[K-K-Food Saltwater R&D]③ Secure Core Technologies for Future Food 'Food Tech'

'Master of Transformation' Nestle... A Closer Look at R&D Investment
Technological Innovation Needed for Core Food Tech
Government Support Should Start with 'R&D Classification System' Reform

Editor's NoteThe popularity of K-Food is heating up worldwide. Korean food products such as ramen and dumplings sold nearly $10 billion (about 15 trillion won) in overseas markets last year, breaking export records every year. This is thanks to the great popularity of Korean content like K-dramas and K-pop overseas. However, there are concerns that the competitiveness of Korean food riding on K-culture may not be sustainable and could end up as a fleeting trend. Asia Economy examined the current state of research and development (R&D) in domestic food companies and explored ways to secure the source of future food resources.

Global No.1 food company Nestl? is regarded as the "most adaptable multinational corporation." It has succeeded in localization in every country it has entered by capturing consumer preferences by gender and age. More than half of Americans answered that Nestl? is an "American company," and in the UK, responses varied among British, French, Italian, and others, illustrating Nestl?'s customized strategy.

Since launching the world's first instant coffee in 1983, Nestl? has continuously introduced new products. To this end, Nestl? is researching consumer behavior analysis using artificial intelligence (AI) and machine learning technologies, product quality optimization, and shelf-life extension. Nestl? has invested over 2 trillion won annually in research and development (R&D) over the past five years.

Experts point out that domestic food companies need to increase R&D investment not only to develop next-generation products but also to secure core food tech technologies. In particular, there are suggestions to change the government's agricultural, fishery, and food R&D classification system to provide systematic support to respond to future food crises such as climate change, environmental pollution, and resource depletion.

'Master of Transformation' Nestl?... A Closer Look at R&D Investment

According to the food industry on the 20th, Nestl? continues R&D innovation through 23 research and development centers worldwide, over 500 laboratories, and more than 4,000 researchers. They focus on the fact that all products, including their flagship instant coffee, change according to consumer preferences and respond sensitively to this.

Nestl?'s R&D centerpiece is Nespresso capsule coffee. Since introducing Nespresso capsule coffee in 1976, Nestl? has remained the king of the global capsule coffee market. To extract espresso by applying pressure to a container filled with ground coffee, Nestl? devoted itself to R&D and eventually developed technology protected by a 25-year patent period.

Nestl? has developed a variety of plant-based product lines, including plant-based beverages, plant-based seafood, and plant-based burger patties, as well as pioneering the medical food market with therapeutic foods for patients with kidney disease, dysphagia, diabetes or hyperglycemia, and metabolic disorders. Development of innovative product lines is ongoing. Nestl? invests about 2.64 trillion won and is committed to environmental friendliness and sustainability, recycling about 88% of packaging for all products, and steadily conducting R&D in various fields.

A senior official in the food industry explained, "Consumers in each country have completely different food cultures, making the food sector one of the most difficult to globalize," adding, "Nestl?'s early adoption of a global corporate brand strategy and its balanced development of product brand strategies are sufficient reasons that made Nestl? a role model for food companies worldwide."

Technological Innovation Needed for Core Food Tech

There are calls for urgent R&D on core technologies like Nestl? in the domestic food industry. Park On-seo, president of the Korea Food Technologist Association, said, "Looking at food factories, there are automated systems, growth rate control devices using gases, carbon dioxide control devices, and equipment analyzing air components," adding, "Food tech literally means food technology, and innovation is needed not only in cultured meat production but also in these basic technologies."

Park said, "Recently, the food industry has advanced by converging with IT, IoT, and big data," adding, "Just as eating pizza in Italy is a way to experience the country's culture, food is connected to the culture of the country and region. Since food plays a leading role in creating culture, efforts should be made for industrial development."

As medical food and senior-friendly food categories continue to grow steadily, voices calling for quality and technological competitiveness enhancement to secure global competitiveness are also rising. In fact, the global medical food market size grew from $7.8 billion (about 11.38 trillion won) in 2021 to $23.6 billion (about 34 trillion won) last year. The World Health Organization (WHO) forecasts an average annual growth rate of 7.95% for the global medical food market from 2017 to 2030.

An industry insider said, "Domestic food companies should consider partnerships, investments, or M&A with domestic and foreign companies possessing technology related to new growth markets such as medical food," adding, "In the postbiotics field, global food companies invest long-term and on a large scale in the microbiome, whereas domestically, pharmaceutical companies lead the market with probiotic health supplements rather than food and beverage companies, which needs to change."

Government Support Should Start with 'R&D Classification System' Reform 

To this end, there have been proposals to change the current government agricultural, fishery, and food R&D classification system. According to the Organization for Economic Cooperation and Development (OECD), as of 2022, the agricultural sector's share of socio-economic R&D budgets was highest in the U.S. at $3.221 billion, followed by Japan at $2.883 billion. Korea's $1.43 billion exceeded Germany's $1.208 billion and France's $479 million. However, this R&D budget includes all allocations based on the government's agricultural, fishery, and food R&D classification system, covering food production, distribution, and technology development. Critics point out that this classification system overlaps with the downstream food industry, preventing precise support for the food industry.

According to the Korea Institute of Science and Technology Planning's February study this year titled "Research on Improving the National R&D System in Agriculture, Forestry, and Fisheries," the new classification system highlights food tech as a technology expected to have significant economic and social ripple effects and high growth potential in the future.

Korea's food tech industry is categorized into online platforms, dining robots, food packaging, and alternative foods, with the food packaging market size reaching $323 billion in 2020, the largest market size recorded. The food packaging industry is expected to grow to $478.2 billion by 2028. Alternative foods are also considered a high-growth industry. With global interest in sustainable food increasing due to food security and the impact of COVID-19, the international plant-based meat substitute market is projected to grow from $29.4 billion in 2020 to $162 billion by 2030.