Food Processing

Meat, Poultry & Dairy

The Meat, Poultry & Dairy industry produces raw and processed animal products, including meats, eggs, and dairy products, for human and animal consumption. Key activities include animal raising, slaughtering, processing, and packaging. The industry’s largest companies have international operations, and companies are vertically integrated to varying degrees, depending on the type of animal produced. Large industry operators typically rely on contract or independent farmers to supply their animals, and may have varying degrees of control over their operations. The industry sells products primarily to the Processed Foods industry and to retail distributors that distribute finished products to key end markets including restaurants, livestock and pet feed consumers, and grocery retailers.

Processed Foods

The Processed Foods industry includes companies that process and package foods such as bread, frozen foods, snack foods, pet foods, and condiments for retail consumer consumption. Typically, these products are made ready to consume, are marketed for retail consumers, and can be found on food retailers’ shelves. The industry is characterized by large and complex ingredient supply chains, as many companies source ingredients from around the world. Large companies operate globally, and international opportunities are driving growth.

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Source: SASB

The food sector is facing major changes as consumers increasingly prioritize environmental protection and ethical treatment of animals. Nearly one-third of all food is wasted before reaching consumers, and the sector is responsible for a third of global emissions, putting pressure on the industry to innovate and reduce its impact. The industry presents a $12 trillion opportunity for transforming the entire food system, with potential in circular economy, personalized nutrition, efficient water usage, and biodiversity expansion.

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Industry Characteristics

• Roughly one-third of all food is wasted before it is consumed by people. The methane emissions that result are 86 times more potent in driving temperature increases than CO2 emissions are, when looking over a 20-year time frame. Source: McKinsey
• Food Loss: 13% will be lost in production. - The greatest share of food loss occurs pre- and postharvest or, in the case of fish, after it is caught. Overproduction is more common in high-income countries, while premature harvest is more likely to occur in low- to middle-income nations, where farmers have a greater need for cash flow. Animal death and climatic challenges (flooding, drought, and pestilence, for example) are root causes of food loss, as are ineffective agricultural practices that fail to maximize yields. Source: BCG
• Food Loss: 6% will be lost in storage, handling, and transportation. - Many of the same issues that are present in the production phase persist as food moves along the value chain. Regional gaps in technology are especially notable in this stage, given the need to keep perishable foods fresh and animals alive in transit. Source: BCG
• Food Loss: 1% will be lost in processing and packaging. - A great deal of loss and waste occurs in canning facilities, slaughterhouses, and during industrial treatment. Crops are needlessly sorted out and edible meat trimmings are discarded. Supply chain issues and disrupted or substandard industrial processes lead to needless waste. Source: BCG
• Food Loss: 6% will be lost in distribution and retail. - Unnecessarily stringent health and aesthetic regulations (including “best by” and expiration dates), lack of temperature control in certain markets, and neglect from retailers and restaurants result in waste. Many retailers, especially those in developed higher-income nations, overstock; poor packaging design and portioning are also key contributors. And though individuals are arguably to blame for wasting the food they purchase, some have argued that retailers’ promotional activities encourage shoppers to buy more than they will likely consume. Source: BCG
• Food Loss: 8% will be wasted by consumers. - Individuals waste a lot of food. From overpurchasing to discarding leftovers, each of us contributes in no small way to the broader problem. While the amount of food wasted varies by region, consumer waste is a truly global crisis. Source: BCG
• Consumer attitudes are changing: In a world with rising health awareness among consumers and the growing importance of environmental protection and ethics, including the treatment of animals, there is a huge potential for brands to innovate the food and beverage market and become a front-runner as a sustainable food and beverage (F&B) business. Source: Planetly

Sustainability Impact

• With approximately 17.3 billion metric tonnes of CO2, the F&B industry is responsible for a third of global emissions, which is almost 19 times more than the amount stemming from the aviation industry. Moreover, with global population growth, there is a 60% increase in food demand projected by 2050, which is putting additional pressure on the industry to reduce emissions. Source: Planetly
• The continuously rising greenhouse gas emissions of an industry, that already accounts for about one third of global emissions, will make it very difficult to limit global warming in line with the 1.5°C target in the Paris Agreement, even if emissions from fossil fuels were to cease immediately. Scientists actually found that food emissions alone could cause the world to exceed the 1.5 degree limit in about 30 to 40 years and that without rapid changes, emissions from the F&B industry could double by 2050. Source: Planetly

Sustainability Investments to watch

• Circular-economy principles, which historically have taken root slowly and gradually, rest on designing out waste and pollution, keeping products and materials in use, and regenerating natural systems. Source: McKinsey
• The personalised nutrition/diet market represents a huge opening for businesses. From a market of €3.2 billion in 2019, the segment is expected to grow to €14.3 billion by 2027, delivering a CAGR of 13.6%. According to the newly published report by Research Dive, the global personalized nutrition market is forecasted to rise at a tremendous CAGR of 13.40%. Source: Deloitte
• AI has the potential to jump-start a circular economy in agriculture, while potentially unlocking more than $100 billion in value for players globally. Source: McKinsey
• Transforming entire food systems around the world offers the solution to the $12 trillion challenge many have not yet realised we are facing.
• Rethinking the whole food systems value chain from the way food is produced to how it is marketed and sold, and how waste is processed, has the potential not only to save these hidden costs but to safeguard the very sustainability of people and planet. Source: United Nations
• (1) Change from producing high quantities of food from few varieties to producing healthy food and enhancing biodiversity; (2) Create a new agricultural revolution based on sustainability and innovation; (3) Enable higher yields on current cropland; (4) Use water and fertiliser much more efficiently; (5) Change crop and feed management practices to help mitigate climate change; (6) Expand biodiversity within agricultural; (7) As per the Paris Agreement, first achieve zero-emissions for the global food system, and by 2040 make it a net carbon sink; (8) Substantially reduce food losses on the production side and food waste on the consumption side; (9) Improve post-harvest infrastructure, food transport, processing and packing; (10) Increase collaboration along the supply chain; (11) Train and equip producers and educate consumers. Source: Deloitte