Horizons July 2018

A monthly newsletter on Australian and international trends, innovation and other insights relevant to the Australian food market

Making news

Bluestone takes on Starbucks – Former banker Nick Stone is bringing coffee culture and smashed avos to the masses in the US. He’s banking on people well beyond its NYC-headquarters being hungry for quality coffee and the quintessential Melbourne café-experience.

Bluestone Lane opened in New York in late 2013, has since grown to over 30 stores across six US cities. After raising US$19.5m to support global expansion. According to Stone, the capital raise will allow the business to double from 30 cafes to 60 within two years, starting out in Boston and Miami among other US locations before travelling to the UK, Canada and the broader Asia Pacific region. “I wanted to export something that Australia does better than anywhere else in the world and be at the forefront of introducing it to other parts of the world,” says Stone.

Bluestone Lane is taking a Melbourne experience based on the uniqueness of the favourite corner café and replicating it in the US where Starbucks sets the standard for a premium coffee. What could possibly go wrong?

Origin labels give consumers choice – New country of origin labelling laws came into effect this month, which require food packaging to clearly indicate which foods are grown, produced or made in Australia. The labels have been phased in over the past two years and will be enforced by the Australian Competition and Consumer Commission (ACCC). According to ACCC commissioner Mick Keogh, the laws will stop practices that mislead consumers about where products come from, as it will clearly indicate how much of a product is made from Australian ingredients.

Local farmers are hopeful it will tip the scales in their favour, with more consumers opting for local produce. Consumer group Choice endorses the new labelling laws, but the group’s spokesperson Katinka Day said the labels weren’t perfect as they fall short of identifying where overseas ingredients are sourced. A product can be made in Australia from no l0ocal ingredients, which Day says doesn’t help consumers understand where their foods are coming from.

Clearer country of origin labelling – it is hoped – will prompt consumers to choose local. Awareness needs to be raised and enforcement of the labelling must be credible to be effective – but in the end will consumers care?

Impossible mid-air drama – Air New Zealand is saying Kia ora to the Impossible Burger, offering the much-hyped synthetic-meat burgers to Business Premier customers on its Los Angeles to Auckland route.

The move has incensed acting New Zealand prime minister Winston Peter, who accused the national carrier of treason for teaming up with Impossible Foods. He said a huge chunk of the taxpayer-funded bailout of Air NZ when it was in financial dire straits came from farmers, who farmed “genuine meat and not fake meat”. Impossible Foods was excited to be on the menu at 9,000 feet, and said it would give passengers options including beef burgers. Virgin Australia has cashed in on the controversy with a cheeky social media ad promoting Kiwi meat on its trans-Tasman flights, while Air NZ itself is making no apologies and says it’s just offering choices.

Air NZ is a Kiwi icon, but with this move it seems to have embraced the “dark side” of the protein market rather than championing home-grown product of a country whose economy is still heavily based on pastoral industries.

Big 4 tackle policy – The world’s four largest food companies – Danone, Mars, Nestle and Unilever – have moved away from traditional industry lobby groups and launched the Sustainable Food Policy Alliance. The alliance will lobby in five policy areas that it says are of interest to modern consumers; product transparency, nutrition, the environment, food safety and a positive workplace for food and agriculture workers. The four companies coordinated on such issues in the past, but with the new alliance they believe they can petition lawmakers and regulators more effectively.

The alliance is already at work, urging the Food and Drug Administration to advance its rollout of new Nutrition Fact panels, weighing in on the forthcoming labels for genetically modified ingredients as well as environmental issues. In a statement, the group said food companies should do more to lead and drive positive policy action for consumers and suppliers as well as the planet. Read more.

Is this another lick and promise? Or is this a different path with some chance of changing things? Large food companies have been outflanked by smaller, more nimble players. Could this be a chance to more positively differentiate themselves and cut through the alphabet soup of influencers?

