Future of Food: Will an Investment Rebound Drive Growth and Sustainability?

Providing a growing global population with the food they need is a crucial aspect of sustainability for the future. Not only does the agricultural sector contribute around 18% of total GHG’s, but our traditional methods of cultivation are also being increasingly challenged by issues such as soil degradation, water shortages and unpredictable climate events. Should the world reach a population of 9.7bn by 2064, forecasted by a University of Washington study, the Food and Agriculture Organisation predicts food production would need to rise by 50% to fulfil current food consumption patterns.

Despite this point, the Food and AgriTech sectors have received lower investment interest (down 44% in 2022) than innovations geared towards energy storage, electric vehicles, hydrogen solutions and carbon capture. Some attribute this to examples such as Beyond Meat which, even after it broke records in 2019 when its IPO rose 160% in its market debut, has seen its shares slump as inflation, competition and consumer preference continues to hamper its progress. Cases like this caused hesitancy in the market and “led some to question whether innovations in plant-based meat alternatives will be able to deliver on the early promise that they could take a significant market share from traditional meat.” Lisa Feria, Partner and CEO at Stray Dog Capital.

Even with the hype supporting lab-grown meat, people’s habits aren’t switching over rapidly enough with current estimates suggesting global meat consumption may see a rise of 14% by 2030 should existing trends continue. While meat replacement options may not be gaining the traction many have hoped for, at least for the moment, the human diet has many components, and the growth in popularity for certain alternatives is providing a great deal of optimism for FoodTech in 2023.

Dairy is one such example. Oat milk for instance, once a niche product, is surging in popularity as its price begins to align with consumer expectations and constant improvements in its composition, e.g. creamier texture and frothing ability for coffee, is improving its position as a viable alternative. Innovative providers such as Blue Farm are helping this trend continue not only through the provision of a range of modern-flavoured oat-based protein sources but through subscription models to help better-cement more sustainable, healthier choices into people’s day-to-day lives.

Hackney-based startup, Better Dairy, is also taking on another key aspect of the dairy sector by developing a healthy alternative to cheese through precision yeast fermentation. With a molecular structure almost identical to cheese, but with no hormones and healthier fats, they have enjoyed over $20m in funding to continue to develop their process with aims to expand into other dairy items such as ice cream. French startup, Standing Ovation, are enjoying similar success in this space raising $12m in a Series A round to further support their goal of creating animal-free caseins for cheeses.

The development of food technology such as this is a complex and pioneering field which requires huge resources to be able to develop innovations such as mimicking textural profiles via 3D printing or cultivating meat from cells. While 2022 may have been a slower year for investment, the sustainability issues FoodTech businesses are attempting to mitigate are only going to become more pressing. “The need for a new food system is ever more prominent, and as awareness of threatened food security keeps growing, the potential, the opportunity and the need will keep driving food-tech investments,” Noga Sela Shalev, CEO of Israeli Foodtech incubator, Fresh Start.

To improve their appeal in the market, 2023 will necessitate FoodTech players to maintain a pressing focus on not just their growth and development, but how this translates into profitability. Investors will likely not just be assessing the story, but also the company’s history meeting their KPIs and their progress towards a possible go-to-market stage. Successful scaling of their teams will be a crucial component of this. Cultivated premium meats specialists, Gourmey, will be looking to expand its headcount from 40 to 120 people by 2024 to help them progress with key routes to profitability such as product development, expansion into new territories and regulatory compliance.

For the leaders of businesses such as these, having the right people on board to drive progress allows them to focus on steering their company towards a successful future as well as continuing the positive impact of the global sustainability mission.

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