Talking Points: Summer Reading
In this note, we tap into various collaborative RaboResearch projects as well as discuss ongoing initiatives such as FoodBytes!—Rabobank’s pathway to explore the exciting avenue of emerging food and ag tech companies:
- Emerging Companies: the Challenges to Growth. Courtesy of Rabobank’s Moonshot competition, we summarize the results of a proprietary Rabobank survey on the constraints faced by emerging companies in the U.S.
- FoodBytes! NYC: a Smorgasbord of Food Talent. We draw out four themes from the 20+ demo companies presenting at our most recent Foodbytes! event.
- Amazon Goes Offline. We discuss the consequences for food companies of Amazon’s unexpected move into brick-and-mortar retailing.
- Sweetness & Lite. We consider the global shift in attitudes towards sugar and calculate the implications for the sugar industry under a range of scenarios.
- Rabobank to Go: What’s up with Food Service? With sibling pride, we give you the lowdown on a new sister publication.
Some highlights:
2. FoodBytes! NYC: a Smorgasbord of Food Talent
FoodBytes! returned to New York in June and was our biggest event to date, with over 400 guests—evidence perhaps that the interest in emerging food, food tech and ag tech companies shows no signs of abating. Trend, not a fad, guys! Out of the thirty companies that took to the stage, 10 finalist companies chosen out of over 120 applicants were given short four-minute pitches, 10 runner ups got a 60-second pitch, and 10 took advantage of the open-mic session to sell their wares. From this smorgasbord of food talent, we draw out the following four themes:
a. Vive la révolution! A decade into the new food movement, emerging brands are still talking about the need for disruption, revolution and regime change to ‘fix the broken food system’. For example, Seal the Seasons is redefining fresh and local by partnering with farmers to bring affordable frozen locally-grown (to your region) fruit that might have otherwise been wasted. The company is attempting to provide a branded differentiated option to consumers in what is largely a USD 13bn private-label category. Similarly, Nom Noms World Food is on a mission to revolutionize the packaged food market by providing ‘healthy world cuisine’—minimally processed, family-focused chilled prepared meals with attention to quality ingredients and a world of flavors. Wanderfuel wants to revolutionize the way you feel when you travel with their curated wellness boxes. Verdical has produced a complete indoor vertical-gardening system that takes the term local to totally new heights. Natural Cuts is revolutionizing the produce supply chain through food processing innovation. It’s a novel ‘all-natural’ low-input technology that extends the shelf life of produce—it works well on potatoes—without the need for cold storage or pre-cooking. GoParrot has devised a new way to communicate with restaurants using artificial intelligence, and Real Oyster Cult believes they have cracked the code on getting fresh oysters delivered to your door in less than 24 hours. Finally, through dynamic pricing, Gebni wants us to reimagine online food ordering through their demand-adjusted meal pricing, while Flashfood provides steep discounts on surplus grocery items.
b. Tech transparency and trust. The use of cutting-edge technologies to restore transparency and trust to the food chain was also a key theme. Agvoice was awarded the top prize from the expert panel of judges. The company empowers F&A professionals by capturing actionable insights hands-free and on-the-go. ImpactVision, which is part of Rabobank’s first Terra cohort and won the audience’s People’s Choice Award, is also aiming to help build a more transparent and less wasteful food chain using hyperspectral technology, which in layperson’s terms is like taking a picture of a food to reveal its nutritional content and freshness levels. A lot of the uniqueness in their approach is in their machine-learning algorithms. And Edamam aims to become the trusted brand in nutrition by providing cloud-based nutrition data analysis and meal recommendations.
c. First, do good. Some companies also have a charitable element in the spirit of Toms to help create a closer connection to their customers. As one of the entrepreneurs said, “Consumers are looking to associate with brands that make them feel good about themselves.” Highly Commended Award winner Proud Pour is helping to fix environmental problems. Its sustainably- grown, vegan wines help restore oyster populations and save bees. Nom Noms World Food donates meals to a school in Uttar Pradesh, India believing that “No child should be deprived of an education because of hunger.”
d. Spice world. Many of the companies were bringing spices and other novel ingredients to the table. Burlap & Barrel works directly with spice farmers and cooperatives around the world to bring unusual and fresh spices to consumers. Mekhala is also adding spice and flavor to our foods with a range of Asian-inspired pastes and condiments. Victory Hemp Foods is working with farmers in Kentucky to bring the superfood hemp to the market, federal legislation notwithstanding. Similarly Love Grain is introducing teff, the ancient ‘super grain’ from Ethiopia, to the U.S. market in the form of chips and pancake mixes. Javazen is bringing us ‘coffee without the crash’ through its proprietary blend of organic coffee with matcha and cacao. JuiceInnov8, a food biotech company from Bangkok, Thailand is adding functionality in a slightly different way. The company is using non-GM microbes to act as a natural sugar reducer, aiming to lower orange juice’s sugar content and calories by about one-third, and ultimately also other juices.
5. Rabobank To Go—What’s up with Food Service?
Rabobank To Go is a new sister publication from Consumer Foods senior analyst Paula Savanti on the foodservice industry, intended to provide commentary on current market developments, to integrate Rabobank knowledge from across the value chain, and to express our views regarding future trends for the industry. This first issue focuses on the U.S. market, where traffic and same- store sales have been negative for the past year in most categories, leaving many in the industry wondering where have consumers’ appetites gone, and when will they come back?
Despite favorable macroeconomic numbers in terms of job growth, consumers remain cautious about their finances. Rising inflation together with real wage stagnation are impacting consumers’ spending patterns, and are expected to continue to do so for the rest of the year. A large gap between prices of food at home versus food away from home has also driven consumers away from food service. While lower food prices are good for restaurants in that they lower their overall food costs, rising labor costs have left restaurants unable to drop prices accordingly, causing them to be out of step with grocery prices. Rabobank’s Burger Index shows that food prices saw some strengthening in 1H 2017, which is expected to continue through the rest of the year, narrowing the gap between grocery and food service prices and enticing some traffic back into food service. Finally, although easier comparables will allow same-store sales to return to positive territory in 2H, restaurant oversupply and an abundance of alternative food choices will keep the competition heated in the space. Survival of the fittest seems to be the name of the game in the current hypercompetitive environment.