Food Goes Digital To Meet Growing Challenges And Demand
he food industry is coming under increasing pressure as the need to feed an ever-growing population collides with a range of challenges including water shortages, soil degradation, overuse of fertilisers and pesticides, and climate change.
However, there are a range of digital tools that can help food industry players respond to these urgent, ongoing challenges. To date, however, without an overarching strategy, their adoption has been slow and unsuccessful, new research has revealed.
Digitalization is catching on rapidly as the agrifood ecosystem evolves, says Lux Research in a new report that outlines the challenges the industry has faced in recent years and the digital tools that offer potential solutions to those challenges across food processing and production, supply chain management, and personalized nutrition.
However, it says that companies need to take a strategic view and identify the problem they want to solve and see if digital technologies can help, rather than grabbing a technology that looks attractive and then looking for problems to solve. “A key challenge for players attempting to interface with digital technologies in food production is the tendency to act tactically from a tech-first perspective rather than acting strategically from an issue-to-outcome perspective,” said Lux analyst Harini Venkataraman.
“The ability to address consumers’ future needs is the driving force behind the rapidly evolving agrifood sector,” he added. “To adequately meet this changing landscape, major industry players must act now to build a robust digital strategy that identifies the right set of digital tools for the right products to maximize the value-add for their respective businesses.”
Lux says that the agrifood sector lags behind other sectors like aerospace and automotive in adopting digital technologies such as artificial intelligence, augmented reality, industrial IoT, and robotics, but it is catching up fast. Digital technologies will enable the sector to offer increasingly personalized products as well as the more prosaic, but equally important, task of creating a more integrated, digital, and omnichannel global supply chain.
“More than in other industries, digitalization in food will be a common thread across the entire agrifood ecosystem to enable industry players to address consumers’ future needs,” said Venkataraman. “The fact is, food companies that resist the digital conversion will not be able to keep up with more digital-savvy innovators, and will face higher R&D costs, longer product development timelines, and shrinking market share.”
Lux highlights eight examples of where digital technology can improve the food value chain, including ingredient informatics, cold chain monitoring, automated food quality inspection, and food traceability and transparency.
The food industry is going through a massive change and digital transformation of the food system can help address key issues but there are challenges in getting it right.
Lux highlights the six ways that digital transformation adds value across every function of a business – by upskilling employees, uncovering invisible insights, predicting the future, automating processes, optimizing processes and making information accessible.
The brewer Carlsberg recently unveiled “beer fingerprinting,” which incorporates sensor data and AI algorithms to cut by 30% the time it takes to develop new products.
Food retail is increasingly becoming an e-commerce battleground, as companies like Amazon and Alibaba create and expand their digital platforms, giving companies an entirely new way for companies to interact with consumers.
There will also be big impacts in the food industry supply. In the longer run, as the food industry looks to become closer to consumers, digital tools like soft robotics and digitally driven applications like last-mile transportation will play an important role. And as the food industry heads toward a more transparent future, a number of industry players will look to adopt “end-to-end” traceability solutions by coupling blockchain with IoT sensors. Digital solutions like AI-enabled sensors, for instance IBM’s next-generation Crypto Anchor Verifier, will play a crucial role in tackling food safety challenges along the supply chain. Stakeholders in the food value chain who do not adopt digital solutions for food safety and transparency will be left behind.
Driven by changing consumer preferences, a number of ingredient and consumer packaged goods (CPG) companies in the food industry will be under even more pressure to revamp their products to resonate better with consumers.