meaningful connections: the future of smart …€¦ · meaningful connections: the future of smart...

ISSUE NO.

05

MEANINGFUL CONNECTIONS: THE FUTURE OF SMART TECHNOLOGY IN FOOD AND DRINK

80% 79%The number of Latin American consumers who believe that technology has made their lives simpler

The number of Asia-Pacific consumers who believe that technology has made their lives simpler

SOURCE

GlobalData’s TrendSights

Overview: Smart & Connected,

Engaging with consumers in a

hyper-connected, technology-

enabled society, October 2018

The number of both American and European consumers who believe that technology has made their lives simpler

The number of Middle East and Africa consumers who believe that technology has made their lives simpler

72% 44%

DOES TECHNOLOGY MAKE LIFE MORE SIMPLE?

THE FUTURE OF SMART TECHNOLOGY IN FOOD AND DRINK FUTURES | JUST-FOOD & JUST-DRINKS

ISSUE NO.5 | FEBRUARY 2019 2

Not long ago the concept of

smart machines being routinely

involved in our everyday places and

spaces was the stuff of science

fiction. Concepts such as the

Internet of Things (IoT), Artificial

Intelligence (AI), machine learning

and blockchain were the stuff

of university high-tech research

programmes, military research

labs and technology company

‘moonshot’ initiatives. But the future

has become the present: in our

smartphones and cars, increasingly

in our homes and at the grocery

store - both the physical and virtual

versions - within food and drink

companies, and on the farm.

Smart technology has been

working for some time behind the

scenes in all areas. Looking ahead

five years, connected technology

has the ability to save beverage

companies money, including in

labour costs, as the ‘intelligence’ of

these machines is rapidly evolving.

Using AI, refrigerated display cases

that automatically order product is

already on the horizon.

Smart tech is now also coming out

of the closet, and could soon play a

key role at home and in the physical

places and virtual spaces where

we get the food we eat and the

beverages we drink.

This report explores the future of

smart technology both in front and

behind the scenes: What trends

are driving smart tech? What

will the market look like in 2023

and beyond? What hurdles will

businesses have to overcome? And,

what should you be doing, right

now, to prepare?


Smart technology has long been behind

the scenes at food and beverage

companies. As consumers become more

tech-savvy, the rise of smart technology

in the home, the shop and the production

facility will continue to change the way

we manufacture, order, cook and

store food and drink.

INTR

ODUC

TION


INCREASED URBANISATION

According to the UN’s Department

of Economic & Social Affairs, two-

thirds of the world’s population is

expected to live in urban areas by

2050.

CASH-RICH, TIME-POOR MIDDLE CLASSES

Stats from the Brookings Institute

suggest that at the end of 2016,

there were 3.2bn middle class

people in the world, with 160m

people per year expected to join the

cohort every year for the next five

years.

CONSUMERS EXPECT EVERYTHING TO BE DELIVERABLE

Tech disruptors such as Lyft, Uber,

Instacart, iGrab.it and Drizly mean

people can order what they want,

when they want it.

DIGITAL REVOLUTION

Technology continues to become

more sophisticated - and its use

knows no boundaries. For example,

according to PwC, by 2020 there

will be “close to seven times the

number of connected devices as

people on the planet”.

SMART LIVING

According to GlobalData’s

‘TrendSights Overview: Smart &

Connected’ report, consumers

are becoming more reliant on

the “efficiency and effectiveness

of digital solutions in managing

their lifestyles and dealing with

household chores and shopping

experiences”. The key audience, the

report says, is Millennials.

FUTURES | JUST-FOOD & JUST-DRINKSTHE FUTURE OF SMART TECHNOLOGY IN FOOD AND DRINK

MEGATRENDS

From the desire to make everyday

tasks more simple and less time

consuming to the rise and affordability

of smart devices, there are several

trends driving us towards connectivity

when it comes to food and drink.


BLOCKS

ROAD

A general distrust of technology still lingers for some consumers, while others shy away from new brands.

VULNERABILITY TO ATTACK

“Connecting devices makes

them accessible to cyberattack,”

says PwC. “If something can

be connected, it also becomes

hackable. Digital security, and the

trust it supports, becomes even

more critical. This applies equally

across consumer and industrial

applications.”

PRIVACY

Inviting smart tech into homes

comes with questions around

privacy, data gathering and data

sharing. Consumers will want to

know how their information is used

and stored.

