FreeAdobestock_237101912
adobestock_237101912

How AI Could Transform the Food and Beverage Industry

Nov. 29, 2023
Artificial intelligence ‘may be the most fundamental enabler of change in the food industry.’

The impact artificial intelligence will have on the food & beverage industry is likely to be transformative on multiple levels; so say multiple observers. A new report from Rabobank is especially optimistic.

“What we are witnessing, beyond the hype, is profound change,” says Julia Buech, senior analyst for consumer foods at Rabobank (www.rabobank.nl/en/business). “AI may be the most fundamental enabler of change in the food industry.”

The three key application areas for AI in the food industry, according to that report, are operational efficiency, marketing & customer experience, and product innovation. “Food companies are exploring the potential of artificial intelligence to refine their operational processes, forge deeper connections with consumers and develop innovative solutions for sustainability and nutrition,” the report states.

In manufacturing, companies use AI to forecast demand, optimize production planning and enhance quality control. Generative AI could enable automating negotiations with suppliers, such as chatbots that help with delivery requests and handling orders.

AI has the potential to push boundaries in product development, the report continues. Machine learning algorithms can analyze 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 product development process and add a “fun factor” to their offerings, such as “AI-created” flavors and recipes. However, the report warns, there is the potential for “AI washing,” where companies claim their efforts involve AI but either don’t or the connection is minimal.

Rabobank says AI could be a lifeline for the struggling alternative protein sector, which “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 specialized 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," the report continues. "Gut health is a key focus of scientific research and innovation, due to its purported links to general health and well-being. Every person’s microbiome is unique, like a fingerprint, and there is hope that AI can help uncover some of its secrets.”

“Moreover," adds Buech, "AI can play a crucial role in helping food companies achieve their environmental, social and governance objectives by allowing them to proactively reduce energy consumption and harmful emissions.”

The Dutch multinational financial group just published a market report that predicts AI – however that label gets assigned to a salable product – will reach a market size of $35 billion in the global food & beverage industry by 2028, up from $7 billion in 2023, citing Mordor Intelligence. That’s a compound annual growth rate of more than 38%.

Companies are using generative AI to create personalized 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.

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 optimization.

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,” concludes Buech.

About the Author

Dave Fusaro | Editor in Chief

Dave Fusaro has served as editor in chief of Food Processing magazine since 2003. Dave has 30 years experience in food & beverage industry journalism and has won several national ASBPE writing awards for his Food Processing stories. Dave has been interviewed on CNN, quoted in national newspapers and he authored a 200-page market research report on the milk industry. Formerly an award-winning newspaper reporter who specialized in business writing, he holds a BA in journalism from Marquette University. Prior to joining Food Processing, Dave was Editor-In-Chief of Dairy Foods and was Managing Editor of Prepared Foods.