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Hungry for change: How food production is being disrupted

How food production is being disrupted

Ruedi Noser and Roman Hartmann talk about changes in the consumer goods industry and the innovativeness of their start-up.

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Farmy: Board member Ruedi Noser together with co-CEO and founder Roman Hartmann

Farmy: Board member Ruedi Noser together with co-CEO and founder Roman Hartmann

How is your industry responding to customers’ evolving needs, and what else is impacting how you do business?

Farmy: Customers are driving a big shift away from ‘offline’ shopping and towards online and mobile business. There is also a keener emphasis on locally, sustainably sourced products – which will continue to grow as a share of the total market for food. An interesting part of this is vertical agriculture taking hold in larger cities and individual households. This is where food production is integrated into buildings. It goes hand in hand with customers increasingly demanding transparency regarding the origin, ingredients and footprint of the products they buy. As a business, it means a better use of big data to communicate around production, transportation and storage. And more information about the nutritional properties of what we consume. For instance, the number of certified organic and local products is rising steadily.

This is where we see ourselves. Farmy stands for transparency and healthy, ethical food. We recognize that the food industry must accept its responsibility. It cannot simply ruin the earth as we fail to change our diets. We must find alternative ways of feeding ourselves in order to offset the growing middle class in Asia and meet the challenge of lowering CO2 emissions and water usage.

How do you and your competitors innovate to adapt to trends, or even shape trends yourselves?

It varies by country. We see the US and UK markets, among others, being already further along as far as digitalization is concerned. And we can expect Switzerland to move in the same direction. On the one hand, we have new market participants who are digitally oriented from the start and burst onto the market. These are primarily foreign companies. On the other hand, even traditional market participants will have to master digitalization at a pace previously unheard of. This isn’t restricted to food, of course. The online share of books, electronics and clothing sales is so high that established offline players are in serious difficulty. We see the food industry being in a very exciting phase in which we face enormous changes.

As digitalization changes the consumer industry, who is driving the agenda forward?

Firstly, we think everyone has come to understand that digitalization will have a marked impact on every company and every market. As well as consumer trends, the driving force behind innovation is the hunger of Silicon Valley’s ecosystem. It is the most important source of digitalization advancement and is the prototype for other innovation hubs such as those we see in China, Israel or even Berlin. Companies such as Amazon, Uber and Alibaba operate on a completely different set of principles than historically. Profitability plays only a secondary role. Using large quantities of risk capital, the primary goal is to capture a vast market share and collect customer data. This sets entire markets in motion and drives digitalization forward. Only retailers who have and use client data and direct access to customers will survive. All others will become irrelevant. And digitalization is becoming ever more deeply integrated into the value chain and the lives of consumers. This is through mobile shopping and voice searching, which are becoming easier, or the Internet of Things. European companies are missing from the line-up of leaders, unfortunately. We are overshadowed by Google, Amazon, Facebook and Apple, as well as the Asian giants such as Alibaba or Flipkart.

What role does your own R&D play in this progress?

We do not have a formal R&D department. Rather, as a young company and start-up with a disruptive approach, we are innovative by nature and are constantly improving our products. Every manager in the company works to continually improve the product and processes and maintain ongoing tests. Our structure is very agile, which means we are able to adapt very quickly to new situations.

The consumer industry is being increasingly altered by M&A. Do you see this continuing, and what will be Farmy’s involvement?

We think this trend will persist as long as Silicon Valley and its imitators retain their hunger for innovation. The emergence of new companies with fresh technologies and products will not let up, which means there is a great deal of M&A potential. But as a start-up, we don’t have the necessary funds to undertake acquisitions. We rather invest our resources heavily in internal innovation.

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KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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