COVID-19: Impact on the Future of Food

Let's take a closer look into the impact COVID-19 has had on the food industry and explore the future of food.

The global pandemic has created major changes in our habits and daily lives. To stay healthy and safe, we have had to make drastic adaptions in all aspects, including how and what we eat. Businesses have been severely affected as well, and the food and beverage industry has had to learn to survive in this locked-down environment. Let's take a closer look into the impact COVID-19 has had on the food industry and explore the future of food.

Five major areas we see growing post-pandemic are e-commerce & food delivery, ghost kitchens, kitchen & restaurant tech, meat alternatives, and the rise of industry 4.0.

Food Delivery/e-Commerce

The pandemic has seen drastic growth in food delivery and e-commerce. In June 2020, U.S. online grocery sales reached $7.2 billion. Pre-pandemic, food deliveries grew 23% over four years, compared to a 152% growth for Uber Eats in June 2020. Food delivery has become a huge market in the future of food, and we believe companies will be creating and adjusting services post-pandemic.

The four top U.S. food delivery applications in the U.S. saw a $3 billion collective revenue increase in the second and third quarters of 2020, while COVID-19 imposed shelter-in-place restrictions.

With indoor dining restrictions and lockdowns in place, consumers have become reliant on food delivery. The pandemic introduced contact-less delivery, curbside pickup, and even relaxed licensing rules, introducing third parties to the grocery and restaurant experience. In order to preserve in-person shopping and dining, technology will need to improve the time and convenience for consumers.

Self-Checkout options have become ubiquitous in grocery stores, however developing more seamless payment options and potentially self-ordering kiosks will keep customers from feeling like their time is being wasted. There are even predictions that a redesign of how grocery stores are stocked will make the experience take about half the typical time. We see this shift to focus on e-commerce emerging post-pandemic with larger grocery chains looking to purchase online grocery retailers. Ahold Delhaize's, a large Dutch retail grocery chain, agreed to purchase 80% of FreshDirect, a pure-play online grocery store with twenty years of experience.

Ghost Kitchens

Ghost kitchens, delivery-only restaurants, could be a $1 trillion business by 2030. These concepts can thrive as they partner with delivery brands like Uber, Doordash, etc. without the overhead and cost of brick-and-mortar restaurants. CloudKitchens has received hundreds of millions of dollars in funding and has spent over $130 million on real-estate for it's kitchens. Ordermark is a software company that works with restaurants to manage online orders and host virtual brands. They recently received $120 million in funding.

The appeal is the speed; ghost kitchens do not require Michelin-star chefs to handle the packaging, transportation and preparation of food.

Kitchen and Restaurant Tech

A rising area in the food space are the gadgets and technology we use in the kitchen. An emerging shift post-pandemic will be digitizing inventory in kitchen spaces, automatizing back-of-house operations. Companies like Square and xtraChef, who have so far focused on front-of-house operations, will emerge and meet other restaurant tech companies to improve kitchen operations.

Plant-Based and Cultivated Meat

In recent years, the alternative protein sector has gained traction for its sustainable, environmental friendly workaround. Now, the pandemic has demonstrated the need for an alternative as our food supply chain can be threatened by disease and bacteria. An innovative solution that can rival the taste, texture, and feel of real meat is on the rise, thanks in part to trailblazers Beyond Burger and Impossible Foods, and the propelling force of the pandemic.

Plant-based meat is in high demand, and even the largest U.S. beef processing companies are taking part in this industry. Tyson Foods, JBS, Cargill, and National Beef are responsible for over two-thirds of beef processing in the U.S., and as the pandemic spread, factories dealt with major repercussions, an estimated loss of over $20 billion in 2020.

With a 70% growth in demand for protein over the next thirty years, these traditional meat manufacturing companies are investing in future solutions. Tyson established Tyson Ventures to develop and invest in alternative protein companies such as Beyond Burger and Memphis Meats. Cargill partnered with KFC China to launch plant-based friend chicken.

Given the desire for healthier and safe alternatives, and the technological advancements that make plant-based meat a tasty, nutritious option, the alternative protein sector will continue to rise post-pandemic. What's more, cultivated meat, the process of taking stem cells from living animals and cultivating their cells in a lab, is the next era of meat alternatives.

Now that plant-based meat companies are making a name for themselves, the next consumer adoption will be cultivated meat consumption. The ethical, sustainable process of keeping animals alive and cultivating meat without farming animals for slaughter is on the rise, with Israeli startups on the forefront of this revolution.

The food industry 4.0

The food industry 4.0 is the process of digitizing the entire food value chain. Utilizing technology such as artificial intelligence, smart data, blockchain, robotization and precision farming, the food industry will rely on such tools to make more resourceful, cost-effective decisions.

Industry 4.0 will help in the following ways;

  • Provide data from every step in the supply chain with real-time output

  • Automation will drive production scheduling, inventory management, maintenance planning, order fulfillment, equipment operations, machine learning, and robotics

  • Decision-making and business decisions will be more complex and will require managers and employees to have higher-level skill sets

In summary, the pandemic has created a more self-sufficient, health conscious consumer with tailored demands. The future of food relies on the ability to make agile adjustments, and focus on improving time and convenience for consumer satisfaction. When it comes to food, the pandemic has led to empowering the consumer in terms of health, ethics and sustainability.

Israel Startup Spotlight

The Israeli food tech scene has taken off in both plant-based and cultivated meat alternatives, especially during the pandemic. In 2018, Racheli Wizman founded SavorEat, a plant-based meat crafted by 3D technology, and by the end of 2020, it became the first plant-based meat company on the Tel Aviv Stock Exchange, raising about $13 million in the share sale. SavorEat is looking to keep inventory to a minimum, creating variety for different consumer preferences, reducing food waste, and has a long-term goal of creating an at-home appliance.

Aleph Farms, a cultivated meat startup founded in 2017, has been making history in the sector. In a partnership with The Good Food Institute Israel partnered, Prime Minister Benjamin Netanyahu was the first head of a state to taste Aleph Farms' cultivated meat, positioning Israel as a leader of the global alternative protein. Other Israeli cultivated meat startups paving the future include MeatTech, Future Meat Technologies, Redefine Meat, and SuperMeat.

Above, chicken being packaged at the SuperMeat facility, courtesy of The Guardian.

The future of cultivated meat is happening right before our eyes, with cutting edge technology and governments realizing the necessity of this emerging market. This past year, the Singapore Food Agency (SFA), the leading agency for food-related matters in the country, approved the sale of cultivated meat.

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