Three ways global food brands can stay competitive
PA Consulting food and sustainability specialist Stuart Gilby and Duncan Macfarlane, innovation and technology expert at PA, explain that global food organizations must get creative and work together to ensure there is a global food supply. Experimenting with new technology and new ingredients while investing in new infrastructure is going to be necessary for CPG companies to continue to grow. And by embracing digital resources and building the right partnerships, food producers can keep costs low and maintain brand loyalty amongst their consumers.
The food production industry is facing an unprecedented rise in prices for ingredients, energy, and labor. The effects of climate change are making it difficult to grow crops, and the war in Ukraine has resulted in lost harvests impacting the globe. The post-COVID labor shortage has made it difficult to staff manufacturing plants. Combined with global increases in shipping times, food producers are facing a difficult and uncertain future.
CPG brands are responding to global circumstances by automating production and looking for alternative ingredients to meet demand. But new production lines take time to install, and new product recipes take time to create.
Food’s rapidly changing global situation is causing new automation to become unfit for purpose before new lines can be delivered because of long lead times and electronic-component shortages, which are leading to increased rework, higher costs and lower efficiencies.
As the cost of living rises across the globe, food companies must embrace digital technology, including artificial intelligence to maintain a low-cost base. While food producers grapple with limited ingredients from poor harvests and growing seasons, here are three ways global food brands can stay competitive.
1. Use digital twins to reduce downtime
Using digital technologies, such as digital twins that create a virtual representation of a real-world platform or facility, allows production to be maintained at the highest efficiencies.
Digital twins can help predict downtimes for maintenance and repair, reduce research and development load on production facilities by predicting production issues on new products and processes. These technologies also can improve scheduling, minimize changeovers and keep operating efficiencies high and energy usage low.
Furthermore, digital twins can optimize process conditions when ingredients change, such as from weak harvests. They do this by analyzing current conditions and data and seeing how various inputs would impact outcomes.
2. Use artificial intelligence to identify cheap ingredient substitutions
Food manufacturers have long substituted ingredients that no longer align to many people’s diets. Meat and dairy substitutions are popular because of sustainability concerns, but other ingredients can be substituted, too. The key is to replicate the experience of the original product — from taste to texture to scent — while finding suitable alternatives to one or more critical ingredients.
In many cases, simply swapping out one ingredient won’t produce the same experience. Hence, it’s important to consider new formulations that go beyond simple substitutions and require the technical knowledge of food scientists and engineers to produce a saleable product.
Food manufacturers often have proprietary knowledge about the effects of ingredients and their constituent parts on their product’s physical, sensory and regulatory properties. Finding the right replacements for hard to find ingredients can end up costing more than the original ingredients – driving up the cost base and causing consumers to find alternative products.
But AI can accelerate the ingredient search, find new innovative solutions that help keep costs low and maintain consumer loyalty. Companies such as Tastewise.io have developed AI to help find alternative ingredients across a range of recipes and product types.
Valio, a Finnish dairy and food company, is launching a new chocolate bar that it claims has re-engineered successfully the milk chocolate bar to reduce sugar by 30% using AI without losing taste to meet new UK government regulations. Yummy, a meal-kit company, specializes in creating and adapting traditional family recipes based on a person’s taste and dietary restrictions using AI technology.
The technology behind these new food creations allows for finding new ingredients and food technologies at early stages of development before they become mainstream in the market. It creates an opportunity for CPG companies to not only meet but exceed food consumers’ wants, needs, and desires but also identify ingredients that may be easier to source locally, further reducing costs.
3. Use artificial intelligence to identify new capabilities and acquisition targets
Another way to accelerate innovation and develop new products in the food industry is to partner with a start-up company with a more responsive mindset. Established food companies can use AI’s enhanced searching ability to identify startup targets before they break through to the mainstream.
Once good partnership possibilities have been identified, both companies should make sure the partnership is building mutual gain. Many start-ups need more than just capital; they often require knowledge, scale-up capabilities and much more. Identification of the type of support startups require will raise the partnerships beyond simple transactional relationships.
Ensuring there is a stable global food supply requires that companies get creative and work together. Experimenting with new technology and new ingredients while investing in new infrastructure is going to be necessary for companies to continue to grow. By embracing digital resources and building the right partnerships, food producers can keep costs low and maintain brand loyalty with their consumers.