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The food value chain

A challenge for the next century


In October 2011, the world population passed the 7 billion mark. This milestone was celebrated in the global media with photos of the symbolic 7 billionth baby, born in the Philippines. Clearly, such precision in accounting is impossible, but it is true that our population has reached a new record. Further, the world population is projected to exceed 10 billion by the end of the century.

Such growth will put a massive strain on the global food supply. Most of this growth will occur in emerging markets. These markets have traditionally been agriculture-based economies, but in recent years they have witnessed explosive growth of the middle class, driven by greater industrialisation and urbanisation. An emerging middle class creates changing dietary habits, such as consuming more meat and dairy. These foods are more resource intensive, which puts local supply chains under greater pressure. These factors alone make the production and distribution of food a critical issue for the 21st century.

While change in emerging markets is dramatic, the developed economies are also experiencing a shift in consumption patterns. Modern North American and European consumers are more health conscious than before. They are worried about the content of their food, its origin, freshness, and safety. These consumers are increasingly concerned about the sustainability of food production and its impact on the environment. Modern farming techniques, such as genetic modification, are being debated and are often perceived as negative. Buying local and the organic food movement are growing trends that have taken hold with the modern consumer.

Product distribution and sales channels are also changing. Retailers are increasing the number of convenience stores in strategic locations that cater to the “grab and go” consumer (e.g. gas stations, public transport stations). To supply these small shops, which maintain little inventory, the underlying distribution network must be able to match supply and demand with the rapid replenishment of stock. The food and beverage sector is also participating in the growing popularity of online shopping. To offset the costs of home delivery, companies will need to establish a network of convenient pickup points and closely collaborate with logistics partners.

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