What Dollar Shave Club can teach the Food & Ag Industries
By now, this story may sound familiar: The sleeping giant of some consumer-facing industry wakes up to find itself suddenly on its heels, out of touch with its customer base, and losing market share. Why? Nimble startups have capitalized on technology — and the occasional viral video — to more quickly and effectively get their products in the hands of consumers, cutting out middlemen and finding messaging that their audience can actually relate to.
P&G and Unilever awoke to this new reality in the razor market last year due to the savviness of Dollar Shave Club, which Unilever ended up buying for $1 billion just five years after its inception. This fantastic synopsis from TechCrunch puts the deal in context of this broader innovation-through-acquisition trend happening across several major industries.
And, though it’s been reported on in a less sexy manner, with fewer unicorns sprouting out of thin air, the same thing is occurring in food and agriculture. In the food realm, consumers are demanding authenticity and transparency. While the big brands play defense and launch marketing gimmicks meant to distract from larger issues (see: cage-free eggs), entrepreneurs and investors are taking note. As the TechCrunch piece alludes to, large brands lost market share to smaller players in 42 out of the top 54 food categories over a recent five-year span.
Within agriculture, another revolution is underway. AgTech newcomers raised $4.6 billion globally in 2015, a massive leap from the $0.5 billion invested in 2012. Solutions in this space range from sensors and drones that can better-monitor field conditions to genomic tech products that more effectively fertilize crops to indoor/vertical farms that use nutrient solutions rather than soil and LEDs in place of sunlight. Meanwhile, the John Deeres of the world seem so focused on squeezing out every drop of recurring revenue, they fail to notice that their bucket is leaking in the first place.
For new players, the barriers to entry continue to diminish. Want to learn how to grow food, but can’t imagine leaving the city? Square Roots will teach you how — out of shipping containers in Brooklyn. Have the newest vegan nut bar recipe that your friends all rave about? Food incubators, popping up across the country — KitchenCru in Portland; The Hatchery in Chicago; or Crop Circle Kitchen in Boston — will give you the knowledge, space, and resources necessary to turn it into a business.
We witnessed this wave of innovation first-hand out at Chicago’s Good Food Festival recently, where people from a myriad of backgrounds are diving into the movement to reinvent an outdated food system. They’re listening to a population that’s increasingly eager to know where their food came from, what’s in it, and what nutritional effects will come from its consumption — designing new products based on these concerns, rather than deploying new marketing campaigns to get around them.
Yet we still have a ways to go. Our current food system is a huge driver of greenhouse gas emissions. We continue to battle a costly public health crisis due in large part to preventable cardiovascular diseases. The average age of a farmer in the US is 58(!). We need to empower a new generation of inventors; leaders who are driven to launch products and build organizations that create consumer trust and well-being as much as shareholder value.
At AgTech X, we’re trying to make a dent by accelerating driven individuals into careers in AgTech & Urban Agriculture. We believe that de-centralizing food production helps connect people back to the ways by which they can better control their diet, their health, and that of the environment. Are you willing to see how you can play your part? We’d like to invite you to the party.