A New Year means new opportunities, goals, and commitments.
But did you know that “New Year’s Resolutions” have a much higher probability of success if they start in December?
Hey guys and gals, Jason Bond here.
You might know me from Jason Bond Picks, Weekly Windfalls, and Smoke Signals. Forgive me for that factoid about New Year’s resolutions. As a trader, I’m kinda a probability nerd!
You may not know that I’ve moved more and more of my attention to Angel Investing over the past couple of years. I’m loving this new challenge.
Right now I’m considered the number one teacher of stock/options traders in the world, and I want to add angel investing to that title, too.
This is my first article for Angel Insights (and the second in our 6 Sectors series), and I’m so excited to share the information with you. Because this next Sector is very near and dear to my heart.
You remember my little factoid about New Year’s Resolutions? Well, my New Year’s Resolution started in August, and it was… dum dum dummmm…
Let me be clear, this was a radical change in my life. All my life, I have loved burgers, steaks, chicken, you name it. I’m a meat and potatoes guy, you know?
But I needed to stay sharp for trading and investing. I haven’t always been great to my body. So I made the switch, and, I gotta say, the benefits have been huge.
Which brings me to the second Startup Sector we know is going to dominate 2020 and the next decade…
6 Startup Sectors that Will Dominate 2020 (And Beyond)
Sector #2 – New Foods
The idea of new food products and services is nothing new. For over a century, people have been applying science to create new food products and agricultural systems.
Dippin’ Dots, anyone?
But the New Foods sector was officially born in the new millennium as food modification reached a new level, thanks to advances in technology and shifts in consumer choices.
New Food, also known as “Innovative Foods,” is a category comprised of agri-food tech startups who’ve discovered new and unique food products and ingredients, offering new alternatives to proteins, meats, sugars, and adding new flavor enhancers (just to name a few).
But I’ll reference the category more broadly, to refer to other innovations within the ag and food distribution space. Within this space, we’re seeing new kinds of growing, harvesting, preparing, delivering, and consuming all across the board.
There have been a couple of well-known food successes in recent memory, like BeyondMeat, the Impossible Burger, and Ripple Ice Cream. The Impossible Burger, for instance, has pioneered an entire market that’s moving mainstream, with McDonald’s and Burger King menus now offering Impossible meat substitutes.
But I really do believe this space is just getting started. And here’s why. The driving force behind this new trend is the shifting demand of consumer habits. More people are demanding more of their food. They want healthy, flavorful, and new convenient options that are made sustainably and varied in ways they’ve never been before.
Startups within the New Food category are sprouting up everywhere, with an overall 60% year-over-year increase. In 2017, 17 Innovative Food startups raised $206 million dollars and in 2018, the number jumped up to $516 million across 70 deals.
Needless to say, some of the year’s largest deals went down in the New Food category, a sure sign of some serious capital gain to be made. These contenders are pulling out the big guns, supporting their big business ideas with innovative biotechnological processes, offering creative solutions to consumer’s problems.
So over the course of this Sector, I’m going to break it up into three subsectors:
1- New Food & Beverage Products
2- Agricultural Systems
3 – Distribution Models
#1 – New Food & Beverage Products
New Food is all about creating unique products to meet consumer’s needs. And we’re seeing consumer demands changing at a faster pace now than ever. This is largely due to our expanding understanding of nutrition as a society. Protein-rich foods in particular, are in high demand.
Since studies have exposed the meat industry responsible for contributing 15% of overall greenhouse gas emissions, contenders in the industry have had to get creative in order to better care for the earth’s resources while meeting demands.
As I briefly noted above, Impossible Foods has made quite a ruckus over the past year or so with their Impossible burger. That phenomenon hit all of America, seemingly overnight. Curious customers lined up in participating burger joints just to be in on the new thing.
Other Innovative Food startups, like Miraculex and Sugarlogix, participate in corners of the industry dealing with human health solutions, creating alternative sweetener options.
As I’ve mentioned in previous Angel Insights, it’s really important to see that whatever startup you invest in, is attempting to offer a real-world solution to a real-world problem. One global issue we can’t ignore any longer is that of climate change. A contender stepping up to the plate in this New Food category is Beyond Meat. They shifted from animal to plant-based meat, addressing the issues of climate change in addition to issues of human health, constraints on natural resources, and animal welfare. There are so many new startups proposing answers to many of the world’s problems today.
Let’s Talk About Personalization
Okay, I want you to take a look around you and notice just how much of our world has been customized to each of us. It’s everywhere! We’ve got voice recognition technology, facial recognition, thumbprint passcodes, product personalization, even advertisements are targeted to individuals, based on their search histories and other online content. And is it just me or do you feel like Alexa is always listening?
Well, the alcohol industry has caught on to this personalization trend. While I highly doubt that, as a society, we would ever stop being interested in our drinks, it’s always smart to incorporate the hottest trends of the times. Even for an industry that’s been around for hundreds, if not thousands, of years.
The alcohol industry, otherwise known as Big Alcohol, has surged by 13% since the year 2015, now valued at $250B. America alone accounts for $44 million and is expected to increase by an additional 6% this year. And with the recent success of craft breweries and micro distilleries, consumers are developing elevated taste buds.
The market for super and high-premium beers and liquors has been consistently swelling over the past few years. According to multiple studies, millenials are making the switch from beer to hard liquor, blended malt-scotch now the fastest-growing alcohol, with a consumption rate of 25% since 2016.
The frontier of customized cocktails on demand, or New Drink, is on the steady rise. We’re seeing this model show up both in restaurants and bars as well as in the form of subscription product services. Customers can choose exactly what they want, how the want it, precisely when they want it.
