Kent Ballard

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Food and Beverage Companies Plant Seeds of Sustainability

Food and Beverage Companies Plant Seeds of Sustainability

  • 06.30.20
  • Lifestyle & Technology
  • Markets and Investing
  • Article

From farm to fork, the industry is innovating and streamlining to feed more while reducing greenhouse gas emissions.

Feed more people with less environmental impact – that is the meaty task on the food and beverage industry’s plate. To get there, scientists say we must grow climate-hardy crops more sustainably and efficiently, take care of topsoil and wildlife, and waste less. And that’s before any of it is packaged and sent to grocery stores.

“We’re seeing the effects of sustainability, ESG, all along the supply chain in different ways,” says Brian Boyle, a managing director and head of the Food & Beverage practice within the Raymond James Consumer Investment Banking Group. “Sustainable food is not just about the food itself; it is a combination of how it is produced, packaged and distributed.”

When you dig in to what’s going on in this sector, it’s easy to find reasons to be hopeful. Here, we take a closer look at companies innovating in this space, and how they are moving us toward the future of food.

Efficiency on the farm

After watching the California drought stretch from 2011 to 2019, making efficient use of precious water resources is top of mind for growers across the U.S. Boyle says farmers are turning to drought-resistant crop varieties and agricultural wastewater recycling to keep things green.

They’re also looking to startups like Indigo Ag and Farmers Business Network to help get more crops to market in an economical way. Their virtual networks “are creating more transparency in the industry, connecting the farmers to real producers and skipping the middleman,” Boyle says. Indigo Ag, for example, runs a specialty marketplace online where buyers who appreciate eco-friendly practices, such as regenerative farming, can purchase directly from farmers.

“We think it is inevitable that our food system shifts to being de-commoditized, so farmers get paid … on commitments to nutritional quality and environmental protection,” Indigo Ag’s chief innovation officer, Geoffrey von Maltzahn, told Wired magazine.

A neat and green package

With hashtags like #breakfreefromplastic trending, the pressure is on for corporations that rely on this material. “The whole use of plastics has been building, and it has hit this point of becoming severely problematic for the environment,” Boyle says.

That’s why many corporations have begun replacing plastic packaging with environmentally friendly alternatives. Companies want to switch to biodegradable materials, but they can also see cost savings from reducing weight and volume of packaging. An Accenture study of green packaging initiatives showed savings of up to 5% of packaging and shipping costs.

Big players have taken notice. Walmart, the largest grocer worldwide, has reported saving as much as $3.4 billion a year through its green packaging initiatives, and in 2019 it announced plans to achieve 100% recyclable, reusable or industrially compostable packaging for its private label brands by 2025.

Squeaky clean labels

Once the food arrives on grocery store shelves, consumers are increasingly choosing products made with natural ingredients or certified organic. Sustainable products have accounted for 50% of the growth in U.S. packaged goods in recent years, according to 2019 research from New York University Stern Center for Sustainable Business.

There is an increasing emphasis on “clean label,” meaning a product contains natural, familiar ingredients, with no synthetic chemicals. Smartphone apps allow shoppers to dissect an ingredient list with a photo of a barcode, and technology has also allowed grocery stores and other retailers unprecedented transparency into the supply chain.

Companies have had to evolve along with these changing tastes and technology to remain competitive, with consumer perception of whether a product is healthy or not having a significant impact on brand value – and in the long run, financial performance, according to research from the Sustainability Accounting Standards Board.

Bringing the future to fruition

Though the social movement toward sustainable food is promising, experts say a few clean labels and a handful of organic farmers is just a fraction of what can be achieved. With agriculture, including livestock and forestry, accounting for 24% of human-generated greenhouse gas emissions, there is tremendous potential for positive change, but it will take powerful forces to turn the tide.

Change agents like Indigo Ag hope for government regulations and incentives that would make sustainability more mainstream. Until then, private industry is leading the charge in transforming how we grow, package and consume our food.

Learn more about how industries are making future-minded progress at RaymondJames.com/PoweringForward.

Sources: Raymond James Investment Banking; company reports; New York University Stern Center for Sustainable Business; Sustainability Accounting Standards Board; Accenture; Wired magazine