There's a feeding frenzy underway in the global food and beverage market. Digitalization, wellness and climate change are fueling new trends in food tech, and investors are hungry for more.
According to food and beverage market research by PitchBook, venture capital deal activity in U.S.-based food tech startups reached its highest point in a decade in 2018. In addition, multiple startups achieved what they referred to as “unicorn" status by surpassing billion-dollar valuation.1 In 2019, one major restaurant delivery service was valued at US$12.6 billion, while investments in one of the grocery delivery giants brought its value to US$7.8 billion, making it one of the most valuable startups in the U.S.2
These kinds of services are becoming highly sought-after because they're responding to new trends and consumer demands. With climate change a growing concern, more and more consumers are seeking out more sustainable food options, such as plant-based and animal free foods, and they're buying from corporations that package their food products in biodegradable and plastic-free products.
Specialized diets are also feeding into the expansion of grocery and restaurant delivery services that offer more convenient ways for consumers to shop. And digitalization is making it possible to create next-gen dining options in the form of e-restaurants and food service robots.
Food and Beverage Industry — Market Overview
Food and beverage industry growth mode is in full effect. According to a food and beverage industry report by Research and Markets, the global food service market was worth US$3.4 trillion in 2018 and is expected to reach a value of $4.2 trillion by 2024, with a compound annual growth rate of 3.6% from 2019-2024.3
There are a few factors at play here, with major trends including a shift to natural ingredients, the heightened appeal of functional drinks such as kombucha and a rise in the popularity of artisanal spirits.
Several new trends in the food and beverage industry are powering this market expansion, and technology is helping fueling the evolution.
Evolving appetites. Food consumers are becoming more daring when it comes to trying out new flavor combinations. Global connectivity is helping make previously exotic foods mainstream, and consumers are trying out new services that meet these demands.
Clean living. Healthier, active lifestyles are in vogue, and consumers are seeking out high-protein foods that promote longevity and healthy snacks that offer alternatives to sugary treats, as well as foods that offset any food allergies or sensitivities. Digitalization and robotization provides greater personalization and development of such food products.
Demands for transparency. Consumers want brands to be transparent about whether their foods contain any artificial ingredients, as well as information on where those ingredients are sourced. According to the 2019 Food and Healthy Survey Report by the International Food Information Council (IFIC), 7 in 10 consumers would trade their favorite products for alternatives that didn't contain artificial ingredients, and more than half said they would pay more for them. In addition, consumers want their foods produced sustainably—six in 10 consumers identified sustainability as a priority.4 Artificial intelligence, which can improve supply chain efficiency, helps execute these initiatives.
Latest Technology Trends in the Food and Beverage Industry
Indeed, the technology impact on the food and beverage industry is reinventing food production and sourcing methods. The use of robotics, data and applications in these processes are among the latest technology used in the food and beverage industry and can create greater efficiencies. Tech can also improve processing and packaging techniques.
Manufacturers are increasingly relying on technology to produce more efficiently for the world's expanding population.
Here is some of the latest technology used in the food and beverage industry:
• Artificial intelligence. AI offers enormous potential for food and beverage industry growth. Consumer demands change seemingly by the minute, and AI can act as a crystal ball to help food and beverage businesses keep pace.
By applying AI, food and beverage companies can get to know their customers' preferences and tastes and leverage that information to create new recipes and forecast inventories. By tracking historical data for customer preferences and habits, AI can put these metrics to work to predict sales cycles.
AI can also make it easier for food processing machines to sort food items. And by tracking food and beverage items throughout the supply chain, AI technology can streamline the tracking of products while helping food brands and restaurants offer transparency about the products they sell.
Internet of things. Internet of Things (IoT) technologies are helping boost food and beverage industry performance, especially when paired with AI to help process the large amounts of data these technologies collect. Analytics programs can translate this data to identify trends and patterns food and beverage businesses can use to gain a competitive edge.
Companies are also using IoT in the form of sensors. In food production and farming, IoT sensors can monitor animal health, crop production and soil conditions. In warehouses, sensors can help track inventory and locate physical goods.
Automated guided vehicles. The advent of self-driving cars is steering a new trend in the food and beverage industry. The industry previously held a distrust of automated guided vehicles (AGVs), which are software-controlled unmanned vehicles that rely on sensors to detect obstacles and read signals from devices such as beacons and lasers.
But there has been a gradual shift in industry attitudes toward the technology, especially now that self-driving cars are gaining more mainstream acceptance. In a bid for efficiency and cost savings, food and beverage companies are increasing their use of automated systems like AGVs in their warehouses for storing and retrieving products.
Businesses can take advantage of many of the tech advances poised to drive future trends in the food and beverage industry. By leveraging technology, businesspeople can help the industry grow while reaping the benefits of more efficient processes, greater cost-effectiveness, a deeper customer understanding, and fresh opportunities to explore new service areas.
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.