The food industry is interesting. Lets do a simple theoretical exercise.
Assuming that the population of the earth grows at 2% per annum.
100% of people need to be fed.
Therefore, the gross food consumption increases by 2% every year.
In theory, the food industry can also grow at 2% a year.
However, in this day an age, 2% growth for a company is considered terrible by most calculations.
There are therefore 3 ways to make more money, corporations can
- Find more people to sell food to – Cannibalizes own industry, not sustainable.
- Bring down price of producing food – More and more small time farmers are being subsumed into the mega food corporations because of this reason, it is getting increasingly difficult to sustainably produce food on a small scale and make a living.
- “Persuade” people to spend more on food. – “Value” adding up and down the chain in order to make more money out of the commodities.
Imagine a punnet of blueberries that can be bought at a supermarket for $5.99
If made into Jam, the same punnet of blueberries are now worth $15
Taking the Jam and baking blueberry Muffins, The same punnet of blueberries are now worth $50
As we process up the chain, the profits increase correspondingly.
Processed food travel better, can be kept longer and does not require chilled transport. All of which leads to cost savings.
It just seems to be an inherently flawed business model focused on deriving the maximum profit for the maximum amount of time until it all falls to pieces. We all need to eat of course, but when it happens, how would the future of the food industry look like ?
Marketing Minds want to know…
hmm.