HomeFoodS2G Ventures talks structural changes shaping tomorrow’s food system | 2021-08-11

S2G Ventures talks structural changes shaping tomorrow’s food system | 2021-08-11

CHICAGO — A century in the past, the Spanish Flu led to developments within the automation of phone operations. The SARS outbreak in 2002 catalyzed on-line ordering with the rise of Alibaba in China. Now, the COVID-19 pandemic is poised to have a long-lasting affect on the way in which food is produced, bought and consumed, based on a brand new report from S2G Ventures. 

The Chicago-based enterprise capital fund analyzed eight pandemics and outbreaks all through historical past to uncover patterns round monetary and financial restoration. It discovered previous pandemic financial historical past is starkly constant, characterised by a cycle of innovation and lasting changes to societal behaviors and norms.

“Diving into pandemic economic history shows a pattern of innovation,” mentioned Dan Ripma, senior affiliate at S2G. “What we see today is that improvement in nutrients, taste, functionality and sustainability will lead to long-term structural changes in our food system.”


Decommodification of protein

Structural changes already are occurring throughout the protein area. Cost inflation and complicated, international provide chains paired with labor intensive processing services have challenged animal-based merchandise, whereas innovation and altering shopper preferences are making the choice protein trade extra engaging, based on S2G.

Improvements within the style, diet and affordability of plant-based protein and developments in cell-based meat will assist take different protein from the “iPod phase” to the “iPhone phase,” mentioned Sanjeev Krishnan, managing director and chief funding officer at S2G.

“On the plant-based side, there’s been a Cambrian explosion post-Beyond Meat of both new brands and new innovation, not just in terms of better soy or yellow pea, but also new things like mushrooms, fungi, chickpea and a number of other science-based ingredients,” he mentioned. “I see the economics of cultured meat getting better and better, I see more interest in regulating it and I see more consumers interested in it.”

The food system would require each typical and different protein to feed a rising international inhabitants, with conventional animal-based protein transferring towards a much less centralized future, he added.

“I think there will be more regional producers,” Mr. Krishnan mentioned. “There will be more producers that differentiate either by production methodology or quality of outputs.”


Channel digitization

The pandemic additionally accelerated digitization inside the food system. A pressured transition to fewer in-person buying selections through the pandemic drove shoppers to have interaction with firms by digital entry factors. More shoppers started educating themselves on diet and food on-line, resulting in the emergence of area of interest food tribes.

“We’re getting more tribal in the information that we’re consuming, especially with the role of social media platforms,” Mr. Krishnan mentioned. “It’s going to lead to more customized food tribes.”

The rise of the direct-to-consumer channel and on-line grocery permits manufacturers to customise and section shoppers, he mentioned.

“That has product development implications, which is really good for startups,” Mr. Krishnan mentioned. “Small companies can be fine being customized and niche, while larger companies have a harder time with that.”

Channel digitalization through the pandemic is also giving rise to the hybrid shopper, with shoppers using a wide range of on-line and in-person procuring modalities. This has implications for manufacturers and retailers round provide chain and success operations.

“The future of food retailing and product development is only going to become more complex, not less,” Mr. Krishnan mentioned. “That’s one of the reasons why we’re so bullish on the whole digitization of the overall food system. The more complex the supply chain, the more SKUs that you have when you get into customization, the more fulfillment is going to be another key pain point.”


Convergence of food and well being

Looking ahead, S2G predicted that food will play an more and more vital function in well being care as developments in science and know-how open new channel entry beforehand unhabitable by food for a number of causes.

One key purpose is that food’s affect on particular well being situations stays troublesome to measure when it comes to direct affect and value financial savings. Many organizations, each personal and public, are working to unravel this barrier, unlocking alternatives for food to be handled as a well being care instrument sooner or later, based on S2G.

With the overwhelming majority of American shoppers going through some type of illness potential on account of a metabolic food plan problem, S2G predicted the food system will type a bridge between illness care and well being care. Opportunities exist for food manufacturers to from direct partnerships with well being care gamers.

“Aging baby boomers in particular are a huge segment, but millennials and Gen Z are also very health and wellness focused,” Mr. Krishnan mentioned. “I see an opportunity for the food system to take market share from health care spend, to deflate costs, improve patient lives, improve mental health and really create a win-win for the US taxpayer.”

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