, and market intelligence will be undoubtedly successful. A plethora of new technologies is helping the industry cater to the changing needs of people. Ensuring that operations are sustainable and cause minimum damage to the environment is still a major challenge. And with all the opportunities brought on by automation and digitalisation, it also brings increasing complexity in operations that need a more skilled workforce.

Customers are now consuming healthy foods of better quality and are also interested in companies that make it a point to be transparent. They consider the labelling of ingredients a pivotal element. Among other factors, sustainable food industries can mitigate environmental problems by reducing nondegradable food packaging waste as well as minimising carbon dioxide emissions, among other things. Customers become more interested in sustainable food companies. An independent 2021 survey found that 78% of Americans would prefer to buy environmentally friendly products.

Food safety and traceability are also a growing concern fuelled by customers increasingly thinking about the quality of food they consume. “We are after all what we eat”. Technologies like Blockchain and IoT allow real-time food monitoring, transparency, and end-to-end traceability. Jean Pougnier, CEO of Crop Enhancement, mentioned that “Traceability will expand beyond food safety and production methods to encompass aroma, flavour, texture, nutritional benefits and other aspects of food quality.”

Through Big Data and NFT technologies, more advanced forms of marketing are now available to help owners of products keep track of quality by engaging global customers.

More and more consumers are choosing online outlets over brick-and-mortar retailers, which has resulted in manufacturers selling their products on a platform that offers easy-to-use functionality to allow direct contact and relationship building between manufacturer and consumer. It would not be wrong to say, technology has had a substantial impact on the FoodTech industry.

Personalisation is also shaping the landscape of food and beverage as “fit to measure” products become a go-to trend in all production. The new trend is called “food as a medicine”. This means that personalised nutrition is getting more and more popular. “It’s commanding the attention of the industry — the idea of using food as a way to prevent or even reverse disease. Our understanding of inflammation, obesity, and the human microbiome is allowing us to create solutions unheard of a decade ago”, said Oliver Katz, conference producer of the Future Food-Tech Summit. Now, companies can design products based on what their customers want to consume, they are focused on how to engage these customers and deliver them the experience they deserve. Undoubtedly, adapting to the consumer’s universe through personalisation is the key to success for brands.

The emerging FoodTech sector has replaced the traditional food industry (including beverages and agriculture). Companies that fail to notice this transformation are bound to be left behind in the marketplace. The industry and consumers are eager to incorporate new ideas and practices, and I am confident that novel concepts such as 3D food and fully automated restaurants will soon become commonplace for us. The future will surely be an exciting place to eat!

Article is also published on Medium: https://medium.com/foodtech-industry/using-innovation-to-feed-the-world-the-changing-landscape-of-the-foodtech-sector-51a0873d6c1d