The global food system is undergoing transformative change driven by health-conscious consumers, climate adaptation and technological advancements.
Key trends include the shift away from processed foods, the rise of AI and automation in agriculture, and growing investments in cold storage and logistics to combat food waste.
Investors focusing on sustainable supply chains, biotechnology innovations and climate-resilient practices are well-positioned to capitalise on the evolving food landscape. Here are 10 themes driving this shift.
1. Focus on food health in the US and dismantling the ‘big food’ monopoly
The health implications of highly processed foods are under renewed scrutiny, spurred by movements like Make America Healthy Again (MAHA) and Robert F. Kennedy Jr.’s advocacy. We expect regulatory pressure and shifts in consumer choices and health food sentiment to erode the dominance of processed food companies and mega-brands reliant on unhealthy formulations.
Impacted Companies: Processed food giants whose portfolios may struggle in a world increasingly prioritising health and transparency. Our fund does not invest in processed food companies.
2. The fall of the monoliths: A reality check for complacent mega-brands
With ‘work from home’ becoming hybrid and grab-and-go models taking precedence, brands built on traditional sit-down experiences are under pressure.
Impacted Companies: Companies like Starbucks, which once thrived on the ‘third space’ concept, are facing challenges, in contrast to ‘grab-and-go’ models like Chipotle and increasingly automated food delivery models like Domino’s.
3. Climate adaptation: Floods and wildfires galore
2024 was the hottest year on record, underscoring the urgency of climate change adaptation. The food sector must prepare for increased climate volatility, with floods, wildfires and droughts reshaping agricultural practices.
Impacted Companies: Companies leading in climate-resilient agriculture will emerge as winners (e.g. Yara International, Valmont Industries, Lindsay Corp).
4. Cold storage and logistics: A key to reducing food waste
Cold storage and logistics are critical for reducing food waste, which the UN estimates accounts for one-third of global food production, exacerbated by climate-related weather disruptions and spoilage risks. By extending the shelf life of perishables and enhancing transportation efficiency, cold storage reduces waste and strengthens supply chain resilience amid climate disruptions.
Impacted Companies: Companies like Lineage and Americold Realty Trust are driving innovation in this space, enabling more sustainable food systems and efficient distribution.
5. The US is now a net importer of agriculture – a big no-no for Trump
A shift toward net food imports raises concerns about food security and geopolitical dynamics, as the US increasingly relies on foreign sources to meet domestic food demand. Trump will likely use tariffs as leverage to rebalance trade agreements, particularly with China, where US soybean exports have lost ground to Latin America (Brazil, Argentina). This trend heightens vulnerabilities in global supply chains, especially during geopolitical tensions or climate-related disruptions, making food security a growing policy focus.
Impacted Companies: Agricultural exporters and their Chinese and Latin American competitors (e.g. US firm CNH Industrial provides agricultural machinery and technology that supports soybean cultivation).
6. The increasing role of AI, automation and robotics in agriculture
Companies like Deere & Co are leading the charge with artificial intelligence (AI) and robotics, unveiling autonomous tractors and trucks at the global technology expo, CES 2025, in January this year. These innovations will address current labour shortages (in the words of the company) and accelerate efficiency and productivity, aligning with Deere’s vision for fully autonomous farming by 2030.
Labour shortages remain a critical issue, and will get exacerbated under the Trump 2.0 deportation programme. Automation is now indispensable, with AI solutions like Deere’s addressing productivity gaps in ways that traditional methods cannot.
These companies are underappreciated and structurally undervalued. With Deere’s current PE ratio of 16x (9 January 2025), the market may be underestimating the transformative impact of AI on agriculture. Beyond Deere, companies like AGCO Corp and CNH Industrial NV are also advancing AI-powered machinery.
7. The role of biotechnology
AI in agriculture is well-covered, but advances in biotechnology, including CRISPR and gene-edited crops, are also game-changing for improving yields, drought resistance and nutritional content.
Precision fermentation, a rapidly advancing technology, is driving cost declines in the production of alternative proteins and sustainable ingredients, making them more commercially viable.
Impacted Companies: Evonik Industries, with a strong focus on fermentation-based processes, and Novozymes, which specialises in enzymes and biotechnological solutions for agriculture and food systems, are also at the forefront of this transformation.
8. The rise of alternative distribution models
The shift to direct-to-consumer models for niche food brands, fuelled by ecommerce and changing supply chain dynamics, could be a significant trend. This also intersects with the fall of the monoliths, as smaller, agile brands find new ways to connect directly with consumers.
For example, Walmart’s investment in milk processing plants. By partnering directly with local farmers, Walmart reduces costs, improves efficiency and ensures higher product quality.
9. Shifting consumer demographics and preferences
Beyond health, food tech and science, generational shifts (e.g. Millennials and Gen Z prioritising plant-based foods and alternative proteins) are redefining consumption habits.
Investors are increasingly aligning portfolios with companies prioritising environmental sustainability, ethical supply chains and health-oriented innovations.
10. Water scarcity driving innovation in agriculture and food systems
With water scarcity intensifying due to overuse, pollution and climate change, the global food system faces mounting pressure to adapt. Water-intensive crops like almonds, avocados and rice are increasingly scrutinised, driving innovation in water-efficient agricultural practices and technologies.
Companies focusing on sustainable irrigation solutions and water recycling, such as Lindsay Corporation and Valmont Industries, are expected to play pivotal roles in addressing this challenge.
Investors who align with these structural trends are positioned to benefit from the transformation of supply chains, the rise of climate-resilient practices and evolving health-focused consumer demands. As we move forward, the intersection of technology, policy, and sustainability will define the next chapter of food innovation, offering significant opportunities for growth and impact.
