From the start of 2021, Maybridge Services has focused on the rapidly developing interface where food meets cutting-edge science, referred to as the “food technology” sector for the purpose of this article. Over the past 12 months, there’s been increasing interest from the family office sector into various food tech businesses, where a combination of Environmental, Social and Governance (ESG) principles, coupled with extremely attractive growth and ROI propositions, are creating potentially game-changing businesses. This suggests that the 2020s will be where the food system, and its carbon-heavy agricultural practices, will be transformed by the end of the decade.
Food technology provides an interesting opportunity for family offices
The difference lies in a normally unspoken truth. Most investors, from the smallest retail investor up to the largest institutions, will pay lip service to the concept of ethical or impact investing and espouse ESG values but are more hesitant when it comes to putting money where their mouths are. Instead, they tend to seek returns from more traditional and trusted sectors and asset classes.
What makes this new breed of food tech businesses different is this combination of strong ethical and environmental values without the feeling that they are part of a fad which will not have its promised impact nor deliver on its promised returns. The size of the investments being made into food tech is a testament to this.
Examples of food tech businesses that have gained significant traction and backing over the last 12 months.
Let’s start with the world’s most commonly consumed protein source, the humble egg. Reportedly, we consume 1.4 trillion eggs per year. That production comes at the cost of 93 million acres of land and 51 billion gallons of water. Just Egg aims to change that. Using proprietary technology, the company converts mung beans into a product that reportedly replicates eggs, in how they cook and taste, and does this using over 80% less land, water and carbon emissions. Where this may get interesting, even for the most ardent capitalists amongst us, is the claim that the Just Egg product is also cheaper to produce on a like-for-like basis than standard egg production.
A similar revolution could be on its way in milk. TurtleTree are bringing milk, and related dairy products to market using a process known as cellular agriculture. Essentially, this involves taking a handful of cells from an otherwise unharmed cow, and “growing” cells under lab conditions into dairy products that are both more nutritionally beneficial to the consumer and do not come with the associated costs of the traditional agricultural process.
The alcohol industry is not immune to these forces either. Endless West was founded in 2015 with the goal of producing spirits and other alcoholic beverages from a molecular level. The products taste like they have been aged for years but were in fact produced overnight by putting together the specific molecular puzzle that gives, for example, a barrel-aged whisky its special characteristics. Again the business model at play here is claimed to use substantially less land and water and emit less carbon than traditional alcohol production methods. Arthur C Clarke famously once said that “any sufficiently advanced technology is indistinguishable from magic.” It is tempting, particularly in this case, to argue that the barrier between technology and magic is being worn very thin indeed!
In a statement made to his thousands of Twitter followers in 2019, the legendary hedge fund manager Ray Dalio said “…As most of you know, I’m a capitalist, and even I think capitalism is broken…”. It has been argued that Dalio, who also founded a charitable foundation that donates to causes including environmental protection, intended this to be a call to action for root and branch change to capitalism.
The food technology industry could be part of a new economic and political model that, whilst recognising financial value, seeks to seek to minimise the impact that traditional industries, and perhaps traditional capitalism, are having on our world.