How COVID-19 is accelerating the food transformation

4 megatrends to act on right now

Wake up food industry

The COVID-19 pandemic fast-tracked the food transformation. The closing of borders, shortage of truck drivers and migrant workers, and lockdown of out-of-home channel are posing immediate challenges to the highly globalised food sector and thus to our food supply itself. But beyond that, the current situation and link between food and health further highlights the urgency of more broadly rethinking our global food system - and making it future-proof as the situation will most likely last for another 18 months (1). The good news is that there are already a lot of use cases that the food industry can leverage.

The current global food system

To our modern food industry, open borders are essential. Raw materials are sourced from halfway round the globe by processing factories, which in their turn ship their finished products to consumers all over the world. Farm labour and logistics staff migrate from low-wage to high-wage countries. Next to that farmers have to cope with the strict legislations around nitrogen and the European Green Deal to achieve climate neutral production. Planes fly fresh goods to far-away destinations as consumers expect their favorite items to be available on a year-round basis2. Meals in the United States travel an estimated 1,500 miles from farm to plate3. This is of course impacting our planet heavily. At the end of the food chain we see that about one third of all food produced and consumed is being wasted4. And it is feared that this percentage is likely to become even higher when taking into account the hoarding trend by consumers.

COVID-19's impact on the food system

Meanwhile, global consumer preferences are changing under the influence of COVID-19. With people becoming more health-conscious and spending more time in their own kitchens, the coronavirus has added a lot of fuel to the already growing demand for fresh, healthy, additive-free food with traceable origins. Another trend that is here to stay is food e-commerce. This was only a small percentage but growing very strongly during the home quarantine and temporary lock-down measures (+12.4% in the US)5.

Future of food

So in fact, food issues that were already on the radar because of their social and environmental impact are now, due to COVID-19, in the full glare of public attention. It has become more urgent than ever for society to rethink the future of food. All of us must work towards a future where there is enough food for our growing global population. Where hunger, malnutrition and obesity are all adequately addressed. Where production and consumption respect planetary boundaries, and waste is minimised. In the transformation ahead, every company in the food value chain, from suppliers to farmers to processors to retailers & restaurants, will be faced with new challenges, but also new opportunities.

1. Personalised nutrition

Consumers are looking for food products that suit their particular lifestyle and the life phase they are in. In response and for example, companies are focusing on alternative proteins to replace meat. Also they produce special products adapted to the nutritional needs of children, elderly and athletes. Personalised nutrition accelerates the cross-over between food, technology and big data. One company we work with has developed a nutrition advice app, currently being used by top athletes to help them make informed nutrition choices.

COVID-19 affects personalised nutrition, as the pandemic has been hitting people with pre-existing health conditions, such as diabetes and obesity. Instead of treating when these people get sick, what can we do to pre-emptive care and improve their health through optimising their personal diet. This might trigger a structural change in consumption patterns, and we should not underestimate the underlying behavioural change and supporting platform that is required in order to make new food habits stick.

2. Responsible production and waste

The question companies facing is: how do we produce and supply safe, healthy food in a way that doesn’t exhaust our planet’s resources and pollute the environment? An example is the Climate-Smart Farming approach. This approach addresses the challenges of food security and a changing climate with a focus on soil health, biodiversity, and soil and water conservation. With the ultimate goal of achieving carbon neutrality, or even a carbon-positive position per farm7. Another, related question is: how can we reduce the amount of food loss and waste, currently a whopping one third of total production? Less waste means feeding more mouths with the same production volumes and resources. A win-win situation. Countless “circular” initiatives are aimed at minimising loss and waste and repurposing waste streams6.

One sore issue in this pandemic is food waste. In countries where a lockdown is in place, waste is currently at an all-time high due to the fact that restaurants, hotels and schools are closed, forcing many farms to destroy tonnes of fresh goods that they can no longer sell8,9.

3. Food Industry 4.0

This megatrend is about the digitisation of the entire food value chain. New digital technologies - artificial intelligence, smart data, blockchain, robotisation and precision farming to name a few - present companies with exciting opportunities to boost their productivity and reduce their costs. Deloitte supported a global biotech company to define and implement digital farming. Digital farming is a combination of digital technology assets - data collection, data storage and management, analytics, and decision modeling - that work together to unlock farming's potential. E.g. our client helps growers to make better decisions that will lead to optimal operations and productivity improvements. In short, they turn data and information into actionable decisions for their retailer and grower customers, all the while ensuring confidentiality.

Food loss & waste per region

Amid the COVID-19 outbreak, the United Arab Emirates pushes to transform food production, where 80% of food is imported. They invest in a new indoor farm that will soon commercially grow tomatoes under solely artificial LED lights in a climate-controlled warehouse10.

4. Ecosystem orchestration

To really change the status quo and achieve maximum impact, what we need is a seamless orchestrated food ecosystem. Besides all the parties in the food value chain, an ecosystem also includes multiple other stakeholders, such as governments, NGOs, the healthcare sector, universities and the financial sector. Bringing this diverse range of parties together and getting them to communicate and cooperate is a challenge in itself, but the dividends of such cooperation are tremendous. Deloitte supported the forming of an ecosystem play connecting upstream (farmers) and downstream (restaurant business) stakeholders to launch an innovative digital platform designed to monitor and optimize farm production performance across economic, social and environmental dimensions.

COVID-19 provides momentum for food ecosystem collaboration, as the pandemic is resulting in food shortages, higher food prices, and inability to fulfil consumer demand of certain consumer segments such as elderly and hospital staff. An illustration of this ecosystem collaboration is one where competitor food retailers are working together to deliver shopping to hospital workers or quick service restaurant employees temporary being staffed to food retailers11.

Wake-up call

To become future-proof, it’s essential for companies to take action within these four themes. With the wealth of opportunities to choose from, there are certain to be a few that suit your company. Key will be to be prepared with a clear north star where you would like to head towards, have different COVID-19 scenarios how the world will change and be able to rapidly respond to these scenarios. Because nobody knows what the future will look like, and there will not be a quick recovery since this situation will highly likely last for another 18 months. In this context, the current COVID-19 outbreak with its knock-on effects on our farm-to-fork food value chain is definitely a wake-up call.

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