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Interview: Gen Z is driving F&B companies to become more sustainable
FoodBev Media

FoodBev Media

23 November 2023

Interview: Gen Z is driving F&B companies to become more sustainable

Recent research found that Gen Z shoppers prioritise taste, value and affordability, as well as social justice-driven causes like sustainability and animal welfare. This means brands have the opportunity to strike a balance between creating the climate-conscious products Gen Z consumers crave at prices they can afford. Barak Bar-Cohen, founder and CEO of Sojo Industries, discusses how F&B companies can start adding climate-responsible practices into every part of the product life cycle, from manufacturing to packaging.` What factors are driving Gen Z's increasing interest in supporting sustainable food and beverage brands? For the most part, Gen Z consumers are entering the workforce under very different circumstances than previous generations. For example, they grew up seeing the impact of climate change and a global pandemic firsthand. In 2023, Gen Z consumers face new challenges such as inflation, higher costs of living and the impact of social media, all of which are driving this generation to make stronger decisions about how they spend their money. So, no wonder Gen Z is using their newfound purchasing power in a much more environmentally and financially responsible fashion. In the world they are growing into, every purchase counts towards preserving the planet and saving dollars toward the basic necessities of living. The good news is that brands and manufacturers are listening. Today, there are far more options for Gen Z consumers to ‘shop their values’ and information available to call out brands that are not migrating towards sustainable and climate-responsible practices. How do existing supply chain complexities pose challenges to sustainability efforts in the food and beverage industry? While the large food and beverage companies mostly control their own supply chains, from ingredient sourcing to manufacturing to warehousing to distribution, most of the emerging brands do not. As such, it is complicated and difficult for the majority of newer brands to influence something they do not control. So, if manufacturers and distributors are using non-recyclable, inefficient, or carbon-intensive materials, they’ll face challenges in the supply chain from adopting these sustainable practices. However, on the other end, for larger brands that control their own supply chains, sustainable practices are still complicated due to their legacy systems and financial return models that require a healthy ROI during challenging economic times…But then again, you have to invest in the future, and the future is selling to Gen Z and Gen Alpha customers who will demand sustainable practices, materials and products. Food and beverage supply chains are also highly fragmented, with multiple intermediaries between production and retail stores. This makes it difficult to track and trace the environmental impact of products while ensuring quality and safety. As food and beverage products may travel long distances or pass through numerous handling points, it can be challenging to adhere to sustainability goals such as lowering greenhouse gas (GHG) emissions or reducing energy consumption. How do supply chain processes like packaging and manufacturing impact the environmental footprint of food and beverage brands? The global food supply chain as a whole accounts for one-third of human-produced GHG emissions each year, and the manufacturing stage can exacerbate this issue even further with continued reliance on non-renewable energy sources. Along with manufacturing food and beverage products, the choice of packaging material can impact brands’ ability to reduce waste and prevent pollution. For example, brands that use non-recyclable or non-biodegradable materials risk creating excess waste as consumers are likely to dispose of products in the trash that eventually end up in landfills. Similarly, inefficient packaging designs can lead to surplus materials, oversized containers and potential product leakage, resulting in higher transportation and storage costs. More importantly, the lack of packaging efficiency can generate immense waste and increase the brand’s carbon footprint. With all this said, the manufacturing and packaging decisions food and beverage brands make are consequential to their green journey.

What strategies can F&B companies use to increase sustainable practices in the supply chain? Companies don’t need a strategy so much as a commitment to making climate-responsible decisions that permeate their corporate DNA. If the choice is between non-recyclable plastic or corrugated packaging made from 100% recycled materials – choose the corrugate and find savings elsewhere to justify the decision. Work with vendors who have developed creative ways to save on freight charges, transportation (ie. electric vehicles) and logistics, and thus reduce your carbon footprint. When developing a payback analysis for specific investments, make sure to include a ‘penalty’ for excessive air travel or multiple pallet touches in your side-by-side calculations. It’s really not that hard. How can technology assist in optimising supply chain processes for sustainability? Technology plays a key role in driving more sustainable practices. The use of robotics reduces the reliance on people for only an incremental amount of energy. This can result in fewer cars driving on the road, fewer resources like ink and paper consumed and less waste generated in the office. Software platforms that optimise freight routes based on minimising miles driven and analysing weather patterns to minimise idling and delays are critical. This information can, in turn, result in better planning and smarter manufacturing practices. AI-powered intelligence is also empowering food and beverage decision-makers with valuable data-driven insights in real time so they can improve their operations to meet the growing environmental preferences of consumers and stakeholders. Generative AI is also helping businesses better understand consumer demand to help improve forecasting projections and meet buyer expectations. Both high-level and granular insights on what’s happening throughout the product life cycle can be generated through AI, and in turn, applied to reduce waste. How might the preferences of Gen Z influence the F&B industry's practices and innovation in the coming years? Gen Z and Gen Alpha preferences are already having a significant impact on the food and beverage industry. Products touting probiotic, plant-based and organic preferences continue to make their way into innovative food and drinks. Drink categories such as spirits-based ready-to-drink brands and non-alcoholic beverages have emerged as major areas of growth in 2023, driven by a much younger demographic. Not only are younger generations influencing the market, but today, we even see older consumers change their buying habits as a result of listening to their children and grandchildren. So, while Gen Z and Gen Alpha are adopting more sustainable behaviours than any other age group, their concerns are having a chain reaction – driving other age groups like Gen X and Millennials to make more sustainable decisions. So whether it is health, sustainability, affordability, quality or another trend that is growing in popularity from Gen Z, we can expect the food and beverage industry to quickly implement these preferences into their products.

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