Looking back at the history of some players in disruptive industries – from Kodak and Blockbuster to Barnes & Noble and Xerox – shows us that, when faced with a burning platform, hesitating for too long can have grave consequences for a business. In our experience, as well, we’ve seen many companies lose out on opportunities and value by failing to take moments of pending disruption seriously.
While the general answer to the question of “When should we move?” is “Now!”, there are a number of influencing factors that businesses should likewise be aware of when planning to address the food system transformation. Overall, the most common indicators we’ve identified for measuring the temperature in this context can be divided into the three broad categories of consumers, investments and regulations.

Consumers

With consumers around the globe becoming more conscious of their impact at an individual level, we’re seeing clear shifts in dietary behavior.

• Global plant-based food & beverage sales set to grow from 1.3 billion to 24.6 billion EUR between 2017 and 2025 – 2 billion in the UK by 2025(4)
• For 80% of consumers, environmental considerations matter more in relation to food & beverage than any other product(3)
• Alternative food is moving from a fringe offering to the mainstream, with a 3.5x increase in interest recorded between 2016 and 2022(1)
• 10% of consumers site clean eating as the reason for converting and plant-based food, with interest expected to grow substantially(2)
• Acceptance of milk substitutes is seeing steady growth, expected to double to 1.6 kg per capita by 2030(5)
• Tesco is targeting a four-fold vegan sales increase by 2025(6)

These figures point to significant growth based on consumer demand, indicating that consumers are clearly moving in this new direction – a trend that is undoubtedly here to stay. At the same time, however, businesses would also be advised to dig a little bit deeper and reflect on how these trends are really starting to impact the bottom line:

• Are consumers already seeking these products or are they still viewed as “Frankenfoods”?
• Have habits really changed or are people just dipping their toes in the water for a taste of novelty but without very much sustaining motivation?
• How do you address perceptions that alternative products are unnatural and unhealthy or that they undermine the livelihood of traditional farmers?

Investments

Faced with a steady shift in consumer behavior and a need to develop new technologies, we’re seeing an abundance of capital helping to accelerate change. Experts predict that, at current prices, revenues of beef and dairy (currently exceeding 400 billion USD) will decline by at least 50% by 2030 and 90% by 20357.

Investors have been closely attuned to predictions pointing to such seismic shifts. Last year alone, the market saw over 3,000 food-tech deals take place8, which can be divided into two categories:

Up-stream investments:

• involving targets such as food safety and traceability as well as innovative food segments such as biotech, marketplaces, farm software, robotics and biomaterials
• 19 billion USD were invested in 2021, representing a 68% year-on-year increase, with just under 2,000 deals(9)

Down-stream investments:

• Experienced a 124 year-on-year increase to reach 32 billion USD in 2021
• This involved areas such as e-grocery (with 5.1 billion USD invested in China alone), retail, in-store, restaurants, cloud solutions etc.
• These large-scale investments are being driven by an increasing number of accelerators, venture capital companies and private equity firms. Investors clearly have their sights set on a very different future of the food system.

Regulations

As action on the part of regulators generally tends to lag behind other market drivers, determining whether regulations are turning into a burning element can be a bit trickier. There is, however, already strong evidence that this is the case:

• In Denmark, the finance minister is setting out plans to ban meat in all public canteens and restaurants twice per week.
• In the UK, the Health Alliance on Climate Change is starting to call for a climate tax based on food, with support from 10 of the royal colleges of medicine and nursing, the British Medical Association and the influential Lancet publication.
• New taxes have already been applied to high-fat and high-sugar foods across Europe, which is having a dramatic impact on retail and FMCG companies.

Markets are being subject to more and more regulations at the global, regional and local levels year after year – be they in response to environmental initiatives or new technologies. Considered together with consumer trends and investments, this supports the view that the platform is indeed smoldering.

A final element that, while not a driving factor in itself, will have a significant impact on the shifts within the food system is economics. We’re seeing the cost for alternative products steadily nearing the level of conventional products. According to expert projections, the critical tipping point will take place sometime between 2025 and 2030. Once these products do become cheaper than their conventional counterparts, we can expect this market to really take off.

In terms of making a move, our advice for companies is to

• go in with their eyes wide open,
• assess the reality of the market and
• make the needed adjustments.

Given the direction of consumers, investors and regulators, now is certainly the time to make strategic moves that will be decisive for building a viable business prepared for the future.

While the time for your business to move may be now, knowing the appropriate size of this transformation will vary greatly from company to company and from context to context. There is no set formula for dimensioning this move, meaning that the answer will depend on conducting a thorough assessment of the existing business strategy, the respective market landscape, your position along the food value chain as well as additional factors specific to your context and business – even including your company culture.
Having helped numerous businesses along the food value chain navigate the food system transformation, Integration has the experience and expertise to support clients on this journey and guide them as to the size of reaction required given their context. In the following, we provide illustrative examples of some businesses we supported in addressing this question as part of their own transformation.

Once your business has identified that now is the right time to go and has a sense for the size of the move, the next key question to address is:

Where do we start the transformation or where do we go next?

There are two entry points for businesses to consider here:

1. We want to go now but don’t know where to start

Businesses beginning to consider their response to the food system transformation are advised to first set a course by developing an end-to-end strategy. This will provide absolute clarity as to where to start, exactly how big you need to go compared to your other investments and the potential benefits your business can expect.

2.We’ve already started but face specific challenges

While some businesses may already have gained clarity as to when, how big and where to start the transformation, the sheer novelty and complexity of the food system transformation means that constant adjustment to new challenges will remain a reality. Some of these may cover areas issues such as:

• the go-to-market model
• your supply chain
• approaches to marketing
• closed-loop systems and more

When defining a plan of action, context is king. Depending on where your business is currently situated, you will face a different transition path, for which there are seven product offerings that can help propel you in the right direction – be it a complete E2E solution or specific challenges involving closed-loop solutions.