With the press attention given to last year’s IPO of Beyond Meat and continued speculation around a market listing for Impossible Foods, you’d be forgiven for thinking plant-based catering is the only way of accessing the trend towards sustainable food.
In reality, this is an area of huge potential, which is multi-faceted and, to an extent, underappreciated. A number of sub-sectors underpin the ongoing sustainability revolution in the global food industry. Valued at $11.7trn in 2019, it is expected to grow at a compound annual growth rate of 5% year-over-year for the next seven years. These sub-sectors span the production, packaging, distribution, consumption and health of food.
Plant-based and organic foods
Let’s start by examining the obvious. Companies in this sub-sector are focused on producing and delivering plant-based foods, particularly as alternatives to meat and dairy.
Demand for plant-based foods has already rocketed in recent years. In the US alone, retail sales of plant-based foods grew 29% over 2018 and 2019 to a record $5bn. As consumer awareness continues to grow in relation to the negative impacts of meat production on the environment and climate, this swell in popularity for meat and dairy alternatives is unlikely to wane.
Organic foods have also surged in popularity as consumers have started to understand the impact of intense agricultural practices. In the UK, last year, sales of organic food rose by 4.5% compared with 2019, to £2.45bn.
Ingredients, flavours and fragrances
According to the Plant-Based Foods Association, the number one driver of all food purchases is taste. This motivation drives companies in this sub-sector to engage in addressing the increasing demand for natural and organic ingredients in the production of both flavours and fragrances.
As more food becomes plant-based, consumers still like the option of eating food that has the colour, flavours and scents they are accustomed too – hence the success of Beyond Meat and Impossible Burger.
Food safety and testing
Companies in this sub-sector are engaged in providing food safety solutions such as cleaning and sanitation and the anti-microbial products used in the processing of food and drinks. The sub-sector also includes companies engaged in the provision of instruments, software and/or services related to the testing of food, soil and water quality.
UN Sustainable Development Goal 2 targets the ending of hunger, achievement of food security, improved nutrition and promotion of sustainable agriculture. A huge focus of agricultural technology these days, therefore, is aimed at increasing the quantity and quality of crops produced on the same amount of land, in order to be able to feed the world’s growing population. By 2050, the world’s population is projected to increase by 35%, up to approximately nine billion. To feed that population, it is estimated current crop production will need to double.
Precision farming looks to improve efficiencies in the use of input resources (such as crop protection products, fertilisers, water and fuel), reduce the negative impact of external/environmental risk factors (e.g. single weather events and climate change) and to reduce the environmental footprint of unchecked agricultural expansion.
Elsewhere, indoor, vertical, aeroponic, hydroponic and aquaponic farming use technologies to grow crops without soil in nutrient-rich solutions and in closed-loop systems, which have the benefit of reducing run-off, reducing (and in many cases eliminating) the need for crop-protection products and saving both water and money.
This sub-sector is home to companies that are engaged in the maximisation of crop yields and the optimisation of input resources through science. This includes seed science (gene editing and breeding technologies, but not gene modification), fertilisers and crop protection products. Agriculture companies engaged in the transition to bio-based fertilisers (as opposed to nitrogen, phosphate and/or potassium fertilisers) also make the cut.
Commercial fishing has long been under fire for the depletion of natural fish stocks and damage to the biodiversity of our oceans. Meanwhile, sea-based fish farming depends on food derived from natural fish stocks and releases pollutants into the world’s waters through its waste product. As an alternative, land-based farming allows for a controlled environment.
This allows for the elimination of sea lice, toxic algae and other external environmental factors. A controlled environment also eliminates the negative impacts of sea-based farms on the natural environment where waste, sea lice and chemicals are discharged directly into the ocean, negatively impacting wild salmon stocks.
Land-based farming creates opportunities for the recycling of fish waste to be used as fertiliser for food crops and the creation of renewable energy in the form of biogas. Recirculating Aquaculture Systems are a growing area of innovation within the land-based aquaculture industry.
This theme focuses on the provision of irrigation technologies aimed at minimising the use of water in agriculture, including the development of advanced precision irrigation systems and Internet of Things technologies that facilitate variable rate irrigation, wireless irrigation and the use of GPS positioning and guidance, which can be controlled remotely on smart devices. This segment also includes on-farm water management technologies, which enhance the efficient use of water on farms, including the reuse of non-potable/grey water.
Supply chain technology
According to the UN Food and Agricultural Organisation, more than a third of all food produced globally is wasted. To tackle this, the continued adoption of improved processing and logistics technologies is vital.
The supply chain technology segment encompasses companies involved in the development of food processing technologies – such as cleaning, peeling, sorting and packing – that are supplied to food and beverage producers and grocery retailers. This sub-sector also captures businesses that provide logistics technologies to companies operating throughout the food value chain, such as automated warehouse logistics solutions, thereby reducing the amount of food wasted and helping to bring down food prices and carbon emissions.
Last but not least, the production of food packaging, which is either reusable, recyclable or compostable is a hugely important segment. It includes companies engaged in fibre-based packaging derived from sustainable forestry, those producing packaging materials out of aluminium and glass, which are both infinitely recyclable, and those producing packaging materials from recycled organic matter that is compostable. As consumer demand and legislation continue to drive demand for more sustainable packaging solutions, this sub-sector is anticipated to innovate and grow substantially in the years ahead.