Demographics is one of the topics that fascinates me the most. Indeed, what is more important for our collective future than knowing how many people will be on this planet? In my opinion, it might be the most underestimated threat facing the food industry. While fertility is collapsing globally, ageing is accelerating everywhere, and yet no one seems to be preparing for it. From fewer farmers to shrinking consumer markets, the impact will be brutal unless we act now.

1 – We need to reduce labour in food more than ever

In the past week, we have received multiple worrying signs on fertility and birth rates. First, the United Nations released an update to its global fertility report, which downgraded its fertility outlook.

As you can see in the graph, this follows a severe decline in fertility around 2020 and the COVID pandemic, from which we have not recovered, as the world entered a period of high inflation and rising concerns about economic opportunities.

Japan, often mentioned as a country at the forefront of this reversed demographic transition, announced an extremely low number of births for 2024. Only 686,000 Japanese were born last year, which the country planned to reach only in 2039!

2 – Agriculture’s workforce has plummeted globally and will continue to shrink

One of the first consequences of this declining birthrate is that the number of people able to work in the agrifood value chain will also shrink at a rate that will probably be even higher. Indeed, as the industry tends to offer lower salaries and harsher conditions, it will have a harder time competing with other employers.

That’s why technology, notably automation, will be necessary to feed a population that will keep rising, even as it is ageing. On the positive side, as you can see on the graph below, this has already been done with great success over the past century for the upstream part of the value chain. While more than 50% of the workforce was involved in agriculture, that share has now declined to low-single-digit numbers.

For agriculture, the consequence of the fertility decline will be pretty visible in the short term, with farmers already being relatively older than the rest of the population. Beyond a more proactive adoption of automation technologies (including precision farming), concentration appears to be inevitable. However, that’s not where we are heading, notably in Europe, where the idea of extensive farms manned by robots is not what voters want to see.

3 – Automation is still not working for food retail

Compared to agriculture, food and beverage retail stores have just started their automation journey. For now, most of the experiences have had quite mixed results.

This can be illustrated by the graph below about Starbucks’ case in the US. While the company expanded its number of stores in the past years, it has seen its number of employees per store (or more precisely, the number of employees in the company divided by the number of stores) shrink. But the result has been far from positive. Starbucks’ results have been quite bad over the past couple of years, with the recently installed CEO hinting that consumers feel less well-served and lack some human interaction. In other words, the company will go in the reverse direction and halt the deployment of some of its high-tech solutions.

Starbucks is far from an isolated case. A recent similar example is Chipotle’s founder’s new restaurant venture. It was supposed to be a fully automated place. After a year and $36M raised, it was a failure, and it is now being rebranded as a quite classical sandwich delivery business. Other experiences are more successful. Sweetgreen’s automated restaurants seem to work, but they still include a significant part of human service and are only viable in some high-traffic areas.

4 – What could be the consequences for the food industry?

In a word, the population is ageing much faster than anticipated (including in developing economies). This creates multiple threats as well as opportunities for food companies, including:

Threat #1 – a shrinking pool of consumers: an ageing population means that the traditional model of development of agrifood business (more mouths to feed) will rapidly vanish. This will be compounded by the fact that many developing economies could miss their opportunity to reach middle-income status.

Opportunity – focusing on healthy ageing, services, and added value ingredients

Threat #2 – declining workforce and raw resources become scarcer

Opportunity – automation and vertical integration

Beyond these obvious factors, demographics is a multi-faceted challenge that includes many other aspects, notably societal and political behaviours that will evolve alongside the age distribution. As we often say to our clients, answers won’t be in short-term trends (and especially not in consumer surveys).