Identifying growth opportunities in food, beverage and agri

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Identifying growth opportunities in food, beverage and agri

Global industry trends point towards growth opportunities

Alongside exponential growth, the food, beverage and agriculture industry is facing a significant and fast-paced change of landscape. Insight in the current trends is the first step to assuring business continuity in this age of change. We present three trends to get you on track with recent developments.

Perry van Overveld & Mridula Krishnan, 23 January 2018

Exponential growth of the food, beverage and agriculture industry

The food, beverage and agriculture industry has experienced exceptional growth in recent years, and continues to expand rapidly. Global revenues for food and beverages were at a whopping $8.3T in 2004 and almost doubled to $15.1T in 20141 - a compounded growth rate of approximately 7% per year. This can be attributed to several factors – changing consumer demographics, rise in disposable income, advances in health care, increases in global population, urbanisation, and growth of the global retail and distribution network. Food systems are central to human societies, and assuming that the industry grows at the same rate, we may see a rise in global revenues to approximately $30T in the next ten years. In other words, opportunities are plentiful. But how can businesses capitalise?

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Health and wellness is increasingly important to consumers

The food, beverage and agriculture industry is experiencing a shift in consumer needs, driven largely by changing consumer lifestyle preferences. After the worldwide prevalence of obesity more than doubled from 1980 to 2014, with over 13% of the world’s adult population globally classified as obese , health and wellness have started to play a significant role in dictating consumer choices. Big food companies are slowly losing share to the small brand firms that are popping up, as these firms play to specific (and evolving) consumer tastes2. Consumer-led disruptions represent an opportunity for companies to reset and reposition themselves with shoppers.

Expand your product portfolio

Businesses can capitalise on this trend and look into expanding their product portfolio in two ways. Firstly, big food companies can leverage their internal research capabilities for product innovation. For example, Dutch-based company Rijk Zwaan has seized growth opportunities through in-house product innovation – a plant breeding company by concept, they have invested significant research and development in genetics and production (for e.g. to enable new varieties of vegetables through cross-breeding or to weather non-traditional soil conditions) and post-harvest treatments like cleaning and seed treatment techniques3. And this is just one of many such independent enterprises that are gaining traction4.

Leverage your connections

Secondly, big food companies can leverage their connections with agribusinesses for potential mergers, acquisitions or joint venture strategies to perfect their product portfolio management. This way, they can either introduce new ingredients into their existing product portfolio, or expand their existing portfolio to include new products developed by their strategic partners.

Sustainability and eco-friendliness drive the industry

Along with consumer tastes, consumer values have also caused an impact on the sector. With sustainability and eco-friendliness being the key principles driving the evolution of the industry, consumer distrust in traditional packaged food and drink is over 3x cross-industry average5 . This indicates potential opportunities to experiment with packaging solutions that provide suitable product protection, while simultaneously aligning with company brand image focused towards health and sustainability.

The digital disruption

In today’s digital world where information is rapidly made available at your fingertips, consumers tend to research and inquire before they buy, particularly within food and beverages6. The internet and social media have made it extremely easy to make informed choices about the products they consume. Where are the ingredients grown? What are the core ethical values of the company manufacturing the product? Successful food and beverage businesses will need to be careful and consistent with their digital and social media strategies to connect with consumers, with this two-way interaction promoting trust and making a key difference in establishing and maintaining customer loyalty.

Digitalisation and consumer lifestyle changes have also led to the rapid development of the F&B delivery model7. With ubiquitous digitalisation of the ‘path-to-purchase’ dramatically reducing barriers to entry, new business models including subscriptions and direct-to-consumer are picking up the pace. Is this viable for existing businesses? Using predictive analytics to discern patterns in evolving customer behaviour can be extremely useful in driving growth and boosting competitive advantage by tailoring their products to each customer segment more accurately. Applying technology and innovation at the ‘roots’ could very well be the way forward – precision agriculture uses analytics to increase their crop yields, which has shown improvements of up to 13%8. See our infographic on precision agriculture for more detailed information about this.

Capitalise on these trends

Capitalising on these changing trends is vital for long term business continuity. Businesses need to be informed, innovative and establish a forward-thinking approach in order to create and sustain a competitive advantage, particularly in big foods, where seamless upstream and downstream interactions are imperative.

More information on growth opportunities in food & agri?

Do you want to know more about growth opportunities in food & agri? Please contact Perry van Overveld at +31 (0) 610042715. 

1 Frost & Sullivan (2010). 2020 Vision: Global Food and Beverage Industry Outlook.

2 Fortune (2015). The War on Big Food.

3 Rijk Zwaan (2017). Seed production and research

4 Seed Processing Holland BV (2017). Innovation at your Service.

5 Deloitte (2016). Capitalizing on the shifting consumer food value equation.

6 RSM (2017). Top 2017 trends for food and beverage industry businesses.

7 Deloitte (2015). Consumer Product Trends.

8 Deloitte (2016). Agribusiness Infographic.

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