The World Is Hungry for Food Tech, and These Innovators Are Changing the Way We Eat

Share prices of companies disrupting their markets, such as Beyond Meat and Israel’s Else Nutrition and SavorEat, are soaring, while startups in the industry are going public

Amir Alshech and Hadar Winner-Schwartz
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A food technician tests a cooked 3D printed plant-based steak mimicking real beef and produced by Israeli start-up Redefine Meat during a demonstration for Reuters at their facility in Rehovot, June 29, 2020.
A food technician tests a cooked 3D printed plant-based steak mimicking real beef and produced by Israeli start-up Redefine Meat during a demonstration for Reuters at their facility in Rehovot, June 2Credit: Amir Cohen/Reuters
Amir Alshech and Hadar Winner-Schwartz

Food tech is among the industries whose disruptive technologies have begun to change the world we live in and whose global influence is only expected to grow.

The industry promises developments such as meatless meat, fishless tuna, laboratory-raised hamburgers and chicken breasts, robot short-order cooks and sugar that is “good for you,” to name just a few.

With a customer base of 7.8 billion people, no industry is bigger than the global food market. In the United States alone, people spent some $1.7 trillion in supermarkets and grocery stores in 2019. About 10% of disposable income in the United States is spent on food.

Nonetheless, despite the guaranteed customer base, the food industry is facing challenges in production, demand and regulation stemming from changing consumer requirements. These represent the firm base of the food tech industry’s growth. Consumers are focusing increasingly on sustainability, health and freshness – and they are even willing to pay a premium for innovations in food technology that can meet their growing needs demands for convenience, fair trade and positive environmental impact.

Once involved mainly in the logistics of online ordering and the delivery of meals and groceries, the food tech industry has expanded rapidly into many other areas. Some of the deals that stood out the most in the sector in the past two years were in the business of ordering meals – which include the investment of $1 billion in Swiggy, the leading online restaurant ordering and delivery platform in India; the $600 million investment in the U.S. delivery and pickup service Instacart and $590 million in the Brazilian restaurant and delivery portal iFood.

Customers select meat at a supermarket in Hangzhou, Zhejiang province, China, June 9, 2016.Credit: Stringer/Reuters

In September 2017, China signed a $300 million deal to import laboratory-grown meat from three Israeli companies in this up-and-coming industry – Super Meat, Meat the Future and Future Meat Technologies – as part of the country’s plan to reduce meat consumption by 50%.

During the coronavirus pandemic, food delivery services have been a lifesaver for people all over the globe staying or working at home. According to the international business data platform Statista, estimated revenue in the segment in the United States alone is expected to reach $27 billion in 2020.

The pace of funding for the food tech industry around the world has accelerated steeply, from less than $100 million in 2008 to about $7 billion in 2019 and some $4.8 billion in the first half of 2020. Each of the industry’s 10 leading investments has taken part in funding rounds of more than $100 million.

Disruptive startups are plentiful in the industry. They include California’s Impossible Foods, with its plant-based Impossible Burger and Impossible Sausage; Natural Machines, which makes food using 3D printing; Momentum Machines, whose robots prepare and serve hamburgers untouched by human hands and Too Good to Go, whose eponymous mobile app connects customers to stores and restaurants with surplus food. Aiming to shake up the sugar industry are German startup Savanna Ingredients, which is developing sugar without calories, and Bonumose, a startup in Charlottesville, Virginia that is manufacturing low-calorie sugar it says “promotes health.”

Of the 250 food tech companies operating in Israel, at least 124 are startups, founded no more than three years ago. Investments in the industry in Israel have grown from $52 million in 2013 to about $135 in 2019. Among the deals that stand out are Dynamic Yield from Tel Aviv, which develops a consumer platform based on artificial intelligence, which was bought by McDonald’s for $300 million.

Ten times the demand

The direction is clear in the stock markets too. In May 2019, California’s Beyond Meat – famous for its meatless burgers and sausages – held its initial public offering. When it began trading on the Nasdaq Stock Market, under the ticker symbol BYND, it was the watershed moment for the manufacturers of plant-based meat alternatives.

In June 2018 The British Columbia-based The Very Good Food Company completed an initial public offering on the Canadian Stock Exchange, becoming the world’s second publicly traded alternative meat company. It was founded in 2016 and opened its first physical store in the Victoria Public Market in the city of the same name in British Columbia. Since then, it has sold its wares directly to consumers, and also sells its products through a number of retailers in Canada.

Another Canadian company is Modern Meat, a startup led by women that completed an IPO on the Canadian Securities Exchange in July. Founded in 2019, Modern Meat offers vegan meat alternatives. They include so-called clean foods that use only non-genetically modified organisms and ingredients such as pea protein, chickpea flour, mushrooms and brown rice. The company noted in its presentation to investors that it intends to use the proceeds from the IPO to increase its manufacturing capacity tenfold to meet the great demand for its products.

Israeli startup Else Nutrition is the first in its niche industry, developing and manufacturing plant-based baby formulas and solid foods. Founded by three former senior executives from baby food manufacturers Abbott, Materna and the Promedico group, Else Nutrition went public on Canada’s TSX Venture Exchange in July 2019 and began trading on the OTCQX market under the ticker symbol BABYF. Its shares have risen over the past year by 675%.

In June, the first food tech company reached the Israeli stock market: Meat Tech began trading on the Tel Aviv Stock Exchange. The company is developing a 3D printer for producing what it calls clean meat.

A sign promoting McDonald's 'PLT' burger with a Beyond Meat plant-based patty at one of 28 test restaurant locations in Ontario, Canada, October 2, 2019.Credit: Moe Doiron/Reuters

In July, an investment vehicle, Millennium Food-Tech, a research and development partnership for investing in the industry, owned by Yossi Tamar and Shai Lior, was launched on the TASE. The partnership invested in SavorEat, which has developed technology for manufacturing plant based meat alternatives based on using a cellulose derivative as a binder – and using 3D printing. In November, SavorEat had its IPO at a company value of 170 million shekels ($52 million) before the money. Its share price soared 33% December 3, climbing 110% since the IPO, before losing most of that gain.

Technology will play an increasingly more important part in how our food is made, packaged and delivered as well as its later reuse and recycling. Most of the companies in the industry are still in private hands, but the involvement of venture capital is accelerating quickly. Experience has taught us that the proper identification of global trends at a relatively early stage of trade can confer an advantage. Food tech is a trend worth getting to know better.

Amir Alshech is the chief strategist of Yelin Lapidot Investment House. Hadar Winner-Schwartz is the director of the company’s economic department. 

This article does not constitute investment advice and cannot substitute for consulting with a licensed investment adviser. Yelin Lapidot may own or sell financial assets of companies discussed in this article.

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