An overview of the FoodTech ecosystem in France
At “Le Hub”, we have gathered in this mapping a vision of the “FoodTech”; a set of technological companies that operate in the food industry (essentially from a final consumption standpoint). This cartography is in proximity to “AgriTech” which represents the upstream technologies of the chain, the “RetailTech”, with applications in the area of Distribution, and even Robotics, with new applications in restaurant outlets and more generally the “food factory of the future”.
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With more than 230 companies selected, but without ambition of completeness, this mapping screens the various bricks of the value chain so as to give a representative view of innovation in the FoodTech sector. We also offer below some insights to understand the dynamics and issues of each segment. These elements were established in partnership with the Bpifrance expert for food sector Ariane Voyatzakis and Octave Letellier, project manager at Bpifrance Hub, as well as contributors from industry.
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Let’s start with some definitions of our categories:
• Food science: production of food products and ingredients intended either for the final consumer or for an intermediate processor
• Logistic & Process: processes and technologies at the service of the agri-food chain
• Short-circuit: includes actors from farm-to-home, from retail-to-home or disintermediation in general
• Solutions for restaurants: B2B solutions made available to restaurateurs to improve their visibility, their distribution, but also all restaurant operations
• B2C / Delivery: various models of food delivery, ranging from grocery delivery to production and delivery of complete meals
• B2C / Home Services: products and services at home, such as catering among individuals, cooking classes, etc.
• Media & Coaching: vectors of information, education and leisure around from the world of food
• Food Appliance: “2.0” household appliances, particularly connected devices and robots.
INVESTMENT DYNAMICS
Investments in the French FoodTech are growing — particularly since 2016 — as demonstrated in the report of the FoodTech specialist DigitalFoodLab, with in particular for the 2013–2017 period:
• Annual investments up from around € 20M to around € 150M in 2017
• Increased fundraising, from about €10M per year to €100–150M in 2017 (with a dual dynamic of growth in small “early-stage” fundraising and in contrast growth in €1+M fundraisings)
• At the international level, the amounts invested in the French ecosystem remain modest compared to the hundreds of millions of euros raised by some foreign startups — notably American ones.
• However, the recent increase in Series A and B rounds, with investments in excess of €20M allow to be optimistic about the upcoming emergence of French FoodTech champions.
DYNAMICS OF THE UNDERLYING MARKETS
The different bricks of this mapping address markets with varying sizes and dynamics; overall, the FoodTech market naturally benefits from the upward trend in the underlying global food consumption market.
• Home food market; a market that has historically been eroding in France in the face of out-of-home catering (75% of meals taken at home in 2014 vs. 86% in 1960), home food has been revitalised by certain new trends such as home delivery, direct delivery from the producer, home cooking classes, cooking between individuals, etc.
• Out-of-home catering market, more subject to fluctuations and trade-offs linked to economic cycles, and which has benefited from a continuous change in consumption habits; for example, the increase in share of lunches taken at the workplace rather than at home. There is also a transformation of uses (e.g. now common use of reservation platforms) as well as of the resources made available to restaurateurs (operation management platforms, connected cash registers, etc.)
• Market of Ingredients (foodstuffs used in the preparation of dishes for home and away-from-home catering): which alone constitutes a large part of producers’ turnover; in this particular segment, alternative proteins could have a crucial role to play.
NATIONAL AND INTERNATIONAL DYNAMICS
On the demand side, consumer expectations are evolving in a relatively similar fashion in European, American and Asian countries (examples of organic or gluten-free products, new modes of out-of-home consumption, etc.), even though it is often necessary to adapt the recipe from one country to another. Indeed, our startups will need to conquer international markets to generate sufficient scale effects: “France can only be a first step before expanding to international markets.”
On the distribution side, on the other hand, there is significant fragmentation and disparities from one country to another (fragmentation of distributors leading to fragmentation of brands), which can represent a barrier for companies relying on large-scale distribution networks.
In fact, to significantly expand their scope, innovative companies are often pushed to expatriate to the United States, or wait for the arrival of players like Amazon to distribute their E-commerce offer.
