FRUIT TRADE 2025...8 fruIt traDe 2025 the lead of the rest of society with tried and tested...

FRUIT TRADE 2025Ideas – Impulses – Insights

By Marta Kwiatkowski and Christine Schäfer

Hello!

GDI Gottlieb Duttweiler Institute 1

Imprint

AuthorsMarta Kwiatkowski, Christine Schäfer

Editor/TextAndreas Güntert

Layout/IllustrationJoppe Berlin

© GDI 2017

PublisherGDI Gottlieb Duttweiler InstituteLanghaldenstrasse 218803 Rüschlikon/Zürich, Switzerlandwww.gdi.ch

on behalf ofMesse Berlin GmbHMessedamm 2214055 Berlin, Germanywww.fruitlogistica.com

Content

03 Preface

04 Introduction

08 Key Trends and Drivers

13 Trends To Watch> Production > Distribution > Consumer Behaviour

29 Conclusion

21 Annex

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Dear Members of the Fresh Produce Trade,

We would like to thank all participants for their contribution to “Ideas – Impulses – Insights”, the trend study on the future of the fresh produce sector.

In the preparation of this trend report, international experts from the entire value chain were interviewed. On this basis, we were able to determine the developments considered to be most disruptive from the perspective of the sector. Together with the expertise of the renowned Swiss think-tank, Gottlieb Duttweiler Institute, the most relevant areas of action were thus defined.

This trend report will allow you to anticipate the key issues affecting the trade and sensitise both stakeholders and decision-makers to them. It will help you to answer questions relating to your business proactively:

What major changes do international experts expect in the fresh produce sector? Which issues will we be dealing with in ten years’ time? Which innovations will our customers expect?

The findings of the survey will be presented on the 25th anniversary of FRUIT LO-GISTICA (8-10 February 2017) and continuously discussed in our media activities throughout the year. The “Ideas, Impulses and Insights” from this trend study are a heartfelt thank you to all customers and partners in the fresh produce sector. They have guided FRUIT LOGISTICA throughout the past 25 years, and have made it the most important platform of the fresh fruit sector.

As FRUIT LOGISTICA, we continually strive to conduct an intensive exchange on the future prospects of the sector with you – growers, traders, technicians, logistic specialists, retailers and service providers.

We are looking forward to hearing your views on this work, and remain with kind regards,

Your FRUIT LOGISTICA Team

Preface

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While food production is increasingly geared to-wards efficiency and cost effectiveness, and beco-ming a highly technical area, consumers long for authenticity and transparency in their food con-sumption. However, the value chain has become increasingly complex and obscure in recent ye-ars. From the consumers’ perspective, the food industry resembles a black box. In addition, fre-quent scandals have undermined their confi-dence. Consumers have become more critical, and expect more simplicity and authenticity. Food is still expected to taste good and act as a feel-good factor. After all, consumers seek an in-tuitive, pleasurable and sensual experience when it comes to food. Local traditions and rituals are more popular than ever, and stand for food that people are familiar with.

In recent years, “unfair” food production condi-tions and unsustainable production methods ha-ve increasingly garnered criticism. As a result, regional foodstuffs and products from fair and organic production have been gaining popularity for some time – representing a counter-trend to globalisation in food production. And consumers are prepared to put their hands in their pockets if these criteria are satisfied.

At the same time, drastic changes can be obser-ved on a global scale; Asia for instance is beco-ming an increasingly interesting export market. China’s middle class is emerging, and urbanisati-on is progressing fast. The longstanding one-child policy coupled with increasing affluence have resulted in a high level of preparedness to pay for the best quality products for the next ge-neration. Stronger demand coupled with higher price acceptance means that many producers now sell to Asia rather than to Europe. As a re-sult, trading channels for fresh fruit are also changing direction, away from Europe – with its

trend towards declining consumption – and to-wards Asian growth markets.

Moreover, consumers are no longer waiting for the larger distributors to react. They are begin-ning to prefer to create the desired transparency and sustainability in the value chain themselves as urban farmers or gardeners. Such niche phe-nomena exert pressure on the market, because they create new lifestyles for urban dwellers which are quickly taken up by conventional busi-nesses. Urban farming and gardening are roman-tic niches which can be organised even better if they are supported by high-tech.

Social demands to get the most out of life increa-ses pressure on personal efficiency. Consequently this requires detailed planning, coordination and a high level of mobility. As everyday life becomes increasingly complex, consumers look for simpli-fication and optimisation. With the support of new technologies, personal organisation is beco-ming easier. Digitalisation has already revolutio-nised entire industries, not only the music and tourism sector. It is now also becoming a signifi-cant factor in the food industry. Visits to a large retailer for the weekly shop can be substituted by the convenient option of home delivery. The aspi-ration towards efficiency coupled with the desire to maintain a healthy and balanced diet also in-volves fast and nutritious take-away meals and the ability to buy food in small quantities while on the move. While online shopping currently only accounts for a small share of food purchases, it is quickly gaining momentum. And this growth is sometimes driven by new players with purely digital business models – the digital platforms. From delivery services to organic farms, restau-rant services or smart meal box providers – what all these concepts have in common is that they do not necessarily require their own distribution

Introduction

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An historical view of the value chain

Past Present Future

Production High level of self-sufficiency in own gardens

Local agriculture

First mechanisation

Low level of self-sufficiency

Trend towards urban gardening

Globalised agriculture

Large-scale, partially automa-ted production

Production increasingly regio-nal/urban

New concepts in urban/vertical farming

Non-industry producers (Goog-le, Toshiba etc.)

