The value of shares in Scottish Mortgage, and any income from them, can fall as well as rise and investors may not get back the amount invested.
The food supply chain, as it stands, is unsustainable. With a world population of 8 billion people (forecasted to rise to nearly 10 billion by 2050), growing affluence and consumers with a strong preference for convenience, it is becoming ever harder to meet global food demands. Technological advances, however, are helping a few companies to reimagine how food is produced, prepared and distributed to help make the food chain fit for purpose for future generations.
Among the companies held in the Scottish Mortgage portfolio, there are those that are predicting food requirements, automating inefficient practices and optimising how consumers receive their food. From helping farmers determine what seeds to plant, utilising natural support systems to improve efficiency levels, through to the possibility of robots delivering food to your door, these companies are revolutionising how and what we eat.
Starting at the beginning of the food production process, Indigo Agriculture uses microbial coating on seeds to increase crop yields and help farmers to make a living, while reducing the environmental impact. The company also works with farmers to gather data on the success of crops, to drive further incremental improvements. In an industry where climate change is having a big impact, Indigo uses technology to analyse images of the earth from satellites to figure out what is growing where and what the conditions are. This insight allows Indigo to monitor the world’s food supply and determine where to focus its efforts to greatest effect. The company has a significant growth potential, even if it only succeeds in supplying a small percentage of the world’s crops grown today.
Once food is produced, it typically makes its way to customers via supermarket shelves. However, with more and more people wanting greater convenience, but also healthier and more responsible food choices, companies such as HelloFresh, offering a meal-kit subscription service, take the hassle out of the dreaded food shop. Each week, HelloFresh provides customers with new meals, delivering the exact amount of ingredients required with clear instructions on how to cook, helping to lower the amount of food waste per household. With over 2 million customers worldwide and access to vast amounts of data, the company can determine customer preferences, including what recipes, ingredients and meals each household enjoys. This information allows HelloFresh to optimise its supply chain management – if it is delivering 1 million meals tonight and knows it needs 100 tonnes of carrots, the company can buy them in bulk and negotiate a better price.
© Bloomberg/Getty Images
Another change in dining preferences is that people want to eat restaurant-style meals, but in their own homes, often with friends. This trend underpins German-born company Delivery Hero, which has one of the largest networks of restaurants in the online food ordering and delivery space. It partners with more than 150,000 restaurants around the world and currently delivers over 1 million orders a day. Its daily target is 10 million. As Delivery Hero scales its network, its focus remains on keeping both its restaurants and customers happy by personalising the service they receive. By tracking data on restaurant performance and customer satisfaction, the company can see when customers receive the wrong food, if an order is not delivered, or if a certain dish leads to very negative customer reviews. By gathering all the data across its network, Delivery Hero can help its restaurants tailor their menu offering, improve food quality and build a loyal customer base.
China food delivery company Meituan Dianping © Visual China Group/Getty Images
Taking food distribution to another level, Meituan Dianping is the largest food delivery company in China, managing over 30 million orders a day. In China, there is a more of a culture of people entertaining, eating out and having food delivered, rather than cooking for themselves. Many people order three meals a day. To meet this demand, Meituan has a delivery fleet of over 500,000 drivers, who can complete an on-demand delivery within an average of 30 minutes, thanks to its AI-enabled ‘Super Brain’ engine that figures out the fastest delivery route for an order within 0.55 milliseconds. But the company is not stopping there. In an attempt to cut costs even further, work is underway on developing a fleet of autonomous, food delivery robots, which can even use elevators. This trend is already influencing the way new homes are designed in China. Watch this space.
The value of shares in Scottish Mortgage, and any income from them, can fall as well as rise and investors may not get back the amount invested. Investment markets and conditions can change rapidly.
The views expressed in this article are those of Scottish Mortgage and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect personal opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.
This article contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned.
Baillie Gifford & Co Limited is authorised and regulated by the Financial Conduct Authority (FCA). The investment trusts managed by Baillie Gifford & Co Limited are listed UK companies. Scottish Mortgage Investment Trust PLC (Scottish Mortgage) is listed on the London Stock Exchange and is not authorised or regulated by the FCA.
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