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What Exactly Is Foodtech?

If you’ve ever eaten the meatless burgers made by a lab, or savored the kale salad that was produced by a hydroponics plant You’ve had an experience of foodtech. It may seem like a fringe option for those who love food. However, in the next few years this fast-growing business will be popular and transform the way we eat.

What’s behind the growth of foodtech? Startups are looking for ways to create food that is more sustainable and efficient to counter the danger of food shortages or inefficiencies, as well as negative environmental impact in the agricultural and meat industries. They are also aiding consumers in making better, healthier choices in their food choices.

Food production in the world isn’t up to the task As these statistics clearly demonstrate:

As per the United Nations, the world has to increase its production of food by 60% in order to support an estimated population of 9 billion by 2050.
Climate change, urbanization , and water shortages have reduced amounts of land that we are able to use to grow food.
More than 690 million people around the world are affected by hunger.
The number is projected to rise to the 840 million mark by 2030. This is aggravated due to the pandemic.

Foodtech companies are aiming to fill a few of the huge gap in the market and have sparked the attention of investors.
The many ingredients in food and technology

Beyond the lab-grown meats and city-based farms in vertical verticals, the term “foodtech” must be considered as a vast enterprise that uses technologies such as artificial intelligence (AI), Internet of Things (IoT) and big data to disrupt various aspects in the supply chain for food starting from the production phase to delivery.

The sector can be classified into six verticals or sub-sectors (definitions that are adapted by The Digital Food Lab):

AgTech Startups that aim to improve the output and quality of crops through drones, sensors, and software that replaces human labor. This vertical concentrates on agricultural products, next-generation farms, and urban agriculture.

Food Science: companies are researching and developing products for food that address environmental and health issues. Plant-based meat, lab-grown alternatives to meat, and other protein sources fall in this category.

Food Service: Startups improve the way that food-related companies (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 in this category.

Coaching: companies that inform consumers and increase the public’s awareness of their choices in food, the benefits of healthy eating and assist individuals to achieve personal goals such as health or managing chronic ailments.

Delivery: companies that dive into the problem of transporting food items in the industry. Restaurant and grocery delivery are discussed here.

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Retail: Startups developing tech-based solutions that optimize the functions of the retail food industry. This can include back-end enhancements like digitizing the supply chain, or front-end programs to provide an improved shopping experience in the store.

Some incubators for food technology have more precise categorisations. However, these six verticals provide an overview of the sector.

Why Investors Love It. for It

Foodtech startups, due to their nature, need plenty of time to conduct R&D and stringent safety tests before they can bring their products to market. In the case of For example, it took nearly 10 years or more for Impossible Foods and Beyond Meat to become household names , with billion-dollar valuations. They are the top success stories of the still-in-progress industry.

The interest of investors in food technology has gained popularity recently, in part because of the United Nations and other international organisations that are highlighting food insecurity as well as setting 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 poured over US 70 billion to Sustainable investment fund between the month of April to June of 2020 due to the growing awareness of climate-related issues among the public.

The COVID-19 epidemic also brought to light our dependence on international supply chains as well as inefficiencies in traditional models of food production. Governments are turning their focus to foodtech in order to speed the production of food in the country and also. For instance, Singapore launched a SGD $30 million (US $21 million) fund to promote local food production on top of the current initiatives to ensure that the island can meet 30 percent of its food requirements 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 in the amount of US $8.4 billion during the three first quarters in 2020. This is more than the record-breaking sum that was US $7 billion the sector received throughout the year.

Alternative proteins have proven to be an enormous success and have seen a huge increase in demand, with US research into alternative proteins and lobbying association The Good Food Institute reporting a total of US $3.1 billion that was channeled to the research field. This is an increase from US $1 billion figure in the year the year 2019.

The advancements in this field do not only apply to the most advanced Western markets. For Southeast Asia, investment in the region’s foodtech and agriculture startups rose up to US $350 million during the beginning of the year 2020’s first half. It is close to exceeding the full-year total 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 showing resilience. After the disruption of imports from abroad and consumers turning to local grocery stores, farmers and food delivery firms.

With the global outlook for food production, the sustainability issues and the constantly changing food trends, the interest in foodtech is not likely to slow down anytime in the near future. It’s a good moment to consider taking an eat at the table. Tomorrow’s foodtech innovations are already being ready to be served.