Fully-automated mixed cultiva-tion production

Distribution First exotic fruit imports

Weekly markets in towns

Colonial goods

Strong seasonality of production

Key locations: Consumers come to the producers

Online trading

Partial return to street markets

Continuous availability of fresh produce, seasonality less important

Primarily via retailers: Consu-mers come to the store

Autonomous

Smaller urban delivery ser-vices

On demand/instant delivery

Crowd-sourced delivery

Rise of the platforms: Producer comes to the consumers

Consumer behaviour

Housewives: Responsibility for the family’s nutrition

Primary requirement: Satisfy-ing hunger

Limited knowledge about nutrition

Food is primarily consumed at home

Marketing of food origins

Health awareness

Organic boom

Fast Good: Fast, convenient and healthy

Flexibility, eating anytime and anywhere

Diets

Marketing of product charac-teristics

Processed fresh produce/Rea-dy-made healthy recipes

Transparency/Requirement to know ingredients and origin of products

Controlled lifestyle

Fast to-go supply that is healthy and aligned with individual nutritional values

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The value chain is becomingatomised and increasingly digital

Quelle:GDI 2016

analogdigital

GRoWER

ConsUmER

Farm Farm Farm

Market

Wholesaler

Retailer

Processing Processing

Other production

Urban Farms

Platform

PAsT PREsEnT FUTURE

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centre or ownership of the products. Their sole purpose is to bring a wide range of providers and suppliers together on a single shopping platform, and either carry out delivery to the consumer themselves or via a logistics partner. The product is going to the customer more and more, instead of the customer going to the retailer.

Consumer preferences today are already diverse and complex. In view of a food industry that is engineered to the very core, people long for simp-licity, authenticity and sensuality when eating. They crave regionality, environmental protec-tion, animal welfare, health and pleasure. They want good food for a good life. However, consu-mer demands are developing much faster than the reality can satisfy, and this becomes apparent in ever higher expectations – for instance in su-perfood products. A key factor here is that we still have only limited knowledge about nutrition. We react to marketing slogans rather than sound sci-entific data. “An apple a day keeps the doctor away” was a marketing slogan in the USA almost 100 years ago. In this respect, apples may even qualify as the first superfood product. Whenever a lifestyle icon such as Gwyneth Paltrow uses her blog to advocate the advantages of Goji berries, promotes avocadoes to power fruit status, or rolls out the red carpet for kale, the desired effect may come in the absence of any scientific evidence. The word of Ms. Paltrow and her colleagues alone suffices to catapult a fruit into sales orbit, and po-

sition it as a new item on the menu of millions of followers.

However, lifestyle individualisation and techni-cal innovations in people’s diets result in custo-mised recipes and the careful analysis of ingredients. This is not limited to attributes such as healthy, organic and sustainable, but also in-volves products that are tailored to individual needs and a personal health style.

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the lead of the rest of society with tried and tested products. In terms of fresh fruit and vegetables, this means that traditional produce will continue to be popular. At the same time, however, diets that are optimally tailored to our requirements, and the origin of the products themselves will be-come more significant.

Uniqueness for the masses: Individualism instead of

individuality

The individual is the mainstay of society. Particu-larly in relation to digital natives, digitalisation has taught us that almost every product or ser-vice can be customised and personalised. Yet the-se unlimited options for self-fulfilment are also experienced as isolation and overload. As much as we strive and seek the product that is ideally tailored to our needs and wishes, we also follow

Key Trends and Drivers

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Health style: The society of longevity

The starting point for these trends is a positive one: we are becoming older and older. Globally, life-expectancy is increasing, especially in more highly developed countries. The society of longevity has long become a reality. Better food, better hygiene and better medicines provide us with longer life and better health. Sport and a balanced diet are part of our everyday routine. In the past, health only became an issue when people actually experi-enced (age-related) ailments. Today, even healthy people have become sensitised. With discipline and effort, we strive to optimise our body and soul. At the same time, however, this compulsion to lead a healthy lifestyle leads to a counter-reaction. The “good life” also means letting yourself go from time to time, ignoring the rules of good sense.

Consequences for the fresh produce trade 2025:In this context, fresh natural products are conti-nuously gaining popularity, almost taking on the role of preventative medicines. This is the reason why consumers are also increasingly interested in the composition of food products and their bene-fits. This trend manifests itself for instance in the fact that the new head of Nestlé, the biggest food corporation in the world, comes from the high-tech health sector rather than the traditional branded food industry, as his predecessors did. The health-science and skin health sectors which were established by Nestlé in 2011 report directly to the CEO. Compulsory innovation, margin pressure and future viability concerns can thus even transform more conservative companies which have enjoyed longstanding success.

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Flexibilisation: The always-on society

Digitalisation gives us access to inspiration, in-formation and shopping 24/7. This has been achieved particularly through the availability of smartphones and their high level of market satu-ration. Digital natives have grown up with digita-lisation and naturally integrate their smart devices into their routines. People use their smartphones hundreds of times each day. They use them to bridge waiting times at train stations, amuse themselves in boring meetings, or re-search something on the internet. These oppor-tunities completely transform the requirements and expectations of today’s consumers. Waiting times are now rarely accepted. People want im-mediate availability and delivery of products. Be-sides, quality and price comparisons are also

easier and faster online. While consumers take advantage of this transparency, it increasingly leads to another obligation – the ability to obtain information about everything online increases the pressure on conscious shopping activity. Not only are companies becoming more transparent, consumers are too. Data records which products have been purchased in the past, thus facilitating the use of incentives such as discounts on future purchases. Above all, this instant gratification is becoming a key theme for digital natives, since feedback and special offers are always immediate and customised. Whenever you pass a relevant store or product on the shelf, you receive an offer directly on your smartphone.

Consequences for the fresh produce trade 2025:In future, fresh products will be bought online just as often as clothing, furniture or foreign tra-vel. Moreover, fast delivery services which bring

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the products to people’s homes offer extra conve-nience. Larger retailers have long been operating their own online shops. Smaller ones are disap-pearing or serving a niche market with special sales concepts. Digital platforms from outside the sector are also establishing themselves as new players on the fresh produce market. Smaller start-ups, as well as global players such as Google or Amazon, have been offering such services for a while. They join forces and as a result the sale of fresh produce becomes consolidated. It is also ob-vious that those who control the data today can respond to consumer needs on a more individual level, and satisfy their demands better. Tech com-panies have a key advantage here.