Discerning consumers

It’s “Survivor” for food – British restaurant critic Marina O’Loughlin has delivered her verdict on a range of UK chain restaurants, suffering the Horizons July Freshagenda consumer taste changing“casual dining crunch”. Margin pressures are mounting on casual dining outlets due to rising labour costs, higher rates and increasing food costs with a weaker pound and fewer immigrant workers post the Brexit vote. Competition from independent restaurants and delivery services are adding to the woes of these chains – which offer table service and a license, but according to O’Loughlin – food that is indifferent, mass-produced in offsite kitchens, and consumed in cookie-cutter environments.

It seems the shuttering of branches and restructuring of a number of casual dining chains reflects more discerning, but less confident consumers who are looking for a better-quality experience and real value. O’Loughlin also points to the downfall of chains like Prezzo, Byron and Jamie’s Italian who have rapidly expanded without the ability to manage distant outlets, and with cheap debt leading to over-saturation. While O’Loughlin acknowledges the comfort of chains where the menu and experience is predictable, she is shedding no tears for the lowest-common-denominator, highest-possible-mark-up operators who’ve “got what’s been coming to them”.

The UK has had a unique fascination for mid-level food chains that isn’t shared in the rest of Europe – or even on our shores. While competition and Brexit both get bad raps sometimes, it seems in the case of some of the UK’s most ordinary chains, both are doing the good work of weeding out the very worst offenders of palates everywhere.

Aldi winning the trust war – According to Roy Morgan’s latest Net Trust Score Horizons australia discerning consumer Survey, Aldi has won the hearts of Australian consumers. Aldi not only took the top spot ahead of direct competitors Woolworths and Coles, it beat out other revered brands such as insurer NRMA, Qantas and Bunnings. According to Roy Morgan CEO Michele Levine, Aldi’s success was not only down to its discount prices, but also “a reputation for reliability and meeting the needs of consumers.”

Meanwhile, the chain has recently had its (second) day in court where a judge ruled that products marketed in Aldi using the term “Naturals” don’t need to be made of mostly natural ingredients. As the wording was less prominent and it’s mostly sold in the discount bin of a discount supermarket, the court ruled that “Naturals” on the label of a look-a-like product wasn’t misleading, as ordinary consumers would understand it referred to one ingredient, not all and would not be expecting to find boutique products at Aldi. This overturned a lower court finding brought be the mimicked brand Moroccanoil.

Netflix docos are increasingly a source of “knowledge” on food and health, so it’s understandable doctors are concerned. Suggesting vulnerable cancer patients can eat their way to health rather than undergo treatment is simply irresponsible. 

Welfare doesn’t drive meat purchases – The Centre for Global Food and Welfare meat purchaseResources at the University of Adelaide has found while Australian meat consumers pay attention to welfare, it doesn’t drive purchases. Professor Wendy Umberger said the research showed Australians, while caring about animal welfare, don’t feel sufficiently informed and are not willing to pay for guarantees. Further, consumers don’t want to know more details about welfare.

Ironically, the researchers found one of the key reasons animal welfare attributes were not driving meat purchases was a belief that the industry is “doing the right thing”. People buying meat with credence attributes did so to deliver personal benefits such as nutritional value and taste, only 25% said they would pay more for meat to improve farm animal welfare. Umberger warned that as production and process attributes can’t be verified by consumers, there is an opportunity they can be misled. The research indicates 44% are completely driven by price and are sceptical of accreditation.

This research indicates welfare is an expectation from consumers not necessarily something they would pay extra for…and they’re not all that interested in what it means! A way of affirming choices made, not changing preferences.

Volatile world

Indonesia must diversify for security – Indonesia must implement policies to Indonesia food security volatile worlddiversify staple food and increase fruit and vegetable consumption, according to the United Nations. Average per capita rice consumption in Indonesia was almost 150kgs in 2017, ahead of China and India. Rice production has been a focus of government self-sufficiency programs, but Indonesia still relies on imports. According to the UN, the government ignored regional cultural differences when it decided to make rise the staple food across the archipelago.

