2025 Catalysts that Will Shape a More Sustainable Food Future

We believe the global food system is at a crossroads, with transformative forces reshaping everything from production to consumption. In this article, we dive into what we believe are the top 10 key catalysts driving this shift in 2025 and what they mean for the future of sustainable food.

1. Focus on Food Health in the U.S. and the Slow Dismantling of the ‘Big Food’ Monopoly

• The health implications of highly processed foods are under renewed scrutiny, spurred by movements like Make America Healthy Again (“MAHA”) and Robert F. Kennedy Jr.’s advocacy.
• We expect regulatory pressure and shifts in consumer choices and health food sentiment to erode the dominance of processed food companies and mega-brands reliant on unhealthy formulations.
• Impacted Companies: Processed food giants whose portfolios may struggle in a world increasingly prioritising health and transparency. Our fund does not invest in processed food companies.

2. The Fall of the Monoliths: A New Reality Check for Complacent Mega-Brands

• With WFH becoming hybrid and “grab-and-go” models taking precedence, brands built on traditional sit-down experiences are under pressure.
• Companies like Starbucks, which once thrived on the “third space” concept, are facing challenges. By contrast, “grab-and-go” models like Chipotle and increasingly automated food delivery models like Domino’s.
• Expert Insight: Aswath Damodaran recently highlighted how evolving business models threaten once-dominant players in this video.

3. Climate Adaptation: Floods and Wildfires Galore

• 2024 was the hottest year on record, underscoring the urgency of climate change adaptation.
• The food sector must prepare for increased climate volatility, with floods, wildfires, and droughts reshaping agricultural practices.
• Impacted Companies: Companies leading in climate-resilient agriculture will emerge as winners (e.g. Yara International, Valmont Industries, Lindsay Corp).

4. Cold Storage and Logistics: A Key to Reducing Food Waste

• Cold storage and logistics are critical for reducing food waste, which the UN estimates accounts for one-third of global food production, exacerbated by climate-related weather disruptions and spoilage risks.
• By extending the shelf life of perishables and enhancing transportation efficiency, cold storage reduces waste and strengthens supply chain resilience amid climate disruptions.
• Impacted Companies: Companies like Lineage and Americold Realty Trust are driving innovation in this space, enabling more sustainable food systems and efficient distribution.

5. The U.S. is Now a Net Importer of Agriculture: A Big No-No for Trump

• A shift toward net food imports raises concerns about food security and geopolitical dynamics, as the U.S. increasingly relies on foreign sources to meet domestic food demand.
• Expect Trump to use tariffs as leverage to rebalance trade agreements, particularly with China, where U.S. soybean exports have lost ground to Latin America (Brazil, Argentina).
• This trend heightens vulnerabilities in global supply chains, especially during geopolitical tensions or climate-related disruptions, making food security a growing policy focus.
• Impacted Companies: Agricultural exporters and their Chinese and Latin American competitors (e.g. US-firm CNH Industrial provides agricultural machinery and technology that supports soybean cultivation).

6. The Increasing Role of AI, Automation and Robotics in Agriculture

• Companies like Deere & Co are leading the charge with AI and robotics, unveiling autonomous tractors and trucks at CES 2025 this week. These innovations will address current labour shortages (in the words of the company) and accelerate efficiency and productivity, aligning with Deere’s vision for fully autonomous farming by 2030.
• Labour shortages remain a critical issue, and will get exacerbated under the Trump 2.0 deportation programme. Automation is now indispensable, with AI solutions like Deere’s addressing productivity gaps in ways that traditional methods cannot.
• Forward-Looking Insight: We believe these companies are underappreciated and structurally undervalued. With Deere’s current PE ratio of 16x (January 9, 2025), the market may be underestimating the transformative impact of AI on agriculture.
• Beyond Deere: Companies like AGCO Corp and CNH Industrial NV are also advancing AI-powered machinery.

7. The Role of Biotechnology

• AI in agriculture is well-covered, but advances in biotechnology, including CRISPR and gene-edited crops, are also game-changing for improving yields, drought resistance, and nutritional content.
• Precision fermentation, a rapidly advancing technology, is driving cost declines in the production of alternative proteins and sustainable ingredients, making them more commercially viable.
• Impacted Companies: Evonik Industries, with a strong focus on fermentation-based processes, and Novozymes, which specialises in enzymes and biotechnological solutions for agriculture and food systems, are also at the forefront of this transformation.

8. The Rise of Alternative Distribution Models

• The shift to DTC models for niche food brands, fuelled by ecommerce and changing supply chain dynamics, could be a significant trend.
• This also intersects with the fall of the monoliths, as smaller, agile brands find new ways to connect directly with consumers.
• Example: Walmart’s investment in milk processing plants, such as its Fort Wayne, Indiana facility, demonstrates a shift toward bypassing intermediaries. By partnering directly with local farmers, Walmart reduces costs, improves efficiency, and ensures higher product quality. Upcoming facilities in Valdosta, Georgia (2025) and Robinson, Texas (2026) further expand this approach, streamlining supply chains and enhancing sustainability.

9. Shifting Consumer Demographics and Preferences

• Beyond health, food tech and science, generational shifts (e.g., Millennials and Gen Z prioritising plant-based foods and alternative proteins) are redefining consumption habits.
• Investors are increasingly aligning portfolios with companies prioritising environmental sustainability, ethical supply chains, and health-oriented innovations.

10. Water Scarcity Driving Innovation in Agriculture and Food Systems

• With water scarcity intensifying due to overuse, pollution, and climate change, the global food system faces mounting pressure to adapt.
• Water-intensive crops like almonds, avocados, and rice are increasingly scrutinised, driving innovation in water-efficient agricultural practices and technologies.
• Companies focusing on sustainable irrigation solutions and water recycling, such Lindsay Corporation and Valmont Industries, are expected to play pivotal roles in addressing this challenge.

Investors who align with these structural trends are positioned to benefit from the transformation of supply chains, the rise of climate-resilient practices, and evolving health-focused consumer demands. As we move forward, the intersection of technology, policy, and sustainability will define the next chapter of food innovation, offering significant opportunities for growth and impact.