KNOWLEDGE GAP

According to PwC, 72% of UK

consumers say they are unlikely

to introduce smart tech into

their homes in the next 2-5

years. The firm said that a lack of

understanding is the issue, but

this is likely to change as the use

of items such as smartphones

continues to advance.

BURDEN OF CHOICE

Being faced with a plethora of

choices can result in consumers

plumping for trusted brands, rather

than experimenting with new

products, according to GlobalData’s

Smart & Connected report.


ISSUE NO.5 | FEBRUARY 2019

USEFUL LINKS

TrendSights Overview: Smart

& Connected - Engaging

with consumers in a hyper-

connected, technology-enabled

society

5

GORDONDON

HOW CAN SMART TECHNOLOGY WORK FOR FOOD AND DRINKS COMPANIES?Don Gordon, global marketing

director for enterprise software

company SAP, offers some insight

into an interesting and highly

successful example of smart

technology behind the scenes. He

says it involves beverage industry

client-companies that own large

networks of branded refrigerated

display cases placed in retail stores.

Working with SAP, large drinks

companies are using IoT connected

devices to “monitor thousands of

refrigerated units from a single

computer to ensure the refrigerated

cases are kept fully-stocked with

the right products at the right

temperature.”

This is proving to be an invaluable

innovation because it significantly

helps reduce out-of-stocks and is

resulting in more happy customers,

Gordon says.

“Not only that,” he adds, “but this

type of control monitoring enables

the client-companies to dispatch

maintenance crews proactively,

before the refrigerated display units

break down. This alone is saving

big beverage companies pretty

impressive amounts of money.”

THIS TYPE OF CONTROL MONITORING ENABLES THE CLIENT-COMPANIES TO DISPATCH MAINTENANCE CREWS PROACTIVELY, BEFORE THE REFRIGERATED DISPLAY UNITS BREAK DOWN.



KEY AREAS FOR

TECHSMART

There are four prime areas where smart technology is

beginning to make its mark in the food and beverage

industry - and these areas span right from farm to fork.

The four touch points for smart tech within food and

drinks are: at home, in the (physical and virtual) grocery

store, in production and on the farm.

THE CONNECTED HOME KITCHEN

One of the biggest high-stakes

debates in the food and beverage

industry is whether the future of

food and eating will take place in or

out of the home - and whether it

will involve cooking, online ordering

of ingredients or prepared foods,

pick-up or home delivery.

The premise of the general debate

is a bit of a false dichotomy: some

people will continue to cook, while

others will opt not to. Most of us

will continue to do some of each.

The important question embedded

in this debate is which one will win

the greater share of consumer

dollars?

The stakes are obviously very high

for grocery retailers, food and drink

makers and restaurants, along

with the myriad venture capital

firm-funded food delivery start-

ups, whose mission is to disrupt all

three established industries – along

with disrupting how we eat and

how and where we buy our food

and beverages.

The dominant narrative – the

disruption thesis – over the last few

years has been that food-away-

from-home would be the likely

winner because fewer people are

cooking at home, and Millennials

and Generation Z simply don’t cook.

WE’LL BLEND MEALS WE MAKE AT HOME WITH READY-TO-EAT ITEMS WE BUY FROM OUTSIDE THE HOME



But new data from more than one

source tends not to back up that

assertion.

For example, recent figures

from food technology research

and communications platform

The Spoon suggest that 47% of

Millennials in the US cook at home

at least five or more times per

week.

Additionally, research firm NPD

Group says that four out of five

meals in the US are prepared

at home, and “although the

relationship of in-home prepared

meals versus those sourced away-

from-home has been stable for a

few years, we still prepare more

meals at home than we did a

decade ago,” researchers wrote in a

June 2018 report.

David Portalatin, vice president,

industry advisor at NPD Group,

predicts we’re headed towards a

mixed approach.

We’ll “blend meals we make at

home with ready-to-eat items we

buy from outside the home,” he

says. Blended meals is where the

connected smart kitchen can come

into play.

Smart ovens such as the June

Oven, which can automatically

recognise and cook hundreds of

foods, will make cooking easier and

faster. Meanwhile, models such as

the Tovala come with a meal kit

service, delivered to your door.

Every major appliance maker

has a smart refrigerator on the

market - and they are investing

big money to create successively


47%

The percentage of millennials in the US who cook at home at least five or

more times per week.


smarter and more useful versions.

