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2021 INNOVATION TRENDS 1 Our predictions for new methods, ideas and processes that are creating more agile and sustainable food systems From Farmgate to Plate: Top Food & Ag Innovation Trends for 2021
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From Farmgate to Plate: Top Food & Ag Innovation Trends ...

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Page 1: From Farmgate to Plate: Top Food & Ag Innovation Trends ...

2021 INNOVATION TRENDS 1

Our predictions for new methods, ideas and processes that are creating more agile

and sustainable food systems

From Farmgate to Plate: Top Food & Ag Innovation

Trends for 2021

Page 2: From Farmgate to Plate: Top Food & Ag Innovation Trends ...

2021 INNOVATION TRENDS 2

The confluence of climate change and the issues created by the pandemic, both economic and logistical, threaten the food security of millions around the world. COVID-19 proved that our food system is vulnerable - exposing weaknesses as it disrupted the supply chain at nearly every point. While the food value chain also showed remarkable resilience, it’s now clear that the ability to achieve collective sustainability goals – and long-term business growth – requires new ways of thinking and operating.

“The pandemic validated the need for real innovation and substantive investment to solve the challenges we’re facing,” said Anne Greven, global head of food and agribusiness innovation and the FoodBytes! platform at Rabobank. “Companies that are planning for the next 10 to 15 years are investing heavily in innovation, and they’re seeing those investments pay off much sooner than they imagined. They’re seeing the returns now.”

In the second half of 2020, Pitchbook figures show the aggregate amount of capital invested in the food and ag space increased, from $4.1 billion to $6.9 billion as food companies began to recover from the initial onset of COVID-19. This upward trend in F&A investment is also reflected in the FoodBytes! startup network: alumni raised $532 million in 2020, more than doubling the $250 million raised in 2019.

As we move into 2021 with a new recognition of the need for innovation, FoodBytes! shares predictions for the top innovation trends that will continue to drive sustainable change this year and highlights startup alumni that are at the cutting edge of these accelerating trends.

2021 Innovation Trends

Sustainable supply chains

Improved resource management

The next frontier of nutrition

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2021 INNOVATION TRENDS 2

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COVID-19 disrupted supply chains across the board resulting in panic buying, which drove price increases, shortages in some areas and excessive waste in other channels. While the food chain adapted fairly quickly, it did expose an opportunity for greater readiness and responsiveness ahead of the next crisis the food industry may face.

“Players all along the supply chain need to prepare for what could be around the next corner and invest in solutions that are innovative, digital, diversified, flexible, resilient, efficient and transparent,” said RaboResearch’s Steve Nicholson, VP, senior analyst for grains and oilseeds, during the markets forum at Rabobank’s annual Food & Agribusiness Summit in December 2020.

In addition, consumers are demanding more visibility about where their food comes from. Despite consumer cost-consciousness driven by the economic pressures of the pandemic, sustainably-marketed products maintained their market share, even seeing growth in key demographics such as millennials.

These examples build a strong case for increased traceability. Head of RaboResearch North America Roland Fumasi sums up the industry shift: “I usually talk about transparency in terms of the consumer demanding it, but it’s become clear that transparency is critical for value chain participants, regardless of consumer demand. There are opportunities for potential cost reduction as transparency is increased in the supply chain.”

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SustainableSupply Chains

2021 INNOVATION TRENDS 3

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2021 INNOVATION TRENDS 4

I. SUSTAINABLE SUPPLY CHAINS

Traceable Technology: Blockchain and Beyond

Blockchain solutions are becoming more sophisticated, and other tech-enabled tools are helping track inputs with increased

transparency along the supply chain.

STARTUPS TO WATCH:

Improves traceability at the smallholder farm level via a mobile platform. Farmforce replaces

existing paper-based processes to help farmers secure sustainable sourcing and grant

visibility down to the field level for a fully traceable supply chain. Farmforce has gained

traction with over 500,000 farmers on the platform across 30 countries, with major corporate

customers including Kellogg’s, Cargill and McCormick.

Helps farmers produce more food with fewer resources using a proprietary crop and

weather sensor, the Arable Mark, which makes farming more predictable. The company has

research collaborations with ag giants including Bayer, Syngenta, BASF and Corteva and is

now focused in driving visibility further down the value chain. In 2021, the team is focused

on piloting with CPG players who want to optimize their yield per acre; Arable currently has

projects running with Ferrero, Lamb Weston and Mars.