UN special rapporteur on the right to food, Hilal Elver says local food sago is the traditionally eaten staple in the eastern part of the country and is suited to the environment. She also points to the irony that in a food-producing country, 30% of children have stunted growth and over 92% of the population eat less fruit and vegetables than WHO recommends.

Taking a broad-brush approach to food security based on having enough of one staple has ignored the diets of its culturally diverse citizens, ignores local staples and is not delivering on the country’s nutritional needs.

WTO at risk – Earlier this month, draft legislation of a Trump administration bill, comically known as FARTS (United States Fair and Reciprocal Tariff Act), gives the US president licence to raise US tariffs at will without congressional consent and ignoring fundamental international rules. The bill has been described as “insane” the equivalent of walking away from World Trade Organization (WTO), and is unlikely to be passed by Congress.

It has others worried however, European trade commissioner Cecilia Malmstrom and Australian trade minister Stephen Ciobo are lobbying the US to avoid the collapse of the WTO court system. The system for settling trade disputes is already being undermined by the Trump Administration vetoing all appointments of judges to its appeals court. Former US Commerce secretary Carlos Gutierrez likened a US withdrawal from WTO to “the wild, wild west” leading to the collapse of the world’s trading system, setting the world back decades.

→ Trump’s “America First” platform appears to consist mostly of attacking trading partners and undermining or abandoning international cooperation. The FARTS Bill may never see the light of day, but highlights the US President’s lack of understanding of global trade. Blowing things up is not a strategy.

Stop immigration? Fix climate! – It’s estimated that more than 22.5m people Immigration climate changehave been displaced by climate-related or extreme weather events since 2008. Guatemala, in Central America’s dry corridor is one of the largest sources of unauthorized immigrants to the US in recent years according to freelance writer Lauren Markham who writes about forced migration. As the climate gets drier, farmers are finding it harder to grow crops which forces them to seek greener pastures and other streams of income in wealthier countries. Markham’s analysis highlights how at odds US environmental and immigration policies are.

Since taking office, the Trump Administration has worked to unravel key environmental policies, walking away from the Paris climate accord and hollowing out the Environmental Protection Agency. But as the climate becomes more extreme and volatile, forced migration will only increase. Read more.

It’s short term considerations rather than longer term climate risk that is driving many farmer decisions when it comes to planting tree-crops that won’t bear fruit for decades, relying on technology and adaptation to survive.

Evolving models

Can Africa milk chocolate? – The global chocolate market is dominated by Europe a 70% share. Africa has supplied over two-thirds of global cocoa, and an even higher percentage is exported as raw material for chocolate production in other regions. Africa has made few inroads into international chocolate trade, Europe’s biggest rival is Asia – and in particular Indonesia which has managed to tap into the growing Chinese middle class.

But according to Gro Intelligence it’s Africa that has the biggest opportunity for production, export and consumption. Now entrepreneurs and the governments of Africa’s largest producers Côte d’Ivoire and Ghana are getting serious about the opportunity to move higher up the cocoa-to-chocolate value supply chain. Read more.

Interesting idea that Africa can capture some money in this value chain – tradition keeps Europe strong, but Asia has shown what is possible.

Amazon looks to entrepreneurs to deliver – Amazon is offering to help anyone Amazon looks to entrepreneurs to deliverwho wants to start a delivery business. Amazon is offering discounted vehicles, fuel, insurance and uniforms and access to delivery technology. Start-up costs can be as low as US$10,000, with an entrepreneur running 40 trucks making an estimated US$300,000 annually. The company will offer qualifying military veterans US$10,000 to start their own delivery business.

Exploring ways to expand its delivery capacity, Amazon is leasing cargo planes and experimenting with drone-delivery to get ahead of competitors and gain further control over its operation. Amazon has relied on the US Postal Service, UPS and FedEx, but has also sought more control over logistics by utilising its own technology and facilities. Amazon has also used independent contractors during busy periods, but the start-up initiative will ensure Amazon branded vehicles and uniforms are on the street and visible.

