The State of European Food Tech 2021

Foodtech has been touted as one of the big winners of the pandemic. As restaurants shut and supermarkets became hazards, consumers were forced into radical behaviour change, accelerating adoption in meal and grocery deliveries. At the same time, big inefficiencies were highlighted in the food supply chain. And in light of a health crisis, there was even more notice put on healthier and sustainable food options. In an important year for foodtech, we’ve once again teamed up with Five Seasons Ventures to look at the state of European foodtech, the winners, losers, copycats and groundbreakers.

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Report - The State of European Foodtech 2021

Foodtech is not a niche

The top 10 foodtech startups are now worth €433 billion, half of what Big Food incumbents are worth. Foodtech startup growth is outpacing that of their sector peers, and still have a lot of enterprise value to eat into.

Much bigger companies will be built in the food and beverage industry in the coming years. The biggest tech companies from the last 10-15 years have been built in media (Spotify $48B), holidays (Booking $92B) and fashion (Zalando $25B). These are much smaller industries overall than food and beverage.

Europe is punching above its weight

European foodtech unicorns are now large, international players, catching up with their US counterparts (i.e. valued at 48% of US foodtech unicorns, compared to 10% for tech overall). In terms of total value of unicorns, Asia leads, but most of the value and growth is driven by one unicorn – Meituan Dianping. Europe and Asia have created the same number of foodtech unicorns – 15. The US has created 26.

2020 saw continued growth in interest in the next generation of European foodtech innovators, with funding reaching €2.4 billion. While the first way of foodtech concerned distribution and consumption of food, i.e food delivery, the next generation includes propositions across the whole value chain. Farm management and robotics, alternative protein, new delivery models, Direct-to-Consumer brands, and more, are attracting significant investment in Europe and beyond.

2020 acceleration, and the opportunity ahead

With the total market for groceries at $2.1tn compared to $0.6tn for restaurants, we expect egrocery to be a bigger opportunity than food delivery. Egrocery companies have seen skyrocketing growth in 2020 (10x in 2020 vs 3x in 2019), as convenience turned into necessity. As demand shifted away from food services, meal kits companies efficiently stepped in together with virtual/dark kitchens, and removed previous doubts over these models.

Supply chain automation on the rise

Empty supermarket shelves at the dawn of the pandemic highlighted inefficiencies in the food supply chain and the need for new technology solutions. Investment to enable supply chain automation, and indoor and vertical farming have been on the rise. While B2C foodtech has been scaling faster so far, B2B is at least as big an opportunity.

European foodtech overall is still a young market, but punching well above its weight on the global stage. The technologically-enabled changes to our food systems are only just underway, and the opportunities remain big in the 2nd largest consumer spending category.

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Report - The State of European Foodtech 2021