For The First Time, Food companies Are Trying to Learn A New game
Let me start with an excerpt from an article on Big Food that was published by the Fortune Magazine in May, 2015: Say the following out loud: Artificial colours and flavours. Pesticides. Preservatives. High fructose corn syrup. Growth hormones. Antibiotics. Gluten. Genetically modified organisms. If any one of these terms raised a hair on the back of your neck, left a sour taste in your mouth, or made your lips purse with disdain, you are part of Big Food's multibillion-dollar problem. In fact, you may even belong to a growing consumer class that has some of the world's biggest and best-known companies scrambling to change their businesses.
The idea of "processing"—from ancient techniques of salting and curing to the modern arsenal of artificial preservatives—arose to make sure the food we ate didn't make us sick. Today many fear that it's the processed food itself that's making us unhealthy. Most of the established food companies, globally, have a history that ranges from 25 years to more than 125 years. For the first time since their inception, they are trying to learn a new game to sustain their growth and relevance in the market place. For the first time in the history of food, the disruption is being driven by the consumers themselves rather than the companies.
Savour this: Americans are increasingly saying no to soda; per capita consumption of carbonated soft drinks fell to a 30-year low in 2015, according to Beverage Digest. Shoppers worldwide are turning to brands they believe can give them less of the ingredients they don't want—and they are turning to smaller (rising) brands because conventional food giants don't have them. According to CB Insights, investors poured $3.3bn, into Consumer Packaged Goods (CPG) firms, up 58 per cent over 2014 and a whopping 638 per cent up since 2011. Traditional CPG companies are skewed toward conventional products; however, they aren't taking the slow-down lightly. They are either attempting to buy their way into the natural space, acquiring small natural-food companies or are radically changing their own product recipes or formulations.
Why is the existence of Food-MNCs being challenged by newage entrepreneurs and consumers?
The answer lies in the history of processed food. The history of food was shaped majorly during the period 1870-1970; this phase reflected the effects of inventions of the late 19th century; every imaginable process related to food, from pasteurization to frying to the invention of ice to refrigeration to basic preservation was devised during this phase. What makes 1870-1970 so special is that these inventions can't be repeated. The combination of preservation technology and fast logistics made food available for masses and most parts of the developed world had achieved foodequity by the late 1960s.
So what has changed now? In some ways it's a strange turn of events, the business model of mass-production of safe food by "processing"— from ancient techniques of salting and curing to the modern collection of artificial preservatives—is being challenged today as unhealthy and questionable. Most importantly food is unifying the world, to give you a simple illustration, turmeric is the most searched functional food in the U.S., as per Google.
India is still at least a decade away from achieving food-equity. However, India is not alien to ancient grains and nutrient-dense products, with the exception of millennials and Generation-Z, we all grew up on pure products and companies like Patanjali, Ayurved are clearly leading this shift in India.
(This article was first published in the December issue of Entrepreneur Magazine. To subscribe, click here)