Origin: Increasing transparency in the supply chain

Digitalisation has also sharpened our awareness. Access to information on all aspects of produc-tion promotes transparency. Many producers handle this offensively, encouraging consumers to trace the supply chain all the way back to the individual farmer online. Naturalness, sustaina-bility, transparency and responsibility are now in great demand. In Western societies interest in material things is declining. Instead it is the unique and individual experience which is beco-ming more important. As part of this trend, food is practically elevated to the status of a new religi-on. Knowing about the production, origin, and history of a product constitutes a new form of lu-xury. As a result producers are becoming more important in terms of marketing strategies. They

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are used for storyline marketing purposes. Gro-wers are becoming the new heroes.

Consequences for the fresh produce trade 2025:When comparing the fresh produce sector with other industries, we see that global branding is only loosely anchored in the fresh produce busi-ness. Can the ‘Chiquita-effect’ be transferred to other produce? Would it be possible to present an orange, berries, or a particular type of nut in a fashion similar to a wine label, so that it would be perceived as an independent brand, and be posi-tioned as such? Consumers these days mostly consider fruit a commodity. One might hope that a brand promise would facilitate the achievement of better and more stable prices, as well as compe-titive advantages based on product differentiati-on. Nevertheless, based solely on their seasonal and perishable nature, subtle variations between harvests, and the complexities of storage and transport, it is obvious that it would require tre-mendous effort to elevate a mandarin or an avo-cado to the level of the next Mars bar or to gain the legendary perception achieved by brands like Nutella. On top of all this, considerable resources would be essential to ensure the success of a new brand on multiple communication channels. The idea of selecting particular sections of the value chain for specific branding might therefore ap-pear more attractive. But this begs the question, to what extent are fruit producers actually able to set trends themselves? This links back to the sub-ject of branded goods. It should be significantly cheaper and easier to market the producer and the origin as brands than it is to elevate individu-al products to branded item status. Thus produ-cer branding at the start of the supply chain would be a more realistic option, as in the case when manufacturers try to communicate direct-ly with the end consumer via the internet. In are-as where the relationship with distributors and

retailers is not negatively affected, the establish-ment of communities based on travel opportuni-ties or Grand Cru deliveries could help to establish a closer bond with the end consumer. Life style carnivores from affluent countries might secure prime meat products as a dividend if they invest in Highland cattle. Or premium dairy products through ‘cow leasing’. So what would stop life-style fruit and vegetable fans from adopting a banana plantation for example? Or track the movements of their personal share in a raspberry crop? If the grower sees this as a risk to his relationship with the retailer, it might be pos-sible to get the latter on board as part of the con-cept. Every supermarket manager must have an interest in creating ‘islands of superior quality’ in their fresh produce segment. In view of the incre-asing efforts of the large retail chains to collect big data, it should be possible to develop such ac-tivities in a targeted way. The regional managers of the leading supermarket chains should already know which outlets would be suitable as special points of sale for such products.

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Production: How will the food supply for the world population

be guaranteed in 2050?

Population growth, larger cities, increasing health awareness – agriculture is having to facing these challenges to an ever greater degree each year. By 2050, world population is expected to in-crease to 9.7 billion.1 How will it then be possible to feed all these people with traditional farming practices? In addition, urban growth is encroa-ching on farmland, while the demand for fresh

vegetables and fruit resulting from increasing health awareness continues to rise. In 30 years’ time more food will have to be produced on a dwindling production area. How can we over-come this challenge? Scientists are under extreme pressure to develop efficient new cultivation me-thods which require less space and preserve natu-ral resources while at the same time helping to remedy the major issue of food waste.

1 news.nationalgeographic.com/2015/07/world-population-ex-pected-to-reach-9-7-billion-by-2050/

Trends To Watch

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InDustry 4.0: the Internet of thInGs, bIG Data anD precIsIon farmInG

What is it all about?As part of the 4th industrial revolution and the internet of things, agriculture is taking a big step towards full automation. Machines, plants and computers communicate and cooperate directly with each other. Since computers are continuous-ly becoming smaller and better embedded, peop-le hardly notice their presence these days. And as a result of the constant interaction between the different computers, enormous volumes of data are being produced. The retail trade and food ser-vice sectors have already been using big data for some time to understand customer actions and attitudes. This mass data should equally help to support agriculture. In this case it is not about collecting customer information, but rather ge-nerating information about factors which might

influence the effectiveness of agricultural pro-duction. Precision farming is a term that is often used in relation to big data in agriculture. Precis-ion farming – or precision agriculture – involves taking account of ground or microclimate varia-tions within a particular cultivation area in order to optimise yields. Subsection-specific cultivati-on allows for measures such as adjusting the amount of seed or fertiliser used to specific ground conditions, thus helping to reduce the ap-plication of chemicals.

Assessment of opportunities and risksBig data and precision farming allow a signifi-cantly more efficient cultivation of land, resulting in more sustainable agriculture with lower crop protection use and less irrigation.

Opportunities: While precision farming is usu-ally based on big data, big data does not automa-

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tically equate to precision farming. Big data analytics can also utilise data from weather sta-tions and satellites, and other sensors used pri-marily for scientific purposes. This allows, for instance, the prediction of crop disease epide-mics.

Risks: Big data usually means that insights are based on historical data. Unforeseen circumstan-ces are not necessarily considered. The effort and financial resources necessary in implementing precision farming on smaller areas of land would have to be quantified in advance.

Examples:www.precisionag.com Variable-Rate Application (VRA) means that the seeds and fertiliser are distributed in variable quantities based on land mapping and alignment with the specific ground conditions.

