COVID-19 is disrupting international meals markets, from the shut-down in meals service to declining ranges of funding.
In response to the first-quarter report from FoodBytes! by Rabobank, the long-term outlook is ‘unsure’ as a result of risk of financial downturn and rising ranges of unemployment. Within the funding house, enterprise capital funding is projected to be 16% decrease within the first quarter of this yr than within the prior quarter alone.
Begin-ups are feeling the squeeze from ‘fast-shifting’ shopper buying behaviour, the financial institution’s start-up innovation crew famous.
Nevertheless, the place there’s uncertainty, there’s additionally alternative. FoodBytes! outlined six areas that, it mentioned, have the potential to ‘drive change in a brand new economic system’.
#1: Practical substances
The coronavirus disaster has positioned immunity top-of-mind for customers, who’re in search of merchandise that they ‘repeatedly use’ however with added well being advantages.
These issues are shifting nicely past the nutraceutical house and increasing into the mainstream.
“With the useful meals house rising steadily all through final yr, the outbreak of coronavirus has additional accelerated the demand for added well being advantages in ‘on a regular basis’ meals merchandise, particularly those who supply immunity assist,” Sonia Shekar and Liz Duijves, start-up innovation analysts at Rabobank, advised FoodNavigator.
In response to the AI-powered meals intelligence start-up Tastewise, which tracks on-line shopper engagement, mentions of ‘immunity’ within the context of meals searches rose 27% between February 2019 and March 2020. Kombucha, pickled greens and bitter melon are examples of grocery objects which have particularly seen an uptick in curiosity because the onset of the virus, in line with Tastewise.
Whereas shoppers search out well being advantages, they’re additionally persevering with to point out an elevated concentrate on snacking. In response to a latest Cargill report, merchandise that provide useful substances like pumpkin seeds, turmeric and probiotics will see heightened success in bars, drinks and different snacks.
The Rabobank analysts famous that beverage manufacturers with wellness connotations are thriving amid public well being issues. Different potential vivid spots are merchandise with important well being and immunity advantages that ask for minimal shopper behaviour change, like enhanced drinks (teas, coffees, and wellness pictures) and fortified snacks (bars, salty snacks).
Nevertheless, there’s a cloud on the horizon. Shopper willingness to pay a premium is prone to lower throughout a recession.
FoodBytes! suggested: “Rising manufacturers ought to be sensible about attaining minimal unit prices for premium merchandise.”
For instance, FoodBytes! alum ShakaTea’s ready-to-drink tea provides the useful advantages of Hawaiian superfood māmaki, but stays value aggressive at below $Three per bottle. Along with being sugar-free and keto-friendly, the tea is introducing māmaki’s excessive antioxidant and stress-relieving properties to the broader market.
#2: Accelerating on-line supply
Demand for groceries has jumped because the foodservice channel has been compelled to shutter throughout lockdown.
Buyers are additionally more and more excited about shopping for their groceries on-line, negating the chance of visiting the grocery store.
The variety of households ordering groceries on-line in March soared to 145.3% in contrast with August 2019, FoodBytes! famous.
FoodBytes! alum like Oddbox, which simply closed its Collection A of $3.8M in mid-March, are experiencing ‘unprecedented demand’ for on-line grocery merchandise.
Oddbox is a UK-based firm that delivers bundles of rescued ‘ugly’ produce at a reduction to regular retail costs, combatting meals waste.
“Whereas the long-term shift in e-commerce remains to be unknown, it’s seemingly that the channel will proceed to be in excessive demand,” FoodBytes! predicted.
#3: Native sourcing will get shopper backing
In response to RaboResearch analysts Roland Fumasi and David Magana, recent produce demand has elevated considerably in retail, on-line, and native gross sales. Orange gross sales alone are up 60% year-over-year, bolstered by their abundance in vitamin C.
As a result of merchandise distributed through chilly chain have a restricted shelf life, demand is extra dependable than for packaged and shelf-stable merchandise. However the principle danger lies within the provide chain, with bigger meals supply operations turning into paralysed by delays, COVID-19 associated disruptions and now, employee strikes.
“This has pushed an uptick in demand for locally-produced meals, with smaller farmers pivoting to direct-to-consumer deliveries and pickups. FoodBytes! alum Seal the Seasons is connecting the dots – the corporate is making native frozen produce out there year-round, whereas additionally serving to present small household farms with a dependable earnings stream.”
