Lux Research recently attended the Future Food-Tech Conference held in person in London. The conference was split across two days with a mix of panel discussions, startup pitches, and roundtables. There were over 800 attendees including corporate R&D leaders and openinnovation leads, venture capitalists (VCs), startups, and regulators from the U.K. Food Safety Authority (FSA).
A reoccurring topic throughout the event was alternative proteins, with many references made to the expected consumption of animal protein to increase 70% by 2050 and the challenges that both plant- and cell-based meat players face as they try to disrupt this growth.
Below, we highlight three key takeaways based on our observations:
1. Alternative proteins to personalized nutrition: Partnerships are critical to build the future food ecosystem
The bottleneck in the alternative ingredients market today is the ability to scale and achieve price parity. During the conference, key players highlighted examples of promising partnerships that aim to overcome this bottleneck as well as calls for partnerships. These included Ajinomoto and SuperMeat working on feedstock that is cost comparative and Tim Spector, co-founder of Zoe, highlighting achieving price parity to health tests as a critical bottleneck for its platform as well as its interest in partnerships with retailers and rapid lipid blood test developers.
AB InBev’s partnerships with The Every Company (formerly Clara Foods) and Benson Hill, ADM’s relationship with New Culture to scale dairy alternatives, and calls from Kingdom Supercultures’ co-founder for partnerships with medium-size fermentation players to scale their precision nutrition platform are just a handful of examples of partnerships powering scale.
To build on this topic, Lux attended the roundtable “How to result in a win-win partnership between corporates and startups,” which sparked great discussions among corporates such as Mondelēz, startups such as Kyomei, and partnership facilitators such as EIT Food. Gil Hosky, who led the roundtable, summarized the discussion in-depth here. Winning criteria included corporates recognizing “no” is the next best thing to “yes” to avoid giving false hope, new innovations gaining corporate executive sponsorships that are resilient to reorganizations, and the need for corporates to budge on exclusivity and settle for being the first one rather than the only one.
2. Developers and regulators are in limbo as the European Food Safety Authority and FSA await novel food submissions
While other panels were referenced as “agree-athons,” the Routes to Regulation panel proved fruitful in both differing opinions and important facts. There is no doubt of the existene of frustration with lengthy and ambiguous novel food approval processes. References were made to three-year-long approvals, the requirement for a 55% vote win and 65% representation of the European population, and a lack of alignment between policy and regulation priorities.
Paul Tossell, head of FSA’s Novel Foods team, confirmed there have been no novel food submissions for cell-based meat, yet his team has processed over 120 cannabidiol (CBD) submissions. Paul suggested the main downfall on timing relates to the lack of quality of submissions, not lack of resources. He detailed how this quality gap relates most commonly to good manufacturing practices. As a result, the discussion progressed to how food players should look to take learnings from adjacent industries, such as pharma, to improve their dossiers.
Too often, startups fear regulators, while regulators need to learn the process behind novel foods. If regulators are not involved enough to understand the risks, the only option left to protect the consumer is to assume the worst and maintain a very strict process. Then again, the lengthy and convoluted process appears designed for corporate standard operating procedures, management structures, and policies, all of which tend to mismatch profoundly with startups’ fast pace, appetite for risk, and scarce capital.
3. Reduced investment moving forward will impact early stage innovators hardest
While the impact on VC funding as a result of the global financial downturn was inevitable, panelists from This, ZX Ventures (AB InBev), Five Seasons Ventures, and SOSV appeared more positive than those across the pond at Future Food-Tech in New York. Panelists continually highlighted the resilience of the food industry and, in cases where funds are not scarce, startups should expect investors moving forward to ask more questions on term sheets before securing funding. Those with just a proof of concept at a very early stage should expect to be impacted most, whereas players with more established processes, products, and customer commitments should anticipate avoiding major impacts. Examples of continued investment this year include Planted’s recent funding round of GBP 61 million and the Green Generation Fund raising EUR 100 million. However, with the risk of reduced funding for smaller players, This expects these small enterprises to follow suit by shifting priorities from gaining market share to improving profitability.
Lux Take
With so many unpredictable, moving pieces, the success of food innovation will depend on open collaborations and partnerships. Expect those that go it alone to fail or, at best, fall behind. This changing environment poses great opportunities for corporates to fill startup gaps with the funds, ability to scale, deep consumer knowledge, and established supplier and retailer relationships. As corporates lack agility, internally promote risk adversity, and struggle to strive toward their 2030 sustainability targets, they prove to gain a lot from smaller innovators.
Finally, but arguably most importantly, there’s more to food than protein. While the conference initiated important discussions, highlighted key challenges, and will likely play a pivotal role in bringing investment to the alternative protein space, it did somewhat allow protein to overshadow other important innovations. Talks on the microbiome and the huge advancements made to prove the effectiveness of food as medicine garnered little interest. Food safety and genomics, personalized nutrition, and regenerative agriculture ultimately took a back seat.
Lux cautions corporates and VCs of missing out on important opportunities while exploring investments in food innovation. Carefully rationalizing hype with critical technology insights, coupled with continuous monitoring of additional developments in the broader food innovation space, can help avoid tunnel vision and create a positive business impact.