The six megatrends that will shape the food industry

Despite industry-wide growth, major food companies are experiencing a drop in sales and intensified competition from smaller players, according to a new report from Lux Research. In the report, titled The Food Company of 2050. Lux analysed startup trends, social norms, and corporate concerns to identify six megatrends shaping the food industry, outlining what food companies must do now to survive and thrive over the next 30 years.
Lux identified food for health, increasing sustainability, incorporating ubiquitous sensing, mastering the role of the microbiome, adapting to new industry structures, and understanding the future of consumption habits as the six megatrends expected for the food industry.
“Food companies will need to adjust and adapt to the six trends in order to truly thrive,” states Thomas Hayes, Analyst at Lux Research and report co-author. “Consumers are increasingly demanding, aligning spending habits with health and sustainability. Food companies will need to take some big risks to truly thrive and stay competitive in the long run.”
Developing food for health, mastering the role of the microbiome, and increasing sustainability are three of the six megatrends. People are demanding more than convenience and enjoyment in their food choices, focusing more on increasing cognitive function, athletic performance, and the overall health of both themselves and the environment. Lux predicts that nearly all products sold will pivot to make health-related claims, with the aim of reducing dependence on medical intervention. Products will also need to pivot to be more sustainable in terms of reducing food waste, working toward decarbonization efforts, and providing sustainable packaging.
Incorporating ubiquitous sensing is a megatrend more food companies are embracing as sensors become smaller, cheaper, and more capable. They are given roles of monitoring food quality, food safety, and even consumer health. “The global pandemic is generating renewed urgency around virus sensing and self-monitoring and has also changed the consumption habits of consumers,” explains Hayes. “Understanding how consumption is changing, including the shift to fresh foods and plant-based proteins, and how allergens are impacting people’s lives, will be key to future success.”
Lastly, food companies will need to adapt to new industry structures. Subscription and delivery options, personalisation, food safety and traceability, and the incorporation of digital tools to drive faster, cheaper  food innovation will all be key for major food companies to compete with their smaller, more agile competitors. Lux says it will also be important for food companies to reframe their identities as part of this adaptation to new structures to understand the role they can play in agricultural production and addressing consumer health needs

Key impacts digitalisation is having on the food industry

Digitalisation is at the heart of the rapidly evolving agrifood ecosystem, according to a major new report released today by Lux Research, a leading provider of tech-enabled research and advisory services. The report outlines the challenges the agrifood industry has faced in recent years and the digital tools that offer potential solutions to those challenges across food processing and production, supply chain management, and personalized nutrition.

Through a series of data-backed use cases, Lux’s new report, The Digital Transformation of the Food Industry, identifies a framework that agrifood industry players should use to evaluate and implement digital tools for solving specific business issues. The analysis reveals that a key challenge for players attempting to interface with digital technologies in food production is the tendency to act tactically from a tech-first perspective rather than acting strategically from an issue-to-outcome perspective. Lux’s digital transformation framework offers a method that industry players can follow to achieve successful testing and adoption of digital tech in food production.

“The ability to address consumers’ future needs is the driving force behind the rapidly evolving agrifood sector,” said Harini Venkataraman, lead analyst of the report. “To adequately meet this changing landscape, major industry players must act now to build a robust digital strategy that identifies the right set of digital tools for the right products to maximize the value-add for their respective businesses.”

The report finds that, while other industrial sectors have been quicker to implement digital solutions like artificial intelligence, augmented reality, industrial IoT, and robotics, the agrifood industry is making great strides to catch up. The impact on the sector will be significant as a means to address consumer demands for personalized product offerings and to manage a more integrated, digital, and omnichannel global supply chain.

“As companies in the food industry are trying to embrace digital transformation, this report is a critical resource to uncover the true potential of digital technologies applied to the right use cases,” said Venkataraman. “More than in other industries, digitalization in food will be a common thread across the entire agrifood ecosystem to enable industry players to address consumers’ future needs. The fact is, food companies that resist the digital conversion will not be able to keep up with more digital-savvy innovators, and will face higher R&D costs, longer product development timelines, and shrinking market share.”

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