How to create long-term value in a reimagined food system

Creating value in a future food system focuses on the consumer, planet and ecosystem. Explore the five areas to help strategize your growth.

In brief

• The food system is being reimagined and companies across the food ecosystem should rethink the value they want to provide.
• A focus on consumer-centricity, planet-friendly practices and a connected ecosystem is driving rapid change across all food and agriculture companies.
• Regardless of where food companies sit within the value chain, there are opportunities to innovate.

A new protein that is created from air and water. Autonomous food delivery robots that can support the campus of a large state university. The rise of electric vehicles. A grocer that offers a vibrant, fresh, locally grown produce shopping experience, as well as a dark store that ships non-perishable items direct to the consumer.

Over the past year, seismic shifts in consumer food preferences and eating behaviors have created waves of upheaval across the value chain. These changes have resulted in the largest investment in innovation that the industry has ever seen. The food system is fundamentally changing from a commodity-driven supply chain focused on scale to a personalized and value-added food and agriculture ecosystem. Disruption is coming in multiple forms, shaped by world events, consumer dynamics, technology and investments from traditional and nontraditional sources. This reality is playing out in crop inputs to grocery stores, in restaurants, in homes and everywhere in between. Industry players are simultaneously reacting to a relentless stream of new consumer demands while plotting their future in a post-pandemic world.

The transformation of the global food industry is happening now. It is a reality that is both exhilarating and daunting for the diverse range of companies which work to feed the world’s nearly 8 billion people. Some of these changes were simply accelerated by the pandemic. Others will take a little more time to move beyond the concept stage. But make no mistake, the industry as we know it is undergoing systematic transformation, revolutionizing not only the way food is produced, but also the way consumers engage with it. The food system is being reimagined, shaped by a focus on the consumer, the planet, and connections.

As with any large-scale industry transformation, there is both risk and opportunity for each segment in the $11.7T global food industry. Traditional approaches of ‘where to play and how to win’ won’t be enough to compete in this frenetic market. Leaders will need to conceptualize their role in the future. They will need to rethink their place in the reimagined food system. It will require addressing tough questions. How much clarity do you have about the trends defining today’s market? How can you evolve your business model to drive engagement and new value? What will power your next wave of growth? What sector convergence scenarios will create opportunities or threats? And how will data mastery create organizational agility? Defining your future is the first step to readying your company for long-term success in a reimagined food system. The complexity of the transformation ahead is real. How will you reimagine your role when the value chain is being reimagined at the same time?

Analyzing five key components of a food system reimagined 

To create long-term value in a reimagined food system, you must look beyond vertical siloes and understand the forces reshaping the industry — from ingredients and data to processing and products to behaviors and digital experiences. We have identified five areas to help companies strategize their growth in a reimagined food system. Each of these areas could equally be a place to start. They aren’t mutually exclusive, but rather provide a framework to help focus your efforts. How you decide what levers best line up is based on your position in the value chain and what role you want to play. 

Consumers’ use of mainstream and emerging technology across multiple aspects of their lives has increased dramatically in the last year, our global research finds. The increasing dependence on digital tools both at work and at home is coming at a time when consumers are more worried about a wide range of economic and personal factors. However, after a period of relatively little movement, this new wave of our Index is tracking a significant pivot toward two concerns: finances and health.

People are prioritizing issues that affect them directly as individuals, rather than those that feel like collective challenges, such as their concerns about the planet. Naturally, many are taking steps to curb spending but how they manage their budget is dependent on where they live. Globally, consumers are focused on value, with 73% of consumers noticing pack sizes reducing but the price staying the same and 64% believing private label products are just as good as branded ones.

Consumers concerns about price put business behaviors in focus

Retailers and consumer product companies should keep these financial and health worries in mind as they use new technologies to engage the consumer. Digital innovation can play a crucial role in improving performance by managing costs, keeping prices competitive, optimizing marketing and finding efficiencies. But the need to meet these daily business challenges should be balanced against a longer-term strategy that anticipates the opportunities continued technological change will create. We will see very different kinds of consumers, different business models to serve them, and different brand/consumer relationships.

Companies should be careful that they don’t do anything for short-term gain now that locks them out of this future. As consumers ignore or abandon innovations that don’t give them what they want, the risk of digital rejection can also be higher. Brands that disappoint a consumer risk closing the door to a future digital relationship with them. This is why it’s so important to tune in to the way consumers think and feel about the digital innovations that are entering every aspect of their lives today.

Consumers remain wary about the impact of new technologies

Consumers can have paradoxical relationships with new technologies. They can become highly reliant on a tool, while also worrying about its risks to their mental and financial wellbeing.

For example, people take the constant connectivity of their mobile devices for granted, yet they increasingly want to turn off alerts and reminders because they find that persistent connectivity overwhelming.

Familiarity alone does not build trust. While artificial intelligence (AI), for example, is becoming a normal part of brand engagement for many consumers, a significant proportion are worried about how it might be used, with 24% of respondents concerned it may completely replace their role. And people who use AI in the workplace are more worried about its impact on their life outside work.

The availability and accessibility of digital innovation is growing, but trust in technology and its usage of personal data is not. Across each wave of the Index, we’ve seen no significant change in the willingness of consumers to share data with companies or brands. Consumers remain wary:

• 55% are very concerned about ID theft and fraud.
• 53% are very concerned about data security/breaches.
• 53% are very concerned about companies selling their personal information to a third party.

They want to weigh the benefits of sharing data against the risks and the value they receive in exchange.

Innovations in technology must give consumers tangible benefits

Companies are rushing to build data repositories they can mine for insights; consumers are increasingly aware that their data is prized. They expect more in return for sharing it, such as access to better deals. How companies balance this exchange is an important part of consumer engagement.

Companies are using technology and data to protect razor-thin margins and market share. They need to tread carefully, as consumers are already turning toward value, experimenting with new brands and re-evaluating what’s essential. If they feel that participating in new technologies doesn’t benefit them, the business won’t just lose their custom now — it could experience irreparable damage to the kind of consumer relationships that long-term success requires.

This latest wave of the Index shows that the high levels of trust consumers had in many companies after the pandemic are steadily falling. Retailers and consumer products companies have many more interactions with consumers than most companies, which is an opportunity to build trust or to damage it, if the consumer’s needs and context are not considered.

Technology will fundamentally change how people live and work

The rapid pace of technological change is going to transform the way people live and work, and will redefine the future consumer. Small, seemingly unconnected changes in many areas can result in sudden unexpected shifts in behaviors and attitudes. And new technologies can slowly insinuate themselves into a consumer’s daily life before anyone realizes.

Half of the consumers in our Index say they work for companies that are taking on large technology projects designed to create more value for investors, employees and consumers. One of the most significant drivers of change is AI, which will revolutionize the consumer experience, with new products and services, novel ways of accessing them, and entirely new modes of living and working on the horizon.

We’ve developed over 200 drivers of change and explored their possible impact on every aspect of the future consumer’s world — from how they might shop, play and stay healthy to how they will consume, work, move, and use technology. Using them we can point to how AI could impact and shape multiple aspects of consumer life and business activity.