Sustainability And Innovation In Asia’s F&B Sector

<h2 style="text-align: justify;"><span style="font-size: 12pt;">Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?</span></h2><p style="text-align: justify;">I am a Chartered Mechanical Engineer by training with a specialty in Robotics and Fibre Optics. However, my first love is Food & Beverage, and this has been evident in my career for the last 20 years, starting with my role as part of a wonderful Asia Pacific Team at Yum! Restaurants (owner of KFC, Pizza Hut, and Taco Bell) to one of the largest catering companies with Singapore Airlines Terminal Services. I spent some years as a farmer in Asia, working to protect the mangroves and building livelihoods for the farmers. The result was a win-win for all parties involved.  UN SDG 14 "Life Below Water" resonated with me as I have been serving on the Asia board of the MSC (Non-Profit Marine Stewardship Council) for the last 12 years and counting, focusing on conserving and sustainably using the oceans, seas, and marine resources. In addition to my full-time work, I have also been giving back; over the last five years, I have been working, coaching, and mentoring agri-tech and food-tech companies. Proud of some of their achievements, with several now in leading positions in their respective channels.</p><h2 style="text-align: justify;"> </h2><h2 style="text-align: justify;"><br><span style="font-size: 12pt;">Q2. How are consumer expectations around sustainability shaping food and beverage innovation across Asia?</span></h2><p style="text-align: justify;">"Sustainovation" - a new term coined by CPF Thailand - is the ability to create high-quality products using advanced technology and innovative operations while ensuring that nearly all products and processes are environmentally friendly. One example is Carbon-Neutral product labeling, launching products that use less energy, produce less waste, and are more responsible to the community and the environment.<br>Sustainability is now viewed by consumers in Asia as a given. Age is no barrier to concerns about sustainability, with sentiments shared across age groups. However, Gen Z and Millennials are the first adopters. For Asia, convenience makes a difference when it comes to sustainability. i.e., Composting and the correct recycling of packaging. Unfortunately, consumers in Asia are not willing to pay much more for sustainability. Premiums between 8% - 15% are the average, delivering smart value and affordable sustainability - optimizing costs and developing affordable, sustainable options. Upcycling food waste into new products, using eco-friendly packaging, and sourcing locally as much as possible.</p><h2 style="text-align: justify;"> </h2><h2 style="text-align: justify;"><br><span style="font-size: 12pt;">Q3. What trends in sustainable packaging or circular supply chains are you seeing gain traction in the region?</span></h2><p style="text-align: justify;">Governments play a significant role in Asia in shaping our food systems, particularly in terms of packaging (including plastics, glass, etc.). Mandatory Reporting Schemes and Extended Producer Responsibility (EPR) frameworks are shaping trends in Sustainable packaging and waste management. Singapore's Mandatory Packaging Reporting framework, under the Resource Sustainability Act requires companies to report on packaging use and submit 3R (reduce, reuse, recycle) plans, paving the way for an EPR scheme by 2025. The Philippines enacted its EPR Act in 2022, mandating producers to recover increasing amounts of plastic packaging waste—rising from 20% in 2023 to 80% by 2028. Meanwhile, Indonesia's Regulation No. 75/2019 sets targets for 100% recyclable packaging and 50% recycled content by 2028, alongside mandatory waste reduction plans.<br>Several Asian manufacturers are incorporating FSC (Forest Stewardship Council)- certified paperboard, plant-based caps, and straws made from sugarcane and recycled polymers into their product portfolios. With inflation on the rise, F&B manufacturers can lower their costs and improve performance by adopting sustainability in their supply chains, utilizing energy-efficient machinery, optimizing water usage, leveraging AI, and implementing advanced automation. <br>Sustainable Packaging is not a fixed cost but a strategic enabler of long-term value. Unlocking downstream benefits with retailers and investor ESG benchmarks, reducing exposure to carbon taxes, and shifting trade standards.  The F&B sector is at a critical juncture now, and those who choose to lead in sustainable packaging will stay ahead of the compliance curve and have a USP (unique selling point) against their competitors.</p><h2 style="text-align: justify;"> </h2><h2 style="text-align: justify;"><br><span style="font-size: 12pt;">Q4. How large is the market opportunity in Asia-Pacific for sustainable or clean-label food products, and where do you see the strongest CAGR potential?