Money Matters

Food show to find the best food start-up

04:00 SGT September 11, 2017
Food
Growth in functional food consumption and sustainable innovations has turned the ball in favour of new-age food start-ups in Asia

The millennial generation and the current decade ride heavily on the emerging entrepreneurial ventures popularly known as start-ups. Driven by technology, they are disrupting various sectors — from transport to finance, food and even health. The world’s population is growing, while our resources are shrinking. By 2050, the total food demand is expected to increase 70% and food prices could rise by as much as 100%. Meanwhile, the foodie movement is well under way, with chefs and home cooks seeking the freshest and purest local ingredients. The need and demand for innovations in the F&B sector is just ripe.

While the foodie boom is starting to taper in Europe and the US, it is developing steadily, and in Singapore, this whole thing is yet to begin. There are so many preconditions for this city to become a food mecca.

 

BOOSTING FOOD ENTREPRENEURS
The Swedish brand that nearly disrupted the décor and furniture industry, IKEA, recently announced the IKEA Bootcamp — an incubator that will fund start-ups in eight subject areas: Food innovation; disruptive technologies; sustainability; heretical design; customer experience; manufacturing; analytics; and supply chains.

Participating companies will receive not only access to IKEA’s prototype shop, a test lab and mentorship but also three months of free housing and funding to the tune of US$22,400, according to the press statement. Yoghurt brand Chobani too recently announced a second incubation round devoted to food-based start-ups, while Pepsi unveiled plans in April this year to build a “nutrition greenhouse” for health- and wellness-oriented brands.

While the food sector is not a new addition in the world of incubators, the innovation possibilities that these funds propel are nearly revolutionary. From reforming urban farming practices to inventing new ingredients and sustainable food products, to using virtual reality and conducting food tastings — the way we produce, sell and eat food is at the brink of a big change.

One such example is Soular — a natural foods start-up from Trinidad and Tobago. It uses 100% local and regional organic inputs to produce banana and cacao products. Riding high on innovation, its sustainable practices are being used to expand its product line with plantain and cassava flours. Moving over from North America, it is now looking at flourishing in the Asian markets, thanks to Arthur Lok Jack Graduate Business School’s BizBooster Programme.

Come October, Meallions will take the food world by storm. Meallions is a first-of-its-kind YouTube reality show, where 30 real food start-ups from all over the globe battle it out for a chance at turning their food ideas into gourmet materializations. Filming for Meallions is under way throughout Europe and Asia, and the streets of Singapore will be the culinary battleground for the last two standing who will compete for US$100,000 to help take their product to a worldwide audience.

Reality food show

In a tête-à-tête with Ivan Sidorok, founder of Mabius — the Russian incubator behind Meallions — and co-owner of one of Russia’s largest food company, NGMK, FoodBiz Asia unravels the future of food start-ups in Asia.

 

What are the start-up trends in the F&B sector in Asia?
Ivan Sidorok: Venture capitalists have been watching the technological start-ups in the food segment closely since the beginning of 2010s. In 2013, they invested US$2.8 billion into food-related projects, and by 2015 this number increased to US$6.8 billion. Nearly half of investments went to all sorts of food delivery services.

Singapore has plenty of those projects. For example, there is a project called Boxgreen, launched in 2014, which was created for delivering healthy snacks based on a subscription. The company went through a well-known incubator “500 Start-ups” and received US$335,000 from it; today, Boxgreen has more than 2,000 subscribers.

The delivery service Caterspot, founded in 2016, brings clients and restaurants together by allowing the ordering of food from any of the partnering enterprises.

Another famous start-up, set up within the field of food and financial technologies, is TabSquare. TabSquare’s [integrated restaurant management and customer engagement technology platform] is designed to help its clients manage prices and make payment using the same mobile device. This platform is already being used by some 100 restaurants, as well as 150 shops.

All these companies are far from producing the actual food, creating new meals or modernizing old and traditional ones. Nevertheless, this is exactly how the foodie revolution started in the West — through new services that drove interest and consumption of food. We want Meallions to inspire Asian food start-ups to experiment and unite the community around it.

