Digital Era for Taste Buds

With a growing customer base of now 7.8 billion people on the planet, the pressure on food and agriculture production are constantly growing. The strain on water, land and labour resources demands for innovation in the industry to keep up with global food needs. Changing consumer behaviour has already started trending before COVID-19 hit, but the pandemic revealed a need for faster change and adaptation towards more sustainable, customisable and higher quality of products. Multinational corporations with all its resources are best placed to drive change, but smaller-scale, new tech start-ups bring innovation to the equation. Governments will have to readjust their agendas to incentivise new partnerships to grow the industry, and push R&D development to embrace a new era of AI-driven businesses. 

The World Economic Forum reported three actions to “redesign the future of food” for 2021. One of which is to “overcome the frailties” of the food supply and production chains exposed by the COVID-19 pandemic, “build a ‘fit-for-purpose’ food systems”, and another is to switch to a “people-first” and solution-centric mindset and build a resilient food systems post COVID-19.

A reframed collaborative approach “could unleash a new generation of business and organisational models” as well as institutional systems leadership. The World Economic Forum also implored that there is a necessity to “retool the entire food system to enable digitalisation and data-driven transformation”.

The use of artificial intelligence in data collecting is at the forefront of a new generation of innovative food technology at which speed and accurate data collection are key. 

A Flavour for Innovation

Analytical Flavor Systems (AFS) developed Gastrograph AI to use artificial intelligence (AI) technology that models human sensory perception of flavour, aroma and texture to predict consumer preferences for food and beverage products.

The words “AI” or “machine learning” can be deceptive, says Jason Cohen, founder and CEO of Analytical Flavor Systems. “A lot of people get caught up with the notion that we have this magical black box. And if you give us your data, we will run our magical algorithms and give you results. I don’t recommend that any company trusts anyone who works in an entirely black box-models, because it is impossible for the company that is building the technology to understand them, to know what is going on and what predictions are coming out.”

AFS’s unique selling point is that their work is topological in nature where they build meaningful pairwise distance metrics in very high dimensional flavour space. The company updates models on demand by utilising the most up-to-date data. Their data sets can be accomplished through looking at variables split by age, sex, race, socioeconomic status, past tasting experience, and smoking habits across 16 countries and about 30 regions.

However, when it comes to implementing AI in developing foodtech, Cohen says it’s a technology yet to be fully relied on. “When the first computers came out, not every company used them; then came the internet in the 90s and companies went online. Then Android and iOS became new ecosystems and every company needed mobile apps became important and Android and iOS became new ecosystems. Now every company is trying to figure out AI.”

“All this is just a progression of technology,” Cohen explains. “AI is at the beginning stages as when the first computers or mobile apps are being introduced. Companies are beginning to adopt AI and learning how to use it. We are not in the mainstream reliance space with AI yet, but pretty soon every company is going to be an AI company. Either they are going to have that expertise in house, or they are going to have to license technologies from companies like ours that have specific specialties.”

Another big change due to COVID-19 is happening in the US’s distribution model. The US has very low rates on grocery delivery and e-commerce for food shopping. Since the pandemic, those rates have skyrocketed. That opens up an avenue that was previously limited with retailer-based distribution.

Cohen says, “If you have products that are targeted at 5 per cent or 10 per cent of the population, then you know it might not even be worth paying for shelf space and shelf placement. You are on a delivery model or a direct consumer model, you can have products that would never survive in a retail environment, that have very high profit margins, and reach the customers directly.”

A third change that may happen in a further future - and an area where Consumer Packaged Goods (CPG) food and beverages companies may invest in - is moving from a point of formulation to the point of sale or point of consumption.

“Things like soda streams where there are flavours that you can drop into your sparkling water, but going much bigger and better by having machines that can create customised or personalised beverages,” Cohen explains. “Companies doing the hardware will need a partner like us to do the software and the AI. Eventually, you will be able to record all of your preferences on your phone which you always have on you. Once again that changes everything. Then, the distribution model focuses on finished products.”

Another observation that the founder made is the difference in adoption and views on AI in the United States as opposed to - for example - Asia.

“A lot of companies in the United States, particularly older executives, will still ask us what type of validation we have done - if they can see any studies showing that AI works,” says Cohen. “We have good answers to those and they are fine questions. However, we don't get those questions in China. People there are used to having the entry gates at office buildings outfitted with facial recognition technology. So the adoption and the visibility of AI seems to be much higher, and we tend not to get asked the type of early validation questions that have easy answers. Instead, we get asked much more around adoption growth rates. If they say, can we take this from working on two or three to four products? Can you afford our line of 600 products? It's a very different mindset. Generally I think that's a good thing.”

