AI set to transform the food sector on multiple levels

Rabobank Australia

Thursday, 30 November, 2023

AI set to transform the food sector on multiple levels

While artificial intelligence (AI) has been around since the 1950s, the recent expansion of cloud computing and the increasing availability of real-time data have provided fertile ground for its development. AI is now expected to transform the consumer foods sector and reach a market size of around AU$53bn in the global food and beverage industry by 2028.

A Rabobank report titled ‘AI appetite: Exploring new horizons in consumer foods’ found AI is becoming more prevalent across the food industry in three key application areas:

  • Operational efficiency.
  • Marketing and customer experience.
  • Product innovation.

“As AI continues to advance, its impact on the food sector is likely to be transformative on multiple levels. What we are witnessing, beyond the hype, is profound change,” said Julia Buech, Senior Analyst – Consumer Foods at Rabobank.

“AI is set to play a key role in the shift toward a more sustainable approach to food production.”

AI to improve operational efficiency

In manufacturing, companies use AI to forecast demand, optimise production planning and enhance quality control. Similarly, retailers are embedding AI into their tools and technology to improve existing operations, particularly regarding inventory management, but also including demand forecasting as well as shelf and checkout optimisation. Meanwhile, generative AI offers new routes for automating negotiations with suppliers, such as chatbots that help with delivery requests and handling orders.

Generative AI to elevate marketing and customer experience

Companies are using generative AI to create personalised services tailored to individual customer interests. Chatbots have changed the face of customer service and are gaining traction because of their ability to automate interactions with customers using natural language.

Pushing boundaries in product innovation

AI has the potential to push boundaries in product development. Machine learning algorithms can analyse vast amounts of data, including consumer preferences, market trends and ingredient profiles, to generate insights that inform the formulation of new or improved food and drink products. Companies are exploring the use of generative AI to accelerate the process and add a ‘fun factor’ to their offerings, such as ‘AI-created’ flavours and recipes.

Solutions for sustainability and nutrition

The alternative protein sector has been a big focus in the food industry over the past decade. While struggling recently and not quite living up to industry expectations due to taste and quality barriers, the sector remains central in the transition to a more sustainable food system. Leading consumer packaged goods companies are looking to AI to conduct research in this area, often partnering with specialised startups in the field.

Another area where AI-driven innovation may accelerate change is the growing segment of functional foods, at the intersection of food and medicine. Gut health is a key focus of scientific research and innovation, due to its purported links to general health and wellbeing. Every person’s microbiome is unique, like a fingerprint, and there is hope that AI can help uncover some of its secrets. There are also signs that food companies are looking to AI to tweak the nutritional profile of mainstream categories, including indulgent products such as sweets and snacks. “But beyond the hype and some attention-grabbing initiatives, AI holds promise to become a critical accelerator in transforming a global food system that is under pressure to change,” Buech noted.

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