The global food system is breaking away from traditional operating models as companies are discovering that protecting their margins requires rethinking entire operating models rather than making incremental improvements, according to a report from management consulting firm Kearney.
The analysis shows how three disruptive forces—evolving consumer demands, supply chain consolidation, and rapid technology adoption—are reshaping operations across five connected ecosystems: broadacre, specialty crops, protein, ingredients and manufacturing, and distribution.
To cope with that change, successful companies are following three enablers for success: automation and data integration, regional agility in production and sourcing, and consumer-aligned innovation, Kearney said in the report, “Food System Outlook 2025: Competing in a rewired food system.”
“The global food system is facing fundamental structural and systemic change, and the old food system playbook doesn’t work anymore. Input costs have never been higher, consumer expectations are more complex, and technology is moving from optional to essential across every part of the food chain,” Rob Dongoski, Kearney’s global lead of the food and agriculture sector and co-author of the report, said in a release. “Companies that understand how the five ecosystems connect and move fastest to automate, build regional agility, and align with consumer needs will define what comes next.”
Examples of the high degree of change include findings that input costs have surged 78% for fertilizer and 66% for pesticides since 2020, forcing companies to rethink operations. And in response to those shifting prices, 68% of consumers in 2024 reported purchasing more white-labled store brands to combat ongoing inflation.
Looking ahead, the outlook identifies regional arbitrage opportunities as essential to creating a competitive advantage. “Companies with global footprints can leverage regional innovations, from South America’s sustainable aviation fuel projects to the Middle East’s food security investments,” notes Dongoski, “while regional players need strategies aligned with their home market positions. The question for these companies isn’t whether to invest in automation, new supply chain models, or technology-led efficiency, but how fast they can get on board.”