</span></h2><p style="text-align: justify;">The clean-label ingredients market in the Asia Pacific was valued at approximately USD 50 billion in 2023 and is projected to reach USD 130 billion by 2030, growing at a CAGR of 14.56%. What is driving this? Aging populations in Japan, Korea, and Singapore, along with increasing consumer demand for natural, sustainable, and clean labels. Low-sugar, low-fat, and high-protein products are dominating the sector. Biosynthesis is also gaining traction as manufacturers utilize microorganisms as factories to produce active ingredients, including proteins, carbohydrates, and nutrients. In South Korea- the food industry has witnessed several innovations aimed at enhancing the clean label trend. New technologies, such as cold-pressing, high-pressure processing (HPP), and fermentation, enable the production of clean-label ingredients while preserving the nutritional integrity of the products. Additionally, the advent of precision fermentation techniques is enabling companies to create clean, plant-based proteins and other ingredients that are sustainable and allergen-free. Besides, South Koreans are among the earliest adopters of Fermentation techniques, particularly with Kimchi.</p><h2 style="text-align: justify;"> </h2><h2 style="text-align: justify;"><br><span style="font-size: 12pt;">Q5. Do you see consolidation happening in the sustainable F&B space, or is fragmentation still dominant with many small players fighting for share? </span></h2><p style="text-align: justify;">This depends on the country in Asia we are considering. Several Chinese F&B brands are rapidly expanding in Southeast Asia. Mix, Chagee, Luckin, Haidilao, to name a few. The rise of the Chinese and Korean F&B brands is challenging the incumbents of the traditional Western brands, and even the Japanese sushi chains are being challenged. The RTE (Ready to Eat) meals market in Asia is also experiencing significant growth driven by rapid urbanization and changing consumer preferences. India, Indonesia, Vietnam, and Thailand are driving this growth in the Asian RTE market.  Online retail and e-commerce are also experiencing this growth due to busy lifestyles and the convenience they offer. <br>Japan is the world's 2nd largest importer of agricultural produce. The country's food self-sufficiency has been in decline for over a decade and is also one of the most fragmented in Asia. Japan also has one of the highest densities of restaurants and cafes in the world. 1 establishment for every 100 people. The Top 30 supermarket chains account for only 30% of total sales nationwide in Japan; the remaining supermarkets are non-consolidated. In India, a significant portion of urban Indian consumers (78%) prioritize speed over cost when purchasing food, and this has led to an explosion in quick Commerce. Cloud Kitchens, cost-efficient operations, and hyper-local distribution are going to be the key differentiator in India. Consumers order groceries multiple times a week instead of making large Costco-like purchases once a week, filling up the trolley type of shopping.</p><h2 style="text-align: justify;"> </h2><h2 style="text-align: justify;"><br><span style="font-size: 12pt;">Q6. Which capabilities—manufacturing, logistics, digital engagement, or sourcing—are proving to be regional advantages in scaling sustainable products?</span></h2><ul style="text-align: justify;"><li>Cloud Kitchens - Central Kitchens to streamline operations and reduce Manpower costs at the store level</li><li>AI-driven food ordering Systems (Analyse customer behavior and predict orders before they are placed)</li><li>The fusion of technology, data analytics, and last-mile delivery to redefine how food is produced, distributed, and consumed</li><li>Optimise packaging and inventory, reducing waste and improving efficiency.</li><li>Loyalty programs and in-app exclusive orders</li><li>Freshness - Cold Chain management, local sourcing algorithms</li><li>Chatbots and personalized recommendations providing 24x7 support to enhance CRM and customer engagement</li></ul><h2 style="text-align: justify;"> </h2><h2 style="text-align: justify;"><br><span style="font-size: 12pt;">Q7. If you were an investor looking at companies within the space, what critical question would you pose to their senior management?</span></h2><ul style="text-align: justify;"><li>What problems in the F&B sector are you solving?</li><li>Who is on your team? And do you have succession planning in place (many companies in Asia are family businesses)</li><li>Where is your beach head? Launch market? What is your 5-year revenue plan, and when will you become profitable</li><li>What is your Go to Market Strategy?</li></ul><p style="text-align: justify;"> </p><p style="text-align: justify;"> </p><p> </p><p> </p><p> </p><p> </p>

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