State of FoodTech. Is the food market important for us?

The FoodTech market has recently started to gain prominence, and for many years it has stood on the sidelines of the interest of both investors and entrepreneurs thinking about starting a business in this industry.

Many of us are unaware of the important role that the food market plays. The Foodtech market is very much driven by consumer needs. Over the past few years, the mindset of the average food market consumer has changed dramatically. People are developing a growing sense of awareness: they want to know if their food comes from sustainable crops, what the ingredients consist of, and if the packaging is created from recyclable materials. 

How big is it?

Is foodtech worth the hype? In terms of investments, the market was valued at $250 BN in 2020, with companies receiving $17 BN of funding that year. This clearly shows that the industry is headed in the right direction. The lion's share of these figures consists of investments made in food delivery and software companies, rather than those focused on developing technology or manufacturing and selling food. The fact that the average European spends 22% of their income on food and beverages further illustrates the market potential here. Even a small share of this would give companies in the next-gen food industry a high source of potential revenue.

Additionally, research from Oxford University shows that human health problems associated with too much meat consumption will cost the world more than $1.6 trillion by 2050. Change is needed now and, thankfully, the revolution has already begun.

Animal protein alternatives are becoming less of a niche business, especially with brands such as Domino's, Burger King, Subway, Starbucks, McDonald’s, and Heinz also releasing their own vegan and vegetarian products.

An exciting market segment is alternative proteins. Animal protein alternatives are becoming less of a niche business, especially with brands such as Domino's, Burger King, Subway, Starbucks, McDonald’s, and Heinz also releasing their own vegan and vegetarian products. 

Vegetarian and vegan diets are increasing in popularity, as is limiting meat consumption in general, which creates opportunities for new market segments. And it is important to remember that the market for animal protein substitutes is not limited to vegetarians and vegans - an increasing number of people now identify as flexitarians. These are individuals who do not completely eliminate meat from their diets, but more or less limit it. Currently, 39% of Americans between the ages of 18 and 25 significantly limit the consumption of animal products in their diet

Environmental impact of the food industry

Additionally, it is worth to point out that producing plant-based products generates 30% to 90% less greenhouse gases than meat, uses 72% to 99% less water, and results in 51% to 91% less wastewater production and water pollution. Additionally, it does not require the use of antibiotics during production (over 70% of antibiotics used in the U.S. are consumed by animals), and we are certain that plant-based products do not contain harmful substances. The meat industry uses over 26% of the land on Earth, and 33% of all crops are used for animal feed. This is an extremely inefficient economy, producing 1 calorie of beef requires as much as 50 calories in the form of food that a cow needs to consume.

“In March 2021 the head of Burger King in the UK announced that as much as 50 % of the products on the company's UK menu will be plant-based by 2031”

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The market for plant-based meat substitutes was worth $4.31 BN in 2019 and is projected to reach $12.16 BN in 2025. Compared to the traditional meat market, which is worth $1.146 trillion globally, the share of plant-based substitutes is a mere percentage of this gigantic industry. Even with meat substitutes slowly replacing meat, there is enormous room for expansion.

Small but very fast growing market

When we look at the history of foodtech projects, we can observe that 2016 saw a significant growth in interest, most of the action started to happen after 2016. In just 4 years, the number of investments increased by almost 4 times from 44 to 170, but this is nothing compared to the value of those investments, which increased from $204 M to $3.1 BN in 2020. This points to a greater than 15-fold increase in investment value. 

By 2035, plant-based alternatives will likely account for 11% of the global protein market. Best case scenario - with technological change and full regulatory support - market share could be as high as 22% and meat consumption in Europe and North America will begin to decline.

The benefits of alternative proteins are clear: gain a healthier diet, produce a lower carbon footprint, and have fewer concerns about the ethics of factory farming and mass animal breeding.

An ever expanding population of flexitarians and a growing interest in plant-based foods from local suppliers and producers, along with some other factors, may create an environment that takes the popularity of plant-based eating to the next level. This change won't happen overnight, but looking at global trends, we're headed in the right direction for our health and the future of our planet. 

Full version of the report can be found here.

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