Flint River Partnership The Flint River Partnership strives to optimise field irrigation in Georgia. By means of an analy-sis service run on an IBM super-computer, data from thousands of local weather stations, satelli-tes and commercial weather networks is analysed to provide highly localised weather forecasts for the next 72 hours in 10-minute intervals.

VertIcal farmInG: the hIGh-rIse Green

reVolutIon

What is it all about?Vertical farming could be become the future of agriculture. Scarcity of resources, population growth and urban sprawl necessitate a rethink in terms of food production. In the past, fields and plots have been laid out at ground level. To facili-tate the better utilisation of available land, the

vertical farms of the future grow plants on sever-al different levels. The roofs of these ‘farm scra-pers’ could be fitted with solar panels, wind turbines and rain water collectors. Underneath, vegetables, fruit and fish are cultivated by means of aeroponics, hydroculture, aquaponics and aquaculture. These can then be marketed directly in shops and restaurants located on lower floors.

Assessment of opportunities and risksVertical farms increase the yield per square metre of ground area, while also significantly reducing resource consumption through closed-loop ope-ration under greenhouse conditions. Due to the controlled environment, fruit and vegetables can be produced all-year round. And since the plants in the greenhouse towers are not at the mercy of the elements, the risk of crop failures caused by severe droughts or floods is eliminated.

Opportunities: Since farm scrapers are primari-ly operated in urban areas, distribution mileage to distributors and consumers is reduced, resul-ting in further resource savings.

Risks: Critics note that the additional input re-quired for artificial lighting, irrigation and other operational tasks could cancel out any sa-vings based on the geographical proximity to the buyers.

Examples:www.skygreens.com Sky Greens in Singapore is the first commercial vertical farm in the world. Soil cultures and hyd-rocultures are arranged in A-shaped rotating to-wers which ensure optimal distribution of sunlight and nutrition through their rotation.

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farmedhere.com FarmedHere in Chicago is the largest organic in-door vertical farm in the USA. FarmedHere em-ploys an aquaponics system which combines fish farming in aquaculture and plant breeding in hy-droculture.

infarm.de InFarm (Indoor Urban Farming) designs and constructs vertical farms in various sizes which are used both by private households, and by res-taurants, hotels and supermarkets.

www.nemosgarden.com Nemo’s Garden focuses on depth, rather than height. Plants are propagated in air-filled plastic chambers below sea level. Sea water condensation is used for irrigation, while consistent temperatu-res, large amounts of sunlight, and the absence of pests create an optimal climate.

farmtech & open source: automatIon of aGrIculture

What is it all about?Not even agriculture can escape digitalisation. New technologies are changing the way in which food is produced today and in the future. From specialised harvest robots, through high-precisi-on agricultural machinery, to soil and plant mo-nitoring with sensors in the soil – agriculture has undergone fundamental changes over the past few decades, as has society as a whole.

Assessment of opportunities and risksScientific advances and technological progress in food production open up new possibilities for farmers and producers all over the world. Net-worked digital farms reduce the workload and

help to make agriculture both more efficient and more sustainable.

Opportunities: Big data analysis helps to estima-te the required quantities of specific types of pro-duce, facilitating optimised production, and therefore reduced food waste.

Risks: If the natural origin of fruit is emphasised, and the expertise of fruit-growing specialists highlighted, the positive image of agriculture based on technology may be difficult to align with consumers’ emotional expectations.

Examples:openag.media.mit.edu/hardware The food computer is a technology platform for controlled plant growth chambers. Robot sys-tems are employed in specialised chambers to monitor climate, energy and plant growth.

farmbot.io Farmbot Genesis is a fully-automated farming robot capable of both planting and irrigating. Its software is 100% open source, allowing anyone to benefit and contribute.

www.phytlsigns.com Phytl Signs is a wearable for plants claiming to facilitate communication between people and plants. In contrast to other systems which moni-tor the soil and solar radiation, Phytl Signs pro-cesses plant signals directly and informs the user about the plants’ level of relaxation or stress, or of any diseases.

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new players: GooGle & co. want to be InVolVeD

What is it all about?The consolidation of agriculture and digitalisati-on ultimately enables traditional agricultural enterprises to use technological developments for their benefit, and brand new players to enter the market. Large technology firms with no previous agricultural experience are at the forefront of this movement, contributing extensive technological know-how. Once they have a foothold in the food-tech sector, these companies will be able to diversify their offer, utilise vacant space, and set an example in terms of sustainability with a re-sultant positive impact on their image.

Assessment of opportunities and risksTech giants entering the food sector have raised

the knowledge level in the industry exponenti-ally. The research departments of these compa-nies are not restricted to theoretical questions, but can test and verify their theories immediately in their own indoor farms.

Opportunities: Technological development is accelerated, and new opportunities arise – and that applies to the competition as well. Moreover, the entire sector becomes more efficient as a re-sult of increased competition from new market entrants.

Risks: Problems could arise if companies such as Google try to keep their newly developed technologies for themselves, and protect these from imitators through patents. This could lead to traditional agri-firms being squeezed out of the market.

