The smart supply chain: Foodtech’s Game-Changing Trend

Caught myself today thinking that, even when doing development for foodtech projects, I almost never give much thought to how food gets to my table. I’m sure most — like me — ignore the whole journey between farming and distribution. This is despite the fact that the passion for farming and cooking is becoming mainstream: COVID has caused many to change their jobs to farmer or baker.

Today, the food supply chain is one of the key trends in FoodTech. This is driven by two popular initiatives in society:

The fight against waste in the form of packaging and food surplus, which originated due to climate change and the growing concern of consumers and companies about their impact.

Digitalization to reduce labor costs and standardization. For example, the number of unskilled workers (particularly in the foodservice industry) is declining. And CPG companies and restaurant chains are pushing for more standardization. So, thanks to the rise of B2B marketplaces and digital tools, consumers can have a much more similar experience from one store (or restaurant) to the next.

The figure highlights six FoodTech ecosystems that participate in the smart supply chain:

💻 Digital Restaurant

This is an ecosystem made up of startups involved in automation in the restaurant business, from paying for orders to managing staff. If you exclude the popularity of pay-at-table (interesting phenomenon, right? Millions were invested in it over the last year, but now the activity has subsided), we see a fairly active startup community, especially in M&A. Analyzing the data, we can conclude that this area is under intensive development, but we should not expect the most disruptive innovations here.

📦 Packaging

Smart packaging. This is about startups that are looking for alternatives to plastic for food packaging. For example, Apeel, who want to reduce food waste by using sensors or edible bio-coatings. This trend will develop more as entrepreneurs finally seek to solve the problem of fresh food by developing combinations of barriers from open air to avoid rotting.

Reusable packaging. This is a separate trend, as startups here are changing more to the business model than to the packaging. Due to regulations banning single-use packaging in restaurants, the trend is growing in Europe. In the next couple of years, it will become clear whether these startups can become major players as they will have to invest in the infrastructure needed to clean and distribute the containers. And while this trend could turn into something bigger for B2B (e.g. a food delivery app for restaurants), it is unlikely to have a real effect on the B2C market.

🗑️ Food Waste Management

Think about a figure like this: 40% of all food is never consumed and never leaves the farm or factory (15% never leaves the farm in the UK and 16% in the US). Therefore, all along the food supply chain, from farm to restaurant to grocery store, solutions are being developed to minimize food waste. Winnow, for example, offers to monitor food waste in restaurants. Other startups are set on improving tools for managing unsold food (these problems can be solved with marketplaces or dynamic pricing in stores).

💳 B2B marketplaces are one of the top FoodTech trends in 2023. And coincidentally my favorite!

In most categories, investment is declining, but not for B2B markets. They are represented by a large number of business models (from pure digital to players launching their own distribution). But everything is done for one simple idea: connecting suppliers more efficiently with small retailers (mainly restaurants in developed countries, but also stores in other parts of the world).

The benefit for restaurant and store owners is obvious: they will save a lot of time and potentially reduce their costs. At the same time, you can expect a reduction in food wastage with more efficient order management.

As you can see, the food supply chain is becoming smarter, more efficient and greener. We have already started to talk about this in an article about the development of marketplaces and in a great interview with the director of the largest restaurant in the CIS. But we are always ready to consider and study private business situations. So if you have any questions about optimization and automation of processes, write in private — I will be happy to advise you.