We are excited to bring Transform 2022 back in-person July 19 and virtually July 20 - 28. Join AI and data leaders for insightful talks and exciting networking opportunities. Register today!
With its first full-size cashier-less grocery store opening, Amazon is bringing mass personalization to the food system and upsetting the order that has reigned since the end of World War II.
Since the war, our food policy, reflected in the federal farm bill, has been to keep food abundant, affordable, and safe. In the words of Greg Page, former CEO of Cargill, the U.S. federal government ensures there is enough food at the price of just $1 for every person on Earth.
This is a food policy focused on production, in particular, of calories and protein (think corn for ingredients, wheat for bread, soy for livestock feed). The consequence of this policy is profoundly depressed commodity prices, so Midwestern row crop farmers cannot make a living, and we’ve ended up with the foods of “Fast Food Nation” — empty calories that lead to diabetes, so cheap that portion sizes keep doubling every few years. It’s a food policy that doesn’t satisfy anyone, really.
At the other end of the food system, look at consumers: While “legacy brands” like Hellmann’s are declining, organic brands like Sir Kensington’s are experiencing meteoric growth. That reflects consumers’ increasing desire for food to reflect our values, tastes, and aspirations. Nearly all legacy food brands have flat or declining sales, while the smallest exotic food brands are proliferating and succeeding. Since retailers don’t make money on Cheerios anyway (because the product amounts to a commodity), they show an increased willingness to put Nature’s Path, Cascadian Farms, or Bob’s Red Mill on the shelves because they can make more money — and consumers want those brands.
Amazon’s Whole Foods is, of course, the originator and master of trying out the latest in niche-food offerings that come into the mainstream. Whole Foods caters to the complete menu of fringe trends: vegan and meat-centric paleo, nut-centric superfoods and nut-free hypoallergenic snacks.
While big-box stores usually are terrified by smartphone-wielding consumers making price and feature comparisons, Amazon has gone out of its way to empower its customers with information on just those hyper-personalized decisions that drive each sale: witness its engagement with the Sage Project, which lets you explore each Stock Keeping Unit along any imaginable ethical, practical, or physical axis.
Or look to their latest experiment with cashier-less grocery stores that track consumers with hundreds of cameras and sensors. Amazon says it uses “the same types of technologies used in self-driving cars: computer vision, sensor fusion, and deep learning” to identify and monitor which products are removed (or even just browsed) by which customer. With every look, touch, and step analyzed, it should not surprise you that the big losers in the stock market following the announcement were legacy grocery chains like Kroger and Costco.
What Amazon has done, by accident or intention, is to upset the entire postwar food system to be driven by the consumer backward, rather than from corn subsidies forward.
Not only will people get Amazon Go’s highly accurate personalized recommendations to buy their organic spelt, einkorn and emmer-filled breakfast cereals without ever waiting in line again, but their willingness to pay more for it will propagate backward to farmers who suddenly can make a living because they are not growing the same winter wheat that every other farmer is pouring into grain elevators. The more consumers desire foods with particular attributes, like diverse plants, sustainable production practices and even terroir, the more the farm system becomes decommodified and gives farmers a viable path to making a living. Wouldn’t that be nice for rural America?
Adam Wolf is Founder and Chief Scientist of AgTech startup Arable Labs.
VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Learn more about membership.