World Food Innovate Summit Series – Food Focused Investments

FutureBridge 29/05/2019

How do you scout the right startup and deliver innovative products to demanding consumers?

The world’s food system is broken and is at a tipping point. For every one person suffering from malnutrition, there are two people overweight or obese. We eat roughly only 150 of 30,000 edible plant species. Food waste is becoming an increasing problem, and current agricultural practices are a leading contributor to greenhouse gas emissions.

For this reason there is now an urgent need for new food solutions. As consumer demand for healthy, sustainable products continues to increase, market leaders of the food and beverage industry are looking to partner with disruptive startups to expand their brand range in this space.

In this piece we will take a look at how NX-FOOD, the Food Innovation Hub of the wholesale store chain METRO, is providing a platform to innovative food startups rethinking the entire food value chain and setting them up for success.

Food Focused Investments

Fabio Ziesmssen, Director of Food Innovation at NX-FOOD, took the stage to discuss the radical shift that is occurring in the food system globally with a large amount of capital and infrastructure being deployed to meet the needs of the new generation of consumers. This new consumer group, typically centered on Millenials and Gen Z, are demanding new experiences from food and beverages that are not only healthier but also deliver ethically in terms of the environment, animal welfare and support for local communities.

Typically, startups are following these key industry trends and for this reason are finding increased attention from big players to reach this growing number of mindful consumers and who have a more positive brand image. Extracted from The

NX-FOOD uses a 3 Building Blog method to bring startups food innovation to the retail shelf.

  1. The first blog is “Trend Identification” which consists of choosing the appropriate trends and their potential impact, identity any regulatory, legal and consumer barriers and finally focus on a small selection of these trends with near- to mid-term impact
  2. The second blog consists of “Strategic Relationships” in which they open innovation principles, build a global deal flow and make sure there is continuous engagement to build trust.
  3. After these 2 blogs are complete, they then move onto their third and final blog “Strong Infrastructure” which is focused on building a database of innovative food supplies to their consumers and creating a business model without heavy capex.

Are startups the answer to repair our broken food system…

METRO believe so! Through their startups’ program they’ve created the opportunity for fledgling businesses to sign up and present their inventive creations to a broad audience over a three-month trial period. NX-FOOD uses this time to pass on any feedback from customers to the innovators to allow them to further develop and improve their product. Those which compel NX-FOODS will be invited to stay on. Let’s now take a look at some of the startups which have done just this;

Fabio Ziesmssen, Director of Food Innovation at NX-FOOD

1. Infarm, Germany

Solution – In 2016, METRO became the first wholesale store to install an indoor vertical farm unit in Europe – more precisely in the METRO Store in Berlin Friedrichshainafter – following their partnership with the startup infarm. After their first stores success, another 80 square meters of “instore farming” platform was installed in METRO Cash and Carry Paris, France, in October 2018. These gardens are about 40 plants, spread over 7 levels, where 13 varieties of aromatic herbs and 4 types of microgreens grow.

Targeted Trend – This partnership is in line with a trend that is becoming increasingly important: urban farming. This urban agriculture complements the offer of traditional agriculture and provides an answer to food self-sufficiency issues in urban areas.

2. Plumento Foods, Germany

Solution – In March 2018, NX-FOODS collaboration with Plumento Foods succeeded in offering insect-based pasta on their Start-up Shelf at “Emmas Enkel” in Düsseldorf as the first retailer in Germany. This was followed by listings in a number of METRO Cash and Carry stores in Germany.

Image source: www.nx-food.com

Targeted Trend – From plant-based and insect proteins to cultured meat, alternative proteins are attracting considerable financial investment, research attention and interest in the media. The increased attention around the unsustainable and environmentally damaging effects of the animal sector and the rise of flexitarian, vegan and vegetarian consumers is putting the spotlight on alternative proteins. More recently in March 2019, METRO became one of the founding members of the Association for Alternative Protein Sources BALPro which aims to bring transparency and clarity to alternative protein sources such as insects or cultured meat.

3. Uwe

Solution – In May 2018, Uwe became the first German craft beer brand specialized solely on non-alcoholic beers. It all started, when the young entrepreneurs themselves were looking for a tasting, non-alcoholic alternative to usual craft beer. Unlike the two startups mentioned above, Uwe are still in the early stage of getting listed at METRO Cash and Carry stores. They are now on their 3-month trial in the hope to move forward and expand their distribution to the whole of Germany with the help of NX-FOODS program.

Image source: www.trinkuwe.de

Targeted Trend – Booze-free beer is on the rise. As more young people opt for wellness-oriented lifestyles, brands are offering more low- and non-alcoholic products. According a report by Bon Appétit, the market for low- to zero-alcohol beverages is expected to grow by 32 percent between 2018 and 2022.

Pioneering the future of food and beverages on our retail shelves

From the introduction of insect pasta to the first installation of a vertical farm inside a wholestore, it seems METROs food innovation hub NX-FOOD is in line with the trends and emerging startups tracked on FutureBridge’s Industry Insider program.

Based on the startups that have been shortlisted by NX-FOOD, it is clear that sustainability, individuality and nutritional awareness are of key interest.

NX-FOODs open application platform for startups is one which should be admired by others in the market. Many startups which have a great product may struggle to find that open door and be lost in the process. “Their work is opening the funnel for innovative startups to reach retail shelves” said Fabio. Providing support and feedback throughout the trial term will set startups up for the best chance of sustained success.

Looking at other creative and innovative retailers in this time of transformative change; Coop Italia uses the latest technology to create the ‘Supermarket of the Future’ implementing sensors, robots, interactive screens and apps in their stores and Albert Heijn, one of the Netherlands largest retailers, has a similar concept in which they organize a Product Pitch every year for startups to bring their products forward with the chance of being on their retail shelves across the country.

Manufacturers and retailers must take the necessary steps to be prepared for the continuous shifts in their consumers eating habits. It seems NX-FOOD is taking this preparation one step further for METRO as their initiatives are as diverse as the food system itself. But are they too niche to be accepted by consumers? Is it too early for insects in our foods? When these startups scale will they lose their ecofriendly message?