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New Opportunities Across the Value Chain in an Amazon/Whole Foods Evolving Food System

By Benson Hill

September 6, 2017

There’s been much speculation that Amazon’s purchase of Whole Foods and the evolution of the online grocery space will drive major transformation in the food retail industry. So, what could that mean for the agriculture value chain supplying food retail? And how can agriculture help food brands differentiate to tap new market opportunities? Lessons from Amazon’s impact on book retail may give some insights – especially for those ready to embrace our modern food system.

Amazon completely disrupted and transformed the book retail industry. More books are sold today than ever before, but the selection and the sources are more diverse.

The 2016 Author Earnings Report shows in the last two years, the market share between Independent “Indie” publishers and the Big 5 publishers has completely inverted, with the Big 5 accounting for less than a quarter of sales today while the Indie publishers approach 45 percent. Online retail opened new opportunities to reach consumers without passing through the gateway of the big publishers.

The same concepts apply for food. Consumers increasingly demand more emphasis on health and wellness, sustainability and transparency in our food system. This creates opportunity for more nutrient-dense crops and production systems with less use of pesticides and other inputs – opportunity that has not been met by the Big 5 agriculture input companies (currently shrinking to the Big 3) focusing on a handful of crops and traits.

This market gap combined with reduced gateway barriers could open doors to online shelves. A community of independent innovators across the food/ag value chain, some that we don’t even know of yet or that are just emerging, can respond and deliver the products consumers prefer. By leveraging advances in agriculture, companies can develop the crops consumers favor with attributes farmers can sustainably grow.

One such opportunity is plant biology. The global genetic diversity of plants is larger than that of humans and largely untapped. Leveraging that genetic diversity that already exists in nature can create a differentiated portfolio of products that is highly beneficial in an online marketplace. From cultivars with proprietary taste and texture profiles to managing plant diseases through natural resistance, plant biology can be leveraged as a powerful differentiator.

We all have unique food preferences – local, organic, spaghetti squash, quality fish, quinoa burgers, beef burgers. Increasingly, we go to multiple sources to fulfil our shopping lists, and we’re willing to pay for what we want. We have yet to see if Amazon becomes the marketplace of food – or perhaps an online farmers market at scale – but it’s clear there will be increasing competition to capture “share of stomach” of the $1.5 trillion that Americans spend on food each year. That also means increased opportunity for those ready to turn the power of plant science to their advantage.

– Matt

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