Technology aimed at achieving Nature Positive for ‛vertical farming’, ‛e-commerce’ and ‛alternative foods’ is developing fast
22 July 2024
PwC Japan Group
On 17 July 2024, the PwC Japan Group (Group Chair: Masataka Kubota; hereinafter ‛PwC Japan’) announced the results of its ‛Transformation and Alternatives on the Dining Table’ study, a survey and analysis of global technology development trends in food value chain-related technologies that help to reduce environmental impact based on investment information and the number of patent applications.
The study was conducted by PwC Japan using ‛Intelligent Business Analytics® (IBA)’, PwC's proprietary tool that utilises AI to analyse global patent data in specified technology fields, as well as company financial and investment information. This study focused on investigating and analysing technology trends related to the food value chain that contribute towards Nature Positive, providing implications for outlooks on this field. Furthermore, this report also discussed how these technologies could solve environmental issues in the food value chain and contribute to Nature-Positive practices in the future, particularly how it transforms the production and procurement of raw materials that have a significant impact on nature, as mentioned above. As an example of how technology can contribute to Nature Positive, current food production methods that affect nature can be replaced by different methods through the application of technology, thereby reducing the loss of natural capital that occurs in conventional production processes. In this way, understanding the global Nature-Positive initiatives from the perspective of technology trends provides valuable information for companies when considering future areas of focus.
As a result, ‛vertical farming’ and ‛e-commerce’ were identified as trending technologies, and ‛alternative foods’ as a promising seed technology. Below are some of the analysis results obtained from each respective field.
1 From soil to factory
| Current status | Japan scores high in GHG reduction and sustainable land-use technologies, while China makes its presence felt in ‛vertical farming’ technologies |
| Technology | The top five representative technologies are dominated by water-related (wastewater/liquid waste treatment and water circulation) and energy-related (plant lighting equipment, heat recovery, solar power generation) technologies |
| Reduction of environmental impact | Transition to vertical farming can reduce environmental impact from fertilisers, pesticides, plastic materials, transport and other factors |
2 From livestock to alternative proteins
| Current status | Europe and the US possess high technological competitiveness, along with significant shares and numbers of important patents |
| Technology | Most (16 of 24 important patents that are identifiable forms of products) are related to plant-based meats, which serve as alternatives to animal meat |
| Reduction of environmental impact | The environmental impact of producing plant materials or insects is said to be lower than that of livestock production, so these could replace livestock products and in turn reduce GHG emissions and environmental impact |
3 From retail shops to e-commerce
| Current status | Japan scores highest in the e-commerce technology cluster, with its IT companies and electronics and electrical manufacturers leading technology development |
| Technology | Japan holds many important patents related to product selection, such as product suggestion systems. Korea possesses a large number of patents related to receiving and placing orders, such as purchase order systems, while the US is strong in shipping and delivery, including delivery systems. |
| Reduction of environmental impact | Since physical stores are not necessary, reliance on building materials is reduced, and logistics can be made more efficient. Contributes to reducing food waste and lowering GHG emissions from disposal through sites selling food products near their expiration dates, etc. |
Key technology trends by country and region
Japan possesses advanced technology in electrification and hydrogenation
Japan’s technology score is high in areas, such as ‛fuel cells’ and ‛batteries and electrodes’ related to the electrification and hydrogenation of agricultural machinery, with major Japanese automakers and electronics companies leading this score. On the other hand, further technological development may be needed for ‛cellular agriculture’*1 and ‛other alternative proteins’, which are considered promising seed domains. In particular, non-technological issues have emerged, particularly with regard to cellular agriculture. Examples include regulations and opposition to cellular agriculture from the livestock industry in some countries and regions, as well as insufficient consumer awareness and understanding. Therefore, efforts by governments, companies and society at large may be necessary to promote cellular agriculture and products based on cellular agriculture, including the establishment of laws and the improvement of consumer awareness.
Figure 1: Comparison of technology scores by country and region
The values are averages of the technology scores of the companies in each country and region, with higher values indicating higher technological competitiveness in that field.
