Foodtech
Market Map: Foodtech reckons with rocketing grocery prices
June 14, 2022
Inflation is driving changes in the foodtech industry, as consumers face dwindling spending power that is shifting buying habits.
A recent report from the Bureau of Labor Statistics estimates that the cost of groceries increased 10% year-over-year in May. Major grocery chains like Kroger are responding by teaming up with grocery fulfillment providers to build automated distribution centers that will save on costs in the long run.
Meal kits could be making headway again, despite the headwinds of supply chain problems and inflation, as the category experienced a resurgence in popularity at the beginning of the COVID-19 pandemic. There were several investments in that space during Q12022 such as UK-based Gousto, which raised $148.2 million in funding.
What else have VC investors placed in their cart? The market map below outlines the global foodtech ecosystem. You can explore the industrial and consumer tech segment by clicking on the green tile.
A recent report from the Bureau of Labor Statistics estimates that the cost of groceries increased 10% year-over-year in May. Major grocery chains like Kroger are responding by teaming up with grocery fulfillment providers to build automated distribution centers that will save on costs in the long run.
Meal kits could be making headway again, despite the headwinds of supply chain problems and inflation, as the category experienced a resurgence in popularity at the beginning of the COVID-19 pandemic. There were several investments in that space during Q12022 such as UK-based Gousto, which raised $148.2 million in funding.
What else have VC investors placed in their cart? The market map below outlines the global foodtech ecosystem. You can explore the industrial and consumer tech segment by clicking on the green tile.
To go deeper, read our Q1 2022 Foodtech Report. PitchBook subscribers can also explore the full foodtech market map with details on more than 2,600 companies.
Spotlight: Industrial and consumer tech
Industrial and consumer tech companies fall into three subsegments:
- Kitchen tech and robotics: Kitchen automation technology that addresses labor shortages and health risks and drives efficiency and productivity gains.
- Food waste and traceability: Providers that reduce food waste from harvest to plate, with a focus on food transportation, storage and preparation.
- Advanced vending: Stand-alone robotic food and beverage distributors, including kiosks, vending machines and contactless restaurants.
Industrial and commercial tech startups attracted $132.6 million in funding in the first quarter across 22 deals, an increase of 20.1% in value from Q4 2021. However, this is a decline of 48.5% YoY.
Food waste and traceability, along with kitchen tech and robotics, were the subsegments that saw the biggest deals. Boston-based Mori, which develops food preservatives, landed the subsegment's largest deal of the quarter with a $52.4 million round.
How deals and exits are trending
Compared with the final quarter of 2021, foodtech saw a cooldown in funding in Q1 2022, according to PitchBook data. Deal value declined 40.8% quarter-over-quarter and nearly 43% YoY. Deal count experienced a smaller decline, decreasing by 13.3% and 11.4% respectively.
This cooldown could be a sign of a market recalibration, according to PitchBook analyst Alex Frederick, given public market volatility and the surge in VC funding in 2021.
Despite the decline in the number of deals, there were some notable transactions during the quarter, including a $120 million investment in Israeli fermented, animal-free dairy provider Remilk and a $768 million round for ultrafast grocery specialist Getir.
The macroeconomic climate's impact is also showing up in exit activity, with exit value in Q1 2022 totaling $100 million, according to PitchBook data, a severe drop from previous quarters.
Of the 13 exits in the first quarter, 10 were acquisitions, one was a buyout and two were public listings, demonstrating significantly less liquidity than in 2021. The turmoil in public markets has also reduced opportunities for foodtech startups to exit in the near term, with investors and startups waiting until conditions improve.
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Featured image by Malte Mueller/Getty Images
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