“Opportunities abound for South Africa, keeping in mind that a new breed of consumers with very specific demands will dictate the global food demand,” says Renee Marais, managing director: Global Corporates at Rabobank and the keynote speaker on agricultural trade at Agri SA’s commodity and corporate conference in Pretoria.
According to Marais, global food demand will keep increasing, based on 158 more mouths to feed globally every minute and more favourable macro-conditions pushing market change. “Feeding Africa’s megacities in the years to come will offer significant opportunities.”
Several social-geographic and economic factors indicate ongoing consumer demand growth on the continent:
- The population in sub-Saharan Africa will double by 2050
- The majority of people (62%) will live in big cities, compared to 40% now
- 15 years of economic growth has increased the average daily income from $0,90 to $1,30 per day
- More than 40% of Africa’s population now have more than $2,00 per day available to spend and move into the middle class
Sustainable building blocks
Rabobank’s roots come from as far back as 1895, with several agri-banks incorporated over the years. The bank wants to contribute to feeding 9 to 10 billion people in 2050 sustainably, based on the following building blocks:
- Increase food availability
- Improve access to food
- Stimulate balanced nutrition
- Enhance stability
Role-players have to be well-informed about the different tastes of different generations, Marais urges. “Keep the millennials in mind: they are experimental, health-conscious and now have more spending power than any other age group.”
Millennials are known for their specific tastes and preferences:
- They prefer artisanal and handcrafted products to big brands
- They are more likely to spend on premium ingredients
- A noteworthy 88% are interested in trying new foods
- They want to know more about how and where food is grown
- About 33% eat organic, compared to 21% of Generation X and only 15% of baby-boomers.
Marais says that it is important for profitable future production and focused marketing to be well-informed of the movement in consumer preferences. “Organic food, for instance, is a fast growing sector that already has a market share of 2,5% of the European food market. The sector recorded close to double digit growth over several years. Popcorn is another interesting market. Demand is not only driven by its convenience, but by the fact that it is viewed as healthy. Popcorn sales have grown 50% over the past five years.”
Consumers are also steering away from processed food to prepared food, healthy snacks and food free from all sorts of “unhealthy” ingredients. It is projected that the daily calorie intake will come down from 1 600 to 1 400 calories. “Protein is also becoming more popular – but not all forms of protein. Ready to drink coffee, nuts, seeds and trail mixes are also ‘hot’ in Western Europe. Food delivery is also growing annually.”
Innovative food is the next big thing, Marais says. “And in the US, big brands are losing market share, a result of, amongst others, consumer distrust in ‘big foods’. Small and private brands are gaining market share: ‘Small is sexy’, consumers say.”
Online buying and convenience stores are the biggest growers, according to Marais.
Faster and fresher future
“Faster and fresher and as little as possible waste will drive future demand. That will result from a change in the supply chain, previously typically taking ten days and with five parties involved, to a mere three days and three parties.”
Farmers should be aware of the merging of health and food, Marais says. “The focus will be more on self-care and the healthiness of food – after taste and price. There is also a renewed interest in functional foods.”
The changing definition of what is healthy includes cutting back on sugar, an interest in growing foods and healthy and fresh convenience. “Transparency will also become more and more important.”
Marais recommends that farmers should be part of implementing innovation “from farm to fork”. A smarter food system will be based on smart breeding, smart farming, smart packaging and distribution and lastly, smart eating. “Even when they don’t know it yet, customers want something better. Your desire to delight customers will drive you to invent on their behalf.”
A farmer’s successful efforts to meet the changing consumer demands will result in bigger profits.