Want to start a food business? Try foodtech

MANILA, Philippines — When Filipino professionals have saved up enough money and decide to put up a business, the industry they most commonly look at is food. They may decide to partner with other investors to launch a restaurant, franchise a chain or food stall, or put up a carinderia. The most common thinking for why food businesses are a good investment is the adage that “everyone eats.” This thinking implies that food businesses are easy to turn into successes because all people are your market. No matter who we are, what we do, or where we live, we all have sit down at least three times a day to eat.

 This thinking is of course flawed. While indeed all people eat, each person has their own individual preferences for food, spread across a wide variety of variables including taste, cost, location, and even aesthetics (Instagrammability is not to be overlooked).

What if there was a way to still participate in the food economy but de-risk yourself of the risk that comes with backing individual establishments? Such is the premise behind the new foodtech portfolio recently launched by multi-asset trading platform, eToro, which pioneered copy-trading. According to statistics cited by the global trading giant, foodtech is on pace to reach an astonishing US$700 billion by 2030. If that figure may strike some readers as incredible, it’s only because it’s driven by an equally incredible trend: over-population.

 With population surging across the world, in many places unsustainably, the strain on food security is growing even more. Limiting population growth is of course difficult and can have dire sociological impacts for the few companies that do try, so the only sensible choice is to increase food supply. The foodtech companies that respond to this crisis will be valuable in two senses of the word — first in the financial value they will create for their shareholders, and second in the way that their innovations will quite literally save lives.

 It’s hard to understand how foodtech can create this value until you examine some of the representative companies in the eToro portfolio. One is Beyond Meat, which became a stock darling when it IPOed this May and quickly quadrupled its value. The company – which trades under the ticker BYND – produces imitation meat that looks and tastes like genuine meat, except it’s been painstakingly created and grown in labs. Such alternative foodstuffs are important not only for vegetarians, but the increasing number of people concerned with the impact that real meat – and in particular, cows — have on the environment in general and climate change in particular.

 Another representative company in the eToro portfolio is Danone, which trades under the ticker BN.PA. What’s notable about Danone is that it’s a food multinational but it actively invests in the foodtech startups pioneering the industry. Such backing is their vote that foodtech is not just a passing trend, but the natural (and inevitable) evolution in how people consume food. What may be viewed as foodtech now may be par course in a few years time, a fact we can witness in the many popular chains experimenting with rollouts of Beyond Meat’s foodstuffs in their dishes and meals.

Taken as a whole, foodtech is one of the most promising fields of tech to have emerged as an investable asset. It allows people to benefit from the ubiquity of food, while limiting the risk that comes inherent to investing into individual food establishments.

 But what’s inspiring about the new foodtech portfolio is not just the financial opportunity – it’s also in the impact.

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Joshua Luna is a graduate of Ateneo de Manila University, who has worked on various land development projects with some of Philippines’ top corporation and conglomerates. He can be reached at [email protected].