brought to you by: david donnan, partner a.t. kearney november 2012 can we feed the world? recipe...
TRANSCRIPT
Brought to you by:
David Donnan, Partner A.T. Kearney
November 2012
Can We Feed the World?Recipe for Change:
Limited and Constrained Resources
7 Billion Consumers
Capital Markets
Su
pp
ly C
hai
n
FarmersProducers/Extractors
Retailers/Buyers
Brands
Manufactures
Traders
Processors
300-500companies control
~70& of choice
Emerging New and Diverse Consumers
The Food Industry Bottleneck
Energy Land Water
By 2020 . . .Very few companies will control the vast majority of food supplyFarmers and producers are more likely to be corporationsConsumers will be serviced by large global retail and restaurant chains
By 2020 . . .Very few companies will control the vast majority of food supplyFarmers and producers are more likely to be corporationsConsumers will be serviced by large global retail and restaurant chains
Source: Jason Clay WWF, A.T. Kearney
The global agrifood industry is undergoing significant change.
Population Growth = Opportunity
Population Income HealthUrbanization
The world population continues to grow and provide opportunity for food & beverage companies
As a result, we are witnessing a global shift in diet and consumption
• 26 cities with > 10 million people
• 60% of global population in cities by 2025
• Today 7 billion people
• By 2050 over 9 billion people
• People over 60 will outnumber those under 15
• By 2015 more middle class households in China than USA
• Brazil and India rapidly increasing middle class populations
• Obesity and longevity expectations are shifting diets in Europe and North America
• Increased protein consumption in Asia
While supply systems face new challenges
Food AdvocacyResource AvailabilityFood
SafetyPackage Waste &
Sustainability
The future will be more about assured supply, than price
• Water, land and energy are all limited resources
• Continued use of crop land for biofuels
• Consumer perceptions of safe and nutritious food
• Lack of global standards and protocols - FSMA
• Driving strategy for many large CPG companies
• Sourcing sustainable ingredients (e.g. Palm oils)
• European restrictions of GMO’s
• California Proposition 37 – GMO labeling
After 20 years of stability…a future of commodity volatility
FAO — Annual Food Price Indices (2002 – 2004 = 100)
400
350
300
250
200
150
100
50
01/1990 1/1993 1/1996 1/1999 1/2002 1/2005 1/2008 1/2011
Food Price Index
Cereals Price Index
Meat Price Index
Oils Price Index
Dairy Price Index
Sugar Price Index
Can we feed 9 billion people by 2050?
The Green Revolution
Emerging technologies will play an important role in shaping the global agricultural landscape
Food & Beverage companies need to focus on four key priorities
2020: Four Future Scenarios
Scenario #1: Global Scarcity
• Agricultural output continues along its same path with no new technology innovations
• Commodity volatility continues as demand outpaces supply resulting in sporadic supply shocks
• Increasing gap between ‘have’ vs. “have not” nations
• Companies focus on reducing risk through operating and financial hedges
Scenario #2: Supply Exclusivity
• Increased regulation and traceability creates constraints on supply sources
• Supplier qualifications become more intense reducing the number of qualified suppliers
• Product differentiation through innovation and product exclusivity
• Competition between supply networks of companies
Scenario #3: Stagnation
• Improved agricultural innovations improve output and yields
• Supply matches and then outpaces demand
• Food prices drop as companies take advantage of agricultural surpluses
• Manufacturing efficiency becomes the main focus of food companies
Scenario #4: The World in Balance
• Continued innovation in agricultural technology
• Demand increases as middle class consumers consume higher valued products
• Government and international trade become more harmonized
• New era of strong global trade
Many thanks to our contributor
For additional information go towww.atkearney.com