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Examples:goo.gl/SbyWZp Google produces fresh vegetables in former ship-ping containers using the Leafy Green Machine by Freight Farms.

goo.gl/I3JU47 In its GrowWise Center on the High Tech Cam-pus in Eindhoven, Philips is researching optimal lighting and suitable climates for indoor farming to optimise production.

packaGInG – smarter, personalIseD anD more sustaInable

What is it all about?Consumer demands for convenience, together with the industry’s requirement for efficient logi-stics in terms of the improved freshness of fresh products, have both resulted in an increase in plastic packaging in recent years. Although the example of Germany shows that the recycling of plastics has seen an enormous increase – from 11.6 % in 1991 to a staggering 99.5 % in 20142, consumer perception of this issue is usually quite different. They are often confronted with images of polluted oceans and animals trapped in plastic packaging. As a result, consumer acceptance of

2 www.bmub.bund.de/fileadmin/Daten_BMU/Bilder_Infografi-ken/verpackungen_gesamt_bf.pdf

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such packaging is continuously declining. Never-theless wish and reality are often miles apart, and consumer behaviour is hybrid. Convenience of-ten wins out because the consumer wants healthy food fast in suitably portioned sizes. In reality the volume of plastic waste almost doubled between 1991 and 19943. Retailers such as “Original Un-verpackt” who avoid any form of packaging cer-tainly have their finger on the pulse of the time. Conventional plastic packaging is no longer en vogue, and natural, bio-degradable packaging materials that can extend freshness are already being intensively researched. Furthermore, smart technology can allow packaging to respond to its specific content, thus for example adapting the best-buy date and the freshness of the product. Packaging is also developing in other ways. Voges Packaging, for instance, has developed “Gropak” which allows mushrooms to continue to grow during transport and storage.

Assessment of opportunities and risksConsumer acceptance of unnecessary packaging is continuing to decline, even though this trend is in conflict with the desire for convenience. Sur-veys in Europe show that the majority of consu-mers would approve a ban on plastic bags . REWE has already stopped selling plastic bags from its outlets at checkout in Germany. Aldi will also ban this type packaging from its stores in 2017. The subject of packaging is thus expected to be-come increasingly important for consumers and lawmakers alike.

Opportunities: New technologies facilitate bio-degradable and ever smarter packaging. Pa-ckaging-free retailing is gaining popularity.

Risks: Novel packaging concepts are significantly more expensive than traditional ones, and put in-creasing pressure on a low-margin sector in the

area of convenience. Legal framework conditions still thwart the development of novel packaging materials in Germany. German packaging regu-lations dictate that TÜV-certified bio-degradable plastics may not be disposed of in industrial com-posting facilities.

Examples:www.voges-packaging.com Gropak is a packaging concept that allows fresh products to continue to grow both during trans-port and in the store.

original-unverpackt.de Original Unverpackt is a supermarket concept that avoids using one-way packaging.

www.designbysol.co.uk/bumpmark Bump Mark is a bio-reactive freshness label. The sticker’s texture changes according to the fresh-ness of the packaging material.

3 www.bmub.bund.de/fileadmin/Daten_BMU/Bilder_Infografi-ken/verpackungen_gesamt_bf.pdf

4 yougov.de/news/2016/10/09/62-prozent-fur-verbot-von-plastik-tuten/

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Distribution: The digital race for the final mile

How does food find its way to distribution cen-tres, supermarkets, restaurants and consumers after production? Digitalisation is responsible for fundamental changes in this area too. Howe-ver, digitalisation is not the only trigger for change. Our lifestyle is also changing conti-nuously. As a result of individualisation and fle-xible working-time models, fixed mealtimes are no longer the rule. Consumers want instead to be able to eat anytime and anywhere. Moreover, traditional fast food such as burgers, pizzas and the like are no longer in tune with the spirit of the times. Today, fast alone is not enough – food must also be healthy and good. Since people are often short of time for shopping, or even coo-king, new ways of bringing healthy food to con-sumers are required.

new technoloGy: fooD DelIVerIes by r2-D2

What is it all about?Technological advances open up completely new logistical possibilities. The distribution of goods from A to B without direct human involvement has already become reality due to automation. Drones move deliveries from ground-based to air-borne transport, significantly reducing trans-port times – both in high-traffic cities as well as in rural areas with difficult terrain. However, progress is not limited to airspace. Plenty is hap-pening on the ground as well. For instance we already have delivery robots which autonomously move through streets and skilfully evade obst-ructions such as pedestrians or street lights. It appears to be only a matter of time before auto-

nomously moving cars, trucks and trains become part of regular traffic.

Assessment of opportunities and risksWith the assistance of transport robots, drones and autonomously moving vehicles, transport routes and times can be shortened, facilitating faster delivery of products to the customer.

Opportunities: This allows difficult terrain and traffic jams to be avoided in urban and rural are-as. Moreover, autonomous transport possibilities reduce the need for delivery staff, freeing up these employees for other activities.

Risks: An adjustment period will be required be-fore robots and drones are fully integrated into our everyday life to ensure smooth operation. Traditional transport users still need to get used to the newcomers in road traffic. New legislation may also be required to regulate the interaction between existing and new transport users on the roads and in the air.

Examples:www.starship.xyz The Estonian start-up Starship has developed a robot which claims it will revolutionise local deli-very services.

millhousemaui.com/drone-to-table With Farm to Table, fresh produce is delivered directly to the restaurant several times a day, where it is served only a short time later.

goo.gl/8nxLvo According to DHL, it is not a question of “if” but a question of “when” logistics will undergo a radi-cal transformation caused by driverless vehicles.

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healthy DelIVery: more than just fast fooD

What is it all about?Until a few years ago, delivery services were still associated with pizza, burgers and Asian food. However, the food delivery sector is trying to lose this unhealthy image with balanced alternatives. In cooperation with restaurants, delivery services now also offer fresh menus prepared by a cook with star ratings. People who prefer to cook themselves but shy away from the effort involved in shopping and menu planning are also catered for. DIY delivery services allow customers to ma-ke a selection from a variety of fixed menus, and then deliver the right quantities of the ingredients – including the recipe – to the door.

Assessment of opportunities and risksConsumers want to be fit and healthy. Achieving

this objective requires exercise as well as a balan-ced and healthy diet. However, customers often lack the time to go shopping due to the flexibilisa-tion of society and increasing job demands.

Opportunities: The new healthy delivery servi-ces cater to an existing – yet previously unsatis-fied – desire for fresh fruit and vegetables. Thanks to these services even very busy people can have a supply of fresh food at home, or at least the possi-bility to have a balanced menu delivered instead of traditional fatty foods. Moreover DIY delivery services motivate their customers to try new re-cipes, and provide keen hobby cooks with a con-tinuous supply of new ideas and inputs.

