If you’ve ever eaten the meatless burgers made by a lab, or savored an kale salad that was grown on a hydroponics farm You’ve had an experience of foodtech. At present, it may seem like a fringe option for those who love food. But in the years to come the rapidly growing sector will be commonplace and will change our eating habits.
What’s behind the growth of foodtech? Startups are trying to create food that is more sustainable and efficient to counter the risk of food insecurity as well as inefficiencies and negative environmental impact in the agricultural and meat industries. Some are even helping consumers make betterand healthier choices in their food choices.
The global food industry isn’t up to the task As these statistics clearly illustrate:
Based on the United Nations, the world must increase its production of food by 60% in order to feed an estimated population of 9 billion by 2050.
Changes in the climate, urbanization , and water shortages reduce amounts of land that we can utilize to grow food.
More than 690 million people around the world are affected by hunger.
The figure is predicted to increase to the 840 million mark in 2030, which will be exacerbated through the pandemic.
Foodtech startups are looking to fill a few of the huge gaps in the market and have sparked the attention of foodtech VC.
The many ingredients in food and technology
Beyond the lab-grown meats and the vertical farms that are located in urban areas, foodtech needs to be viewed as an enterprise that uses technologies such as artificial intelligence Internet of Things (IoT) and big data to disrupt various aspects in the supply chain for food all the way from manufacturing to distribution.
The industry is divided into six verticals or sub-sectors (definitions that are adapted by The Digital Food Lab):
AgTech Startups that aim to improve output and the quality of crops through drones, sensors, and software to replace humans. This vertical concentrates on agricultural products, next-generation farms, and urban agriculture.
Food Science: Startups are studying and developing products for food which address environmental and health issues. The lab-grown meat, plant-based alternatives to meat, and other protein sources fall in this category.
Food Service: New startups are changing the way that food-related businesses (hotels cafes, restaurants and hotels) are run in the present. The latest innovations dubbed’restaurants for the next generation’, such as robotic chefs and cloud kitchens are part of this sector.
Coaching: companies that inform consumers and increase the awareness of people about their food choices, health benefits , and help people achieve their personal goals, such as health or managing chronic ailments.
Delivery: companies that dive into the issue of transporting food items in the industry. Food and restaurant delivery is included in this.
Retail: companies that are developing technology-based solutions that optimize the functions of the retail food industry. This could include improvements to the back end, such as digitizing supply chains or front-end programs to provide an improved shopping experience in the store.
Some incubators for food technology have more precise categorisations. However, the six verticals listed above offer an overview of the field.
Why Investors Love It. for It
Foodtech companies, by nature, need plenty of time to R&D and stringent safety tests before they can bring their products to market. It took 10 years or more for Impossible Foods and Beyond Meat to be household names with billion-dollar valuations. They are the most successful success stories in the industry’s early days to date.
The interest of investors in foodtech has been growing momentum recently, partly because of the United Nations and other international organizations highlighting the issue of food insecurity and creating the Sustainable Development Goals (SDGs) to be met by 2030.
The Financial Times reported a surge of investors interested in investing based on Environmental, Social and Governance (ESG) principles. Investors channeled more than US 70 billion to sustainability-focused investment funds in the months of April through June of 2020 due to the growing awareness of the climate crisis.
The COVID-19 epidemic also brought to light our dependence on international supply chains, as well as the inefficiencies of traditional food production systems. The government has begun turning its focus to foodtech in order to speed the production of food in the country in addition. For instance, Singapore launched a SGD $30 million (US $21 million) fund to boost local food production on top of the current initiatives to ensure that the island’s ability to supply 30 percent of its food needs in 2030.
Private investors are getting in the business as well. In the report by Food Navigator USA, investment in US foodtech reached a record all-time high at US $8.4 billion during the initial three quarters of 2019. This was more than the record amount in the amount of US $7 billion this sector earned during the entire year of 2019.
Alternative proteins have proven to be hugely popular in recent years, with US research into alternative proteins and lobbying organization The Good Food Institute reporting a total of US $3.1 billion funneled in the area, an increase from US $1 billion figure for the year.
The advancements in this field do not only apply to the most advanced Western markets. For Southeast Asia, investment in the food and agriculture startups rose up to US $350 million during the initial six months of 2019. It is in line to surpass the total of 2019’s year-long haul which was US 423 million.
In this case, the pandemic and lockdowns haven’t stopped the pace of innovation, with a variety of foodtech businesses taking advantage of the crisis and being resilient. When international imports were disrupted the majority of consumers turned to local grocery stores, farmers and food delivery services.
With the global outlook for food production, the sustainability issues and the constantly changing diet trends, interest in foodtech is not likely to slow down anytime very soon. It’s a good time to take a look at securing an eat at the table. Tomorrow’s foodtech innovations are already being ready to be served.
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