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Boom or bust

As the industry braces itself for a further meltdown in the economy, global pundits are offering advice as well as taking action on global food security and ways of coping in the economic downturn.

No one knows for sure what will definitely happen in the future. The picture in our crystal balls isn't as clear as everyone would like it to be about the challenges affecting our food chain. But that hasn't stopped the Government and industry experts taking global issues seriously as well as steps to try and stem the downward spiral the world seems to have got itself into.

Recently the All Party Parliamentary Group on Agriculture and Food for Development (APPG) launched an inquiry into whether the UK is meeting its commitments for addressing issues of global food security and how well equipped it is to play its part in generating long term predictable and sustainable development for those affected in the developing world.

It has called for evidence from a range of stakeholders and eminent authorities about this issue, giving them a deadline of March 31 to answer questions on global challenges such as: how can nine billion people be fed equitably, healthily, safely and sustainably by 2050? How significant a threat does a lack of food security present globally? How is the UK part of the global problem and/or solution, and does UK plc have a global responsibility to share its appropriate science, skills and technology to help those in developing and emerging markets face the ongoing challenges presented by food security?

APPG chair Dr Ian Gibson MP says: "This inquiry will act to focus cross party and wider public attention on the key issue of global food security at a time when the effects of the economic downturn will inevitably be felt hardest by the poorest of the poor in the developing world."

Organisations such as the Royal Society of Chemistry and the Institution of Chemical Engineers are also looking at the world food crisis from a scientific viewpoint. In its report entitled: The Vital Ingredient – chemical science and engineering for sustainable food, it says that "changing weather patterns, crops being used for fuel rather than food and emerging Chinese and Indian middle classes will contribute to a breakdown in the global food supply chain".

Professor Peter Lillford, chairman of the working party that produced the report, says it will be the countries that are less technologically advanced and those that rely most heavily on food imports that will be the first to suffer and "it will be the survival of the fittest".

"Last year we saw riots in Bangladesh, Cameroon, Senegal and Morocco because of food shortages. We experienced ripples of change in the UK too where many food prices rose. It's all about the availability of food as a commodity on a global scale.

"In the developed world, because food is relatively cheap, we waste it. That is no longer morally or economically acceptable and we'll rely on the chemical sciences to implement technology to reduce this waste, alongside the need for adjustments in consumer behaviour. There is no way out of this unless we make changes," he warns.

The report recommends a stronger focus on developing and improving chemical engineering technologies to conserve and reuse water; the development of modern biotechnology to create pest resistant crops; the application of novel enzyme chemistry and technology in food manufacture; and the creation of ways to treat livestock waste to generate energy and bio gas as possible solutions to prevent the food shortfall. It also calls for improved scientific literacy among policy makers and says supermarkets must make greater efforts to champion sustainability.

Many cash strapped consumers have in fact faced up to the need to cut back on waste and look more closely at value for money when buying food and eating out, therefore food suppliers are having to rethink their business strategies.

At Schöller Ice Cream's 21st anniversary conference in February, futurist Rohit Talwar gave a presentation entitled: Winning in a Downturn, where he presented his views on the future and ways to tackle issues in the current economic climate.

Against a backdrop of financial woes, he has been conducting a survey around Europe and the rest of the world to find out how foodservice operators are seeing the downturn and what tactics they are adopting to survive, the full results of which will soon be announced.

"Sometimes it needs someone like me to take the lens cap off. People believe by just having confidence things won't happen, but you have to understand what is going on and take that confidence into the rest of the world," he says.

Thanks to the banking crisis, which Talwar says will take $7.7 trillion alone to bail out the US and damage businesses in the UK for a long time to come, facing up to the credit crunch means changing company strategies and planning ahead for different scenarios – plans A, B, C and D that cover anything from the boom to recession.

Last year, he says, Starbucks said it would open 6,000 units and now they are closing them. "McDonald's saw a recession coming and looked at the categories of food they have and how they would enhance them. It did this with coffee. It decided to sell what Starbucks sell at £1.50 instead of £3.50 and brought in Kraft to produce for them a good quality coffee. It's about people looking at the situation very differently and playing the game."

In his survey to date, many of those questioned about the effects of the downturn on their businesses gave reduced budgets and revenue as their top answer, and the top three counter measures were cost cutting, NPD and improvement and customer service. When considering the three most important priorities for survival, 68% said clear direction and strategy, 52% customer relationships and 42% cost control. Talwar says it was sad to see staff motivation very low down on the list, and surprised that no one saw greater use of the internet as a service.

"People aren't seeing it as an opportunity," he says. "It is a huge tool for learning." He says the majority thought the upturn in the market wouldn't happen until the first half of 2010. But looking ahead, lots of innovation and new routes to market are predicted as one of the key trends over the next three years, and he believes the types of firms that will emerge strongest from the downturn will be innovators and pubs, while the strongest sectors will be restaurants and fast food – "people will want to treat themselves well again".

Travel industry growth topped the list of key trends that could help companies recover, and among the top 10 restaurant food trends were local produce, organic and bite size desserts, "a small treat out when you can," he says.

Top flavours include persimmon, star fruit and lavender but Talwar flagged up flavours in a dish from a US restaurant that you wouldn't normally see – green apple syrup with parsnip purée and courgette jam. The most expensive was a $25,000 dessert from Serendip 3 in the US – a chocolate mousse with 5g of 23 carat gold. Its bowl was lined with gold and at the bottom an 18 carat gold bracelet with one carat white diamonds, complete with white and chocolate diamonds – and people are buying into this, he says.

One concept he believes will take off is Vapiano, a fast food "luxury" concept. "You order food and when it's ready greeters take you to a table. People are moved around to accommodate diners and there's a good turnover of food. It competes with McDonald's, but it will take off fast in a downturn."

"Winning in a downturn is about innovation, thought leadership which means passing things on, and focusing on customers who will help you both to grow. Form partnerships in environment and recycling –make yourself part of your customers solutions. What can businesses do to bring people in to exchange ideas?"

Looking at demographic destinies, he says that in 40 years there will be three billion more people in 40 years. By 2050 Europe will shrink by 90 million while Africa will grow by one billion and Asia slightly more, creating opportunities but also competition.

"People going into secondary markets are finding more interest and less barriers. If you are abroad ask yourself where are the opportunities? Scan global trends and look at what comes out of them. It will give you ideas about what is changing.

"What are you ignoring that you can play up?"

This article originally appeared in the Food Development Association's fd magazine

Text Sheila Eggleston Photography Shutterstock, Steve Forward