Agricultural progress with AI

One such example of Chinese tech company putting AI to work is Deltron. The company provides intelligent fruit and vegetable grading and sorting solutions to the fruit industry; from major fruit producing areas to supermarket brands such as Walmart and Pagoda. The makeup of Deltron is in their spectrum technology with AI algorithms. Through this tech, Deltron aims to innovate the traditional agricultural business with two core modules integrated in their spectrum technology, which are “SpekSense” and “SpekVision”, and a third product that is ultimately a business intelligence software system integrated within the two hardware modules.

“These two modules can detect the internal quality [SpekSense module] and external quality [SpekVision module] of the fruit without destroying them,” says Ria Chen, marketing director at Deltron. “We put these two core modules into two product lines to serve the fruit industry. One is the intelligent fruit sorting line and the other one is a portable quality detector. For upstream customers, like fruit growers and the sorting factories, we will provide them with an intelligent fruit sorting line, which with our help can deal with mass fruit processing. Right now, after harvesting, most of the fruit are sorted manually, this costs a lot of time and human resources. Not to mention, humans cannot identify the internal quality of the food [without opening them up]. But through our intelligence sorting machine, they only need to put the fruits into our equipment and we can help them sort all the fruit according to specific standards.”

“For downstream retailers, such as supermarkets, we provide them a portable spectrum detector to help manage the quality control section,” says Chen, while pointing out that Deltron’s detector can help customers quickly get the internal quality results, such as the sweetness level, maturity level, moisture proportion... of the fruit without destroying them. One of Deltron’s key customers, Pagoda, one of the largest high-end retailers in China, has strict quality control protocols. Deltron’s technology helps the big retailer assess fruits by simply passing it through their detectors without having to damage the product for immediate results, saving precious time and commodities. In effect, this reduces the amount of waste generated in the sorting process, which is an area open to much improvement and opportunities.

“All the sorting and detecting data will be collected and uploaded to the cloud,” says Chen. “So our customer can use the invaluable information we provide to make scientific decisions and manage their supply chain.”

Walmart is the first to initiate Deltron’s pilot programme by using their portable detector in their quality controls in China. “We did encounter problems when they used our product, and we received invaluable feedback. For example, they needed a lot of throttle varieties. Also at that time, we only provided apples and pears’ models. They have requested to include oranges. So far our detector has covered over 60 varieties of fruits. They also remarked that our detector is not portable enough and as a result we made improvements on the structure to allow it to be more mobile.” Deltron and Walmart’s cooperation started in April 2020, and already the former has fine-tuned their technology to address the needs of a big retailer.

This is an example of an immediate response time from foodtech companies in which businesses have to react and provide solutions almost instantaneously.

Apart from saving precious operation time as one key driver to foodtech innovation, other drivers include an increasingly higher requirement for food quality from consumers, Chen adds. “Everyone wants to eat tasty food. Such higher requirements force upstream customers to make changes and upgrades, leading to promoting a large number of technological innovations within our industry.” 

China is projected to increase economic support to some major food producing areas within their borders in order to attract companies to settle in local areas such as Shandong and Shanxi provinces.

“The government provides preferential tax reduction policies,” says Chen. “They also provide free office space and can introduce customers to companies. For example, the Shandong Province introduced supporting policies related to the apple growing industry.”

Deltron was also limited to visiting customers due to social distancing and lockdown measures caused by COVID-19 . However, in the industry, Chen says, produce still needs to be harvested, sorted and delivered to customers all over the world. “Due to the pandemic, the demand for intelligence fruit sorting has become even greater as people can’t gather anymore. During this period, we accelerated our R&D and business work in April [last year], such as our cooperation with Walmart. In October, we started our PoC [Proof of Concept] cooperation with Pagoda, and in November we launched our intelligent auto sorting line to the lemon producing area of Sichuan province.”

Through Deltron’s products, farmers also have the option to grow better fruits as the technology allows them to pinpoint the superior and more popular products, in which case they can focus on producing more of those, and help reduce waste.

No Waste, No Gain

One of the biggest losses in the food supply chain from the get-go is food waste on the agricultural level. However, one company has brought a solution to the problem.

US-based biotechnology start-up, Mi Terro, uses agricultural waste to create compostable packaging material, especially flexible packaging film that is widely used for food, for fashion, or even traditional, ordinary, flexible packaging. The company won HKSTP’s annual and first virtual Elevator Pitch Competition of 2020.

Its technology produces 100 per cent plant-based packaging films, the company claims, which are home compostable, ocean degradable and 3 to 5 times cheaper than other bio-based materials.

The man behind this idea is founder and CEO, Robert Luo. “One of the reasons why we can provide a very low cost material is that we can source our raw material globally by partnering with food companies,” says Luo. “Oftentimes, they have to pay money to get rid of their agricultural waste. Or farmers would buy their waste for a very small amount of money to make into animal feed. At this point, we made them an offer, and presented them with a more technical and eco-friendly solution.”