New Agricultural Systems
Now, I don’t mean to scare you, but according to the United Nations’ Food and Agriculture Organization, the earth’s population is predicted to jump up to 9B by the year 2050. That means that we need to increase food production by 70% in order to feed everyone. That’s a lot, I know.
On top of that, the agriculture industry is facing rising costs to production, shortages in labor, land management inefficiencies, and food waste. Not to mention a disconnected consumer base, demanding to know every detail of where their food comes from. Farmers of the world have a lot on weighing on their shoulders, to say the least.
As an angel, we know that it’s important to honor your own personal values and to make sure your portfolio to reflect those things that matter most to you. There are a lot of startups that have been implementing new business based off their core values, too.
Thankfully, we’ve seen a flux of Agtech startups popping up to offer solutions, worldwide. Startups like EarthSense, have worked to develop a robot that collects data, using a variety of sensors. It tracks plants’ health, physiology, and stress responses, while converting field data into specific and actionable information about plant-traits.
Take a look at Verdical. It’s an indoor automated gardening system that allows customers to grow their own plants and herbs with just one touch of a button. This frees up restaurants and farm-to-table startups, by getting rid of the middle man and creating their own supply to sell directly to customers. Verdical allows urban spaces to become life-sustaining places to source their own local food.
The winds of change are swirling all around us. We’re seeing a wide array of new businesses blossom on the daily. As I mentioned earlier, it’s imperative to take seriously the signs of the times and adapt business methods accordingly. As an angel, you want to see this taken seriously by any startup you’re considering adding to your portfolio.
New Food Distribution Systems
We’re seeing the rise of subscription product services in nearly every industry. So of course, New Food is no exception. Successful startups like Blue Apron and Hello Fresh allow customers to order meal-kit boxes stocked with everything needed for dinner that night, on a subscription basis. Or if customers wanted to get a bit more personal with it, they could order grass-fed and finished beef products locally, from farm-to-table distributors like Oregon Valley Farms.
Or, consider the newer bridge-gapping restaurateurs, like Modern Market, Dog Haus, and Luna Grill, taking up the space between traditional fast-casual and casual-dining sectors. Fast casual 2.0 concepts have menus that are chef-driven, featuring signature dishes, while offering premium hospitality.
The focus is shifted on customer experience, offering higher-end beverages, often including alcoholic options. Food is made with a higher quality and often showcases farm-to-table local sourcing with healthy ingredients. A lot of these startups exhibit ambitions that stretch beyond growth and dollar signs, seeking to become staples of their community by way of inclusivity, collaboration, and long-term relationships with investors.
Yet, other industry players are relying more heavily on technology, like startup Makr Shakr. There’s a new wave of artificial intelligence they’ve designed, developing robotic bartenders. Since their debut in 2013, cruise liners and hotels all across the world have hired their very own machine mixologist, capable of mixing infinite varieties of drinks, utilizing up to 170 bottles of varying liquors, all stored in its overhead rack. Today, Makr Shakr units have made over a million drinks, sometimes making up to 800 in a single night.
Designer, Ratti, says, “We like to think that Nino can help us explore how people might embrace the new possibilities offered by robotics and digital manufacturing… Robots are already revolutionising the job market — but few people have seen them in real life, let alone controlled them.”
He explained that these were not designed to take the place of human mixologists, rather it’s an opportunity to get people used to interacting with robots, as they almost certainly will become a larger part of our future lives.
Product Subscription Services Within New Food
That’s right, people don’t have to move a muscle to reap the benefits of personalized drink services. Subscription product services like Opn, are taking their place and branching out into the personalized libation market.
Opn implements its own intelligence system, allowing customers to learn about and customize their very own recipes, choosing from a 300-drink database. Customers are coached each step of the way, as they craft their shopping list with the exact ingredients needed for their favorite bevs. With just a few clicks, individuals can order exactly what they need and have it sent to their front door just in time for the next party. Opn can also assist in helping customers create social calendars, offering new tips on how to be the perfect host. Opn has certainly opened up new possibilities for a new kind of consumerism.
Johnny Walker launched their own line of personalized alcohol services, called My Edition. Along with the Diageo Futures and Vivanda Team, they developed taste profiling technologies to create one-of-a-kind, new and exclusive scotch whisky blends, based on individual customer preferences.
It’s an easy-to-use-software program where customers answer a variety of questions, which the My Edition machine learns and then crafts a customized blend. From there, individuals can personalize the glass bottle and add an engraved message or symbol of their choosing.
Not only does this expand their reach, engaging brand new customers, but it also retaining long-time customers, making them happy with a new product line. Additionally, they’re changing with the times and keeping their brand in the mouths of people, staying on the cutting edge of future business.
Another company, Master of Malt, hailing from the United Kingdom, invites customers to personalize their own whiskey blends. Individuals have the option to either concoct their perfect bottle online or order their very own home blending kit. The home kit allows customers to make smaller batches, trying all of the ingredients first before purchasing a full bottle online, where they can personalize labels and messages.
As you can see, and most likely didn’t need me to point out, our need for food will never go away. Nor will our desire to see it presented differently and more creatively. We humans are creative beings and as long as we’re alive, we will continue to create!
I’m inspired by the brilliance demonstrated by so many new startups implementing creative innovation and technology as business solutions to real problems. Even for needs as basic as food, the possibilities are quite endless.
The New Food industry doesn’t seem to be drying up any time soon. Now just might be the perfect time to take a look at some players looking to get in the game. The water seems just fine, it might just be your time to take the plunge.
I wish you well in your next endeavour!
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