Food Entrepreneur - January 5, 2021 - 11

January 5, 2021

Expect to see increased investment in technologies that automate production and
delivery as labor challenges persist across
the food and agriculture industries.

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wellness will become a key priority for
food companies in 2021, " said Jonathan
Hua, an investor at Scrum Ventures, San
Francisco. " Consumer demand for healthy
food and beverage products that can improve mood, immunity and overall mental
health will see an unprecedented spike. "
The popularity of functional ingredients may continue to rise even after
COVID-19 fades. Ms. Greven said the aging

seeking to sustain top-line gains achieved
in the past year due to the shift to at-home
consumption may pursue acquisitions in
high-growth categories.
" The big companies have more capital
because they have more cash flow, " said
Nicolas McCoy, co-founder and managing
director at Whipstitch Capital, Framingham,
Mass. " They're making more earnings. They
still have the underlying growth problem of
legacy brands, so they still need to buy, even
though they are up a bit in legacy brands. "
He cited an emergence of special-purpose acquisition companies, or SPACs,
in the food sector. These " blank-check
companies " have no commercial operations and provide to takeover targets an
alternative to a traditional initial public offering. The Wall Street Journal dubbed 2020
" a record year for new SPAC listings. "
" When a SPAC does its first deal,
then they do add-ons, so that's a new pool
of buyers, particularly for companies that
are relatively small for big CPGs to buy, "
Mr. McCoy said.
The events of the past year amplified

'Consumer demand for healthy
food and beverage products
that can improve mood, immunity and overall mental health
will see an unprecedented spike.'

©BOYARKINA MARINA - STOCK.ADOBE.COM

©FABIOBERTI.IT - STOCK.ADOBE.COM

and beef, it will become increasingly hard
for startups to differentiate from an already
packed shelf and stand out of a crowded
market, " Mr. Cohen said. " However, there is
still white space for new food tech entrants
in the seafood sector, where startups have
more opportunities to own a product category, such as shrimp, salmon or crab. "
Several experts expect to see increased investment in technologies that
automate production and delivery as labor
challenges persist across the food and
agriculture industries.
" As more US farmers continue to battle
devastating labor shortages, a problem exacerbated by COVID-19, expect to see a rise
of autonomous robots in agriculture augmenting human effectiveness and driving
efficiency in farming, " said Julia Reichelstein, an investor at Piva Capital. " While the
technology is nascent, advanced computer
vision and new prototypes will soon drive
robots through farming fields amidst tough
weather, treacherous mud and even pesky
bugs. With these advancements, robots will
be able to perform a number of once-manual tasks, from weeding to harvesting,
especially taking a first hold in high-value
specialty crops. Driven by AI technology
gains and customer urgency, we'll start to
see a rise in VC funding in this area. "
Ms. Reichelstein also forecast a surge
in food traceability solutions as consumers
demand more sustainable products with
climate change increasingly a priority.
" Because of this demand, new technology companies with advanced smart
tracking and data analytics capabilities will
bubble to the surface, working with farmers
and providing direct food intelligence to
consumers, restaurants and grocery stores, "
she said. " While consumers may not have
a high willingness to pay for traceability
alone, there will be more traction with
corporates and large-scale buyers, especially
those with net-zero emissions targets.
" Although it may not be viable
to place a biometric sticker on every
single fruit or vegetable, new innovative
solutions such as edible bio-tracing could
bring breakthroughs, driving cost down
and usage up. Expect to see an increase in
funding to those startups that can solve
this challenge of food traceability on a
larger scale in 2021. "
Health and wellness products are
expected to gain greater relevance as
consumers continue seeking food and
beverage brands promoting immunity
benefits, relaxation and stress relief.
" As the current crisis of the pandemic
continues to introduce more stress and
anxiety into our lives, mental health

- Jonathan Hua, Scrum Ventures

boomer population will drive demand.
Another trend supercharged by the
pandemic, e-commerce will continue
to grow across categories, according to
Coefficient Capital, New York, which predicted large corporate buyers will acquire
direct-to-consumer brands at higher multiples. Consumers who shopped from a
food or beverage brand website cited such
reasons as better quality, better selection,
better customer service and personalization, according to Coefficient Capital.
" With food 'at home' exceeding food
'away from home,' and e-commerce representing a growing share of grocery sales,
we will see increased M&A deal activity
among DTC food and beverage brands
looking to 'unbundle' the shopping cart, "
Mr. Matthews said.
Large packaged food companies

the importance of conscientious consumption. Increasingly, shoppers are seeking companies advancing equity, diversity,
justice and inclusion across the industry,
casting a bigger light on women- and
minority-owned businesses. As a result,
efforts to support previously underrepresented entrepreneurs are advancing.
PepsiCo's Mtn Dew brand, for example,
recently launched the Real Change Opportunity Fund to invest in Black founders.
" I think the awareness around that
has created a movement that will get some
traction, " Ms. Greven said. " What I fear
and what I'm cautious about is it will be
slower than everybody wants. It's about
changing the mindset of people but also
how we look at investing, and it depends
on who holds the dollars ... We need diversity across the board. " ▪
Food Business News

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Food Entrepreneur - January 5, 2021

Table of Contents for the Digital Edition of Food Entrepreneur - January 5, 2021

Food Entrepreneur - January 5, 2021 - 1
Food Entrepreneur - January 5, 2021 - 2
Food Entrepreneur - January 5, 2021 - 3
Food Entrepreneur - January 5, 2021 - 4
Food Entrepreneur - January 5, 2021 - 5
Food Entrepreneur - January 5, 2021 - 6
Food Entrepreneur - January 5, 2021 - 7
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Food Entrepreneur - January 5, 2021 - 9
Food Entrepreneur - January 5, 2021 - 10
Food Entrepreneur - January 5, 2021 - 11
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