Delivers near real-time information and informs better business decisions by allowing grain

elevators and cooperatives to digitally connect with their growers through an innovative software

platform and ecosystem. Investors include FoodBytes! Pitch members Continental Grain Company

and Germin8 Ventures. Bushel touches more than 22 percent of U.S. grain volume and has 60,000

active farmers on its platform, with partners including Scoular and Continental Grain. Like Arable,

Bushel is looking further downstream to build relationships with CPG players to help optimize

their grain ingredient supply chains and bolster their sustainability stories for the end consumer.

Connecting Food offers a food transparency platform for food manufacturers based on

blockchain technology to protect and build brand equity in the food system, including

a smartphone app to prove sustainable sourcing. The European company counts Barilla,

Mondelez and Walmart among its customers and is planning to expand its footprint to the

U.S. in 2021.

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I. SUSTAINABLE SUPPLY CHAINS

Improved Animal Health

The pandemic heightened animal welfare concerns from consumers – and accelerated calls to find new ways to lower the environmental impact of

animal agriculture.

RaboResearch Senior Analyst for Animal Protein Angus Gidley-Baird reports that supply chain initiatives will be key in unlocking climate-friendly meat. “Carbon

neutrality or reduced emissions will become one of a number of attributes associated with a product in a dedicated supply chain used to promote a product, gain consumer trust, and maintain or build access into markets.”

STARTUPS TO WATCH:

Improves feed efficiency through an understanding of the gut microbiome, enabling farmers to rely on less. Feed is a major component of both the cost and climate impacts of animal production – accounting for almost half of emissions overall.

Delivers novel oral vaccines through feed, creating a more cost effective, safer and stable vaccination administration.

Uses novel gas fermentation technology to produce animal feed from industrial carbon dioxide emissions. The team is looking to engage in pilots this year to scale up its protein production and expand to new markets. NovoNutrients was recently selected to test at feed giant Skretting’s Aquaculture Research Centre.

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I. SUSTAINABLE SUPPLY CHAINS

Upcycled Products

Officially defined in 2020, upcycled foods “use ingredients that otherwise would not have gone to human consumption, are procured and produced

using verifiable supply chains, and have a positive impact on the environment.” According to Forbes, “the practice could help reduce the more than 70 billion

tons of greenhouse gases generated by food loss and waste, while creating new jobs and innovative products.”

As consumers continue to seek products with smaller carbon footprints, upcycled ingredients have become a key signal that a product is built with

sustainability in mind. Both big and small food players have shown an increasing level of creativity as they integrate unused or repurposed “waste” ingredients.

FoodBytes! predicts that upcycled product growth will continue in 2021.

STARTUPS TO WATCH:

Connects farmers in emerging economies to global markets through a vertically-integrated supply chain and portfolio of upcycled brands. CPG category winner of FoodBytes! Pitch 2020, Agricycle has enabled 7,000 livelihoods to date globally and took part in the Target Incubator in 2019.

Upcycles whey byproducts from dairy manufacturers into a distilled spirit, repurposing a food system waste stream to create a craft beverage. The company launched in September 2020, with key advisors from industry leaders including Blue Apron and Dairy Farmers of America.

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Increasing pressure from governments and consumers around the globe are pushing corporate leaders to make investments in reducing carbon emissions. Companies are also marketing these milestones and are promoting their commitments through industry partnerships and public goal-setting.

The European Green Deal, which has identified zero net greenhouse gas emissions by 2050, has applied a “Farm to Fork” strategy focused on shorter supply chains to reduce footprint in four key areas: production, practices, consumption, and waste. This underscores how efforts along the entire value chain are necessary to create results.

FoodBytes! Pitch member General Mills, which was recognized by Rabobank for its leadership in sustainability, has pledged to reduce greenhouse gas emission and committed to 100 percent renewable energy in operations by 2030.

In September 2020, FoodBytes! Pitch member Dole announced its plans to meet net zero carbon emissions by 2030 as a part of its Dole Promise – reflecting “the recognition that ‘business as usual’ is unacceptable in the face of a looming food crisis.” These are just a few examples of influential CPG companies who are demonstrating their commitment to more sustainable practices and products.

There are a number of pathways to realizing resource efficiencies and reducing carbon footprints. Below are four areas where FoodBytes! predicts increased traction in 2021.

