How Food Industries will be in the future?

Global food prices are surging and starting to drastically increase the cost of living for the bottom 50%.

Eit Food

Employing over 4.5 million people and accounting for 290,000 small to medium enterprises (SMEs), the food and drinks industry is one of the largest manufacturing sectors in the EU. As the industry continues to grow and the need to find solutions to food system challenges increases, what are the influences driving the transition of the food system to be healthier and more sustainable?

From policy and legislation to consumer trends and market growth, we have combined insights from the EIT Food community and key food system stakeholders to collate our top 5 food trends for Europe in 2022:

• Food systems will play a key role in discussions and decision-making about climate change in the run up to COP27
• More large-scale farms and corporations will begin to adopt regenerative farming practices
• The European alternative proteins market will see further growth in 2022 including more ‘meaty alternatives’
• The role of young people as food activists and agents of change will increase
• More brands will adopt front of pack environmental labelling in 2022.

As part of our food trends predictions for 2021, we stated that the alternative proteins market would continue to gain ground with consumers. This is likely to persist in 2022, with both existing and new players in the space working to perfect the ‘meatiness’ of alternative proteins to appeal to a wider range of consumers, such as those who may not consider themselves vegetarian, flexitarian or vegan. This will result in more meat alternatives on supermarket shelves and restaurant menus.

It doesn’t matter if consumers are vegan or not, but what matters is if the alternatives that are available taste good, cook well, are genuinely cheaper and make it to market quicker. If we get to a place where the steak on the shelf that was made in a lab is the same price as the steak that was made from killing a cow, consumers will switch. Therefore, the cultivated meat industry is likely to be a key player in solving this problem.

The rise of youth activism has seen widespread attention in recent years, and the food system is no exception in this. Young people are calling for change with how food is produced and consumed in Europe and they are demanding a seat at the decision-making table.

Atradius

Global Food & Beverages

Food & beverages growth drivers

• The food & beverages industry is non-cyclical. Demand is inelastic, due to the essential nature of output.
• In emerging economies, the number of middle-income families is growing. As disposable incomes increase, consumers substitute low value-added food items with higher value-added goods.
• Technology is increasingly used to engineer solutions for global food supply. Some forward-looking companies are developing solutions to replace traditional farms and factories with scientifically engineered ingredients and finished products.

Food & beverages constraints

• In many markets the profit margins of food producing and processing businesses are structurally thin and under pressure. This is due to a fiercely competitive environment, in which the bargaining power of major retailers and discounters is very strong.
• Food markets are vulnerable to sudden downside risks, with issues such as commodity price volatility, disease outbreaks and weather always difficult to predict. Such issues could lead to an immediate deterioration of business profitability.
• Consumer habits are changing as the end-client increasingly demands full transparency. Distrust has increased the need for food and drink manufacturers to be more transparent about their ingredients, production processes, and supply chains.

Precedence Research

The global functional food market was valued at US$ 175 billion in 2020 and predicted to hit over US$ 309 billion by 2027 at a CAGR 7.5% during the forecast period 2020 to 2027.

Positive outlook on food &beverage industry, especially in Brazil, Russia, India, China and South Africa (BRICS) predicted to continue to drive the market over the upcoming timeframe. Rising domestic consumption of food &beverages because of new product launches, the expansion of retail network, and population growth expected to influence the market growth in BRICS.

In addition, regulatory support for assisting Foreign Direct Investments (FDI) at domestic level in BRICS owing to political change particularly in China and India aimed at improving the manufacturing output in the countries and expected to intensify the growth of the market.

The Asia Pacific encountered as the largest markets for functional food and accounted for more than 40% of the total value share in the year 2019. The prominent growth of the region was mainly due to the rising disposable income coupled with burgeoning population. Rapid growth in the consumption of processed food together with rising awareness pertaining to fitness & health in the developing countries are the prime factors that drive the market growth.

Furthermore, the region is categorized by increasing concern for food safety among consumers that subsequently drives the growth of the region. Food fortification expected to be the prime focus of the government to fight against the increasing concerns of poverty and malnutrition.

Global Market Insights

Baby Food Market size will exceed USD 33 billion by 2025; according to a new research report by Global Market Insights.

Increasing infant population and corresponding rising food demand will propel baby food industry growth during the forecast period. According to world Bank, birth rates have remained highest in developing nations. Rapid urbanization, growth of middle class and increasing rates of female participation in labor force in many developing markets has encouraged adoption of convenience-oriented lifestyles, making prepared baby foods more wanted.

The baby food industry is highly regulated, right from ingredients to its packaging and labelling. As the industry is increasingly globalized, the need for guidance, monitoring and regulation is growing. There are standards and guidelines for canned food for babies, processed cereal-based foods for babies, hygiene practice for children and infant foods and complimentary foods for infants and children.

The standards set by each country may differ for baby food, for example, it may differ on ingredients in infant nutrition such as carbohydrates, fats, minerals, vitamins, etc. percentage of pesticide residue in food, etc. Also, every product needs to be pathogen free.

My conclusions and considerations

• In this article we have just see a few sides of the food industry and I’m remained curios about three point:

1. How India is going to cover the food industry until 2023, but in general how all the emerging economies will be over the years and how could impact these industries;
2. The important role that will play in my view the Global Plant Based until 2026 and over;
3. And how important U.S. baby could be on food market.

• The global functional food market was valued at US$ 175 billion in 2020 and predicted to hit over US$ 309 billion by 2027 at a CAGR 7.5% during the forecast period 2020 to 2027.
• The Asia Pacific encountered as the largest markets for functional food and accounted for more than 40% of the total value share in the year 2019. The prominent growth of the region was mainly due to the rising disposable income coupled with burgeoning population.
• Baby Food Market size will exceed USD 33 billion by 2025; according to a new research report by Global Market Insights.

Join the conversation with your own take on these topics in the comments below.

About the Author

Alessandro is a Financial Markets enthusiastic and he loves learning from articles/papers on many financial topics and in doing so he shares with you the most interesting charts and comments.

Disclosure

This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. This material has been prepared for informational purposes only. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.