The food revolution

Trends disrupting the food industry

Food is no longer a private matter - whole economies and even national security depend on it. The choices we make about how and what to eat are shaping the world's food system. The influence of technology on the food industry is greater than ever. Sweeping innovations, including trends in vertical farming, aquaculture, biotech, blockchain, and robotics, are transforming the way we produce food and will continue to do so.

What does the future of food look like? What factors will impact food production most? How will supply chains adapt? These are the main themes we explore in this report. We know that the technology needed to revolutionize the food system already exists. The trouble is that it’s being developed in silos with limited integration.

We invite you to explore how the food industry is about to change. Discover the drivers shaping the future of food and upcoming challenges.

 

Challenges

Population growth

The UN estimates farmers will need to produce at least 50% more food by 2050 because populations are growing and incomes are rising.

Climate change

Changing weather conditions will have a major impact on food production. According to the UN, the most important agricultural regions worldwide may face substantial declines in agricultural output due to climate-related changes (e.g. extreme heat).

Water access

Water use has tripled since the 1950s and demand continues to soar. Under current trends, demand for water will exceed supply by 40 % in 2030.

Food waste

The UN estimates 1.3 billion tons of food are lost or wasted annually, equating to roughly one-third of global food production. Food is wasted in almost every category: 45% of fruit and vegetables, 30% of cereal products, 35% of fish and seafood, 20% of dairy and 20% of meat.

Major demographic shifts

Source: United Nations, Worldometers, June 2019

Source: United Nations


 

Drivers of change

Consumer demands

Demographic shifts are disrupting how food will be consumed in the future. Surging middle-class growth and increasing consumer demand for transparency and nutritious alternatives are forcing the food industry to adapt.

According to Deloitte, by 2020 millennials will make up 40% of all consumers. This group are adopting digital solutions that provide instant access to products and services they want without being confined to physically nearby choices. Millennial consumers increasingly show a preference toward “mindful eating” – that is, choosing brands and foods that come from sustainable sources – and a conscious engagement with the food industry, and how food is produced and the way it is consumed.

Digital living

The food and agriculture industry is on the cusp of digital revolution. New technological advances and their proliferation across industries are gradually ushering in a new wave of food-related innovation. 

The speed of innovation led the WEF to declare 2016 the start of the Fourth Industrial Revolution, one based on the concept of merging of physical, digital, and biological technologies – or in food production, "Farming 4.0."

The adoption of digital technologies (i.e. environment sensors, mobile computing, satellites and imaging, drones and the Internet of Things) in food production is drawing substantial interest from investors who see a clear and pressing need to bring farming into the future. The impact of diffused innovation and the wide application of digital technologies are fundamental and transformational in nature.

Profit with impact

Governments all over the world are increasingly paying more attention to the United Nations’ 17 Sustainable Development Goals (SDGs). Moreover, policymaker's decisions will be significantly influenced by climate-related changes, as people pressure city municipalities to clean the air, and food producers to reduce GHG emissions and waste, and rebuild biodiversity.

Moreover, climate-related changes will significantly influence policymakers' decisions in the coming years, as people pressure city municipalities to clean the air, and food producers to reduce GHG emissions and waste, and rebuild biodiversity.

Many companies are plotting new technologies to improve the efficiency of food production, as sustainability becomes a key component of their business strategy. Impact rather than profit will become a core value of food companies.

Order food delivery demand driven by young consumers

ordering frequency per week

Source: UBS Evidence Lab, as of 2018

 

Solutions

Food innovation

Gene-editing, plant-based protein, 3D food printing, and personalized nutrition can make food much healthier and much more sustainable.

Smart farming

Vertical farming, lab-grown food, and algae aquaculture, and the components of the Fourth Industrial Revolution (big data and AI) can reduce resource use, boost yields, and improve crop resilience.

Supply chain innovation

Blockchain, food delivery apps, Internet of Things, and bioplastics can reduce food waste, improve provenance, limit fraud risks, and increase traceability.

Water saving technology

Digital and analytics technologies, like smart sensors in crop fields and satellite images to glean information about soil conditions, can enable producers to understand their water availability and utilize it with precision, hence reducing water waste.

Big data and connectivity

Connected devices like IoT and sensors make it possible to gather vast amounts of data, such as humidity, local rainfall rates, and temperature variations, which can be used to optimize many processes.

Satellite-enabled systems

Precision farming technologies, including the use of data from high-resolution satellite images, meteorological records and soil nutrient sensors, can help farmers both to reduce costs and enhance production yields.

Barcoding technologies

Offers opportunity to consumers, brands and food producers

 

Opportunities

Overall market: USD 700bn market by 2030

Overall, we estimate the food innovation opportunity represents a USD 700bn market by 2030. We expect it to grow more than fivefold, at a 15% CAGR, from USD 135bn in 2018.

Online food delivery: USD 365bn market by 2030

Online food delivery is set to be the largest segment, expanding from a market worth USD 60bn in 2018 to USD 365bn, a mid-teen CAGR, according to our forecasts. Emerging markets, improving logistics, and a structural shift from offline to online food delivery are likely to drive this growth.

Farming 4.0: USD 90bn market by 2030

Farming 4.0 is another promising segment within that timeframe. We anticipate it expanding from a USD 15bn market in 2018 to USD 90bn.

Plant-based protein: USD 85bn market by 2030

We expect the plant-based meat market to expand from USD 4.6bn in 2018 to USD 85bn at the end of the next decade.

How big is the addressable market?

Revenue opportunity

Source: Company reports, Bloomberg intelligence, UBS estimates, as of June 2019


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We explore the trends disrupting the food industry


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