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Improved Resource Management

2021 INNOVATION TRENDS 7

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II. IMPROVED RESOURCE MANAGEMENT

Carbon Sequestration

Increasingly, consumers are driving the conversation around regenerative agriculture as a means to reduce their carbon footprint through sustainable food purchasing decisions. Maintaining healthy soil helps ensure that carbon is stored in the ground rather than released into the atmosphere as harmful greenhouse

gases, 30 percent of which currently come from the food system. We expect technologies that support soil health as a path to carbon sequestration to gain

momentum this year.

According to a recent RaboResearch report, agriculture can “play an important role in sequestering carbon in plant stands and in the soil,” with the “first

initiatives to measure carbon sequestration at farms and rewarding farmers for that” now coming to the market.

STARTUPS TO WATCH:

Designs and produces more efficient, sustainable agricultural chemicals to improve crop performance and soil health.

Distributes soil testing kits that make sustainable land management more accessible. Partnering with leading scientists and tech developers in the regenerative ag space, AgriCORE intends to bring to market the first affordable method of soil carbon content analysis that can be conducted in-field.

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II. IMPROVED RESOURCE MANAGEMENT

Water Reduction

Next to labor, water remains a major resource constraint. According tothe World Wildlife Fund (WWF), 1.1 billion people lack water access and by

2025, two-thirds of the world’s population could face water shortages. This scarcity is driving increased interest in on-farm technology as an aggregator

for data points and use as a decision-making tool to use water more efficiently in agriculture.

STARTUPS TO WATCH:

Improves water and resource management. The AgTech category winner of FoodBytes! Pitch 2020, SWAN Systems plans on expanding from Australia into the U.S. in 2021. Market traction to date includes 160 active accounts, such as the Almond Board of Australia and Pernod Ricard.

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II. IMPROVED RESOURCE MANAGEMENT

Waste Reduction

According to the UN’s Food and Agricultural Organization, 1.3 billion tons of food are wasted or lost every year, costing the global economy more than $940 billion annually. The WWF claims that if we

can prevent wasted food from rotting in landfill and creating methane, we could reduce 11 percent of all the greenhouse gas emissions that come from the food system.

Opportunities to stop waste exist across the entire supply chain, starting at farms and distribution centers and extending to retailers and consumer homes. For both environmental and business

efficiency reasons, companies are setting ambitious waste reduction goals.

Leading natural foods distributor, UNFI, has committed to reducing 50 percent of food waste within its distribution centers by 2025 and achieving zero waste to landfill by 2030. Yet, consumers will be challenged to do their part to reduce waste as well – even during a pandemic. The Rabobank 2020 Food Waste Report showed that the COVID-19 pandemic derailed Australia’s consumer progress in reducing food waste, leading to a spike in the amount of food Aussie households are throwing out,

reversing positive inroads to reducing food waste before the pandemic hit.

STARTUPS TO WATCH:

Uses a cold plasma technology treatment to protect food from common pathogens that lead to waste. This pasteurization method is effective without the use of heat and without any residue. Early commercial partners that see seed coating and supply chain food safety potential through NanoGuard’s disruptive technology include Bungee, Cargill and Monsanto.

Connects farmers to consumers by delivering discounted grocery items that would otherwise go to waste. Recognized with the 2020 Rabobank Award for Emerging Leadership in Innovation for addressing issues in the food and agribusiness space in a novel way, Imperfect scaled nationally in early 2020. The triple bottom line-focused online grocery leader announced a $95M Series D fundraise following triple digit growth in 2020 with a revenue run rate of $500M+. The startup’s success during the pandemic exemplifies the consumer-driven confluence of convenience and sustainability.

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II. IMPROVED RESOURCE MANAGEMENT

Sustainable Packaging

Progress in reducing single-use packaging also slowed due to pandemic concerns as companies halted “bring your own cup” initiatives in the interest of public health. We

also see a greater need for recyclable options in retail and for direct-to-consumer delivery options as more consumers continue to eat at home.

In December 2020, FoodBytes! Pitch member PepsiCo committed to 100 percent recycled plastic beverage bottles for its Pepsi brand in nine EU Markets by 2022, which

it states will lower carbon emissions by 40 percent as compared to standard bottles. The company’s efforts to help build a more sustainable and regenerative global food system, as well as its leadership in improving planetary health, were recognized with

the Rabobank Award for Excellence in Food & Ag Leadership in 2020.