Fast and accurate delivery is Amazon’s trademark, but it isn’t resting on its laurels. Incentivizing entrepreneurs and getting branded vehicles and uniformed delivery people should help it exert greater control and be a PR win.

Another grower-owned processor struggles – After the demise of dairy co-operative Murray Goulburn, another grower-owned agrifood processor is in Grower-owned processor strugglesstrife. Sugar miller Mackay Sugar recently announced it was nearing a comprehensive recapitalisation plan which will see a strategic investor take a stake in the company. The recapitalisation comes after Mackay scrapped plans to sell its power generation assets which could have raised A$100 million to pay down crippling debt of A$180 million. The former cooperative is an unlisted company owned by 1,000 cane growers, a structure that provides limited equity options for the high capital requirements of mill development and maintenance. A proposed cane levy of $2/tonne resulted in a grower backlash and legal action.

It’s rumoured a Brazilian company will step in, after the 18-month search for a new owner or equity investors, during which growers have complained of being uninformed. Mackay is reported to be negotiating the sale of it Mossman Mill, which it purchased for A$25 million in 2012 to an entity controlled by growers in the Mossman and Atherton Tableland cane-growing districts.

Mackay was a co-op and changed to a similar structure as others – an unlisted PLC owned by growers. It’s another example of the struggle to adequately finance competitive food processing and maintain grower control.

More from less

The only way to feed the masses – The UK has one of the largest poultry sectors in Europe and it needs it too as most Brits eat chicken twice a week. But as angst about “factory farms” builds in the general community, the UK’s poultry lobby has been upfront about the need for more mega farms.

Richard Griffiths CEO of the British Poultry Council maintains the only way to feed the country is larger farmers that efficiently use resources, deploy technology and manage waste. Rearing birds indoors in a controlled environment delivers good welfare outcomes governed by science-based regulations administered by professionals. The industry has reduced antibiotic usage by 82% and is committed to improving standards. But if consumers want free-range it is available says Griffiths – that’s the strength of British poultry production.

Scale is better for a whole lot of issues, but this won’t stop the welfare niches – nor should it. However, sustainability must address issues of profitability and affordability to feed populations.

Farmers taking on climate change – On both sides of the Tasman, farmers are more from less farmers take on climate change facing the realities of climate change and being pro-active about a response. Australian lobby organisation Federated Farmers’ president Fiona Simson says farmers are no longer questioning the validity of climate science. Simson said farmers were now on the front foot of the issue and urged politicians need to focus on reaching consensus as opposed to picking winners.

Across the ditch, DairyNZ has recently appointed 15 dairy farmers as climate change ambassadors who represent best environmental practice for their farm system. One of them, Southland dairy farmer Dean Alexander, acknowledges that despite his focus on leaving things better placed for future generations, he wasn’t doing enough. With the agricultural industry responsible for 48% of New Zealand’s emissions, Alexander says farmers need to take responsibility and make a significant contribution to reducing our environmental footprint.

These farmer leaders are accepting of the science and the evidence they experience themselves. They are going against traditional views of their political representatives and colleagues to foster change.

China leading the way in sustainability? – A major review published in Nature highlights the significant progress China has made in improving the environment. Between 1998 and 2015 US$350 billion has been invested in sustainability programs addressing 65% of China’s land mass. It’s a centrally planned government approach that doesn’t leave things to the market!

The programs aimed at reducing erosion and sedimentation in key rivers, conserving forests, mitigating desertification and increasing agricultural productivity. There were also important socio-economic objectives of reducing poverty. While not perfect, the effort is unparalleled anywhere else in the world – a massive response to a looming catastrophe. Read more.

We don’t often hear positive stories about Chinese sustainability measures, and this effort isn’t perfect. What other nations can learn from the significant strides China has made in improving the rural environment is the need for concerted and coordinated long-term commitment and investment.

Disruptive technologies

Snapchatting the future – Augmented reality makes it possible to examine Snapchatting the futurefutures of food. Recently, The Economist teamed up with New York-based start-up Kabaq to give snapchatters a chance to see what it looks like when there’s edible insects, artificial meat and algae on the menu. Adding a temporary filter to Snapchat a waffle made from mealworm flour, dried cakes made from Spirulina (a type of algae) powder or 3-D printed red-pepper hummus places these novel foods on a plate.

