More consumers are becoming increasingly savvy about the foods they eat and how and where their foods are sourced. Although healthy eating is a critical factor in their fresh food demands, more nuanced requirements cover the where, how, and why. What we have learned is that the food industry cannot meet these demands without rapid innovation.
According to ADM insights, consumer demands for fresh food is not just about eating, but also a growing interest for features such as:
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Traceable supply chains providing transparency
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Locally produced
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Functional ingredients
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Grown responsibly and sustainably
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Longer shelf life to avoid food waste
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Better animal welfare
Despite the growing demand for various food-related improvements, businesses are getting better at meeting the challenges by thinking in innovative, creative ways, from production to delivery.
What is surprising to many business leaders is the speed of innovation to meet these consumer demands as well as how innovation is taking place at each stage in the supply chain. What would typically take years to implement is now being created in months. Some of the innovations within our portfolio demonstrate how businesses meet these consumer demands directly. They are making a considerable impact on how companies of all sizes will follow suit. Two of our portfolio companies are at the forefront of innovation in food production. The business models are hard to replicate, address numerous problems from animal welfare to food waste, and ultimately result in healthier food products.
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Vital Farms: This once single farm in Austin, Texas, is now the leading U.S. brand of pasture-raised eggs in the U.S. by retail dollar sales. It isn’t easy to replicate a network of over 200 family farms that agree to produce pasture-raised eggs under the Vital Farms brand, but their model and commitment to their partners make it possible. Collaborating with farms to ensure their pasture-raised eggs meet the standards of ethically produced food and animal welfare is a top priority. The model promotes conscious capitalism, starting with production.
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Gotham Greens: A pioneer in indoor agriculture, Gotham Greens is a leading fresh food company where produce is grown using hydroponic systems in 100 percent renewable electricity-powered greenhouses that use 95 percent less water and 97 percent less land than conventional farming. Gotham Greens ensures high-quality products, comprehensive food safety, freshness, and year-round local production to meet consumer demand. Indoor controlled agriculture provides stabilized growing conditions for consistent output and reducing food waste through decreased distribution time. By not having to ship across the country, the shelf life of produce increases, and the consumer can easily trace their food.
In evaluating the broad food and beverage marketplace, we see innovations in other key areas, such as:
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Digital improvements that include direct-to-consumer distribution. Technology enables companies to remove the middle-man and provide more up-front, personalized service to consumers. Digital tracking has also become important to increase traceability and maintain transparency.
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Secondary markets for food waste or extended shelf life have become a significant area of interest, especially when recent studies from the Department of Agriculture revealed that the annual value of wasted food is at $165 billion and amounts to about 30 percent of all the food we produce in the U.S.
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Co-manufacturers specifically focused on the production of healthy foods and beverages, which can provide options and support to scale new brands and businesses in the better-for-you category, using higher quality ingredients and ensuring a high degree of focus on safety and quality.
In particular, the past year has required businesses to pivot quickly and address the growing consumer demand for fresh foods and better-for-you options. During COVID-19 lockdowns, consumers became more aware of their health and how food is a significant contributor to it.
The unexpected interruptions required companies to enhance their supply chain operations, creating improvements in how products, information, work, and funds flow. Many of the changes were not new, but rather existing themes that were accelerated due to COVID.
As we address current consumer demands while also moving beyond industry upsets, Manna Tree embraces new ways to meet consumer demands for production innovations around food and nutrition supply chains. We closely track the innovation cycle to identify category leaders and investable businesses.
