Food after Covid

How the pandemic is changing the way we eat and transforming the food industry for good.

Chicks in the farm

Spending an entire day in the fresh air and sunshine, having the freedom to roam in outdoor space of some 108 square feet, and being able to feast on delicious wildflowers in open pastures untouched by pesticides or herbicides.

This is the leisurely daily routine that the “girls” – or hens – at Texas-based food company Vital Farms enjoy in return for producing their highly prized eggs.

It's a scene you'd expect to come across in a small organic farm, the sort run by a family committed to ethical production.

Vital Farms certainly started out that way. But it is now going big. So big in fact that in 2020 the ethical food company secured a valuation of USD1.3 billion in one of the sector's most-anticipated initial public offerings.

The food industry will soon be full of companies like Vital. That's because the firm's success owes much to some powerful trends unleashed by Covid-19.

Two stand out. First, food producers are having to re-configure their supply chains after the pandemic disrupted global trade.

It's an environment where complex international sourcing and distribution networks are under pressure and under scrutiny.

Second, the industry now has to cater to the needs of a more demanding customer base – one that cares less about convenience and more about the nutritional and ethical aspects of what it buys and eats.

In a few years, the food industry could look very different – it might consist almost entirely of companies that possess only the strongest social and environmental credentials.

Japanese plates and chopsticks

Covid: shaken and stirred

The pandemic has unleashed turmoil across a wide range of industries.

Food suffered more than most.

Lockdowns and border closures disrupted the distribution of agricultural products and also led to severe labour shortages at food processing facilities.

At the same time, Covid-19 triggered a change in consumer behaviour. A survey by consultancy Accenture conducted during the pandemic found that consumers increasingly prioritised health and sustainability when deciding what to buy.1

In the UK alone, sales of ethical food and drink are forecast to rise by 17 per cent to GBP9.6 billion by 2023, having already grown more than 40 per cent in the five years to 2018.2

In response, the food industry is investing heavily in a wide range of high-tech solutions. Many are geared to strengthening supply chains, raising production standards and reducing food waste.

It is perhaps in the meat industry where the pandemic-induced transformation is particularly acute.

Slaughterhouses and meat-processing plants found themselves in the frontline of the Covid battle after clusters of virus cases emerged in facilities worldwide.

In the US for example, more than 80 beef and pork packing plants reported virus outbreaks between April and June 2020. By mid-May, meat production had fallen 40 per cent below 2019 levels.3

But keeping facilities safe and virus free isn't the industry's only problem. The pandemic also brought into relief the health and environmental costs associated with meat consumption and production.

Studies have shown a strong link between obesity and Covid.At the same time, consumers have been reminded of meat's outsized environmental footprint.

Livestock farming is responsible for 15 per cent of greenhouse gas emissions and accounts for some 29 per cent of the world’s freshwater use.5

It's no wonder, then, that meat consumption is set to fall and healthier alternative meats and plant-based diets are to become more popular.

Infographic on different types of meat consumption forecasts

Funding craze

Alternative meat producers such as Beyond Meat and Impossible Foods have already raised hundreds of millions of dollars in funding in recent years.

But Europe is not sitting still. Better Dairy, a London-based start-up developing animal-free dairy, has managed to raise GBP1.6 million in seed funding in the middle of the pandemic. The firm is currently in the R&D stages of using yeast fermentation to develop products that are “molecularly identical” to traditional dairy without using animals.

It hopes to scale up the manufacturing process to eventually disrupt the USD700 billion dairy industry and supply chain.

Across the Channel, 2MX Organic, a blank-cheque company which plans to acquire businesses involved in organic food and sustainable consumer goods, raised EUR300 million in December in the largest public offering on the Paris market in 2020. The firm was founded by telecoms billionaire Xavier Niel and two other prominent French businessmen who say they are keen to capitalise on the momentum among consumers and investors increasingly looking for companies built around environmental, social and governance themes.

Internet of Food

The industry, enriched by ample investment, should transform itself in the coming years to meet the ever changing needs and tastes of consumers.

Automation is one area that will take centre stage. Meat production, for example, is still very labour intensive. This became a vulnerability during the virus outbreak as plants struggled to remain operational with severely depleted workforces.

Many producers now see technology as a means to improve their resilience.

The same is true for industries beyond meat.

Greater use of automated systems would not only ensure food security and quality. It also brings the added benefit of more efficient resource use. The production lines and supply chains of the future will be likely built on sensor networks, the Internet of Things and blockchain technology.

Japanese food with sushi donburi tempura and miso soup

Taste of the future

Faced with a growing world population and climate change, the food industry was already under severe strain even before Covid-19 struck.

Looking ahead however, the pandemic could help revitalise it.

If food producers and distributors move quickly to deploy advanced technology and innovation to meet growing consumer appetite for food that is healthier and more sustainable, the industry will be fit to meet the demands of the 21st century.

[1] Accenture COVID-19 Consumer Research, conducted March 19–25 and April 2–6, 2020
[2] Includes organic, Fairtrade, Rainforest Alliance and Marine Stewardship Council (MSC) certified product. https://www.mintel.com/press-centre/food-and-drink/eating-with-a-conscience-ethical-food-and-drink-sales-hit-8-2-billion-in-2018
[3] COVID-19 Disruptions in the US Meat Supply Chain, Federal Reserve Bank of Kansas City
[4] Popkin, BM, Du, S, Green, WD, et al. Individuals with obesity and COVID‐19: A global perspective on the epidemiology and biological relationships. Obesity Reviews. 2020; 21:e13128. https://doi.org/10.1111/obr.13128
[5] UN Food and Agriculture Organization

About

Mega

Mega seeks to energise and enrich the debate over how to create a better-functioning economy and society.

Megatrends are the powerful socio-economic, environmental and technological forces that shape our planet. The digitisation of the economy, the rapid expansion of cities and the depletion of the Earth’s natural resources are just some of the structural trends transforming the way countries are governed, companies are run and people live their lives.

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