WORLD – The food tech space has proved to be resilient during the pandemic, attracting more billions in the first three quarters than it did in the entire year of 2019.

According to a recent report by Finistere Ventures, investment in the food technology space for the first three quarters of 2020 amounted to US$8.37 billion, dwarfing the US$7 billion raised during all of 2019.

Late stage startups represented 78% of the capital deployed into the sector, with Impossible Foods, Memphis Meats, LiveKindly and Perfect Day representing some of the largest deals of 2020 to date.

According to Finister Ventures, interest in the food space has been rapidly growing, transforming the sector into a safe space for investors looking to see a return on their money.

The pandemic, on the other hand, as acted as a catalyst to food tech sector growth, accelerating demand for its products and solutions as consumers embraced at home cooking and shunned dining out.

As a result of this demand for food tech solutions, Finister Ventures notes that the sector is becoming a larger component of the overall agrifood technology space.

According to the Finistere report, as of the end of Q3, agrifood tech startups raised $11.6 billion in funding, and food tech companies made up 72% of those investments.

“As of the end of Q3, agrifood tech startups raised $11.6 billion in funding, and food tech companies made up 72% of those investments.”

Finister ventures

The pandemic has however not only benefited the food tech sector alone, even legacy companies that were in decline also saw an uptick in demand for their products.

Campbell Soup for instance posted a 34.4% increase in its food and beverage segment sales between mid-March and mid-April, compared to last year.

Companies selling trendy products particularly those perceived to have functional and healthy benefits to consumers also immensely benefited from the shifts in consumer tastes and preferences during the pandemic.

Premium brands and plant-based protein alternatives have also seen a substantial increase in revenues as a result of the pandemic.

Sales for super-premium and premium brands have increased 1.7% year over year at retailers for the 26 weeks ended Oct. 4, according to IRI data.

And SPINS data found that all plant-based meat sales are up 148% compared to 2019 for the 16 weeks ending April 19.

Sales within the meal kits sector have also almost doubled year-over-year after sinking earlier in 2020 as these options tap into consumer interest for easy-to-prepare meals with flavorful variety.

As the world wallows through the pandemic with promises of effective vaccines in the horizon, analysts project interesting trends moving forward.

Euromonitor for instance, forecasts food and nonalcoholic beverages to be the only sector of the economy that will post positive growth in 2020.

The firm predicts the sector will grow at above 2%, which is slightly below what it posted in 2019.

Within the whole of the agrifood tech space, more money is expected to continue flowing into alternative proteins, ingredient refinement and supply chain advances as companies develop from nascent startups into powerhouses.

Finistere Ventures Co-Founder Arama Kukutai said in a statement that he does not expect big valuations of these food and beverage companies to collapse anytime soon, but he does anticipate that 2021 will have more startups being “forced to prove both their ability to scale to profitability and deliver return on investment.” 

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE