Key market drivers behind AI-led innovation in the food processing industry
Today, the food processing industry plays a crucial role in feeding nearly 8 billion people worldwide. As the global population has grown explosively in recent decades (increasing by 81 million people in 2020 alone), so has the industry’s reach, revenue, and logistical challenges.
Food processing service providers (FPSPs) are turning to artificial intelligence (AI) and data science: powerful tools to optimize and automate processes.
The appeal of these tools lies in their ability to generate valuable insights from vast volumes of data. Consider, for example, that 1.16 billion people use Instagram, 43 percent of whom list “Food & Drink” among their top interests. Advertisers, as well as Instagram itself, use AI and data science applications to comb through users’ interaction history. The result is market and customer research like we’ve never seen before: semi-automated analysis of consumer preferences on a global scale.
This article explores the key market drivers behind AI-led innovation in the food processing industry. We discuss the industry’s changing landscape, including changes to consumer demographics, consumer preferences, and global regulations. Read on to learn why AI should be front-of-mind for all FPSPs.
1. Shifting Consumer Demographics
Fifty years ago, the global population was less than 4 billion people, and 37 percent lived in urban settings. Today, it is closer to 8 billion, with 56 percent living in urban settings.
Two trends are apparent: the global population is growing, and so is the percentage of people living in urban (as opposed to rural) areas. By 2050, we can expect the global population to approach 10 billion, with a large majority living in urban settings, where demand for processed food is highest.
To prepare for this shift, FPSPs must scale up in a major way. Much of the systems, machinery, and equipment used today will be inadequate for feeding the global population of tomorrow. Top FPSPs have already recognized and reacted to this inevitability; brands like PepsiCo Inc. and Nestlé are leveraging AI-led innovation to automate their manufacturing systems and create insight-producing databases.
FPSPs face a choice: innovation now or obsoletion soon. Many are choosing the former, pursuing AI and data science applications in order to evolve with shifting consumer demographics.
2. Changing Consumer Preferences
In addition to population growth, emerging market growth (e.g., in Asia and developing nations), urbanization, and rising living standards are driving global consumer preferences toward “cleaner” foods.
GMOs, fats, and sugars are “out”; organic is “in”. According to leading international consulting firm McKinsey & Co., “consumer preferences have and will continue to move toward organic and healthier food markets.” The result is rising demand for fresh foods, which entails new logistical challenges.
First, processing foods like produce and fresh-cooked meals requires precise scheduling. Too long in transit, and they will spoil on the manufacturing line or in delivery trucks; too short, and they will rot on the shelf, instead. That’s why FPSPs are leveraging predictive analytics: an AI-and-data-science application that uses historical data to predict the nature and timing of future events.
Second, health-food demand is subject to fickle trends. What is popular today may not be tomorrow, as we have seen with “cloud bread,” “carrot bacon,” and mug cakes short-lived predominance on social media at various, fleeting points in 2020. FPSPs can take advantage of this turbulence by leaning into AI-led market and customer research, which can predict trends weeks or even months in advance.
Ultimately, FPSPs should view AI-led innovation not only as a necessary shield against volatile demand but also as an opportunity to capitalize fully on growing, vibrant markets worldwide.
3. Evolving Global Regulations
Food-borne pathogens and viral outbreaks, including the 2018 Chipotle Clostridium perfringens scare and, more recently, the COVID-19 pandemic, are driving strengthened food safety regulations worldwide. Simultaneously, concerns about climate change are motivating energy-use restrictions.
This upward trend in regulation has, is, and will continue to raise operational costs for FPSPs. The solution is AI-led innovation, which can cut costs and add value through automation, augmentation, digital transformation, and more. For example, Nestlé recently invested in digital transformation for supply-chain tracking. As a result, the company significantly increased its products’ traceability — allowing for faster recalls, more secure sustainability guarantees, and nearly unlimited data insights.
The COVID-19 pandemic is a dire reminder of food safety’s paramount importance. FPSPs can protect their customers — and themselves — by investing proactively in AI-led innovation.
The Most Important Takeaway
Today, the food processing industry faces a rapidly changing market: one which offers as many challenges as it does opportunities. Disruptions that would have been unprecedented decades ago — e.g., the rise of the Internet, social media, the COVID-19 pandemic, and more — are now commonplace.
FPSPs can enhance their ability to take advantage of growth opportunities and circumvent logistical challenges by investing in AI-led innovation, including a range of AI-and-data-science applications. Considering the market drivers we explore above, their increasing adoption by FPSPs is no surprise.
With over 50 clients in 20 sectors worldwide, Synaptiq is a full-scale AI consultancy delivering impactful solutions with applied machine learning, natural language processing, and other data-driven techniques. If you are a food processing service provider looking to explore AI-led innovation, we can help you unlock the power of AI and data science.
For more information about Synaptiq, please visit www.synaptiq.ai