Risks: If these types of delivery service want to keep up with the times, they must be flexible in their offer. For instance, a supplier selling super-foods who continuously lists new exotic fruits

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must keep up with the increasing complexity of orders, storage and expertise.

Examples:deliveroo.de Deliveroo brings restaurants and customers to-gether. The customer selects food via the platform which is delivered straight from the restaurant to the door by Deliveroo drivers.

www.hellofresh.de Hello Fresh compiles various recipes on a weekly basis and delivers the matching ingredients in the right quantities to the customer’s home.

www.tonysfarm.com Growing concerns about food safety in China ha-ve sparked the popularity of organic foods amongst locals and expats in Shanghai, for which

the customers are prepared to pay a significant premium. Tony’s Farm offers various subscrip-tions for weekly deliveries of seasonal and orga-nic products.

www.everytable.com While Everytable does not deliver to the door, it brings food into the neighbourhood. What ma-kes it special? The menus are priced in accordance with each area’s economic situation, making healthy food affordable to everyone.

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new players In the DIstrIbutIon Game

What is it all about?Various companies which have never been invol-ved with food before are now entering the delive-ry sector. These are often companies which already have a logistics network due to their core business, such as Amazon or Uber. These new players often offer a delivery service without pro-ducing the food themselves. For instance Uber does not own any taxis but links supply and de-mand for taxi services via its platform. UberEATS follows the same principle: restaurants and rum-bling stomachs are connected via an app.

Assessment of opportunities and risksMore competitors means more competition, and ultimately lower prices or innovative new offers. Both benefit the consumer.

Opportunities: Thanks to the new platforms, re-staurants are now also able to enter the delivery business. Previously logistical problems preven-ted their market entry. This opens up the market and helps to diversify the offer.

Risks: New players in the delivery sector could squeeze even established businesses out of the market if the latter fail to adjust or do not do so fast enough.

Examples:fresh.amazon.com With Amazon Fresh the US internet corporation Amazon is stirring up the food trade.

ubereats.com Uber has already managed to cause problems for taxi and other transport firms. The company is

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now turning the food delivery sector on its head with UberEATS.

www.google.com/express Google Express delivers products from various companies such as Costco, Target or Whole Foods directly to the door.

Consumer behaviour: The customer is king? Or

dictator? Or slave?On the one hand innovations are created because technological advances open up new possibilities. This is called ‘technology push’. On the other hand, innovations are based on changes in custo-mer requirements which suppliers are forced to respond to. This is called a ‘market pull’ or ‘de-mand pull’. A shift in customer requirements is particularly evident in the areas of health and sustainability. This creates challenges for compa-nies. Consumers are not satisfied with a healthy diet alone. They also want to know where their food comes from, and the conditions in which the products were produced and processed.

transparency: the Glass supply chaIn

What is it all about?Consumers no longer want to be left in the dark. Greater health awareness also creates a need for information and transparency. What exactly am I eating? Which ingredients does it contain? Where was it produced, and under which condi-tions? Enterprises from many different sectors have already recognised this requirement. In or-der to ensure long-term customer loyalty, they try to satisfy this desire by various means.

Assessment of opportunities and risksThe demand for organic and fair-trade products continues, and consumers are willing to put their hand in their pockets to pay for them. However it is virtually impossible to differentiate between organic or fair-trade fruit and vegetable products on the basis of appearance or taste alone. As a re-sult, official certification has to be supplemented by transparency in the value chain in order to provide assurance to the consumer and justify the higher price.

Opportunities: Not only do consumers benefit from this transparency. Producers and the envi-ronment are also winners if production is actu-ally as fair and sustainable as claimed.

Risks: Anyone claiming transparency is sitting in a glass house and must be able to cope with very close and critical observation.

Examplescorporate.marksandspencer.com/plan-a Plan A is a Marks & Spencer initiative for pro-tecting the planet. The ultimate goal is to be-come the largest sustainable retailer in the world. An interactive supply chain map shows which products are manufactured by whom in which location.

www.farmcation.us Farmcation combines ‘farm’ with ‘vacation’. The company runs various courses and events to con-nect consumers with producers, and generally deepen understanding of the food supply system.

www.consumerphysics.com/myscio/scio How many calories does this drink contain? Which melon is sweeter? Is my avocado ripe yet? The SCiO molecular scanner knows the answer to these and other questions. It scans the chemi-

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cal composition of food, drinks and even medica-tions, and transfers these directly to the smart-phone within a very short time.

conVenIent health: healthy lIfestyle wIthout major effort or cost

What is it all about?We are striving for a better version of ourselves, and improve our habits with sports and a healthy lifestyle. Success is measured with smart wearables and compared to the results achieved by friends. However many people feel that ea-ting a healthy diet requires too much effort and time, and is also rather complicated. Moreover, focusing on quality seals and organic labels is no longer enough. Natural food is increasingly being presented in a pharmaceutical context.

New business ideas and platforms try to make a healthy lifestyle more attainable for us. Ingre-dients are broken down and presented in a transparent manner, and delivery services pro-vide us with a daily smoothie tailored to our re-quirements.

Assessment of opportunities and risksGrowing consumer demand for fresh and healthy food inevitably also increases demand for fruit and vegetables. Their composition and health ef-fects will thus be even more in the limelight in the future.

Opportunities: Tools and technologies which help us to achieve our personal objectives are be-coming more important. This also applies to sup-pliers and service providers who offer healthy, perfectly portioned convenience products.

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Risks: Anyone promoting food as having health-promoting properties must be confident that this is the case. The next food-related alarm might otherwise not be far off. It can also dama-ge credibility if healthy eating alone is expected to achieve better health. Traditional medicine generally assumes that health is the result of a balanced diet coupled with a minimum amount of exercise.

