Investment Themes

Our thoughts on the future of food and wellness, in collaboration with M&S

Investment Themes

Our thoughts on the future of food and wellness, in collaboration with M&S

Words Michelle Wilk

In collaboration with M&S Food Trends Researcher Emily Smith

December 22nd 2020 / 6 min read

The food sector saw unprecedented change in 2020, with the pandemic driving significant changes in shopping behaviour: three quarters of the UK now do at least some of their grocery shopping online, a 26% increase on the previous year, with less frequent, larger baskets. From May-July, we saw online grocery shopping in the UK grow by 92% (Kantar FMCG Purchase Panel) as consumers rushed to secure delivery slots and have their weekly food shop delivered to their door.

Outside of online, we have also seen growth in a community-centric approach to shopping, with an emphasis on local. A study by the UK’s Centre for Economics and Business Research showed that 60% of consumers intend to shop more locally once lockdown is over, and 58% are willing to pay more for products made in Britain. These factors, combined with the climate crisis that we now face, highlight the need for more sustainable solutions to both the food and drink we consume, as well as the packaging that surrounds it.

Our relationship with particular foods has also changed, with 80% of consumers now adopting a “food as medicine” approach to eating, according to Nielsen, in response to the global health crisis.

We see these changes as a huge opportunity to build and scale breakout businesses in the food space, and play a part in supporting the hospitality sector’s recovery. That's why, together with M&S, we’ve outlined where we believe we should be making investments, coupled with examples of M&S’ initiatives and existing startups in these categories. If you're working on an exciting startup or idea in any of these spaces, apply to join our startup accelerator or venture studio.

Agile Product Development

In line with the rapid pace of change we have seen in 2020, supermarkets and brands are needing to iterate and develop new food products faster than ever. We are looking for startups that make this easy across the end-to-end product development process; from predictive insights into shifting consumer tastes, right through to packaging design software and modular manufacturing.

Startups we love in this space:
  • Tastewise : Fuels food product innovation, sales, and marketing by helping predict how consumers cook, order, and eat.

  • Klydo AI : AI-powered research assistant using consumer discussions to inform product innovation.

  • Lumi: End-to-end supply chain platform that helps brands source, manufacture and manage packaging.

Sustainability

Plastic pollution, climate change and animal welfare are the most important ethical issues for consumers (Ethical Retailing including impact of COVID-19, Mintel, October 2020). We’re particularly excited by startups that can reduce our dependence on land, water and nutrients at the very start of the food value chain, through solutions such as vertical farming, that enable us to grow food in urban local communities.

Further down the food value chain, brands and retailers are also more committed than ever to finding innovative ways to reuse, recycle and reduce plastic. According to Mintel, 33% of consumers would avoid a retailer that used excess packaging.

We’re looking for startup solutions that can help brands achieve this at scale, in a cost-effective way, whether via circular refill solutions, or innovative new materials as alternatives to plastic packaging.

“At M&S, over the last two years we’ve removed over 2,000 tonnes of plastic where it adds no benefit – from switching our in-store bakery bags to paper alternatives, to removing plastic trays from a number of fruit and veg lines, to reducing the plastic on our sandwich packs by 40%. We’ve got lots of other projects in the pipeline, including a goal to ensure all of our packaging is recyclable by 2022 - but we still have lots to do!”

– Emily Smith, Food Trends Researcher M&S

Startups we love in this space:
  • COGZ: B2B marketplace for food processors to buy surplus and process grade produce directly from growers.

  • envoPAP: Sustainable packaging made from renewable sources, such as recycled sugarcane.

  • Apeel: Plant-based packaging solution for fruit & vegetables that keeps moisture in, and oxygen out - without the need for plastic.

  • InFarm & Smallhold: Hydroponic veg and herb growing in metropolitan areas and retail stores.

  • Wilo: A monthly subscription service that allows you to effectively ‘build your own farm’ - choosing your crops, and having the produce grown then delivered to you.

  • 3F Bio: Biotech startup producing alternative proteins using zero-water processes and partnering with M&S’s newly-created Food Innovation Hub.

Health and Wellness

Never has society felt less ‘well’. The COVID-19 epidemic has already ushered in society’s biggest-ever health kick. According to Mintel, five-a-day is a higher priority now, with almost a quarter (23%) of Brits saying they are eating more fruit and vegetables since the outbreak of the virus, and 51% believing that plant and botanical ingredients can have medicinal benefits. In 2020 consumers looked to add more vitamins to their diets as Vitamin D hit the headlines with its immune-boosting powers. Google trends have reported large increases in searches for ‘Vitamin D & Covid”. A fifth (21%) of shoppers claimed to take more vitamins and supplements during lockdown and nearly half intend to eat more foods that support immune function in future (IGD).

We’re looking for startups addressing this growing market; from pharma tech all the way through to digitally-native D2C health supplement brands offering the very latest in personalised health, plant-based ingredients and 3D printing.

Startups we love in this space:
  • Nourished: 3D printed vitamins, personalised for you.

  • Base: At-home testing for sleep, stress, energy and diet.

  • Brightseed: A biotech startup mapping plants and their corresponding nutrients for human health.

Personalised Nutrition

Over 2 million people in the UK are estimated to have a food allergy, with millions more actively choosing to limit certain food groups, for religious, environmental, preventative or trend-based reasons. As a result, our diets are becoming increasingly complex. We’re looking for technology that makes accessing and navigating the right food choices easier, from food prescription platforms with tech-enabled nutritionist advice, to chef-cooked meals delivered to consumers’ homes, right through to platforms that diagnose, prevent and monitor food allergies.

Startups we love in this space:
  • Tyme: Ready-to-eat meals requiring no prep or cooking, delivered to your door each week.

  • Detox Kitchen: Chef-cooked, nutritious meal plans prepared and delivered to your home.

  • Wellory: Platform matching consumers with nutrition coaches for personalised food plans.

  • Cara Care: Digital platform for managing better gut health.

Future of the Food Workforce

The last few months have brought immense uncertainty for the hospitality industry and those it employs. Enabling the food workforce to quickly adapt to these peaks and troughs in demand, with the flexibility to choose their stores and shifts using dynamic scheduling software, or to quickly find new work, is going to become increasingly important. We’re also excited by tech enablers allowing the hospitality industry to benefit from a share of the growing eat-in market, such as dark kitchen solutions and delivery enablers.

Startups we love in this space:
  • Reef Technology: Modular, in-garage dark kitchens, using parking lots in urban areas.

  • Karma Kitchen: Cloud kitchen startup, turning industrial spaces into easy-to-book, co-working spaces for the food industry.

  • Recroot: Hiring marketplace for hourly work using video, to speed up the hospitality and retail recruitment process.

  • Weezy: The new local online supermarket with fresh products delivered in fifteen minutes.

If you’re working on something in any of these spaces, even if it’s just an idea, apply to join our Venture Studio or Startup Accelerator.

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