Anthony DeLio is senior vice president, corporate strategy and chief innovation officer for Ingredion, a Fortune 500 based in Chicago’s suburbs. He is responsible for global research, development and innovation ventures.
On July 20th, we celebrated the 50th anniversary of Apollo 11 landing the first two astronauts on the moon. This milestone has prompted me to reflect on how the food industry has advanced since a man walked on the moon. There are many innovations that are synonymous with the space program, including the development of a powdered drink called “Tang.”
Without a doubt, the food industry has experienced unprecedented change since that time, and the changes have never been more dramatic than in the past several years. Consumers more than ever are interested in where their food comes from, how it was produced, and what’s in it. Their relentless drive for convenience has culminated in sales of food prepared out of home surpassing food prepared at home in the United States and many other countries.
Technology that includes Web 2.0, robotics, artificial intelligence, the Internet and the next wave of biotechnology is enabling a whole new range of food options, including ingredient sourcing and manufacturing practices that are sustainable and animal free. Furthermore, established food companies are being disrupted by agile start-ups backed by VC’s that are breaking the rules and bringing new concepts to market at an accelerated pace.
Traditional retailers are also being disrupted and are being displaced by Amazon, Uber Eats and other non-traditional distribution channels. It is indeed an exciting time to be in the food industry, and at this rate it is certainly possible that we will witness more changes in the food industry in the next 10 years than in the past 50 years.
On top of all that, according to a recent United Nations report, the world population is increasing steadily by about 83 million per year (or roughly the size of Germany) and will reach 8.6 billion in 2030, 9.8 billion in 2050 and 11.2 billion in 2100. New technologies and new sources of food will be needed to supply the world with food in ways that are more sustainable than what we have today. Today’s model of using precious farm land to produce crops that we feed to animals is not efficient or even perhaps capable of meeting the nutrition needs in the future.
The pace of change is accelerating
Technology is driving market disruption at an even faster pace. You can either disrupt your business or someone else will. No one could have predicted that air travel would once again lend itself to the food industry with drones becoming a delivery option for California residents this summer. Disruption surrounds us all and the magnitude and pace of change in the marketplace has undermined the traditional growth models for many companies, especially larger ones.
Companies need to combine greater agility to compete more effectively. Speed is of the essence as consumers are looking for convenience and trying to do more with less time. Today, businesses know that they need to focus on constantly improving the experience they provide if they want to win and retain loyal customers. To stay competitive, companies need to anticipate the trends that are shaping our business and changing our customers.
You CAN have your cake and eat it too
There are several trends shifting consumers’ diets and lifestyles that are top of mind and impacting food consumption right now. First, consumers globally are looking for ways to reduce sugar intake. The World Health Organization (WHO) led the charge in 2015 by introducing new guidelines and calling on countries to reduce sugar intakes among adults and children. And in 2016, the U.S. Food and Drug Administration (FDA) announced a new nutrition facts label for packaged foods to reflect new scientific information, which would make it easier for consumers to make informed food choices.
From our own consumer research, we also know that more than 60% of consumers are actively monitoring the sugar content of the products they purchase and according to Mintel, over the past 12 months, 84% of consumers say they have reduced their sugar intakes. These changes are certainly magnified by governments around the world pushing for sugar reduction by imposing taxes on products, especially sugar-sweetened beverages. All of this has prompted food manufacturers to make sugar reduction commitments and further evaluate their products to meet new legislation along with consumers’ changing preferences.
However, reducing sugar can be a challenge for food manufacturers who are looking to match the sweet taste of sugar while achieving the same functional benefits in their products. There are no ‘silver bullets’ and each application has its own challenge, which are focusing more closely on health and wellness, especially in this area.
And finally, there is an ongoing explosion occurring in the demand for plant-based foods as an increased number of consumers are switching to plant-based diets for many reasons, including protecting animals, preserving the environment, general health concerns or changing taste preferences. According to Nielsen, 38% of consumers see positive health effects in plant-based proteins.
With the world population now surpassing six billion, and as prosperity increases in emerging countries, the demand for protein is increasing rapidly. We need new sustainable solutions to meet this nutritional demand.The market for plant-based proteins is rapidly growing and extending beyond North America to sources beyond soy and wheat.
Collaboration leads to greater innovation
My team has been innovating with both big and small customers to help them succeed with consumers for many years. We see innovation in these emerging areas as enablers of an area future growth in the food industry. Several years ago, we started to lay the foundation within the walls of Ingredion to find new solutions to address these challenges, but also looked externally for partners that could help us move faster.
We have combined our expertise and resources along with our global manufacturing network and go-to-market capabilities with both Matsutani in Japan to bring to market a new type of zero calorie sugar and Verdient Foods in Canada to expand our offerings of pulse-based proteins that can be used in a whole range of foods and beverages. In April, the FDA announced draft guidance recognizing allulose as a zero calorie sugar. This recent announcement was a watershed moment for the food industry who has been looking for ways to reduce and replace sugar without negatively impacting the taste profile of reduced sugar products.
One thing is certain. The food industry will see more changes in the next 10 years than in the last 50 years and change will provide opportunities for those who grasp it and act.