Examplessageproject.com The Sage Project offers a data platform that provi-des a new type of food labelling containing ingre-dients, nutritional values and composition of the products, coupled with information on the exer-cise times required to burn the calories off again.

twitter.com/hashtag/weighthis With the new health awareness, diets alone are no longer in. “Health over weight loss” is the mot-to. With #weighthis, Lean Cuisine is launching a campaign which encourages users to only take account of the weight of things that really matter.

owenandalchemy.com/elixirs With their elixirs, Owen + Alchemy go a step further than the competition. “Beyond Organic” emphasises the mystical side of juicing, and highlights the fact that products also have an ef-fect on health, and can be considered to have me-dicinal value.

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the aGe of memes – when socIal celebrItIes are faster than scIence

What is it all about?A meme is an idea, behaviour or style that quickly spreads from person to person within a culture. This spread takes place via the written or spoken word, gestures, rituals, or other imitable pheno-mena. Today, the most famous form of meme is the internet meme. These memes are spread via the internet in image, audio or video format at incredible speed, and are correspondingly versa-tile and sometimes very short-lived.

Memes are used in marketing to achieve a viral effect and reach a greater number of people with minimum input. This is called viral marketing. An example of this is the “Will it blend?” cam-paign from Blendtec. In these entertaining vi-

deos, a ‘scientist’ throws various objects ranging from iPhones, through glow sticks to Justin Bie-ber CDs into a Blendtec mixer to prove its quality.The hype about superfoods is clever marketing. It cannot be scientifically proven that so-called su-perfoods such as blueberries or avocados have a higher concentration of nutrients than other ty-pes of food. However, the term has become estab-lished in everyday life and was primarily introduced to the masses through food bloggers and Instagram users. This trend also shows in the sales figures. Since 2000, the quantity of avocados sold in the USA has quadrupled5. On the one hand, these superfood hypes boost the consump-

5 www.washingtonpost.com/news/wonk/wp/2015/01/22/the-sudden-rise-of-the-avocado-americas-new-favorite-fruit/

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tion of fresh fruit and vegetables. On the other hand, the industry’s ability to manage or influ-ence the phenomenon is very limited.

Assessment of opportunities and risksOpportunities: If a viral campaign takes off, it can achieve an unexpectedly large audience. The associated media costs are also relatively low.

Risks: It is very difficult to plan and to control such campaigns. Cooperation with celebrities can fall into a legal grey area if it is not declared as advertising.

Examples:www.thugkitchen.com Website and book with healthy recipes to promo-te a healthy lifestyle. Since everything is spiced with a good pinch of expletives, the tips are very popular on the internet.

itm.marcelww.com/inglorious With “Inglorious fruits & vegetables”, the French retailer Intermarché launched a major campaign against food waste. Vegetable soup and fruit jui-ces from “inglorious” fruit and vegetables are served to convince customers of the flawless qua-lity of the products. Humorous images turned the campaign into a viral hit.

goo.gl/6EV7QS / goo.gl/eZA09R Stars like Miranda Kerr use social media to mar-ket products. Celebrities post a selfie with the product on their personal Instagram account, re-aching millions of followers keen to emulate them and their lifestyle. Corporations trying to position their products with a younger target group often pay millions for this form of celebrity endorsement.

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The most recent studies and forecasts by the Uni-ted Nations show higher growth in total world population than has been assumed so far. There are currently around 7.3 billion people6 on the planet today, and the reliable expectation is that this figure will increase to 8.5 billion people by 20307. This significant acceleration in the rate of growth is also evident in the fact that the world population has tripled between 1950 and 2015. One crucial reason for this development appears to be technical innovation, and the associated continuous efficiency gains in global food pro-duction, as well as improved medical care.

In affluent societies, interest in health and healthy fresh food is growing. Demand for fresh fruit and vegetables should therefore increase. In reality, however, the opposite applies. In Germany, for instance, demand is falling, at least in terms of sales volume.8 According to the 2016 GfK Consu-mer Index, Germans are consuming lower volu-mes of fresh fruit and vegetables. However several parameters indicate that potential for higher consumption exists, and that the industry must therefore utilise these opportunities better. The fact that new, non-industry players are mo-ving into the business makes a focus on these op-portunities even more important. This benefits markets such as China, ensuring major changes in the flow of goods from West to East because of the strong demand for fresh fruit and vegetables.

Production: New efficiency and authenticity

The tech race is also happening in the fruit and vegetable segment. New measurement technolo-gies are becoming more professional and precise, facilitating higher quality cultivation. Big data makes production more autonomous, secure and

Conclusion

efficient. This promotes cost-effective and precise cultivation methods. In the best-case scenario, this means that healthy, fresh food is not reserved for the elite alone.

But not so fast: New players – primarily from the tech sector itself – are playing an increasingly si-gnificant role in the differentiated market. They have the technological know-how, and can put this to use very quickly, thus achieving a compe-titive advantage. Moreover, diversified compa-nies such as Philips are dedicating production facilities to this development, creating space for the innovative, vertical cultivation of fresh pro-duce. Traditional agriculture must adapt to these new players, and also implement innovative tech-nologies to remain competitive.

crItIcal success factors for the proDuctIon of tomorrow:

> Approach: Am I efficient and silent, or am I au-thentic and talk about it? ‘Authentic’ means in line with the way the romantic urban dweller imagines the production of his carefully selec-ted vitamin serving – people celebrating fruit with great expertise and pride in their work, not GPS-controlled devices ensuring maxi-

6 United Nations, Department of Economic and Social Affairs, Population Division (2015). Population 2030: Demographic challenges and opportunities for sustainable development plan-ning (ST/ESA/SER.A/389).

7 United Nations, Department of Economic and Social Affairs, Population Division (2015). Population 2030: Demographic challenges and opportunities for sustainable development plan-ning (ST/ESA/SER.A/389).

