Three factors will be critical in shaping demand over the 21st century:
Alongside Population Growth, Affluence Will Drive Future Food Demand
As countries grow in affluence, their food consumption patterns change drastically. Higher income causes diets to shift towards more resource-intensive foods – such as meat, fish and processed foods. Consequently, as consumers become more affluent and shift their diets, the energy required to meet their daily intake increases significantly.
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Consumer preferences
INCOME GROWTH
Converging Diets
Converging Diets
Consumer preferences
INCOME GROWTH
Meat consumption increases with affluence
Sub-Saharan nations versus rest of world
Source: World Bank and Food and Agriculture Organization of the United Nations.
Note: GDP per capita in PPP, constant 2017 $US.
Food Loss and Waste
As much as 40% of food that is grown or produced goes uneaten around the world each year. This has a significant toll on food security, economic well-being and the environment. The natural resources used in its production account for approximately 4.4 gigatons of greenhouse gas emissions (GHG) – making it the world’s third-largest emitter after China and the United States.
Investment Implications Across Food Demand
Countries across the globE are converging towards a ‘Western Diet’
The convergence of global diets has three key implications. First, the distance food needs to travel to the end-consumer will increase. Second, the reliance on food imports and supply chains will create new infrastructure needs while simultaneously increasing the risk around disruptions and their impact on food security. Third, the merging of global diets means we are increasingly dependent on fewer crops, making our food system less resilient.
Global diets are converging
Source: United Nations, Food and Agriculture Organization. Note: In this chart, “western diet” refers to animal proteins, dairy products, wheat, vegetable oils and sugars.
Share of total daily calories from a “western diet”
Global Consumer Preferences Are Evolving in Different Ways
For an increasing number of consumers in developed markets, the importance of health and wellness influences their product choices, from ingredient sourcing to food processing. In rapidly urbanizing countries such as India, Brazil and China, consumers are increasingly concerned with food safety. This has led to a marked uptick in demand for recognized brands, ready-to-eat snacks and packaged foods.
US Production of High-Fructose Corn Syrup
Since 1999
Source: The White House, Fortune Business Insights, McKinsey & Company
20%
Global Demand for Prepared Foods & Meals
Source: Fortune Business Insights
to $250B by 2029
60%
US Online Grocery
Source: McKinsey & Company
of food-at-home market by 2030
30%
Rising income and population are transforming food demand
The convergence of global diets is altering food supply chains and agricultural production
Consumer preferences for more convenient, healthier and safer food options will determine winners and losers
As much as 40% of food that is grown or produced goes uneaten around the world each year. This has a significant toll on food security, economic well-being and the environment. The natural resources used in its production account for approximately 4.4 gigatons of greenhouse gas emissions (GHG) – making it the world’s third-largest emitter after China and the United States.
1. Meat producers offer a contrarian investment opportunity
More affluent populations and convergence of global diets create opportunity for meat producers
ESG investors should consider engaging with conventional meat manufacturers
2. Cold storage and transportation provide global opportunities
Proximity to urban centers and transportation hubs are key
3. Packaging offers cash flows no matter the underlying food fad
Irrespective of the trend, food innovation is reliant on new packaging and machinery
Cold logistics providers and real estate in the US, SE Asia and Latin America can be attractive
Seek out leading packaging firms as well as equipment makers in the US and Europe
4. Health and wellness options drive grocery and food innovation
Consumers are seeking healthier food options and may be willing to pay up for it
Look for companies that are closing the gap on price and taste rather than relying on changes to consumer tastes
5. Convenience and food safety drives emerging market opportunities
Concerns around food safety in EM has led to demand for recognized brands and packaged foods
Regional bakers and bottlers offer opportunities in India and Latin America
1960
2020
South Korea
China
Brazil
1960
2020
Meat consumption
GDP per capita, PPP
1.
2.
3.
1.
2.
3.
Kg per capita, annually