According to RaboResearch Associate Analyst for Supply Chains Xinnan Li, the circular economy and collaboration with retail will be key to corporate success. In addition,

design innovations, alternative materials and cost-effective reusable business models will be key areas of innovation in 2021.

STARTUPS TO WATCH:

Planeteer manufactures edible cutlery, reducing not only environmental hazards, but also the carbon footprint of plastic production and incineration (which is predicted to contribute almost 50 times the emissions of coal power plants in the US between now and 2050). Planeteer is partnering with five large dessert chains to roll out its cutlery into foodservice, as it continues to expand its product offering.

Upcycles milk proteins into plastic and cotton-like fibers to be used as more sustainable fabric and packaging. Interest in the technology is coming from customers across the US, Europe and Japan, with large companies like Dole looking into packaging film and Arla looking to repurpose cheese waste.

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As consumer expectations for food and beverage products expand beyond taste to include health benefits and enhanced performance, technology will become a growing part of the product development equation. The almost medicinal demands from consumers around hot topics like gut health and immunity require new ingredients and a better understanding of foods’ nutritional value.

As discussed in a RaboResearch “Post-Corona Musings” podcast, sustainability and health will continue to increase as top drivers of consumer purchasing behavior, alongside price, taste and convenience. Consumers are more and more aware of the impact food has on their health, and their expectations around what food should be providing from a benefits perspective is setting an increasingly higher bar.

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The Next Frontierof Nutrition

2021 INNOVATION TRENDS 12

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III. THE NEXT FRONTIER OF NUTRITION

Re-evaluating Food as Medicine

As the list of desired benefits from food grows, the industry must leverage technology to deliver – whether that means an entirely new ingredient or rethinking processing

to allow for better product capabilities. While we expect continued strong demand for products that support gut health, we also predict a growing emergence of products and technologies that offer aging support – as well as a range of wellness issues like

mood, immunity and energy.

The looming global issue of the aging population is forcing food formulators to think more carefully about such issues as bone density, muscle waste and brain support. By 2050, one in six people in the world will be over age 65 (16 percent), up from one in 11 in 2019 (9 percent). There is a significant opportunity in the category for products

that address the health needs of this growing population, who will look to reduce their medical bills by supplementing with foods that can deliver health benefits.

Beyond aging support, interest in immune fortification and nutrient-dense foods are attracting consumer attention. According to research by FoodBytes! Pitch member ADM, one of the top trends that will drive food this year is a “proactive approach to

nourishing the body and mind.”

STARTUPS TO WATCH:

Makes a plant-based power blend that slows down the digestion of carbohydrates, with its first product geared toward white rice. In January 2020, the company received investment led by Thai Union Group, an indicator that the world’s largest seafood company is looking at ways to provide their consumers with more ways to manage their health through food. Alchemy plans to use the funding to scale up production and expand into new markets, focusing on China.

Flagship product Encala focuses on plant-based fats and lipids to address nutrient malabsorption in Cystic Fibrosis patients. The food tech category winner of FoodBytes! Pitch 2020, Envara has tested and validated Encala, most notably through a National Institutes of Health sponsored clinical study. Both the team’s background and the company’s mission converge food innovation, biotech and clinical nutrition.

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Beyond Plant-Based Protein

As demand for products with the “plant-based” label continues to grow, new entrants are exploring solutions for harnessing total nutrition and benefits from plants. While plant-based burgers led the way, consumers are now

seeking out the plant-based label across all kinds of products, opening up a sizable opportunity in new aisles. The dialogue also is moving beyond protein,

and we predict that plant-based players will look to leverage other nutrient properties of plants, like fiber. It is clear, however, that products must continue to improve across taste, texture and performance metrics to continue to drive

consumer trial and retention.

STARTUPS TO WATCH:

Improves the functionality of plant-based cheese, with a vegan product that truly melts on pizza. The company’s cheese is made from an allergen-friendly blend of white beans, enabling customers to enjoy a healthy alternative to dairy-based cheese. The team has collective experience across leading food corporates and investors, including PepsiCo, Compass Group and P&G.

Creates a liquid egg replacement from lentils that has zero cholesterol, is lower in fat and in calories, and free from antibiotics, enabling consumers to get vitamin D and branched-chain amino acids, which benefit muscle growth. Leveraging recent investment from Big Idea Ventures and VegInvest, Evo plans to launch its liquid egg DTC in the Indian market this year.

