Innovation & Disruption 28 March 2022
What does the next generation expect from food science and technology? A conversation with Valerio Nannini
The future of food products is changing. But alongside the challenges of demand, we have another big challenge to overcome: that of consumer expectations, and in particular, the way the younger generations view the role of technology in their food supply. In this conversation with Valerio Nannini, we look at the tension between a yearning for naturalness and the need for new solutions to the world's food supply problems.
The future of food products is changing. We’ve talked before about the challenges that face humankind when it comes to protein. But there’s another challenge that will impact how we think about protein, and the way new protein offers will develop. It’s all about consumer expectations, and in particular, the way the younger generations view the role of technology in their food supply.
While we have seen a strong sense of trust in technology from Generation Z, we see also that their expectations around the food they select to eat is influenced by their perception of ‘naturalness’. Authentic, smaller and more local producers of food are the preference – they want to eat good quality food products, with fewer additives, while also addressing the problems we face, many of which will depend on technological solutions.
In this conversation between Sevendots Partners Valerio Nannini and Andrea Bielli, we looked to understand more about the role of technology and how this will impact future food advancements. From problems in supply, to the growing awareness of environmental sciences working to solve our planet’s problems, please enjoy this far-reaching conversation about the potential for change and the challenge of meeting a young generation’s expectations around their food choices.
We can see there’s been a big push in investment in research and associated with agriculture. This is really enlarging the role of new technology – from a way to increase productivity towards something that may possibly improve on or solve problems, particularly related to the impact agriculture has had on the environment. Do you feel this change to be accurate – from productivity to improving the sustainability of agriculture?
Well, there’s two sides of the coin – like everything in life, right? On one side, it’s exactly what you’re saying, a way to turn from productivity to addressing sustainability more broadly. On the other side, there’s also a need to ensure we are not exploiting the resources we have left. It’s food quality against quantity. And this means considering what are really the right things for us to be doing, instead of exploiting all we have for the maximum benefit. To be more concrete, before we were trying to improve the yield, which was a big driver for any type of crop that we would have, right? Providing better income for the farmer, cheaper costs for the industrial producer in one way of another, etc. And I think as trends are changing, this is still valid, but we’re also starting to look at quality – what I would call nutrition density. So, the limits of nutrition density become an important driver for quality control.
Take soya beans for example. The fact that soya beans now are used for making meat radically changes the type of soya varieties you require – you can’t exploit land to the maximum because you may lose quality elements that come into the crop. Technology and particularly agtech, which is the area you’re defining, needs two types of solution. One to know when it’s the right time to raise and remove the crop, and then also if there’s enough irrigation or the right nutrient value to improve the overall quality of the crop – the nutritional value of the crop.
So, you agree that there has been this shift in the role of technology – it was about increasing production and the capacity of food processing and quality assurance in the past…
Yes, but with a twist, yeah, which is what technology needs to do. The two sides still maintain a good level of productivity. Nobody’s debating that. But there is the added value to consider – quality can mean various things, like maximizing the yield per hectare but not over exploiting some piece of land and under exploiting others, right? So, trying to use the land in a more consistent way and still reaching the good yields. We can achieve this by being more precise, and that’s why we talk about precision agriculture. You’re enabling a new and different way of looking at agriculture.
Yeah. And food scientists, of course, are playing a role here in trying to help the selection of these elements…
Yes, the seeds and in some cases, you could apply CRISPR technology for food engineering, which is more than just insertion of a new species to create heat resistance, drought resistance, etc.
There is, of course, an expanded role of technology and science when talking about the sourcing of ingredients. When we look at Gen Z, they have a lot of trust in technology and science, because we know from different data that they are really much more hopeful about what technology and science can offer in terms of quality of life, in terms of solving problems, and so on. But, it has often been shown that when talking to Gen Z, even if they trust in technology and science, they react very negatively when you apply technology to food – they are really looking for more natural, wholesome ingredients in new products. Do you see that there is a tension here between the role of technology and the cultural perception of food?
I think it’s a question of knowing exactly what is happening with the technology and adopting a more democratic approach towards technology rather than it being very distant. I have another piece of data that says the GMO type of biotech is something that Gen Z are prepared to look at.
Gen Z are still young and very inspirational in their thinking, but as they get older, they will learn more about technology, what it can do and what you need to compromise on.
– Valerio Nannini
No question, an education process needs to take place. But at the same time, there are plenty of people who are curious to eat cultivated meat, with lots of Gen Z being very excited about it. There’s a conflicting position here. Gen Z are still young and very inspirational in their thinking, but as they get older, they will learn more about technology, what it can do and what you need to compromise on.
You can’t have it all, and I think when it comes to food, the compromise you need to have is to be able to feed the planet. We also cannot continue to do what we’re doing today. If we only resort to things that are completely ‘natural’, there won’t be enough food for humanity. We can see what is happening now in the supply chain when you’re dependent on one country for grain, and then a pandemic or a war starts, and things like that. All these events will shift things.
Fundamentally, the food industry is faced with the fact that taste is king. But then there are other factors that may impact the role of technology, like the lifestyle shift – needing nutrition efficiency, as people are busy and need efficient eating during the day, until night when you might have a social moment and indulge. We’re seeing this shift post-Covid, with some willingness to experiment. This experimentation around nutrition – it’s not always natural, what we do. There’s also the climate crisis, which is more and more evident, and the way we exploit nature needs to change. If technology enables our lifestyle shift, and a response to the climate crisis, I think Gen Z will be early adopters.
You mentioned the educational component of associating technology to food in a positive way, to explain the role technology can have in making food nutrient dense and sustainable. But how can a food manufacturer, in your view, manage any potential resistance to new forms of foodtech? Is it just about communication, or is it also about product development or innovative food and bringing new alternatives forward?