In this context, our retailers have a major role to play in helping innovative companies to scale up, in particular by allowing the co-development of products, organising full-scale pilots, and by opening the doors of their national and international brands (without necessarily an exclusive contract).
FRENCH INNOVATION WITH REGARDS TO OTHER COUNTRIES
France, land of gastronomy! While this heritage is recognized, consumer expectations are changing rapidly and globally. On traceability, for example, consumers will soon expect to be able to trace the entire upstream chain of the products they consume. On this point the French startups are competitive; and will have to maintain their efforts to operate this mutation necessary to our gustatory heritage.
Similarly, the leading FoodTech countries (such as the United States/Canada, China, Israel) are actively pushing subjects on which France is less disruptive, such as new types of packaging, alternative proteins, meal substitutes, robotics applied to catering, etc. Generally speaking, we could want the French ecosystem to take even more risks on certain cutting-edge topics.
STARTUPS OFFERING VS. MARKET OPPORTUNITIES
The concentration of innovative companies can vary significantly from one FoodTech segment to another, sometimes despite market opportunities — Here we take two examples:
• Large retailers have seen a resurgence in recent years of products based on rare or exotic fruits and plants (such as hibiscus and maté juices): with stiff competition today in these segments
• On certain topics, distributors are inclined to collaborate with innovative companies because the offer is still limited: packaging innovation (e.g. new soluble, biodegradable, edible packaging), product innovation (e.g. meal supplements or substitutes, or lacto-fermented products such as the ancestral sauerkraut).
SOLUTIONS FOR RESTAURANTS
This segment represents a significant potential market because of the depth of reservoir of restaurants in France and its mutation challenge:
• There is an abundance of offers to assist restaurateurs in the management of their operations, their staff, their menus, their visibility on the Internet, etc., with probably a forthcoming consolidation and integration stake for this vast pool of suppliers.
• On the other hand, innovations in robotics (food preparation, table service, autonomous delivery), which are emerging strongly in Asia or the United States, do not exist much in France.
CONSUMERS VS. INDUSTRIAL PERSPECTIVE
On several of the subjects mentioned above, we can observe that it is the consumer who has evolved faster than the offer (e.g. strong appeal for meal substitutes, specific diets and food supplements, traceability…), and it is now for the producers, the manufacturers, or the restaurant owners to catch up by upgrading their offer, notably through collaborations with startups.
On other subjects, however, such as insect foods, it is the consumer who remains reluctant, pushing industrialists and startups in the sector to make major efforts to educate and acculturate them.
MATURITY OF ECONOMIC MODELS
Most segments of our mapping rely on relatively clear and established business models: e.g. manufacturing of products for mass retail, B2B bricks financed by subscriptions or commissions, or advertising revenues for a major part of the “Media & Coaching” offers. Among the still emerging models, Farm-to-home and marketplaces activities are struggling to find a profitable economic model, particularly because of transport and distribution costs. This is also the case for food and meal delivery services, for the same logistical reasons. For these segments where supply is abundant, consolidation and scaling up appear to be key factors for future success
STARTUPS YOU DIDN’T SEE IN THAT MAPPING… AND FOR GOOD REASON!
‘Exits’ are often a desirable outcome both for acquirers that strengthen and sustain their differentiation, as well as for startups that value their technology, customer base, etc. while benefiting from a generally international expansion platform.
Some recent examples of industrial exits include:
• FoodChéri: acquired by Sodexo
• Quitoque: acquired by Carrefour
• Cook Angels: acquired by Norak
• TraQfood: acquired by Biomerieux
In conclusion, French FoodTech is a vibrant ecosystem that is doing well and growing in the right direction! To occupy the forefront of the world stage, it must aim to extend far beyond our borders, and dare to explore territories that are at odds with 20th century gastronomy. At the Hub Bpifrance, we support large companies in the reflection and identification of their best innovation strategy, notably via external collaborations. These collaborations can take various forms, from commercial partnerships to minority or majority stakes.
Please note: Our mappings only reference independent startups. If any typos have slipped in, don’t hesitate to let us know, it’s an on-going job to enrich this mapping with your comments.