Offers animal-free meat using proprietary 3D printing technology, meat digital modeling, and advanced food formulations. FoodBytes! London 2019 winner Redefine Meat produces the appearance, texture, and flavor of whole muscle meat.

III. THE NEXT FRONTIER OF NUTRITION

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Biotech Meets Foods

III. THE NEXT FRONTIER OF NUTRITION

Food biotechnology is not new, but consumer acceptance has increased and there will likely be more applications as consumers demand products that are

more sustainable and healthier. Solutions gleaned from biotech, including gene and genome editing, fermentation and cellular agriculture have

emerged as exciting (and investment-worthy) opportunities.

CRISPR applications in food and agriculture saw exciting developments during 2020, such as the birth of Cosmo at UC-Davis, pigs that are “pandemic

proof,” and the increasing interest in crop editing, evidenced by corporate partnerships. With the pending regulatory oversight of gene editing in

animals moving from the FDA to US Department of Agriculture, more lenient rules are anticipated. The benefits of CRISPR applications are exciting –

improved yields, enhanced resistance to disease and elongated shelf life.

Another biotech application that should result in broader commercialization is fermentation processes. Particularly within the alternative protein and

dairy sectors, fermentation has been touted as a solution for existing product issues like processing and texture. Fermentation will be able to

efficiently deliver more high protein foods at scale – for both human and animal consumption. As early success indicates, mycelium-based products are enjoying success in the market as taste enhancers and sweeteners, as is

evidenced by industry-leading FoodBytes! startup alum and Rabobank client MycoTechnology. The next wave will likely move to take on animal protein imitation cuts that deliver on clean label demand with short ingredient lists

and the ability to mimic animal protein textures.

Cellular agriculture represents yet another biotech application that experienced significant progress to broad commercialization during 2020.

The regulatory approval Singapore granted in December 2020 for the commercial sale of JUST’s cellular chicken nuggets was an important signal

for cellular agriculture as a whole. While challenges remain around achieving scale, solution-based companies are emerging to help with issues like growth

serum and scaffolding. Hybrid products (plant-based protein and cultivated fat) will likely lead the way for cellular products in the near term. Other

emerging products like cellular breast milk and dairy products will also gain steam in 2021.

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STARTUPS TO WATCH:

Operates a biotech platform producing natural food colorants through a unique fermentation

process. The company’s natural colorants enable food manufacturers to produce clean label

products while maintaining desirable attributes for the consumer.

Creates functional ingredients from spirulina microalgae as a replacement for petroleum and

animal compounds for healthier, more sustainable food. Spira’s two main products are a blue

colorant and a protein compound derived through CRISPR genetic engineering to enhance the

natural attributes of spirulina.

Develops revolutionary enzyme immobilization technologies. Its platform improves the activity,

stability, and delivery of any enzyme in order to provide more nutritious ingredients, cheaper

medicines, and greater food security. After a successful collaboration with Zymtronix through

FoodBytes! Pilot in 2019, corporate member Tate & Lyle made an investment in its cutting edge

enzyme immobilization platform, which enabled the startup to scale its production.

Aims to provide its clients a platform for scaling up cellular agriculture through its novel cell

coating and continuous culturing system. According to the company, cells are currently grown

in batches, which places a limit on the number of cells that can be created. Cellular Revolution’s

continuous technology will enable its clients to scale to the level required for commercialization. A

spin-out from Newcastle University with strong academic and scientific roots, the company is now

focusing on further product development and commercialization.

III. THE NEXT FRONTIER OF NUTRITION

Biotech Meets Foods

Develops lab-grown pork made using cell culture techniques, enabling people access to eco-

friendly, healthy and animal-friendly meat products. The company gained significant media attention

after it revealed its lab-grown pork belly in July 2020.

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Rabobank built the FoodBytes! innovation platform as an engine for ongoing collaboration between large food and agriculture companies, startups and investors working towards a more sustainable food system.

FoodBytes! is taking a two-pronged approach to industry change: discovering and supporting startup innovation; and helping large food and agriculture companies embed and drive innovation across their organizations through connections to startups. In today’s virtual world, the FoodBytes! network is able to tap into global solutions and bring them to different regions to support our clients and advance the industry.

For more information,visit foodbytesworld.com

What’s Shaping the FoodBytes! Perspective

2021 INNOVATION TRENDS 17

Disclaimer: Rabobank has not conducted due diligence examinations and Rabobank is not promoting investment in any of the companies mentioned by

including them in this trend report.