Mi Terro’s major clients are the US and Japanese markets. The company also received a lot of interest from companies based in Europe, and China has the potential to be a key market.

“China is starting to ban plastic this year [2021] where all non-compostable or non-biodegradable plastic cannot be manufactured or sold on the market,” says Luo, who is referring to an announcement made by China’s National Development and Reform Commission in January. The country generates rubbish of 1.4 billion citizens. In 2017, that equalled 215 million tonnes of urban household waste. Currently, its largest landfill - the size of 100 football fields - is already at full capacity, 25 years ahead of schedule.

The policy includes banning non-degradable bags in major cities by the end of 2020 and in all cities and towns by 2022, with the exemption of markets selling fresh produce until 2025. This includes banning single-use straws in restaurants and reducing their other single-use plastic items by 30 per cent. Hotels are required to stop offering free single-use plastic items by 2025. The production and sale of plastic bags less than 0.025mm thick will also be banned.

China’s special administrative region, Hong Kong, undergoes a different trajectory. The Hong Kong government introduced the Plastic Shopping Bag (PSB) Charging Scheme in 2009 with further enhancement to the measure in 2015 in order to curb plastic shopping bag usage in the city.

However, this scheme does not cover the excessive use of other plastic usage, such as single-use items and plastic packaging. When it comes to PSBs, the scheme also seems to have little effect as statistics by the Environmental Protection Department revealed that the average daily disposal quantity of plastic bags in 2017 reached 793 metric tonnes, which closes in on the record level of 2008 - a year before the implementation of the levy - of 867 metric tonnes. The latest figures in 2019 for PSBs saw a dip to 768 metric tonnes from 2017.

It has been previously suggested by certain members of the Legislative Council that the government should apply the Producer Responsibility Scheme to regulate producers of single-use plastic products by imposing a pollution levy to those who sell them. A measure akin to those adopted by many Western countries with positive results.

It shows that despite the gargantuan task, governmental financial schemes and incentives can work to move the plastic reduction agenda forward. A trajectory that Mi Terro is undertaking.

Luo’s company has received a government grant from Hangzhou province to launch their project in their district and work closely together. Such public sector partnership gives companies great exposure to form further alliances. “We know we cannot be the only one in this industry to make a difference. We provide our technology to other companies or to existing plastic manufacturers where they don’t have to source fossil fuel-powered plastic pellets but instead our compostable plant-based pellets,” the CEO adds.

“We have been trying to establish partnerships both on the raw material supply end toward downstream, buying customer brands. So far we have seen a lot of successes, a lot of willingness to work with us, especially from big brands such as Budweiser.”

To Luo, the direction of the current corporate agenda towards more active, sustainable practices is an optimistic one. “Five to ten years ago, corporations could greenwash entire sustainability topics, but now consumers are really nitpicky or they understand what the true definition of sustainability is. The word itself is often very manipulative. Companies talk about sustainability in the sense of business and revenue profit growth, and not on environmental concerns. Nowadays, corporations are taking real actions by partnering with innovative companies like ours or have innovative technology developing in-house.”

A recent trend has seen food waste turning into beverages or snacks, and there is also a focus on plant-based AI engineering. But Luo reckons there is a huge potential for nanomaterials and biomaterials to enter the scene.

The global hydrogen film industry is estimated at US$128.8 billion. Luo’s Mi Terro business in mobile, biodegradable film takes about US$1.5 billion of the pie. “We still have a lot of room for growth,” says Luo. “In fact, we think that this is an endless potential for a technology like ours. But in terms of what we want to improve are things like transparency of our films - as it isn’t as clear yet as plastic is, and lowering cost to compete with traditional, classic materials.” 

In order to achieve concrete commercialised applications and products to innovate the food industry, it is important to rise to the challenge of jumping onto the next generation of technologies, such as using the Internet of Things (IoT) to monitor progress and growth and making AI a mainstream component in your business operations. China is one of the world’s biggest agricultural producers and the latest foodtech will aid in standardising the country’s product quality, which has been subject to much scrutiny and distrust in the past, of which a legacy continues till this day.

With standardising food quality comes improvement of farmer livelihoods and their operations. The COVID-19 pandemic also exposes the willingness of consumers to pay a premium for higher quality and healthier food sources. Health and wellness are now at the forefront of consumption. Changes in consumer preferences will underscore a new set of lifestyle products in which personalising one’s diet and consumption could be one of the biggest trends forthcoming.

While a shift from plastic to biodegradables offers ample opportunity for profit and environmental margins, problems need to be tackled from multiple fronts. Firstly, the cost of raw material resources; secondly, create better processes to ensure a higher conversion rate that minimises material waste in the production process; and thirdly, to build awareness on the topic where people - though paying a little more for non-traditional products - will be reassured that their money isn’t spent for their own self-satisfaction only, but goes toward alleviating food production stresses and sustainable environmental practices.