We are entering a really interesting phase in the food industry that I think most people don’t fully realize. For the last 20+ years, the dominant trend among grocers, restaurants, packaged food and beverage companies and others have been a market shift towards natural and organic products. What started as a niche movement has permeated all corners of the food and beverage industry, and has been a major strategic priority for large CPG companies and restaurant chains for the last two decades.
But we seem to be well past peak organic, and have moved on to a pretty interesting new phase. It’s not the end of this movement by any means, but in many categories, I think consumers are now taking for granted that they will have plenty of options around products with better ingredients that are naturally and responsibly sourced. As things become more of an expectation than a differentiator (kind of like free shipping and returns in ecommerce) the focus starts to shift to other, more novel benefits.
The new wave of food products tend not to have pictures or farms or vegetable fields or happy cows on their packaging. Instead of focusing on the source of the raw ingredients, I think consumers are increasingly focused on the benefits of these ingredients and are looking to foods more as a solution to a problem. Because of that, foods are being increasingly engineered to achieve certain goals or outcomes, and consumers are willing to accept some pretty weird form factors to achieve this.
The obvious examples are companies like Soylent, or more conventionally, RX bar. These brands stand for something quite different from whatever you would consider their more mainstream competitors. The brands are much more tuned towards the science behind their products and the outcomes they drive. Check them out here:
Compare that to some older food and beverage brands like:
Pretty huge difference right? And it’s way beyond packaging and branding. It goes to the underlying design of the products themselves, and tradeoffs that are willing to make around the look, taste, form factor, and how the products are prepared. Some of these products have already been brought to market and are having commercial success. But I think things are just beginning. If companies like Impossible Burger represents the initial baby steps, a pretty clear path is being paved towards companies that are in the R&D phase and still years away from commercial acceptance, like many of these lab-grown meat companies.
At first, these companies just seem like isolated, niche new experiments. But it is really the beginning of what I think is the next 20+ year wave around these engineered, purpose built food products. We’ve already made two investments in this space (both unannounced), and I think we are barely into the first inning here. Just like the megatrend around organic and natural changed the face of the food landscape and reshaped the strategy of the biggest CPGs on the planet, this same megatrend will drive a similar, and perhaps even bigger shift in the coming decades.