#4: ‘Inexpensive’ packaging options
Pre-coronavirus, the meals business was struggling to maintain up with the large shift in shopper attitudes to plastic packaging. The worldwide pandemic has, nonetheless, put the meals security and waste advantages that packaging delivers within the highlight. Rising on-line gross sales and a shift to shelf-stable meals has additionally boosted demand.
RaboResearch analyst Xinnan Li acknowledged that there’s a optimistic short-term outlook for the sector. Nevertheless, with an impending recession she predicted an elevated demand for decrease value suppliers.
“Delivering on that demand is FoodBytes! alum Corumat, which provides packaging as much as 30% decrease value than conventional applied sciences and is derived from sustainable plant-based materials; a win-win. The identical goes for Element Packaging; final yr’s FoodBytes! London finalist providers many excessive profile chains and huge distributors within the UK and overseas with its sustainable meals packaging options,” FoodBytes! mentioned.
#5: Meals hygiene is ‘crucial’
Though there isn’t any proof that COVID-19 is transmitted by meals, it could actually survive on surfaces for a number of days.
In an business with merchandise and substances altering fingers ‘numerous occasions’ in a matter of days, pathogen testing stays integral within the meals provide chain course of.
Even exterior of the business, the widespread and speedy proliferation of COVID-19 has positioned further significance on speedy pathogen testing to trace and management the unfold of harmful illnesses.
FoodBytes!, Rabobank’s discovery and networking platform for meals and ag innovation, backs quite a lot of start-ups which are working to assist ship secure, hygienic merchandise by means of the meals chain.
“FoodBytes! alum FreshCheck is revolutionising meals security with a easy color change instrument to check hygiene. The Contemporary Verify Spray is in the marketplace and enhancing cleanliness in over 80 meals firms, with plans to increase to residence, healthcare, and past,” the report famous.
One other FoodBytes! alum, SnapDNA, has developed the ‘quickest’ meals security pathogen check within the business. Its expertise eliminates the necessity to tradition micro organism previous to evaluation, enabling sample-to-answer check ends in an hour for key pathogens like listeria, salmonella, and E. coli.
Equally, YarokMicroBio goals to guard shoppers and safeguard producer pursuits with its quick microbiological testing system for the recent meals business.
#6: Ag tech for provide chain effectivity
Migrant labour is a cornerstone of many agricultural programs. The provision of labour has been disrupted by international journey bans as a consequence of COVID-19.
With issues that harvests could possibly be left to rot within the fields, Rabobank predicted this ‘sudden and large’ shock might pressure adoption of an alternate: on-farm automation.
In response to RaboResearch analyst Sam Taylor, farmers might be seeking to undertake extra expertise to attract down on using inputs, which might open up R&D alternatives for startups working in these areas.
Right here too, start-ups are growing options. For instance, Augean Robotics has developed a data-acquisitive robotic cart that works alongside people to automate the extra tedious duties of crop harvesting. In response to the corporate, farmers are capable of utilise the robotic to extend productiveness by as much as 30%.
Elsewhere, start-ups like DataFarming purpose to unlock the potential of precision agriculture merchandise and farm knowledge. DataFarming’s strategy places ‘easy, automated and low-cost digital options’ within the fingers of agronomists and producers.
“As the availability chain faces uncertainty with every new day, we’re following these options carefully.”
COVID-19: Innovation driver or disruptor?
Rabobank start-up innovation analysts Shekar and Duijves noticed that a few of the tendencies which have emerged in recent times are nicely positioned to prosper within the wake of COVID-19. The analysts pointed to personalised vitamin and native provide chains, that are ‘nicely positioned for the brand new economic system’.
Nevertheless, COVID-19 has not acted as an accelerator for each emergent pattern. “The pandemic has definitely precipitated a disruption of different rising tendencies, notably the sustainable packaging motion,” Shekar and Duijves advised this publication.
Certainly, in line with a latest McKinsey report, shoppers have recognized the hygiene benefits plastic packaging as doubtlessly ‘outweighing issues about recyclability and plastic-waste leakage into the setting’.
In response to RaboResearch packaging analyst, Xinnan Li, this shopper behaviour has definitely transpired within the meals business, with a ‘surging demand’ for single-use plastic packaged items and the expansion of e-commerce channels.
“On the retail facet, many firms which have been working in direction of sustainable packaging options at the moment are compelled to prioritise meals security. For instance, international coffee-chain Starbucks banned reusable cups amid the outbreak at the start of April. As well as, an impending recession will influence wallets, and whether or not sustainable packaging stays a precedence for a lot of shoppers stays to be seen,” Shekar and Duijves noticed.