The food landscape as we know it is changing rapidly on a global scale. Analysts are predicting greater changes to the food industry in the next 10 years than what has occurred in the last 50, and the impacts following COVID-19 have exacerbated the course profoundly.
Pressuring incumbents for change
Multidimensional layers of motivation nuance the shift in the food landscape besides the impact of the ongoing global pandemic. Consumer trends where sustainable values coupled with a demand for health and transparency have been key drivers forcing the standing, somewhat static food incumbents to reinvent their propositions. Increased consumer awareness placing pressure on market dominators for change, as well as a growing demand for convenience has accommodated startups and innovators to break into the space.
The consumer trends currently squeezing market leaders have already been seen to challenge the status quo in food production and procurement. Adaptations of emerging technologies providing transparency, traceability and plant-based alternatives to meat and dairy products have accelerated, growing 18% since 2018. Following this trajectory the use of blockchain technologies in the supply chain has become more ubiquitous. Blockchain technology enables transparency and traceability throughout the entire supply chain which allows end-consumers to gain full disclosure as well as brokers to ensure quality and safety. VC backed startups such as Ripe and AgriChain raised millions in their seed rounds with AgriChain securing $6m through Australian based Cornerstone Growth Capital earlier this year. Agritech’s expected CAGR is 19.3% and predicted to reach $430m by 2023. However, emerging startups are not the only disruptors in the space. IT giant IBM is increasing market share and has recently partnered with Chainyard to introduce a new blockchain network featuring a qualification and validification system. Though traditionally, market dominators tend to push the smaller entrants to the sidelines by leveraging economies of scale and overall deeper pockets, there has been a clear preference toward the startup scene which is reflected by sizable investments in early stage innovators.
Disruptors in consumer food tech paving the way
Sitting at the very forefront of the rapidly changing food industry is the consumer food segment. Funding for consumer food tech startups has increased from $60m in 2008 to >$1b in 2015 with an expected market value of $250b by 2022. The largest share in this segment is attributed to advancements of plant-based-proteins with a CAGR of 28%. Plant-based success stories involve unicorn food tech disruptor ‘Beyond Meat’, who went public in May 2019 with an IPO of $25/per share is currently trading at $140/share with a market cap of $8.8b – only in one year of being publicly traded. The Swedish dairy alternative ‘OATLY’ is another consumer food tech unicorn with a current valuation north of $2b. ‘OATLY’, who’s been around since the 1990’s has likely been an inspiration for Nordic innovators and an instigator of the great volume of food tech startups coming out of Scandinavia today.
The food tech industry is on an aggressive growth spur with consumer food tech in US markets currently holding the largest market share. Advancements in tech are often seemingly linear, however, when applying regression models one can appreciate outliers, which as witnessed in the past, have the possibility to change the trajectory of an entire segment. And this factor is what so many enjoy about the world of tech, namely, that an ‘outlier’, being that of a seed or an idea, suddenly couples with the technology needed for actualisation and accelerates into aggressive development. With this in mind, the future of food tech in light of investment sentiment seems to rest in the segment of consumer food tech concerned with cultivating non-animal-derived food alternatives. In particular, products that also master taste and texture are expected to become big disruptors in the space. Companies to look out for include Ripple Foods, Eat Just Inc, Noquo Foods and Hooked Seafood.
Ronja Lodmark
Corporate Strategy & Startups
