GLOBAL MEGA-TRENDS AND THE ROLE OF THE FOOD BUSINESS
Author of The Big Pivot
We humans are facing unprecedented challenges as we move deeper into the twenty-first century. Consider a few of the largest mega-forces: climate change and extreme weather, resource constraints and volatile prices for the key inputs to our economy and society (food, energy, metals, and so on), and a level of technology-enabled transparency that allows us to ask new questions about the products we use and the companies that make them. These mega-trends are changing how we live our lives and are pushing the business world in particular to fundamentally change how it operates.
At the center of all three big trends sits the thing we consume most frequently: food. A changing climate and stressed global resource pool (particularly in regard to water) has profoundly impacted our food system. At the same time, transparency is changing our expectations about what we put in our bodies. We’re asking new, pressing questions about what’s in our food, what it takes to grow and produce that food, and how much of this material we are wasting. Perhaps the most basic question of all, however, is how much meat are we each choosing to consume.
Individual dietary choices are both personal and cultural, of course, but the collective impact of billions of decisions has very real implications for how the entire world evolves. The way we answer all these big questions will largely determine whether the 9 billion people that will soon share this planet will be able to thrive equally.
The way we think about food is a critically important aspect of climate change, the most fundamental and complicated challenge the human race has ever faced. In total the agriculture industry accounts for about 30 percent of the carbon emissions on the planet. This number includes the energy needed to produce food, but also the carbon released while mowing down trees for cattle or farmland (which in large part goes to feed livestock anyway). Our most pressing and precious resource challenge, the availability of clean water, also relies largely on the choices we make about food. The food and agriculture industry is the dominant user of water—up to 70 percent of all water withdrawals.
So food is intricately wrapped up in the two big mega-trends of climate change and resource availability. Agriculture’s enormous and outsize impact will, one hopes, put pressure on the food industry to find ways to improve. But the third mega-trend, increased transparency, may be having the greatest impact on our food system. Consumers and businesses now demand more information about the food they buy. While mandatory nutrition labels started the conversation years ago, new demands are changing the food business today faster than ever before.
In the past few years alone, many of the world’s largest food companies have announced major shifts in their approach to ingredients and production transparency. McDonald’s is implementing new sustainable beef policies and will only buy chicken raised without the antibiotics that are important to human medicine. Tyson Foods, the largest poultry producer in the United States, is eliminating those same antibiotics. General Mills is reducing genetically modified organisms and sugar in its products. Kraft, Taco Bell, Pizza Hut, and Subway are among the many chains announcing drastic reductions in their use of artificial colors and preservatives.
These moves are part of a larger shift toward a so-called clean label approach to food and personal care products: a commitment to reducing the total number of ingredients, using foods that are recognizable as food (that is, avoiding long chemical names), and sourcing food that’s as natural as possible (although defining natural is trickier than many people realize).
Companies are taking these complicated and sometimes expensive steps because people want to know what exactly they are eating and increasingly expect that information to be easily available. (Note: In some cases the government has officially mandated the information be readily available.) With this increased transparency, it’s no surprise companies are trying to clean up their act. If you have to be naked, you might as well look good doing it.
So will this movement toward cleaner, simpler foods impact how much meat we all eat? Perhaps, but it’s hard to say. There is clearly a desire for more naturally raised beef, pork, poultry, and fish. And the number of people experimenting with reducetarian-type commitments to eat less meat—either for a day, a week, or for certain parts of the day—is rising.
At the same time, however, the growth of the global middle class is driving increased consumption of meat, particularly pork (half the pigs in the world are in China). There are clearly competing forces at work. But ultimately the largest issues—climate change and resource constraints—will trump all others. Resource-intensive products, be they energy-hogging vehicles or actual hogs, will become more expensive than other options either through reduced availability or commonsense regulation. After all, nothing shifts behavior more efficiently than economics.
For now, food businesses and restaurants will continue to react to market dynamics like shifting input costs: As food prices rose in the first half of this decade, for example, value meals and dollar menus became harder to maintain. Rising costs of production will drive change, but so will shifting preferences. In the fast-food world, companies have attempted to introduce vegetarian and healthier options for years, and there have been (very) few success stories. In Sweden, for example, the midsize chain Max Burgers has for years pushed healthier options and encouraged consumers to reduce their carbon footprint by eating less meat. The chain has since experienced encouragingly high profit margins.
Unfortunately, vegetarian and healthful options at the biggest brands have had more mixed results, making companies wary of taking big risks. And yet, chains like Panera and Chipotle have demonstrated there’s strong demand for healthier foods with cleaner labels. Chipotle has had significant success with its overall pitch about sourcing (grass-fed beef, for example) and has done well with its sofritas (a tofu-based filling for burritos)—40 percent of customers who buy this vegan option are not vegetarians. With a quarter of U.S. adults now saying they are reducing meat to some extent, companies will take notice.
The food business, our eating habits, and the earth are all changing in important ways, and these shifts are reinforcing each other. In the near future, the world of food will look much different from how it does today, and it will certainly include less mass-produced meat.