How FoodTech goes beyond convenience and is becoming more about climate, people and health.

May 6, 2020

EVOLVING FOCUS

Global challenges related to climate and health urgently require new solutions. At Industrifonden we believe that innovative companies within FoodTech capable of linking biology with engineering will offer some of the greatest opportunities in facing these challenges.

During the last couple of years, as a result of digitalization as an enabler, and consumers’ search for convenience as a driver, entrepreneurs brought us food delivery services, affordable personal grocery shoppers and curated recipes and grocery bags. With an increasing awareness of the environmental crisis, a better knowledge of the link between health and diet, and the evolvement of more self-expressionist values, the winds are now turning. As a result, more than ever before, consumers use their agency to premier the sustainable option, people turn to food to resolve their health issues, and policy makers accept technology as a way to resolve the global environmental and food crisis.

We believe that these mega-drivers create the momentum required to make a change. By using that momentum, entrepreneurs will bring us new FoodTech solutions with the potential to transform the way we understand, and deal with, food. We see opportunities emerging in three technological and scientific solution domains: solutions that improve the resource efficiency and distribution of food, solutions that bring us alternative foods & drinks, and precision nutrition solutions that will tie in with the mega-trend of personalized health to resolve unhealthy food-intakes and health behaviors.

OPTIMIZE WHAT WE HAVE

In the short-term, we’ll likely continue to see considerable optimization of the current food value chain. The number of startups that are offering services that target the reduction of food waste, improved logistics and optimization at the resource level (e.g. farming), are increasing at a rapid pace. Customers to services that aim to reduce food waste and improve logistics understand that there is an up-side for them in addition to the altruistic value of fighting the environmental crisis – they see that savings can be made. Solutions targeting the resource side of the value chain instead enable efficient ways of farming and local trade, where otherwise it wouldn’t be possible. Thus, strong customer pull effects are emerging, and so, viable businesses built around these will too.

GREENER ALTERNATIVES

To address the growing concern regarding the environmental footprint of the food industry, we believe in two (although closely related) technological tracks: alternative foods & drinks, and production processes that draw from the concept of circular economy.

Within alternative foods & drinks, the substitution of meat has been of late focus, and we believe it’ll continue to be a hot topic, producing newcomers within plant-based protein as well as lab-cultivated meats to obtain higher levels of customer satisfaction and minimize the environmental impact. However, challengers aren’t only targeting the meat industry. For instance, our portfolio company Oatly is transforming the dairy market, offering an environmentally sustainable alternative to milk. Going forward, we believe that a wave of alternative foods & drinks are going to enter our supermarkets. With it comes not only opportunities within the consumer-faced sector, but also great potential for B2B opportunities that enable and support the production of these alternatives. A concrete example is circular economy processes that valorize cheap output from e.g. the traditional food industry, and uses that to produce alternative proteins. It can be done with microbes, with plants or to take it a step further – with engineered biological systems.  

FOOD TO MAKE US HEALTHY

The future of food will look nothing like its former self. Similar to what is taking place in the field of oncology, where physicians are choosing treatments based on the characteristics of each patient and their pathology, researchers are now looking to patient-tailored nutrition as a promising approach to prevent and manage diseases. Precision nutrition seeks to design health-improving nutritional recommendations based on the combined characteristics of a patient’s dietary habits, their unique genetic code and microbiota, joined with knowledge about any specific environmental or lifestyle factors that may affect the pathology.

To unravel the complexity of the issue, multidisciplinary research spanning across fields like genomics, nutrition and medicine, is required. To ensure scalability on a commercial plane, we’re likely to see a verticalization of the precision nutrition industry; populated with ventures providing niche services like mapping, designing and testing, producing and providing, much like we’re used to in the health care industry today. Development is likely to start at the upstream side of the value chain – a hypothesis that will guide our search for investment opportunities within precision nutrition.

THE OVERARCHING TREND

Needless to say, the future efforts will happen at the intersection of biology and engineering. And so, to find the future of food, we organize ourselves to bring these disciplines together, and we look for teams that do the same.

/by Rebecka Löthman Rydå, Patrik Sobocki & Alex Basu

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