8 Consumer Index Total Grocery 07.2016, GfK

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mum exploitation of every square metre of ma-jor stretches of land. Continuous improvements in the efficient farming of large production areas? Or production for niche markets promi-sing interesting margins even if the target group is limited? The most likely scenario is that the new technologies of tomorrow will fa-cilitate a connection between high-tech and organic romanticism, and producers will no longer need to decide between efficiency and authenticity.

> Branding: In-situ production conveys fresh-ness, while catering to the consumer’s roman-tic craving for the real thing, for authenticity. This can be a very relevant factor, especially in terms of marketing. Origin can be a magnet for the customer, extending to the rest of the product range. Brands can even emerge via the back-end in the fruit and vegetable segment, similar to the wine sector. However, rather than attempting to transform common avoca-dos or conventional mandarins into a brand product, basic values like origin, producer and expertise should be utilised for differentiation.

Distribution: Setting the right speed

Accelerate here, slow down there. It is not always easy for the trade to determine which speed it should move at. On top of that, the classical con-sumption scenario is becoming largely irrelevant. To stay in the race, one needs to understand the customer’s speed requirements, and be able to an-ticipate them. In the home delivery business, the answer is obvious. The period from ‘feeling hungry’ to ‘delivered to the door’ is becoming shorter and shorter – from next day delivery through same day delivery to one hour delivery.

Consumers are less and less willing to wait for the product – ‘wait time’ is ‘waste time’. The first offers, such as Amazon’s Prime Now, guarantee fresh produce deliveries within the hour. It re-mains to be seen how much ground speed retai-ling will gain. But then there is also the antithesis to the ‘superfast’ lifestyle – consumption situa-tions which offer a convergence of gastronomy and retail to create a complete experience. Mar-ket hall concepts are thus becoming more attrac-tive: people go there to do their shopping, but they also want to see and be seen.

crItIcal success factors for the DIstrIbutIon of tomorrow:

> The rise of the platforms: The front-end for the customer is being increasingly dominated by digital platforms. Growing consumer demand for transparency may moderate this effect so-mewhat, especially if producers present them-selves better and more directly through these platforms. But as a result, pressure on traditio-nal retailing is mounting, and it will be neces-sary for it to offer its own platforms.

> Data will win: The more one knows about a consumer, the better one can organise produc-tion and logistics, and satisfy market require-ments. Customers need to be offered incentives and simple solutions if they are to share data with businesses. A feeling of security that their data will not be misused is paramount for con-sumers. A specific added value must therefore be offered in return. For instance through bet-ter and more personalised alignment with their personal diet plan. Data is becoming the new currency. But consumers expect so-mething in return for their data.

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Consumer requirements: Understanding and managing

hybrid customersAlternating between Aldi and Armani: That is how market researchers and businesses experi-ence today’s hybrid consumer, and they have quickly become wise to him. When ego involve-ment is high, brands take the limelight and prices become irrelevant. For low ego involvement goods, however, the drivers are convenience and price. But it is not so simple when it comes to diet. In one scenario, a religious diet philosophy for the conscious consumer dictates that an apple can only be eaten if he knows the name and the physical distance to the producer, as well as the production methods used. But in a take-away si-tuation, personal karma is not compromised if the same apple is procured cheaper in bulk – and even sourced from a distant time zone. Suppor-ted by a new range of food products, hybridisati-on of eating habits is on the increase. While it used to be anchored at the extreme poles of McDonald’s and Haute Cuisine, it now revolves around Soylent and experience gastronomy – and all that without neglecting a healthy diet. Soylent is synonymous with completely liquid food, ‘ast-ronaut food’ for everyone – healthy, tasty, nutri-tious and affordable.

Social media act as a high-speed news ticker, con-stantly transmitting new diet-related trends. However, rapid changes in food trends and hyped products, demanded instantaneously by a large number of consumers, can be a problem for the fresh produce industry. A natural product is limi-ted in its capacity to cater for such erratic and vo-latile levels of demand. Nevertheless, these popular social channels are also open to the fresh produce sector itself. It can therefore try to use

social media mechanisms to position the issues it considers important. Bloggers (Instagram), You-Tube channels, celebrity cooks – the field is wide ranging. New production technologies can also facilitate better production options, independent of seasonality and weather. This will allow a qui-cker, more targeted response to demand in the future.

crItIcal success factors for consumer reQuIrements of tomorrow:

> Transparency: Establishing transparency will become increasingly easy, though this will be a challenge for food safety. Nevertheless it is an opportunity for the entire supply chain. Pro-ducers have a direct line to the consumer, pro-viding opportunities to differentiate themselves from the competition. The provision of consu-mer information is becoming simpler and fas-ter. This also offers the opportunity to highlight seasonal production, and even address the consumers’ willingness to pay higher prices.

> Individualisation: Healthy food is tested for its specific health effects, and tailored to indivi-dual diet plans. New technologies make it ea-sier to prepare customised diet plans based on fresh products such as fruit and vegetables. This significant development goes beyond the current organic trend (‘Beyond Organic’).

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Annex

Methodical approachThis study is based on a multi-stage process in-volving the following components:

1. Desk research: Research into specialist and technical literature and the screening of new business ideas and start-ups provided an initial overview of the status quo as well as of key deve-lopments in the fresh produce trade. Following on from this, trend studies were used to identify the key social drivers which will characterise tomorrow’s consumer demands.

2. Online survey: In an online survey, internati-onal experts from all sectors of the value chain in all five continents were interviewed on the key trends in the sector. In addition to freely listing the trends they had observed, experts were asked to evaluate current innovations and develop-ments in respect of their significance and influ-ence on the sector.

3. Panel: In September 2016, a panel meeting of the FRUIT LOGISTICA Advisory Committee was held in Düsseldorf. After a presentation of the study, the findings were discussed and debated.

4. Drafting of the trend report: All findings we-re condensed, refined and recorded in this report.

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© GDI 2017

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