Technology will have to really be an enabler for FMCG companies to be able to make the step change from the conventional markets to new markets. That’s one element, and the other element which will help with adoption of these new technologies is regulation. Regulation today is not very supportive of these new types of foods, right? There’s a lot of obsession particularly in Europe. And in the US, for example, they’re thinking of passing this new law around biofuel food. This starts enabling technology to be part of the food system. It will be a big game changer and Europe will also need to respond. They can sit on the sidelines, but sooner or later under the pressures of a new generation and new policymakers who are more open minded, there will need to be regulatory consideration of these new types of food.
What could be a downside is resistance from consumers that are basically not totally convinced that this is the right thing for us. I think climate change and the geopolitical situation is probably influencing those consumers. You will start having what I call the flexitarian generation. That will force big FMCG companies to rethink. I think you saw the data, for example, from Nestle – the year before last, $300 million US dollars in turnover of meat alternatives. Just the other day it was $800 million for the last year. That’s just in one year.
Organizations like Nestle and others will have to adapt, either by adopting technology that comes from outside their organizations to shift their manufacturing processes, or to adopt or buy completely new technologies with which to adapt their own factories, both of which I think are happening at the same time.
We’ve touched on this in the past, but do you think manufacturers are investing enough in new forms of food science and technology or are they relying mainly on smaller players, like startups, to innovate?
My experience in FMCG is that innovation is more about renovation, or adaptation of something. The biggest innovations come from outside because nobody’s really investing in R&D in this type of space because it’s a very, very complex environment. They prefer to either buy an existing company which already has gained market share and then split it up like I think Nestle has done in the US. They have the demographic and the penetration of the market as well as the reach. That’s the power of the big multinationals. I think they will continue to buy and keep on branding and innovating and those smaller brands. We’re seeing the emergence of many new brands – it’s not the big known brand that will make the change.
So you see it as difficult for existing main brands to renovate to the point of becoming appealing with a new alternative…?
I think it’s more complicated for them to do it all in one go because you’re running with a P&L. If you buy a brand or you create a new brand, and you separate it from the big organization – there’s also corporate venturing opportunity created in a separate unit and then you have your vehicle to go and buy things which enabled us to have the right mindset about innovation to drive it.
In this market for new food solutions, I think there’s plenty of space for innovation, especially within specialty nutrition.
– Valerio Nannini
So far, if you look to what has been done in coffee – take Nespresso, which was doing well in the e-market, but not too well in retail. They went – and everybody thought they were crazy – when they bought the Starbucks brand, but basically with that they are now on track. They make good money, and it’s of a good quality, similar to Nespresso, but without jeopardizing their espresso brand. So, you could buy a brand and build on that brand and then enable it with new technology. I think it goes both ways.
In this market for new food solutions, I think there’s plenty of space for innovation, especially within specialty nutrition. That’s a big space for proteins and new proteins have to be recreated now. In terms of how you are going to deliver them to the public, well, that’s a different story.
Do you think that the biggest role technology plays is in the sourcing and manufacturing portion of the food chain, or is it in what happens next? Where is technology and science playing the biggest role in the entire food chain?
Innovation is not given by one company but needs to form itself through collaboration. The collaboration needs to happen across the whole value chain.
– Valerio Nannini
I think if you take the value chain, not only from raw material, but also R&D, food research, and then you have what we would call the technology and the market – all the way to the end of the value chain – I think innovation happens in every single step. Across the entire value chain. And that’s why today innovation is not given by one company but needs to form itself through collaboration. The collaboration needs to happen across the whole value chain. The reason why I’m saying this is that if you have the wrong raw material and you’re trying to do magic from that raw material, it doesn’t work.
For example, think about upscaling waste – this was never considered a “raw material”. That always needed to be a fresh crop in the past. Upscaling the waste stream of the beer industry could now be valorized to apply a technology, from an R&D point of view, to make something out of that material. It is predominantly fiber, but also sugar, which could convert it into a protein that could be eaten by humans or animals or could feed the whole cycle of life. So today, technology can play in different parts of the whole thing. Technology can also play in creating the right type of food that we need. We can be extremely efficient as human beings, but today we’re very inefficient in the way that we’re eating. That has other consequences, particularly as regards our health. I think if we can optimize the way we are eating but still have indulgent moments, optimizing the best nutritional intake.
For that you need to work on product engineering. You cannot just work with nature. The whole value chain is connected and it’s extremely complex for one company to address.
You need an ecosystem…
Yes, a system that together can start creating the necessary solutions. It’s like the car industry – you had many companies helping to deliver the fantastic product, the car we drive. And it’s the same with the food industry that you need to have a sort of symphony. There’s a scarcity problem – if you aren’t using all your resources well, there’s going to be a scarcity problem. Let’s see what’s going to happen with bread in a few months, it’s going to be crazy. But if you could make bread with a waste product…?
I like the car analogy. You need different elements to bring things to life. Food has traditionally been a very owned process – owning the whole value chain.
What’s happening in the food industry is what happened 10 years ago with Tesla for the car industry – exactly the same thing. Smaller companies are today innovating and creating new markets out of things that were unthinkable not long ago. Big companies never did it because it was still cannibalizing their own business, amongst other factors. In a very traditional market like food, taste is king.
Taste will continue to be king for consumers making a selection at the grocery store. Though food also impacts many things – public health, life expectancy, the planet…
Yes, exactly. The future of food is an important topic. And scarcity is certainly a problem that we will have in the future, no matter what world we will be in – we will still need to feed ourselves in one way or another.
