What’s on your plate? Tech-powered sustainability solutions for the F&B industry
Conscious consumerism and sustainability are not new concepts. Many of us buy and use products that have fair trade, animal cruelty free, free range, and eco-friendly packaging labels on them (to name a few). Such labeling is the product of growing consumer awareness of the production/sourcing conditions of what they purchase, and business and regulatory responses to changing buyer preferences. Food and beverage manufacturers recognize this demand with nearly 30% of decision-makers noting that consumer demand for eco-friendly products is driving investments in sustainability. Almost 40% respondents of the same IDC study note that even with inflationary pressures, the top priority over this year for F&B organizations is sustainability. While companies recognize that technology will be a key enabler in minimizing waste and creating a sustainable future for the food and beverage industry, most businesses still have a lot of work to do from an adoption standpoint.
Sustainability, no longer a choice but an imperative
The supply chain shocks that resulted from the pandemic, and the growing discourse about the environmental effects of our business practices and climate change have translated into an urgency to address sustainability challenges. In the food and beverage (F&B) industry, there is growing scrutiny of traditional supply chains and a need to build more sustainable, resilient supply chains that address long term needs. The Food and Agriculture Organization of the United Nations defines a sustainable food system as: “One that delivers food security and nutrition for all in such a way that the economic, social and environmental bases to generate food security and nutrition for future generations is not compromised.”
Sustainability is thus a complex issue, one that must consider many factors if it is to deliver its long term goals. It is also well known that the F&B industry struggles with food wastage (1.3 billion tons of food wasted), is responsible for a significant amount of greenhouse gas emissions (26%), requires swathes of land for food production, and will be under much pressure to increase food production as the global population increases (according to one estimation, there needs to be a 35% increase in food production by 2030). Policymakers too have introduced a number of regulations in many regions. Some examples include Farm to Fork Strategy in the EU to transition to a more sustainable food system; U.S. 2030 Food Loss and Waste Reduction Goal in the United States which aims to halve food waste by 2030; and the Resource Sustainability Act in Singapore that targets food and packaging waste to ensure sustainability.
Faced with customer expectations and regulatory standards, the F&B industry is shifting towards leaner, more transparent, and more efficient supply chains, with greater oversight of quality control and production conditions. It is not surprising that 55% of business leaders once stated that they have increased sustainability related investments in their business operations.
How the F&B industry is addressing its sustainability challenge
Food and beverage companies are taking several actions to make sustainability a reality, including reducing waste and spoilage across the supply chain, increasing product traceability, working with local and responsible sourcing suppliers, and leveraging technology to better identify sustainability improvements.
Reducing food waste
Many businesses in the F&B industry are gaining more control over their inventories and targeting the supply chain to reduce food wastage. This is largely assisted by technology that gives greater visibility over supply chains and the insights that will aid supply orders, food and beverage stock management, and accurate labeling of sell by/use by dates.
Innovation and reducing emissions
Tackling the sustainability challenge has spurred innovation. F&B corporations are expanding their product range and introducing alternatives in their attempt to address the greenhouse gases emissions problem. Cultured meat (or lab grown meat) is now being experimented with. Apart from being animal cruelty free, cultured meat uses a lower percentage of land, can use renewable energy sources, and has the potential to reduce the carbon footprint and emissions according to researchers and industry experts. Plant-based food alternatives are also on the rise – examples include dairy alternatives such as soy, oat, and coconut milk, egg alternatives such as flax seeds, tofu, and other egg replacers, and plant based snacks. Widening the product range this way enables the F&B industry to promote its innovative items to health-conscious consumers and provides them with the opportunity to position themselves as sustainability leaders.
Adopting ESG as an integral part of brand identity
Becoming a sustainability leader requires another factor – the adoption of ESG metrics. Companies are moving beyond achieving favorable ESG scores to incorporating ESG as an integral part of their brand identity and gaining a competitive advantage. ESG contributes towards adopting a holistic sustainability-driven corporate strategy; one that supports the F&B industry to ensure that they are maintaining high standards in their manufacturing and sourcing practices while gaining the trust of consumers.
Single-use plastics are gradually being phased out. It is becoming more common to see the use of environmentally-friendly packaging for F&B products such as recycled paper, cardboard, plastics, textiles, and cloth-based bags. Consumers are also encouraged and incentivized to participate in recycling efforts in the industry i.e. bottle deposit systems for glass, plastic or metal bottles and cans.
Technology and sustainability
As companies look to embark on their sustainability journey, one of the key priorities would be complete visibility and decision-making that’s grounded on data, not speculation. However, most companies still rely on paper-based, manual processes and disparate systems. Connecting these business processes and eliminating silos is key to making rapid and confident sustainability-driven decisions. The right technology stack and digital strategy can help accelerate sustainability efforts in three key areas; – transparency, collaboration, and cost.
Traceability across the supply chains will not only help food and beverage companies meet customers’ demand for quality assurance, but also track and trace every stage of a product’s life cycle and ensure the credibility of chosen suppliers. But making this value chain transparent, when more often than not it is riddled with multiple stakeholders scattered across the globe, is not easy. Technology can not only simplify some of this complexity. Technologies like an ERP system built for the F&B industry as well as a PLM solution can help manufacturers make better-informed decisions about what to source and from whom minimize the risk of unsafe food, make food recalls faster and more efficient, and foster trust among consumers, resulting in a better and sustainable food system.
Food value chains include a complex list of players, such as farmers, processors, manufacturers, retailers, and consumers. For food and beverage manufacturers, successful sourcing no longer means just procuring for the lowest cost but also evaluating ingredient suppliers to see what efforts they are making to reduce emissions. With technology as an enabler, manufacturers can look to purchase ingredients from local players and reduce their supply chain’s carbon footprint. Companies can also leverage technology to source their ingredients from organic and fair-trade sources, thus catering towards those consumers who lean towards ‘sustainable’ products.
Access to the right data at the right time will also enable corporations to track product and manufacturing costs and monitor fluctuations so that you can decide on the best strategy to address both sustainability and pricing concerns. Manufacturers are also leveraging technology to make their plants more operationally efficient and avoid food waste through optimal inventory management.
Around one third of food produced for human consumption is either lost or wasted. From food waste to packaging to farming and factory emissions, there are numerous ways food & beverage companies can engage around sustainability initiatives. To learn more about sustainability in the F&B industry, listen to Fortude’s Colin Strang as he explores how F&B manufacturers can leverage innovative technologies to address the social and environmental impact of the industry in our three-part vlog series produced in partnership with Infor.