The ultimate objective is the

connected refrigerator, which can

automatically order its food and

drink contents.

Tied-in with smart cooking

appliances and devices,

connected smart refrigerators -

manufacturers hope - might make

home food preparation so easy, less

time-consuming, and perhaps even

fun, that more consumers embrace

cooking at home.

Bioprinting of food is also another

emerging technology that many

believe will grow the home food

preparation ranks even further.

Simple. No fuss. No cooking skills

required.

Theoretically it’s the perfect

solution. Practically, the jury

remains out, although home food

printers like the Foodini are being

bought by early adopters.

USEFUL LINKS

NPD Group: U.S. Consumers

Are Increasingly Eating and

Preparing Their Meals At

Home Often With The Help Of

Foodservice

Bioprinting is the three-

dimensional printing of biological

tissue and organs through the

layering of living cells. They also

dispense a dissolvable hydrogel

to support and protect cells

as tissues are constructed

vertically, to act as fillers to fill

empty spaces within the tissues.

US-based startup Memphis

Meats is producing beef, chicken,

and duck from animal cells using

bioprinting technology. The

company says it soon plans to

launch its first product.

Bioprinting is the hallmark in

many ways of the smart food

and drink phenomenon. It’s the

literal engineering of a product


that looks like and the company

promises will taste like meat but

doesn’t come from an animal.

If such technology becomes

affordable and bioprinted

products catch on, it could

revolutionise the food industry.

Instead of exclusively having

animal feedlots and meat

processing plants, we might also

have scientists competing for

a share of the consumer meat

dollar.

Bioprinting also can be used in

creating “lab-grown” seafood,

which many of its supporters

hope will help alleviate the

problem of overfishing.

HOLD ON, WHAT IS BIOPRINTING?


THE CONNECTED GROCERY STORE

For grocery retailers, widespread

adoption of smart appliances has

great promise. The connected

kitchen-to-grocery store offers

food retailers - both physical and

virtual - the ability to keep their

share of the food and drink dollar

in the battle with away-from-home.

Either way grocers win.

Brick-and-mortar grocery shopping

remains the norm globally. And

by the time the smart kitchen

becomes widespread, if it does,

nearly every grocer on the planet

will have an online grocery service.

THE CONNECTED CPG COMPANY

Food and beverage companies

wanting to play seriously in the

direct-to-consumer sales channel

have an opportunity to be big

winners if the smart kitchen takes

off.

THERE ARE SO MANY DIFFERENT DIRECTIONS COMPANIES CAN GO IN


Smart refrigerators and smart

pantries - Amazon’s Dash buttons

are an early example of the latter

- offer consumers the potential to

more easily order products direct

from manufacturers, bypassing

the traditional retail channel and

possibly saving money as a result.

Connectivity offers CPG companies

a whole host of other opportunities

and advantages. SAP recently

conducted a study on the IoT-

connected CPG company.

“One thing we discovered from

our IoT study is that many CPG

companies are looking to employ

IoT technology in ways that aren’t

immediately visible to consumers

– to do things like improve supply

chain efficiency or monitoring of

everything from warehouses, to

fleets of trucks, and beyond,” says

the firm’s Don Gordon.


“By collecting sensor data from all

these different points, companies

can make better decisions about

how much to produce (reducing

food waste), where to route

vehicles (reducing fuel waste), or

even what new varieties of a given

food item are likely to take off.


“There are so many different

directions companies can go in. One

of the most immediate challenges

is figuring out where there’s highest

value – both to the bottom line

of the CPG company and, most

importantly, to the consumer,”

Gordon says.

THE CONNECTED FARM

IoT and other forms of smart

technology are rapidly advancing on

farms throughout the world. Among

the most talked about is the use of

blockchain to promote traceability

of ingredients.

It’s very possible that we will

soon be able to connect farmers

to retailers and CPG companies,

and all three to consumers via the

smart kitchen.

This will likely lead to disruption of

the current status quo. For example,

just as CPG companies could more-

easily sell directly to the new

connected consumer via a smart

kitchen, so too could farmers.

A farm might produce its own

line of frozen vegetables, for

example, which consumers could

buy directly, via their smart fridge,

rather than buying them from the

grocer or the CPG company that

sells branded frozen vegetables.

