Kearney: The Food Industry Enters the Era of the "New Operating Reality"

Introduction

The global food system is entering an era that Kearney consultants call the "new operating reality." The firm's latest outlook report argues that shifting consumer preferences, restructuring policy environments, geopolitical uncertainty, and sustained cost pressure are rewriting the rules of the game from farm to fork at a foundational level.

Generational Shifts in Consumption and the GLP-1 Shock

On the demand side, millennials and Gen Z have become the largest consumer groups. Their enthusiasm for fresh, minimally processed foods and protein, along with their stance of reducing carbonated beverage and alcohol intake, is reshaping product portfolios. Notably, GLP-1 weight-loss drugs are becoming an important variable influencing food purchasing. As drug costs decline and delivery methods shift toward oral forms, their impact will become even broader. Some studies show that such users proactively reduce spending on snacks, sweets, and overall groceries, while their demand for high-protein foods rises markedly. Innovations such as protein coffee and ice cream labeled with 30 grams of protein have appeared on the market, and fermentation technology is also demonstrating new application space in both cost and performance.

The Dilemma of Cost Pressure and Seasonality

Pressure on the supply side is equally not to be underestimated. Kearney report data show that since 2020, fertilizer prices paid by American farmers have risen 78%, and pesticide prices have risen 66%. At the same time, declining commodity prices and mounting export policy and compliance pressures are squeezing profit margins in agricultural production. At the retail end, consumer expectations of year-round fresh supply clash with the production reality of localization and seasonality. Rob Dongoski, Kearney's global leader for agricultural food business, cited as an example that labor costs for growing blueberries in California are significantly higher than in Peru, so actual market supply decisions depend more on economics than on intention. He also noted that "taste and affordability" have never changed and have always been at the core of food consumption.

Policy Shifts and Industry Restructuring

The new U.S. edition of the Dietary Guidelines for Americans proposes an "inverted dietary pyramid," placing protein, dairy, and healthy fats in more prominent positions. This marks a substantive turn in nutrition policy and sends a clear signal to upstream production. Meanwhile, the food processing industry is undergoing deep consolidation. Keurig Dr Pepper announced plans to acquire JDE Peet's for approximately $18.4 billion and subsequently spin off into two publicly listed companies; Kraft Heinz has also chosen to split itself into two independent companies to manage a complex portfolio of more than 200 brands. Kearney emphasizes in its report that companies can only truly orient themselves toward future consumers by breaking down internal silos and rapidly restructuring their operating models.

Industry Impact: Transmission Along the Supply Chain## Industry Impact: Transmission Along the Supply Chain

This transformation will not stop at shelf labels and corporate announcements; its impact will run through the entire agricultural and food chain. First, there is pressure on production efficiency—when the cost of agricultural inputs remains high, reducing ineffective inputs and improving precision management becomes a pragmatic choice, accelerating the adoption of digital agronomy and intelligent equipment. Second, there is the upstream transmission of demand signals—preferences for high protein and freshness will influence planting structures, animal protein systems, and the utilization of dairy by-products, driving deeper applications of bioprocessing and fermentation technology. Third, there is the question of supply chain resilience: in the face of climate and geopolitical uncertainty, the cost of "off-season supply chains" is rising, providing fertile long-term ground for cold-chain logistics, controlled-environment agriculture, and alternative proteins. Finally, there is the logic of capital and M&A—in the long run, asset restructuring by food giants will direct agricultural technology capital toward projects that can create genuine cost advantages and sustainable value.

Future Outlook

Looking ahead three to five years, the global food system faces both challenges and opportunities. Population growth and rising incomes continue to push up total protein demand, but land, water, and environmental capacity are limited. Tracks such as alternative proteins, cell culture, and precision fermentation will gradually move from proof of concept to industrial competition. Meanwhile, agricultural AI and sensor networks are expected to deliver tangible value in crop modeling, input optimization, and supply chain forecasting. Faced with an increasingly fragmented trading environment and diverse local regulations, distributed production systems close to consumer markets and consumer communication based on "seasonality transparency" may also become new supply chain themes. And once the pricing of fresh food truly reflects its environmental and labor costs, the value of technological innovation in greenhouse agriculture, vertical farming, and storage and transport will become even more prominent.

Conclusion

The Kearney report captured the current opportunity and urgency in one sentence: "The opportunity is real, but so is the urgency." As a turning point, 2025 truly opens a long slope toward more efficient, healthier, and more resilient food. On this slope, companies and regions that can deeply couple consumer insights with agricultural technology will be more likely to define the food system of the next decade.