Sustaining the food supply: Improving quality, promoting sustainability, rather than merely increasing production.
The food industry is undergoing a significant transformation, driven by a variety of factors that are reshaping the landscape of global agriculture and nutrition.
One of the key drivers of this change is the rising middle class in emerging economies, which is putting pressure on the global food supply. As consumer demands evolve, there is a growing emphasis on healthy and sustainable food options. This shift is leading to increased Initial Public Offering (IPO) activity, expanding the investable universe in the food sector.
Agriculture, which generates about a third of global greenhouse gas emissions, is coming under scrutiny. Unchecked intensification of agriculture leads to environmental impacts, such as decreased biodiversity, increased deforestation, and excessive use of fertilizers and pesticides. In response, a significant portion of EU and USA's climate packages is dedicated to the sustainable transformation of agriculture, aiming to reduce CO2 emissions through more efficient cultivation methods.
The transformation in our understanding of healthy and sustainable nutrition is irreversible. Consumers are demanding a "healthy" and more tolerable composition of food, with the appeal of fatty and sugary convenience products decreasing. This shift is exemplified by the rise of plant-based or vegan cuisine, which is no longer exclusive to vegetarians. New companies and innovation projects, such as New Roots AG, offering a protein-rich lupine milk as an environmentally friendlier alternative to cow's milk, are leading the way.
The COVID-19 pandemic has further accelerated this trend. The pandemic has sparked a change in awareness about personal well-being and living in good health, leading to changes in consumption habits and shopping behaviors. If everyone in China wanted to eat as much meat as people in developed countries, it would further strain global food supply. The pandemic has also exacerbated the problem of hunger and malnutrition in the world.
Lab-grown meat could become competitive with traditional livestock farming in a few years, considering the environmental costs. Innovation in the food industry has accelerated, leading to new products and production methods such as food additives for better dairy digestibility, pea and soy protein replacements for meat, vertical farming, indoor fish farming, and lab-grown meat.
Historically, food strategies have shown a more defensive performance on the stock market. However, the new innovators are bringing new growth prospects to the sector. The world population is projected to grow to 9 to 11 billion by the middle to end of the 21st century, making sustainable and efficient food production more crucial than ever.
The food industry is experiencing disruption, with traditional corporations adjusting their products to meet new demands and numerous startups innovating in agriculture and food. This disruption is leading to a more diverse and dynamic food industry, offering a wider range of sustainable and healthy food options to consumers. The future of the food industry looks promising, with a focus on innovation, sustainability, and consumer health.
