A NUMBER of emerging global trends are increasingly leading the way when it comes to consumers’ food choices. And with it, they are dictating what everyone involved in the agribusiness supply chain – from the farmer to the largest agri corporate – needs to heed when planning for the future.
The recent annual meeting of Rabobank’s Food and Agri Advisory Board brought together leaders of some of Australia and New Zealand’s largest and most progressive corporate agribusinesses to examine the challenges (and opportunities) facing the sector in a world where the consumer increasingly is ‘king’.
In an industry sector where just a couple of generations ago consumer food choices were, to a large part, determined by the availability of produce and the production decisions of producers, processors and manufacturers based on the most cost-effective business models, consumers are now driving the agenda like never before.
And, as the industry leaders on our advisory board fully recognise, corporate food and agriculture companies and the agribusiness industry are now the responders.
Further, with consumers demonstrating they are willing to switch brands – and even product types – at speed, this presents a significant industry challenge.
At its most fundamental level, this shift in the ‘balance of power’ has manifested in a market where consumers have a dizzying array of choice of what they eat and how, when and where they purchase it.
As we move into the future though, a number of significant trends are becoming increasingly apparent as the dominant drivers of consumer demand into the 2020s and beyond.
Among these is the new generation of consumers who the food and ag industries must cater for. We’re talking about a generation increasingly-focussed on sustainability, provenance and traceability, freshness and the quality and health properties of food.
As Rabobank US analyst Nick Fereday told the advisory board, this has already resulted in a market where a number of iconic brands are increasingly out of favour with consumers whose preferences have changed – leaving these companies scrambling to try to position their businesses and products to cater for evolving customer tastes.
Consumers are now driving the agenda like never before.
And we see plenty of evidence of this both here and globally, with food companies reformulating their existing products by replacing artificial ingredients with natural and sustainably-sourced alternatives and removing preservatives.
Today’s consumers are much more focused on health and ‘wellness’ – with a growing demand for natural and organic foods, with no artificial ingredients or GMOs, and minimally processed.
But this is only part of the equation. Sustainability is also a significant consideration and growing, with consumers increasingly conscious of their role in ensuring the food they eat is sourced ethically and sustainably, with minimal impact on the planet.
Many of these food trends are is being led by – though are by no means exclusive to – those younger generations of consumers known as ‘millennials’.
Trends and fads they adopt are driving the market like never before. Take the example of gluten free, which has gone from being a fad to a well-established trend causing long-term impact on the sector and recognised as contributing to the 10 per cent decrease in wheat consumption in the US that has been seen since 1997.
The gluten-free trend has nothing to do with availability of wheat supply or the price of wheat, but is purely consumer led.
As Nick Fereday makes clear – rightly or wrongly, consumers have made a connection between gluten free and better health and the implications of this are working their way back up the supply chain.
Plant-based foods and proteins are also growing quickly, if off a low base, as consumers take a more ‘flexitarian’ approach to eating – not no meat, just less meat, choosing to eat more from the ever-expanding portfolio of meat and animal-free- options.
While not yet as prevalent in Australia, we are beginning to witness this now with the popularity of non-dairy alternatives, such as almond and cashew-nut milks.
Premiumisation is also a growing theme in the food and ag market as customers seek out quality, health and provenance properties in their food and are prepared to pay a premium for them.
This is a not a trend exclusive to developed countries – but is increasingly driving the food-purchasing habits among the younger generations in markets such as China as well.
These trends are seeing a growing distrust of ‘big food’ among certain sectors of the market, as purchasers gravitate towards smaller boutique food producers, with what are perceived as more sustainable ‘artisanal’ offerings.
Of course trends, by definition, are not static – and there will undoubtedly be new and changing themes emerging as the food and agri ‘disruptors’ of the future.
What is clear though is that the focus on sustainability, freshness, provenance, quality and health properties of food is growing and here to stay.
Consumer preferences are changing and consumers are ‘calling the tune’ like never before.
This presents huge opportunities for those in the food and agri sector who can respond to these shifts, and a considerable challenge for those who don’t.
- Els Kamphof is Rabobank’s group executive of wholesale banking for Australia and NZ.
