3 Investment Trends Changing the Future of Food
Arman Atatürk’s recent article on what 25 leading Food Tech investors are most excited to develop in 2022 is a must-read for anyone in the food innovation space! The record-breaking funding rounds and explosion of new players on the market in 2021 has set the tone for 2022 — and here at Bloom Partners, we are immensely looking forward to what will no doubt be a capstone year for Food Tech.
Today, we dip into just 3 investment areas we are especially optimistic about, and explain the exciting potential for corporates and consumers — in not-too-technical terms.
PRECISION FERMENTATION
WHAT IS IT?
Fermentation is the process whereby microorganisms break down organic compounds (like sugars) to create useful components — the most well-known example is beer fermentation, where beermakers convert sugar into alcohol. The proteins can be harvested to create ingredients such as enzymes, flavouring agents, vitamins, natural pigments and fats.
While beer has traditionally been fermented in a liquid environment, innovation in solid state fermentation (where the process is performed on a solid substrate with low liquid content) has proven to produce foods with higher yields, and lower production costs, saving on water and energy.
Microbes have been called “the third pillar” in alternative protein, and the global market for fermented alternatives is expected to reach a value of $422.26 million by 2026!
POTENTIAL FOR CORPORATES:
1. Wider range of possibilities for meat alternatives:
Consumers are moving away from traditional meat, and precision fermentation may help corporates to accelerate this “protein transition”. PF creates ingredients with over 50% protein content by dry weight, and presents exciting new opportunities to experiment with new, healthy, animal-free proteins.
2. Less intensive:
Industrial-scale brewing is far less resource and labour intensive than traditional farming. For corporates, this means drastically reduced costs, as well as a lower carbon footprint. According to Rethinkx’s Food & Agriculture Report, PF alternatives will be up to 100 times more land efficient, 10–25 times more feedstock efficient, 20 times more time efficient, and 10 times more water efficient than traditional animal proteins.
3. Safer food, for more people:
PF removes the need for antibiotics, hormones and other negative by-products associated with animal farming. The COVID-19 pandemic has raised concerns about zoonotic diseases and the risks of factory farming — which is far less efficient than PF. The large scale of PF production makes the products more affordable for a wider consumer base — securing sustainable food for future generations.
LEADING THE WAY:
In Berlin, Formo is using microorganisms to produce “realistic”, cow-free cheese proteins — and raised €42 million in its September 2021 funding round. Formo tackles a long-established pain point for vegan consumers: cheese. The taste, meltability and stretchability of cheese have proved challenging to replicate with plant-based alternatives — but Precision Fermentation launches new possibilities for this segment.
Other players are milking this technology in new ways. After a successful pre-seed round led by CPT Capital and FoodSparks by PeakBridge in 2020, Israeli precision fermentation startup Imagindairy secured $13 million it its November 2021 seed round. The startup relies on a systems and synthetic biology platform, and a production method which can be integrated into existing dairy processing facilities — drastically shortening time to market and generating yields high enough to meet broader commercial demand.
2. SIDE STREAM VALORISATION
WHAT IS IT?
Side stream valorisation is a circular value chain practice whereby firms look at their product lifecycle, and discover innovative new ways to reuse waste (“sidestreams”) in ways which derive new value for the firm and consumers. This may mean reusing or making new food, pharmaceutical or animal feed products from the byproducts which would have otherwise gone to waste.
POTENTIAL FOR CORPORATES:
- Replace waste with new value.
Disposing of organic waste on a large scale becomes expensive — but SSV repurposes the waste, cutting out disposal costs and instead adding a new revenue stream. A highly successful example of this is Nescafe’s Nativ Cascara, a carbonated soft drinks made from the “coffee berry” fruit which surrounds the coffee bean, and would have otherwise been thrown away.
2. Reduce demand for non-renewable raw materials.
Alarm bells are ringing as raw materials become more scarce. SSV captures as much value as possible by reusing “waste” resources at least once more, whether it as packaging, an ingredient, or an entirely new product. While reducing demand for new materials is a positive, it’s also important to ensure that the upcycling process is less energy-intensive than creating new materials.
3. Sustainability credentials.
Reusing resources is better for the environment, and will no doubt be a value add for the growing numbers of consumers concerned about their waste’s impact on the environment. According to FMCG Gurus’ 2022 trend survey, 61% of global consumers find upcycled products appealing. Sustainability should become an integral part of the brand’s identity and inspire self-expressionist consumers to consider the new product.
LEADING THE WAY:
Dutch startup Greencovery helps food manufacturers recover valuable products from their side-streams by identifying potentially useful compounds and designing the necessary industrial process to capture new value. An example may be extracting nutrients or ingredients from food waste.
An example of SSV in practise is Brazilian startup Growpack. This startup uses corn husk (a material which is often disposed of) to produce new, fully-compostable packaging, all while using 80% less water and generating 50% less carbon emissions than traditional cardboard.
3. MOLECULAR FARMING
WHAT IS IT?
Molecular farming (also known as “pharming” or GMOs) is a form of genetic engineering whereby genes which create useful pharmaceuticals are inserted into host plants that do not already have those genes, usually by “agrobacteria” (microorganisms). The proteins are harvested from the leaves and tissues of the bloomed plant, creating proteins for use in vaccines, medications, cosmetics, and most recently, food.
In 2000, the cost of creating a kilogram of a molecule was a staggering €903k — but scientific developments have reduced this to less than €100 today. Industry hopefuls aspire to make molecular farming cost competitive with animal protein in the 2030s.
POTENTIAL FOR CORPORATES:
1. New business models & products:
PBF has exploded in popularity in recent years, and Pharming will increase the range and quality of meat-free products available for consumers. An example is University of Lleida’s “Carolight”, a transgenic maize enriched with essential nutrients, and designed to make dense, high-quality nutrition more widely available in low-income markets. A “Food-as-a-Software” model, where scientists engineer foods at a molecular level to share on databases, could present thrilling opportunities for new innovation.
2. Reduced costs:
Large scale Pharming will reduce the cost of these products for consumers. At present, certain proteins in nature are too difficult or expensive to extract from natural macro-organisms. However, with Pharming, proteins are easily accessible, scalable, and modifiable. The removal of costly bioreactors, and the possibility of vertically farming plants, further reduces the costs for corporates. Plants can be cultivated on an agricultural scale to yield 100–1000 kg of the pure protein annually.
3. Health & Safety:
Unlike bioreactors, molecular farming does not need to invest time and money in maintaining sterile conditions, as plants have natural immune systems. Other advantages include easier storage and transportation. An example: plant-derived vaccines can be stored by harvesting and freeze-drying the leaves, meaning they are more heat stable and thus more convenient to transport across long distances.
LEADING THE WAY:
German biotech startup Phytowelt works with clients to develop new plants or bacteria and create desired ingredients. This may involve crossbreeding plants, or even editing genomes. The startup has even patented a specially developed process for creating a new natural raspberry flavour ingredient: (R)-alpha-ionone.
Early in 2022, Israeli startup Remilk raised $120m to further develop its cow-free milk proteins. Remilk recreates the milk proteins by taking the genes that encode them and inserting these into a single-cell microbe. Lastly, they are dried into a powder which can be used for other dairy products.
It’s an exciting time for the Foodtech space.
Not only does Foodtech present exciting opportunities for corporates, investors and consumers, it also enables us to secure a safer, more sustainable food future. The applications for technology in nutrition are infinite, and these 3 topics are just some of the groundbreaking trends in the space. We look forward to further working with clients in this crucial market space in 2022 and shape the future of food, together.
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