The future of food: Winning in a tough market
Food is culture and food is identity. As a result, the food market is not the most volatile market. Trends may present themselves quickly, but they spread slowly. There is always a small, specific group interested in new developments. They, for example, want natural (or organic) food, are looking for products that support a healthy lifestyle (low carb, low sugar, low fat), are looking for ‘local products’ and are happy to occasionally open their wallets for exclusive products out of season or for ‘bad calories’ – as long as it is a quality product: really good chocolate, or really tasty vanilla ice cream. But opposite the hip, urban ‘oat milk elite’ stands a much larger, traditional group: the boys and girls of the mashed pot. People who value grandma’s cooking and even claim a right to a piece of meat every day. This group has had the political wind in its sails recently.
Small steps
Of course, real ‘revolutions’ or ‘disruptions’ do happen in the field of food, but they happen in small, specific segments. They also quickly reach a ceiling as growth opportunities prove to be limited. The food industry simply needs to work with this. Consumer behaviour around food changes only slowly – in very small steps. In addition, the major changes in the industry in the coming decade will probably not come from the large, existing brands. These changes will almost certainly originate from new or niche brands. This has everything to do with credibility: the consumer is less likely to ‘believe’ a natural, healthy, ‘artisanal,’ ‘pure’ peanut butter ‘without additives’ from Calvé/Unilever than a similar product from a new, small, authentic ‘peanut butter farmer’ with a trendy beard.
For both large, existing brands and small, new ones, it is important to think strategically about how to survive in this market. Turning the food industry on its head in one fell swoop is unlikely. It is therefore better and easier to take small steps. To accelerate successful concepts and discard less successful or less sustainable ones. To respond to new customer needs with sensitivity and then further build on it. Enforcement does not work. Too often large actors resort to takeovers as the ultimate solution, leading to sympathetic niche brands being ‘hugged to death’ in the process. In 2025, hybrid alternatives are much more attractive. For the large market participants, this means, for example, taking a share in a smaller brand.
Or, buy small, scale up and sell again – without too much integration. While the small market participants should seek cooperation and use, for example, the distribution power of large companies – without being absorbed into the large machine where the small party loses its identity. Focus cooperation only on the elements that strengthen the small party. In doing so, the large market participant will have to be satisfied with only partial control and perhaps even a minority share. Be that as it may, the current market leaders will have to be especially bullish in acquisitions. They will have to be upfront about what the plan is for both ‘old’ and ‘new.’ Exciting? Certainly. But there is no alternative.
Precision fermentation
The progress being made in precision fermentation is extremely promising. In fact, looking back on the food system transition in thirty years, precision fermentation is likely to have been the game changer. Precision fermentation is a biochemical manufacturing process that uses microorganisms to produce specific ingredients. Precision fermentation is ultimately a platform to redesign the composition of food. It allows companies to create functionally identical or nutritionally superior proteins and fats without animals – which offers huge advantages in the area of efficiency, sustainability and health. The advantage of precision fermentation is that we no longer need to change consumer behaviour, but instead ‘only’ replace the 'problem ingredients.'
Limiting climate risks
The ‘tough market’ is certainly not the only challenge facing the industry. A factor presenting larger than average concern is the climate. Severe climate fluctuations are putting pressure on crops, something anyone adding coffee, cocoa, vanilla, olive oil or cinnamon to their shopping basket can attest to. Poor harvests have driven up prices worldwide and are putting pressure on margins. And not only the prices of luxury products, but also the prices of typical ‘bulk products’ such as wheat, soy, corn and rice, are likely to rise sharply in future. The effects are becoming increasingly clear, more intense, and greater.
How can companies prevent these effects from becoming destructive to their business models? It starts with recognising the climate risks in the chain and network. It then requires developing long-term strategies to mitigate risks at the beginning of the chain. Crops will increasingly vary in quality and yield. Key is to set up the chain accordingly and be proactive. The food industry uses trees and shrubs that only bear fruit (and thus raw materials) years later. So, you need to already be busy with the harvest of 2030.
The role of the end customer
Another major problem in the food industry is that the chains are long and opaque. Traditionally, producers had little or no involvement in what happened 'further down' the chain. Stay to your core was the strict adage. Large chocolate manufacturers were good at making, packaging, and selling chocolate bars. The basic raw material of the product - in this case the cocoa bean - well... it was always just there. Some other party took care of that. That is no longer the reality. To survive in this industry, you will have to know your entire chain like the back of your hand, and as end customer will have to play a bigger role. Companies like Driscoll’s, Tony’s Chocolonely and PepsiCo are already doing that, dealing with the little plant that will later provide them with their basic raw materials (in this case berries, cocoa beans, and potatoes respectively). Major players in the chain will have to take responsibility all the way to the source. Entering into long-term contracts with chain partners is part of this. In some cases, it may well be attractive to work closely with one or more competitors. The raw materials, after all, are the same. Managers will have to look at their supply chain in a different way as they look at their long-term investments (capital expenditure, or CAPEX). Failing to thoroughly appraise the chain with a ‘CAPEX lens’ will only mean kicking the problems three to five years down the line.
Winners
The food industry is a global industry. All of us are coveting cocoa from West Africa, vanilla from Madagascar, oranges from Brazil and almonds from California. It is an industry that would benefit from open borders and free trade. That very concept is going a bit out of fashion at the moment. Instead of breaking down borders, tariff walls are being erected. Instead of one large, free world market, we seem to be heading for multiple trading blocs wanting to protect their own markets. The food industry is more affected by the current geopolitical wind than any other industry. We can all blow hard, but it is unlikely we will change the geopolitical wind, in the short term, at least. Therefore, we had better concentrate on the things we do have influence over. For politics: opt for guidance from the European trading bloc. For the food industry: dare to look away from what is happening on the world stage and look in your own backyard. See what is flourishing there. Identify the promising niches there. Who will be the winners in this complicated market in five, ten or twenty years? It is extremely difficult to predict. Although... there are some things we have no doubt about. Tomorrow's winners will have thought about the future of their entire chain today. They will be the parties that innovated. Companies that offered an alternative to climate-damaging production methods will be among the winners. This will apply, for example, to companies that can offer good and credible alternatives to dairy and meat production, such as plant-based meat and vegetable dairy (see box). Winners will excel in deep tech, strategic partnerships, public-private collaboration, and platform thinking - preferably in combination.
In conclusion
There is no shortage of headaches, but there is also no shortage of opportunities. Companies in the food sector will have to reinvent themselves to remain relevant in the future. And this is precisely where great opportunities for the Netherlands and the Dutch food industry are to be found. All things considered, the Netherlands is in pole position. In the agricultural sector, we are still world leaders. There are few better performers in terms of knowledge. And when it comes to logistics, the Dutch are virtually unbeatable. All we need now is courage, long-term thinking and, above all, the ability to change. The Netherlands holds the keys to cracking the food code.
This essay was published in Management Scope 06 2025.