• The World after Covid-19 (Part 3)

The Future of Food: Megatrend versus Covid-19

After discussing briefly the visions of two influent thinkers (a futurologist and an historian) and then using a mind map to draw a scenario based on our available knowledge, I am now going to present here another tool especially suited to estimate the impact of Covid-19 on a sector, e.g. the food sector, defined in a wide sense and in a global perspective (production, transformation, distribution and consumption).

This is a topic I am already familiar with. In 2018-19 I followed a project on the future of food, whose results are about to be published.

Let’s start from today. The situation is known: being food supplies fundamental for the population, even under lockdown, the sector remained in activity. Bread and flour sell more, Easter Eggs less. Hypermarket are suffering, small grocery stores with home delivery perform better. Yes, but what about the sector in 5 to 10 years? Long-term is more interesting for companies and investors, but the question leaves nobody indifferent: we are talking of a primary need of the human being, at the basis of the famous Maslow’s pyramid.

To go beyond the veil of Maya wrapping the future, I will use a technique from the field of social science, only recently applied also in economics and management: megatrends. These drivers of change (“a general shift in thinking or approach”, in the words of John Naisbitt who coined the term in 1982[1]) cannot be stopped by the action of single groups of people and do influence the whole society.  Which are they? Experts are not unanimous about their number and names but, pointing at the substance, I consider them to be 4: 1) demographic growth; 2) globalization; 3) environmental degradation (which include climate change); 4) digital revolution. The exercise, which I am suggesting to you, consists in imagining the type of interference exerted on them by Covid-19.

Let’s start with the action of demographic growth. This driver pushes for an aggregated increase in both food demand and caloric intake (due to the Engel law and to the substitution effects), which the supply will try to satisfy by intensifying and industrializing food production. Covid-19 – considered not as a single event but as a pandemic threat to which we have to adapt – will not reduce significantly the world population growth rate. Its influence over this driver will be minimal.

Globalization, the second driver, is in part responsible for the commodification of food raw materials, for the shaping of global markets, for the expansion of multinational corporations within the industry  (from production to distribution), for the creation of long production chains integrating ingredients and semi-finished products from all over the word in order to offer the consumer a “convenience food”. Will something change after Covid-19? The answer is “a lot”. International trade will be declining in 2020. In 2021 there will probably be a rebound, but sometime will pass before recovering the levels of 2019 and the previous growth rate. In fact, Covid-19 will throw sand in the gears of globalization. In 2019 deregulation (financial and trade-related) was already waning for geo-political reasons. From now on, Covid-19 will lay the foundation for new forms of regulation. The movement of persons (tourists and business people) will be subject to precautionary health standards. The movement of capital will be conditioned by the limits imposed on direct investments, especially for the acquisition of strategic corporations (including food industries). The movement of goods (and of food in particular) could fall under new phytosanitary requirements (in addition to duties). Food sovereignism (the key of many “Buy Irish”, “Buy French” or “Buy Italian” campaigns) could impose itself over ethnic food consumption. It is probable that everywhere food chains will shorten.

We can move, then, to the effects of the environmental degradation. This driver, provoking the reduction of arable land and the contamination of food (from pesticides to microplastics), is behind the growth of the demand (and therefore of the supply of) for healthy/safe/natural and ultimately trustworthy foods, like biological, PGI/PDO, short chain, or zero-miles products. What role will Covid-19 play? The fact is that also Covid-19 is a consequence of environmental degradation and demographic growth (destruction of natural habitats and contacts between humans and wild animals). Therefore, it will increase consumer preference for safe foods, also in terms of origin.

Finally, we come to digital devolution. Food remained always on the margins of this transformation. Like once for cloths, we kept believing that also to buy food we needed first to touch it (or to look at it closely). In fact, people bought food mostly through traditional channels (in 2018, online sales in Italy were only a bit more than 1% of the industry total turnover[2]). A short period of quarantine has been enough to understand that cooked, processed or fresh food could be easily home delivered. Given that first containment and then social distancing measures will be with us for years, we have to expect a consolidation of these trends. Digitalization is acting also on the side of the electronic traceability of ingredients, processes and origin of food products. Covid-10 will push it, too.

In conclusion, please, do not consider mines as forecasts but preferably as deductions about trends, which could shape the future of food. Indeed, the goal of this exercise was to show a possible application of the megatrend technique .

[1] Naisbitt J. (1982).  Megatrends: Ten New Directions Transforming our Lives, Warner Books: New York. For an application of megatrends analysis to economics, see: Sachs, J. (2011). The Price of Civilization: Reawakening American Virtue and Prosperity, Random House: New York.

[2] Osservatorio eCommerce B2c (2019), L’eCommerce B2c: il motore di crescita e innovazione del Retail! Online