Decoding the Food and Beverage Roadmap for Environmental Stewardship

As the ESG movement continues to build steam, balancing the consumer preferences with new product innovation will be top of mind in a future defined by environmental stewardship.

Miha Creative Adobe Stock 484607009
Miha Creative AdobeStock_484607009

Today's environmentally conscious consumers are more concerned with their health and the planet than ever before. People aren’t just interested in what's on their plate; they want to know their food was ethically sourced, its creation didn't harm the planet, and the packaging supports a circular economy. This growing demand for transparency is putting pressure on food and beverage (F&B) brands to rewrite their environmental and sustainability playbooks to remain competitive.

The good news is, according to a 2023 report by TraceGains, 64% of brands actually do acknowledge the importance of environmental, social, governance (ESG) compliance. Even newer data released six months later shows them taking action on ESG with 44% placing greater emphasis on supply chain traceability and 42% using sustainable ingredients in product formulations and packaging.

As the ESG movement continues to build steam, what strategies will brands implement to be successful? Balancing the consumer preferences with new product innovation will be top of mind in a future defined by environmental stewardship.

Rise of the eco-conscious consumer

According to the 2022 Business of Sustainability Index, 66% of U.S. consumers are willing to pay more for sustainable products. In exchange for their willingness to pay more, they are demanding greater transparency into how those products are being brought to market. Today's shoppers are no longer satisfied with simply knowing what's in their food.

Robust traceability systems help brands give consumers the confidence they need to make informed purchases. Tracking ingredients from farm to table, providing detailed information about sourcing practices, and understanding the environmental impact and ethical considerations involved with the manufacture of food and beverage items is critical. This level of transparency not only fosters trust with eco-conscious consumers but also provides a tangible source of differentiation against competitors who may be lagging on sustainability efforts.

Harnessing the power of AI for sustainability

Technology plays a pivotal role in the successful execution of forward-thinking strategies. Fortunately, the industry is witnessing exciting advancements on this front. Just last year, the U.S. Department of Agriculture (USDA) announced a new initiative focused on harnessing the power of Artificial Intelligence (AI) for food production, safety, security, and disease resistance.

One of the most promising applications of artificial intelligence (AI) lies in ingredient sourcing and product formulation where more than half (53%) of brands recognize the potential of AI. The development of AI algorithms capable of analyzing vast datasets to identify sustainable sourcing options are growing in popularity. As well as those built to optimize product formulations for environmental impact and health benefits and predict consumer trends to help brands stay ahead of the curve.

Innovation on the horizon

Fueled by the advent of new technology and shift towards sustainability, 65% of brands are planning to increase product innovation in the coming year despite unstable material costs and possible ingredient shortages. R&D leaders will have a critical role to play. For example, the impact of transitioning from animal-based materials to plant-based ingredients carries long-term implications on carbon reduction, with plant-based products yielding up to half the carbon impact of their animal-based counterparts.

In addition to the environmental and consumer health benefits, shoppers are also choosing more sustainable options based on the ethical considerations. As the taste, texture, and versatility improves, we expect to see this relatively new class of products become even more mainstream in the coming years. The food and beverage industry is also exploring other promising avenues for sustainability such as cellular agriculture, upcycled food, and sustainable packaging.

Aligning international expansion with environmental stewardship

As brands broaden their sights on the global market, expect to see the integration of environmental considerations shift from optional to imperative. Adapting and aligning with environmental regulations and consumer preferences in each new market is mandatory. Adjusting product formulations or packaging materials may be necessary to meet local regulations or cater to demands for sustainable options. Each region has its own sustainable agricultural practices or food production techniques. Incorporating these local nuances can bolster a brand's environmental credibility and product diversity, giving them a competitive edge while honoring regional traditions.

The future looks bright for progressive food and beverage brands that step up to shape a greener future. As technology advances, the tools and strategies will begin to evolve and improve. This continuous movement promises a more sustainable food system, benefiting both consumers and the environment for years to come.