While the foodie boom is starting to taper in Europe and the US, it is developing steadily, and in Singapore, this whole thing is yet to begin. There are so many preconditions for this city to become a food mecca. Russia is not lagging behind in this area either. One of the country’s leading international companies has launched a unique programme for food start-ups — business accelerator. Mabius, a centre for food start-ups, has become an operator of the food track. A total of 12 teams that came up tops at the finals of the selection process will be able to launch their products after three months of this acceleration programme, and these products will come up to a completely different scale.

We have received around 200 applications for participation, and healthy food products and concepts — including functional ones such as yoghurts with probiotics an zero sugar, energy capsules, healthy snacks with granola, sport drinks based on organic ingredients — rule the roost.

According to Euromonitor, the global market for health products such as organic or hypoallergenic ones was evaluated to be worth as much as US$38 billion in 2017. This reflects the global tendency towards leading healthier lifestyles and preventing illnesses by changing food consumption habits. Nowadays, around 30% of the world’s food companies invest in health products and this segment is growing much faster than the others.

A decrease in consumption of sugar and related products has already started to jolt the market. The biggest growth is also expected in foods and beverages containing turmeric. The hero of “anti-inflammation” food and known for its immunity-boosting properties, turmeric and almond milk latte, which has already started gaining grounds in Europe and the US, is making its way to Asia too.

Milk consumption will also see a downward trend, as substitutes such as soy, almond and coconut ‘milk’ will increase. Beans will take the spotlight as they are touted to be good sources of proteins. In fact, leaders of the functional nutrition movement are already recommending diets that include more beans and lentils (rather than meat as a source of protein).

Food producers are already starting to react to this, manufacturing products based on peas, lentils and quinoa. Gluten-free and non-lactose products will be popular too. Yeast drinks such as kombucha are also becoming a thing; in the US, sales of such functional beverages have already crossed the US$1-billion mark. These effervescent tea-based drinks are said to be great non-sugar substitutes for fruit juices.

 

What are the main parameters that make any F&B start-up worth your consideration?
Sidorok: I often face similar issues in all the markets I work at — there are plenty of ideas, but there are very few teams that would be able to bring those ideas to life. We are looking for teams that would ideally consist of passionate people, who would be able to set and achieve their own goals, as well as good managers, who would have the capacity to build their business under the right leadership.

We opened applications on August 20 this year. The initial pool of registrants will be analysed by an AI programme we specially designed for this purpose in lieu of a human judging panel. This programme will evaluate the chances of the pitched product to be successful, by taking into consideration the current trends, consumer choices as well as cultural specificity. This system was developed by accelerator Mabius and has been successfully used to evaluate new projects.

Around 30% of the world’s food companies invest in health products and this segment is growing much faster than the others.

We consider our human judgment to be less reliable because it cannot be entirely objective. In the meantime, we have a method of preliminary validation of the market value of ideas. We work in the social media market with the audience selected by our start-up team, and then we test the product’s concept on it. This happens before the product is released or produced as a test version. Furthermore, this validation happens on every stage of start-up development. We consider analytics every time before we decide to act. The same system will be used during the judging segments of Meallions.

 

How different is Meallions from any food show? What were the considerations while shortlisting start-ups?
Sidorok: There are culinary shows and there are start-up shows, but with Meallions, we are combining them together. It is not just a creation of food but also a test for the entrepreneurships skills. It used to be impossible to produce small portions of products and test the product’s potential in a different markets, but it is now, thanks to relevant technologies.

 

Why did you choose Singapore for the Meallions finale?
Sidorok: I see it as another gastronomical capital of the world alongside New York and London. In Singapore, you can find good-quality food from different cuisines for a wide price range, from $3-$100. Singapore has all the ingredients required for a food start-up boom. There are investors, thus entrepreneurs are encouraged and nourished. The country has arguably the best start-up support programme in the world. It is already a huge hub for entrepreneurs in the biotech and IT fields. The next big thing, we envision, will be in the food-FMCG space.

Singapore is the most developed region in South-east Asia in terms of human resources. It is a multicultural centre where people from different countries are easily accepted. There is also no language barrier because almost everyone speaks English. Besides, it is also well designed for business as in Singapore you pay taxes only on what you have earned here.

Food producers are already starting to react to this, manufacturing products based on peas, lentils and quinoa. Gluten-free and nonlactose products will be popular too. Yeast drinks such as kombucha are also becoming a thing