I’m a startup CEO in the food industry with a background in medicine. One of my tasks has been to distill the food ecosystem so our team can create a product that’s well positioned in the marketplace. In building a platform to help people make informed decisions about the food they eat, my team and I have collected meaningful data and identified trends that will affect the market structure. Here are a few predictions you should consider if you’re in the food or health industry.
The Market Structure and Bargaining Power Will Shift
For the last several decades, bargaining power has consolidated with large companies supplying farmers and grocery chains. Due to the large-scale monoculture and reliance on industrial fertilizers leading to soil degradation or over-processing of food, this consolidation has created an ecosystem where nutritious food has often been sacrificed in search of scalable economies.
We Will Need to Build a Better Information System
Drivers for changes in the market structure have largely been out of the consumer’s control until now. We believe the problem with feeding billions of people while delaying the onset of chronic disease is primarily an informational problem. It’s difficult to promote healthy eating behavior when we focus on counting calories. Hence, we end up growing, subsidizing and distributing the wrong types of foods. Good food impacts health positively, so an ideal solution would emphasize the nutritive value of food. If we consider “counting calories” as an information system, then we need to create another system that is as easy to use but one that’s better at informing the food ecosystem of what it should grow, distribute and consume.
Having Knowledgeable Consumers Creates a New Market Opportunity
There’s an enormous number of food decisions being made across the board. The financial impact of those decisions in the U.S. alone is staggering: According to the Bureau of Economic Statistics, 5.46 percent of the 2015 U.S. GDP revolved around food and food-related industries (including tobacco). And according to the CDC, 115 million individuals the U.S. now have some element of chronic disease with a component contribution related to nutrition or one requiring nutrition management. Understanding the determinants of poor food decision-making becomes crucial in not only repositioning product and service offerings so that existing companies maintain market share, but because food should be nutritious. This situation is only exacerbated since the consumer is increasingly aware of the impact of food on health. As a result, empowering the end user with information can be a competitive advantage and is an opportunity for startups looking to enter the market.
Clinical Systems Need to Be User-Friendly and Informative
There is a general belief that baby boomers and millennials respond to technology differently — and that baby boomers, not being digital natives, feel uncomfortable using apps and therefore need different user interfaces. We think this separation, however, is exaggerated: Most people with a smartphone are comfortable using apps, so there’s no need to create a UI separate for baby boomers. Additionally, some believe 2015 was a watershed for the fundamental shift in the food industry, which seems to be largely due to millennials and their demand for data-backed decisions. Before, nonclinical devices were not required to generate clinically relevant data, but wearables like Fitbit and Garmin are using their consumer-oriented devices to generate clinically relevant and meaningful data that can be used for making informed decisions. Collectively, there’s a need to design clinical systems that are user-friendly and consumer offerings that have a measurable impact on health.
What Does This Mean for Consumers and Business Owners?
Consumers are demanding the nutritional information of their food from reputable sources — and they’re more knowledgeable about whether an ingredient is good for them. In light of this, business owners need to make their offerings and marketing strategies transparent and exemplary of the values their customers want.
Early-stage startups need to seek out collaborations and partnerships with both incumbents and new entrants to demonstrate the usefulness of their products. Open innovation isn’t just a buzzword anymore: It is de rigueur. And while the task of product creation and strategic partnerships may seem daunting, the ecosystem is more open to these conversations. Health accelerators are catching up to this new reality and are investing more time and money to refine their product as well as creating partnerships.
We need to view food as a means to nourish and prevent ill health. The prospect of a sustainable food ecosystem that’s healthier for the planet as well as our bodies is very exciting. For us, the future couldn’t come sooner!
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Image Credit: CC by Alex Proimos