China is an emerging player in the field of ‛vertical farming’
In the trending ‛vertical farming’ technology cluster, China is making its presence felt. The percentage of patents filed by Chinese companies and research institutions is also high, with China exerting a significant influence over this entire technology cluster, which is leading to negative scores for Japan and Europe*2. For example, in China, some of the technologies related to vertical farming (especially wastewater treatment) are being used for pig farming in high-rise buildings, which can be viewed as indicating a different direction from other countries. Additionally, China is making progress with multi-level and large-scale vertical farming. Japan and Europe, meanwhile, have relatively more patents related to advanced environmental control technologies, such as lighting and wastewater management, in addition to developing unit-based and modular farms, which focus on producing only the agricultural products needed at the consumption site, highlighting the differences in technological direction.
Europe and US making technological progress in replacing livestock
Europe and the US scored high for technologies related to GHG reduction from livestock production. ‛Cellular agriculture’ is a technology that uses cell cultures to produce agricultural products, particularly livestock products. Since it is a field where technologies related to regenerative medicine can be applied, medical equipment manufacturers and biotech companies possess high technological competitiveness in this area. ‛Other alternative proteins’ refers to technologies and products, such as plant-based alternative foods like plant-based meat, with European food manufacturers leading the way in the development of these technologies.
Contributing towards Nature Positive and the market’s evaluation of technologies
A Nature-Positive scenario attained through technology
Vertical farming may switch the production of some agricultural products from soil-based cultivation to cultivation in closed facilities. This transition will enable efficient use of fertiliser components, such as nitrogen and phosphorus, and prevent their runoff into soil and water bodies, thereby reducing their environmental impact. Additionally, advances in alternative food development technologies may lead to the replacement of livestock products with alternative food products, such as cultured meat and plant-based meat. These technologies may also help mitigate environmental impacts by replacing livestock products, which are a major source of GHG emissions, and fish and shellfish, which have a significant impact on marine ecosystems due to overfishing, fishing gear and other factors. Furthermore, the expansion and advancement of cutting-edge technologies, such as e-commerce and smart food chains, will improve the efficiency of commercial distribution and logistics, leading to changes in the methods and channels for purchasing food. This promises to help reduce food waste and reduce the environmental impact associated with food disposal. It is expected that further technological development and expanded application will reduce the impact on nature from the food value chain overall.
‛Vertical farming’ and ‛e-commerce’ technological developments are moving ahead and securing funding
In this study, available patent information related to GHG reduction, sustainable agriculture and food loss reduction, as well as company and investment information gathered from open sources, is analysed using IBA. The results revealed that ‛vertical farming’ and ‛e-commerce’ have high technology scores and marketability, positioning them as Category 1, driving the formation of new markets. The ‛smart food chain’ that uses advanced technology to optimise supply and demand adjustment, storage and distribution, thus reducing food loss, has already attracted significant investment while still having room for technological development, indicating a high likelihood of further progress going forward. Although neither the technology score nor marketability is yet fully developed, technologies related to ‛cellular agriculture’ and ‛other alternative proteins’ hold the potential to become next-generation trends considering their significant technology score growth rates.
Figure 2: Marketability, technology score and number of patent applications for each technology
This study analyses an overview of the Nature-Positive food value chain and describes current technology trends, as well as country- and region-specific technology trends. In addition, the report identifies through specific analysis ‛vertical farming’ and ‛e-commerce’ as trending technologies, ‛smart food chain’ as a technology that will experience further development going forward and ‛alternative foods’ as a promising seed technology. It also examines the current status, technology trends and potential contribution to Nature Positive in detail.
*1 Cellular agriculture refers to the technology of producing primarily meat by culturing edible animal cells. The process involves four steps: cell extraction, large-scale cultivation, tissue formation and processing to produce alternative proteins.
*2 A negative technology score does not necessarily indicate low technological competitiveness, but rather that technological developments are progressing in a different direction from trends.
End of report