On the other hand, this technology

might create so many options

and buying opportunities that the

aggregator, the grocery retailer,

wins out.

After all, that’s been the key to

success for grocery stores for

over a century - being a one-stop

marketplace where consumers can

get most if what they want and

need.

It’s a fascinating and uncertain

future proposition.


3KEY BENEFITSTO FARM-TO-CONSUMERCONNECTED TECH


Michelle Weisberg, who was most

recently SVP at Texas-based

global trading company McLane

Global, and a senior executive at

the Los Angeles-based Smart &

Final supermarket chain, is now a

Chicago-based food and grocery

industry consultant, researching the

future of food and drink. She offers

three key benefits of smart food and

drink associated with the farm-to-

consumer connected scenario.

1. FOOD SAFETY

Using blockchain, retailers and

manufacturers will be able to identify

recalled products quickly. Consumers

could be contacted by app if they

have already purchased the product

or if the consumer tries to prepare

the recalled product, they could

be alerted by a smart appliance. In

addition, if a product’s shelf life is out

of code, the smart appliances would

have the ability to communicate this

information to the consumer.

2. MARKETING TRACEABILITY

Customers could learn more about

a product - from what farm it was

grown on, to the temperature it was

transported at, simply by scanning

the packaging. Proper cooking

directions and storage information

could be utilised to talk to smart

ovens, refrigerators and pantries.

3. CONVENIENCE

In addition to everyday convenience,

holiday stress could also be eased

by having seasonal purchases

automatically ordered annually (with

an opt-out option). Customers would

be able to have all the ingredients

shipped to them along with their

favourite recipes without worrying

about anything, except for who will

have to sit next to Aunt Martha at

dinner.


BECOME DIGITAL

The smart food and drink revolution

is digital, not analog. This is job

#1 for food and drink companies.

All aspects of the operation, from

supply chain to marketing, need

to be digitalised to compete in the

present and future of smart food

and drink.

FORM STRATEGIC ALLIANCES

Food and drink companies need to

form strategic alliances with smart

kitchen/appliance companies and

grocers. The synergies between

packaged goods, smart homes and

online grocery retailing in its many

formats are going to increase every

year for the next 10 years. As a

result it’s essential food and drink

companies start forming these

alliances today.

BECOME OMNICHANNEL

No single distribution channel is

going to rule. Instead, we have

entered into an omnichannel world.

Brick and mortar retail, online

grocery retail, direct-to-consumer

are all must-do strategies of

distribution for food and drink

companies in the new age of smart

food and drink. Food and drink

companies currently without an

omnichannel strategy are already at

a disadvantage.


WHAT DO

FIRMS NEED TO DOFOOD & DRINKS

NOWFrom ensuring a business is completely digital

to forming strategic alliances in the tech

world, there is plenty that food and drinks

companies can start to do now.


UNDERSTAND THE CONSUMER LIKE NEVER BEFORE

Consumers are increasingly in the

driving seat in the age of smart

food and drink. As a result, food

and drink companies need to

better understand what drives and

motivates shoppers, be it online

or in stores. This requires greater

effort in research and analysis.

Those who fail do so so will be left

behind.

THE

WRAPSmart technology has the ability to change the food

and drinks at home equation. It is also changing

how we obtain food and drinks out of the home,

most-specifically in the form of online ordering with

food delivery. Looking five or so years out, we’ll see

connectivity in the homes of early adopters who can

afford smart appliances, the cost of which will keep

coming down as more people purchase them.

TAKE PERSONALISATION SERIOUSLY

Consumers increasingly want to

be addressed personally as well

as a demographic or lifestyle

group. Food and drink companies

therefore need to start putting

personalisation into their product

development and marketing mix.

The age of smart food and drink

means smarter consumers who

want to be addressed as a group of

one. Personalisation therefore is no

longer a luxury, it’s a must.



LUCY BRITNEREditor, FUTURES

+44 (0) 1527 573 721

[email protected]

This report was written by Victor Martino. Martino is a California-based strategic marketing and business development

consultant, analyst, entrepreneur and writer, specialising in the food and grocery industry. Additional material by Lucy Britner.

© 2019 All content copyright aroq limited. All rights reserved.

FUTURES TEAM

DEAN BESTManaging editor, just-food

+44 (0) 1527 573 726

[email protected]

OLLY WEHRINGManaging editor, just-drinks

+44 (0) 1527 573 720

[email protected]

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