The "ultimate goal" of the food industry: personalized nutrition plans

For sharp investors, the future landscape of the food industry is becoming increasingly clear. The disruptive changes faced by traditional food giants are far from over, and the ultimate direction of this transformation is not merely plant-based meat or weight loss drugs, but truly personalized nutrition solutions.

According to the Chasing Wind Trading Desk, UBS's in-depth report reveals that by 2040, the personalized nutrition market is expected to reach USD 64 billion. Although this figure seems large, it still accounts for less than 1% of the global food and beverage market, which is projected to be USD 6.1 trillion in 2024, indicating significant growth potential. The rapid development of artificial intelligence (AI) capabilities, which can quickly interpret the vast continuous data provided by wearable devices, will be a key catalyst driving the growth of this industry.

This trend will reshape the entire value chain, and for investors, it means: this is no longer a competition within a single food track, but a new cross-border ecosystem that encompasses biotechnology (diagnostic testing), wearable devices (such as Apple), food ingredients, and meal delivery (such as Hello Fresh). Companies that can find their positioning within this ecosystem will become the biggest winners, while those that cling to traditional standardized products may be marginalized.

Drivers and Pull Factors of Change: Supply Side and Demand Side

The report points out that the food industry is undergoing a profound evolution, driven by two major forces.

The "push" comes from the hard constraints on the supply side. First, the global arable land area is limited, while agriculture consumes 70% of the world's freshwater resources and contributes about one-third of greenhouse gas emissions, forcing the supply chain to transition towards sustainability. Second, the aging global population and the ongoing pressure on government healthcare funding also compel the food industry to provide healthier nutritional solutions in order to reduce overall societal healthcare costs in the future.

The "pull" comes from the awakening of consumers on the demand side. Modern consumers' focus on health and well-being has reached unprecedented heights. They are increasingly aware of the importance of diet to health and wish to break free from a diet dominated by ultra-processed foods (UPFs). However, consumers are also extremely reluctant to compromise on taste. They want balanced nutrition, sustainable production, and delicious products. This "impossible triangle" poses a significant challenge to the food industry while also creating opportunities for innovators who can resolve this contradiction.

Disruptive Technologies: A Necessary Path to the Endgame, but Not the Endpoint

In the journey towards the ultimate goal, various disruptive technologies have emerged, but the report clearly states that they are only part of the solution, not the entirety

• Plant-based protein: Growth stagnation, taste is a hard injury. As an early disruptor, the plant-based protein market has clearly slowed down after experiencing rapid growth in its early stages. The global market size is expected to reach $6.1 billion in 2024, but in the key U.S. market, it has declined for two consecutive years since 2022. Its core obstacle lies in the failure of taste to meet mainstream consumer expectations, while the label of "ultra-processed" has also raised health concerns.
• Cultured meat and precision fermentation: Dual challenges of cost and perception. As potential solutions to the taste problem, these two technologies face similar dilemmas: high production costs, lengthy regulatory approval processes, and consumer concerns about the ethics and safety of "artificial" food. Currently, they remain in niche markets.
• GLP-1 weight loss drugs: A new force reshaping consumption habits. GLP-1 drugs are profoundly influencing people's eating behaviors. According to a survey by UBS Evidence Lab, 45% to 53% of users reported a reduction in calorie intake during medication. Their consumption of fast food, ice cream, and sugary snacks has significantly decreased (by as much as 70%, 61%, and 61%, respectively), while their intake of vegetables, fruits, white meat, and yogurt has increased. This trend poses direct benefits or drawbacks to different food categories, forcing companies to accelerate product innovation to adapt to new consumer preferences.

Investment Insights: A new ecosystem of cross-border integration is forming

The realization of personalized nutrition relies on a complex ecosystem. Investors need to focus not on isolated companies, but on participants that can collaborate synergistically within this ecosystem:

1. Diagnostic and biotechnology companies (such as Nutrigenomix, Zoe): Responsible for extracting and interpreting consumer genetic or microbiome data to provide scientific basis for personalized solutions.
2. Wearable technology companies (such as Apple, Garmin, Oura): Provide real-time, continuous monitoring of bodily data, allowing users to dynamically adjust their nutritional intake.
3. Food and ingredient companies (such as DSM-Firmenich, Kerry Group): Responsible for producing foods and core ingredients that meet specific nutritional needs while also considering taste.
4. Meal delivery and ready-to-eat/prepared meal companies (such as Hello Fresh): Meet consumers' ultimate pursuit of convenience by delivering customized meals directly to their doorsteps. The report specifically notes that these companies and wearable technology companies may be the biggest beneficiaries of this trend.

For traditional participants, the impact is differentiated:

• Positive impact: Athletic apparel may benefit from the overall increase in health awareness. Some ingredient companies may gain short-term growth momentum due to the demand for product improvements **
• Neutral to Negative Impact: Traditional food producers must make changes, shifting from selling standardized SKUs to providing customized services, or they will face the risk of elimination. Similarly, traditional food retailers may be impacted by the popularity of home delivery models. Categories such as soft drinks and alcoholic beverages will face ongoing health-related pressures.

The report believes that personalized nutrition is not only the future of the food industry but also a cross-industry revolution affecting technology, healthcare, and consumer sectors. Investors who can gain insights and position themselves in this emerging ecosystem will have the opportunity to seize one of the most significant growth opportunities of the next decade