Alternative Avenues for Innovation

As COVID-19 hits global markets across the board, the Food and Ag (F&A) industry faces rising pressure in the fight against food insecurity. The long-term outlook is still uncertain due to variables ranging from foodservice employees seeing rising levels of unemployment, to consumers embracing processed foods vs. pricier yet nutritious alternatives. The impact is also seen across the investment landscape, with Venture Capital (VC) investment projected to be 16% lower in Q1 than the prior quarter alone and startups feeling pressure from fast-shifting consumer purchasing behavior.

However, through all this uncertainty we see areas of opportunity emerging with the power to shape the industry long-term. Ahead, we examine six areas with the potential to drive change in a new economy, and the FoodBytes! alumni who could come out as winners.

1-The hunt for functional food is on the rise

The virus has made immunity top of mind, and consumers are seeking added health benefits in products they regularly use. According to RaboResearch analysts Steve Rannekleiv and Bourcard Nesin, beverage brands with wellness connotations are thriving amid public health concerns, however consumer willingness to pay a premium is likely to decrease during a recession. Emerging brands should be smart about achieving minimal unit costs for premium products. FoodBytes! alum Shaka Tea’s ready-to-drink (RTD) tea offers the functional benefits of Hawaiian superfood māmaki, yet remains price competitive at under $3 per bottle. In addition to being sugar-free and keto-friendly, the tea is introducing mamaki’s high antioxidant and stress-relieving properties to the broader market.

Other potential bright spots are products with significant health and immunity benefits that ask for minimal consumer behavior change, like enhanced beverages (teas, coffees, and wellness shots) and fortified snacks (bars, salty snacks). Two FoodBytes! alumni hit the mark: Vive Organic, which produces organic, non-GMO and cold-pressed wellness shots to strengthen the immune system, and Kuli Kuli, the first company in the US that offers ‘moringa’ (a new protein-rich green superfood) through bars, powder and energy shots. Despite the price pressures mentioned above, we find that these wellness brands are able to command higher demand from select consumer segments through their “enhanced” product offering.

2- Is the future of food online? Embracing e-commerce for grocery delivery

In an interview with CNN, President and CEO of the National Grocers Association, Greg Ferrara, describes the current grocery demand as astronomical, and given the reality of global lockdowns, shoppers who normally buy groceries in-store are adopting e-commerce to get products delivered to their door. The number of households ordering groceries online in March soared to 145.3% compared with August 2019, and FoodBytes! alumni like Oddbox, who just closed their Series A of $3.8M in mid-March, are experiencing unprecedented demand for its online grocery products. The UK-based company delivers bundles of rescued produce at a discount to normal retail prices, combating food waste. While the long-term shift in e-commerce is still unknown, it’s likely that the channel will continue to be in high demand.

3- Supply chain uncertainty: Consumers turning to locally-sourced produce

According to RaboResearch analysts Roland Fumasi and David Magaña, fresh produce demand has increased significantly in retail, online, and local sales; orange sales alone are up 60% year-over-year bolstered by their abundance in vitamin C. Because products distributed via cold chain have a limited shelf life, demand is more reliable than for packaged and shelf-stable products. But the main risk lies in the supply chain, with larger food delivery operations becoming paralyzed by delays and now, worker strikes. This has driven an uptick in demand for locally-produced food, with smaller farmers pivoting to direct-to-consumer deliveries and pickups. FoodBytes! alum Seal the Seasons is connecting the dots – the company is making local frozen produce available year-round, while also helping provide small family farms with a reliable income stream.

Source: Reuters, 2020. Fresh produce in Europe set to be more scarce as coronavirus strikes.

4- Affordable packaging solutions are thriving

On the back of increased e-commerce sales and demand for shelf-stable food, the industry is developing a growing need for cartons, containerboard, and single-use-plastics. Consumer spend on packaged mandarins rose over 111% in the week ending March 8th versus the same time last year. RaboResearch analyst Xinnan Li acknowledges that there is a positive short-term outlook for the sector, however with an impending recession she expects an increased demand for lower cost providers. Delivering on that demand is FoodBytes! alum Corumat, which offers packaging up to 30% lower cost than traditional technologies and is derived from sustainable plant-based material; a win-win. The same goes for Element Packaging; last year’s FoodBytes! finalist services many high profile chains and large distributors in the UK and abroad with its sustainable food packaging solutions.

5- Food hygiene is imperative now more than ever

Although there is no evidence that COVID-19 is transmitted by food, it can survive on surfaces for several days. In an industry with products and ingredients changing hands countless times in a matter of days, pathogen testing remains integral in the food supply chain process. Even outside of the industry, the widespread and rapid proliferation of COVID-19 has placed additional importance on rapid pathogen testing to track and control the spread of dangerous diseases.

Enter FoodBytes! alum FreshCheck, which is revolutionizing food safety with a simple color change tool to test hygiene. The Fresh Check Spray is on the market and improving cleanliness in over 80 food companies, with plans to expand to home, healthcare, and beyond.

Another alum, SnapDNA has developed the fastest food safety pathogen test in the industry. Their technology eliminates the need to culture bacteria prior to analysis, enabling sample-to-answer test results in a mere hour for key pathogens like listeria, salmonella, and E. coli. Similarly, alum Yarok MicroBio aims to protect consumers and safeguard producer interests with their fast microbiological testing system for the fresh food industry.

6- Achieving supply chain efficiencies through farm automation

With global travel bans placing an unintended squeeze on migrant labor – a cornerstone of food production – the impact on U.S. harvest crops alone could be devastating. Labor shortages are not new to the field, but one this sudden and massive could force an alternative: on-farm automation. According to RaboResearch analyst Sam Taylor, farmers will be looking to adopt more technology to draw down on the use of inputs, which could open up R&D opportunities for startups operating in these spaces. FoodBytes! alum Augean Robotics has developed a data-acquisitive robotic cart, called Burro, that works alongside humans to automate the more tedious tasks of crop harvesting. According to the company, farmers are able to utilize the robot to increase productivity up to 30%. Another FoodBytes! alum, DataFarming, aims to unlock the potential of Precision Agriculture products and farm data by putting simple, automated and low-cost digital solutions in the hands of agronomists and producers. As the supply chain faces uncertainty with each new day, we’re following these alternatives closely.

Source: Robotics and Automation News, 2019. Augean Robotics raises $1.5 million to commercialize farm robot.

A path to a new normal

Rabobank’s Research analysts have compiled a wealth of insights on the macro impacts of the pandemic on the industry’s key sectors (you can also listen to their insights on our webinar recap here), but the main takeaway we see is that this path to a new normal will force us to examine alternative avenues, including new functional food products, ecommerce channels, supply chain optimizations and automated farming systems. These solutions may be the best equipped to build momentum in a recovering world craving wellness, transparency, and accessibility.

Are you a sustainable startup innovating in food & ag? We want to hear from you! Fill out our interest form to be considered for our pitch and pilot programs. Questions? Reach out to FoodBytes! team member Sonia Shekar.

Corporates and investors looking to drive innovation and change from the top: FoodBytes! can help. Reach out to our team member Eline Boot to learn how our programs are addressing the food and ag landscape in today’s environment and beyond.

Together we are growing a better world.





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