Wider adoption of these new, innovative foods require acceptance and while the snapchat filters don’t give us the chance to feast on the mealworm waffles, it provides an insight into a different dining experience.

They say we “eat with our eyes” here’s a chance to taste the possible future of food on your smartphone! 

AI to hurt developing countries most AI to hurt developing countries mostA new study by economists Lukas Schlogl and Andy Sumner at King’s College in London suggests technology disruption may hurt developing nations the most. It’s expected agricultural and industrial sectors have higher potential for automation than service sector jobs, concerning to developing nations with larger pools of unskilled labour.

Strategies to cope with the rise of automation in developed countries will not translate well to the developing world. Developing countries have limited choices. They can use policy measures to constrain automation, and curb disruption, but disincentives such as taxing robots or cutting minimum wages are less likely to work in developing countries where wages are already low. Disincentivising automation could see whole sectors move to countries where robot usage isn’t penalised. Retraining workers is a challenge in developing nations with limited education sectors, while universal basic incomes would be difficult to finance. Schlogl and Sumner suggest a global universal income, or building out sectors that are less susceptible to automation in the future – but this also requires significant investment.

Developing countries will be particularly vulnerable to automation of agriculture and manufacturing jobs. It’s unlikely governments in these countries can hold back the AI tide or deal with the fallout. Just who is ethically responsible for this disruption?.

Horizons July 2018 is Freshagenda’s monthly newsletter on Australian and international trends, innovation and other insights relevant to the Australian food market

Freshagenda’s Horizons July 2018 newsletter is a free publication on Australian and international trends, innovation and other insights relevant to the Australian food markets.

Our Horizons newsletter describes Freshagenda’s megatrends, describing how tech and innovation is shaping the food industry around the world. Our megatrends are; Discerning consumers, volatile world, disruptive technologies, evolving value chain models and more from less.

Horizons digs into our megatrends

Freshagenda identified a set of major megatrends affecting the future of food that combine to provide the key inputs to industry or enterprise strategic planning built on future scenarios.

In a paper outlining these megatrends, Freshagenda explains what they mean, how they are playing out, and how they fit together.  These forces might be nice to know, and great to stimulate thinking, but how do you harness them?

As shown in the process summarised below, understanding these forces, articulating how they are affecting your industry and business outcomes in future, and drawing insights from them to stretch future thinking, are a key component that can provide impetus and context to strategy development


Discerning consumers – A diverse set of influences

  • Increasing developing world affluence creating new consumers
  • New channels of influence on behavior and wants
  • More complex segments and preferences affecting value, ethics, health and indulgence
  • Competing demands driving greater needs for convenience
  • Aging demographics in developed world


Volatile world – Food markets are more complex and unpredictable

  • Climate change affecting stability of food supply
  • Food commodity markets more prone to price volatility and closely linked as intensification continues
  • Ad-hoc protectionism of farmers and consumers
  • Trade policy becoming more technical rather than fiscal
  • Geopolitical conflicts
  • Lingering economic and financial uncertainty post GFC
  • Resilience of traditional farming threatened by volatile returns

Disruptive technologies – Technologies rapidly reshaping life

  • Digital tools and platforms are changing engagement, behaviour and lifestyles
  • Advances in GE and GM know-how and applications
  • Advances in automation for production and processing
  • New substitutes (3D printing, synthetics)

Evolving value chain models – Redefining how to add and capture value

  • Shift in capital power
  • Risks being reassessed
  • Emerging preferences for capital investors
  • Emerging retail models
  • New forms of value chain integration


More from less – Limited resources and capacities

  • Growing populations – more mouths to feed over time from finite natural resources
  • Greater community concern for sustainable production systems
  • Sustainability agendas balancing “3Ps” changing value chain relationships
  • Policy unevenness and short-termism