By 2050, the world’s population will exceed 9 billion people, and, as we all know, the set of basic human needs throughout history has not transformed much. In these terms the finest hour of food industry is about to start (with growth estimates of up to 70% even according to the most conservative views).
Such forecasts are optimistic for the Latin American economy, which ranks first in terms of world food exports. But the new times set new standards: as to traceability of the supply chain, safety of raw materials and products, environmentally friendly approaches, ethical production and conformity with customers’ tastes.
Manufacturers and retailers are now assisted by modern technologies and digital solutions transforming the approach to food and its production. As Mordor Intelligence reports, Latin American AI-powered food tech sector would grow three and a half times by 2025.
A successful case that even got the attention of Jeff Bezos (the billionaire invested $30 M USD in the project) is the Chilean startup NotCo. A young team of specialists in biotechnology, plant genetics and IT-engineers are promoting a new approach to plant-based foods (for both economic and ethical reasons). With a focus on mayonnaise, one of the most beloved products of the Chileans, NotCo released its vegan version, which captured 10% of the domestic sales market and ended up on the shelves of 1,000 stores in just a couple of years, including the retail giant Walmart. Other products from NotCo’s portfolio – ice creams, burgers and alternative milks – are also fully plant-based, but their key feature is their complete similarity to the original animal-based products’ taste, smell and texture. The idea is based on a machine-learning algorithm that selects flavour combinations from a library of plant ingredients and then builds respective molecular structures. The products are marketed in Chile, Argentina, Brazil and Mexico, and the company reports that more than 92% of its customers are non-vegetarian.
To stay trendy in times of increased mindfulness, companies need to keep aligned with the flexible preferences of a new generation of consumers: millennials, who represent up to 30% of the region’s population, are reframe customer behaviour patterns and provide up to 70% of e-commerce demand. They appreciate traceability of the supply chain, usability of online service and are glad to follow the stream of mango harvesting from an organic plantation in the highlands of Peru.
Considered the global epidemiological situation and local outbreaks of livestock diseases, consumers’ attention to safety and manufacturing hygiene has also increased. A survey by Zebra Technologies Corporation found that 79% of Latin American participants would like to have access to information on the origin of what they eat, and 87% are worried about industrial hygiene. Innovations are helping here as well: blockchain technologies coupled with smartphones help to track the path from farm to shelf, while smart packaging serve to increase shelf life.
Another ambitious project of this year was the launch of an Argentine blockchain platform Carnes Validadas, which reveals all information about packed meat from the store: by scanning a QR code with a smartphone, the buyer gets access to massive of data, starting from the calf’s diet to the exact time and place of each stage of the supply chain. This brings transparency in terms of freshness and quality through information that was previously available only to businesses (but is now in the hands of end consumers). In addition, Carnes Validadas creators outline other advantages as well: reliable and easily traceable data on livestock and production processes could help farmers and small enterprises dealing with banks, insurance companies and new partners when applying for loans and entering new markets.
Increasing the shelf life is another critical point for the food industry, considered the global goal to fight hunger. According to statistics from FAO, the Food and Agriculture Organization of the United Nations, from 20% to 40% of harvested vegetables and fruits are spoiled and thrown away (and that’s in average 1,3 billion tons of food annually!). In these terms, and efficient and environmentally friendly solution is extremely urgent. Science-intensive approaches (e.g., application of radiation technologies) are competing with startups, and the artificial petrochemical waxes to cover fruits are being replaced by plant-based formulae. A solution was proposed by a Chilean startup PolyNatural that raised $800 million in investments offering a safe and natural solution for agribusiness. Their emulsion for fruit coating contains natural extracts, lipids and plant polymers that prevent the growth of bacteria and extend the shelf life, protecting avocados, oranges and berries from drying out.
Industry transformation has reached all segments of food and agro-industry supply chains and involves not only IT-enthusiasts and young scientists. Despite the fact that Latin American startups raised an aggregate of $1.4 billion in 2019, trends are being driven by such majors as IBM, Amazon and Oracle creating new full-cycle digital ecosystems in Latin America. Digital solutions penetrated the region later than the US, Asia and the EU and this supports the forecasts for intensive growth in the coming years. New digital platforms cover a wide range of segments: from intelligent farm management systems and irrigation scheduling linked to satellite climate data to universal cloud marketplaces. In the coming years, the food tech sector of the region would keep on growing and attracting institutional investors from all over the world. Regardless of the 2020 crisis the German BASF Venture Capital invested in several agrotech startups in Latin America through the Brazilian fund AgVentures II, while the Japanese Softbank Group holding plans to invest up to $1 billion in fast-growing regional projects and has already supported Rappi, the leading Colombian e-commerce service.