The foodtech industry is a rising star that attracts billions of dollars in venture capital each year. Despite a recent slowdown in investment, the industry is rapidly changing with emerging sub-sectors that are furthering the relationship between food and science/technology, creating new ways food is discovered, purchased, delivered, prepared, and consumed.
Pitchbook’s Q3 2022 Foodtech Report details the trends and opportunities taking place within this dynamic sector.
These are the six segments that are expanding the foodtech industry:
Alternative proteins include the following: cultivated meat, seafood, dairy, and egg products that are manufactured using live animal cells in a laboratory; edible insects; fermented proteins, and plant-based proteins.
This segment includes functional foods that offer health benefits such as energy or gut health; future food forms such as meal replacement products and nontraditional forms (i.e. ice cream in powder form); molecular engineered foods that create allergy-free, environmentally-friendly, or more affordable alternatives; novel ingredients; and upcycled foods made from agricultural waste.
Discovery & Review
The discovery and review category includes websites and mobile apps that inform consumers about restaurants and culinary brands, kitchen enablement software including smart appliances, and personalized nutrition products and services to help consumers meet health goals.
Foodtech’s e-commerce segment includes meal kit companies, online grocers, and restaurant marketplaces such as DoorDash.
This category involves companies that develop, manufacture, package, and trace food products. Sustainable packaging, shelf-life extension, transportation and storage to reduce waste, and the development of new ingredients all fall under this category.
Restaurant & Retail Tech
New technology within grocers and restaurants include kiosks and vending machines, delivery robots, kitchen automation, and restaurant management solutions to assist in inventory management, labor management, drive-through technology, and loyalty programs.
During Q3 2022, the E-Commerce segment saw the most venture capital investment with 68 deals and $973.3 million invested. The Restaurant & Retail Tech segment had $605 million invested through 43 deals, followed by Alt-Proteins with $492.8 million invested through 50 deals.
The foodtech report also identified the following emerging opportunities:
While plant-based dairy milks have become quite popular over the past several years, this will be expanded to include creamer, ice cream, cheese, and yogurt. These animal-free dairy alternatives will become more mainstream, and it’s projected that products made from cell cultivation and precision fermentation will soon be on the horizon.
Sustainable Grocery Technology
Grocery store technologies are helping to cut food waste and improve profit margins. It is expected that artificial intelligence and machine learning will help improve grocer’s forecasting and inventory management, and dynamic pricing strategies will curb waste of perishable foods.
In addition, this past September, the Biden administration signed an executive order directing federal research into foodtech among several other biotech areas. Alternative food sources and technologies to increase food quality and nutrition are to be explored. This is a promising sign that the foodtech industry will continue on a growth trajectory.
Source: Frederick, A. (2022). Q3 2022 Foodtech Report. Pitchbook Data, Inc. <https://www.pitchbook.com/>.