The Food Industry Is the Next Frontier for Startups

May 15, 2016

10:34 am

Technology is forcing established industries to transform and re-imagine how they can remain relevant. Uber and Lyft, using easy mobile apps, have dealt a blow to the taxi industry; Airbnb is disrupting the hospitality industry; and e-learning is threatening traditional educational models. One industry that has lagged behind is food. That is changing, and the “institutionalized” methods of food production and consumption need to be prepared for the disrupters.

Archaic Practices and Consumer Anger

These are probably the two biggest factors in the coming revolution in food. A large group of innovators are now addressing these factors – how and where food is produced, what it contains, how consumers are choosing to eat, waste, and delivery models – through technology.

Supported by both crowdfunding and accelerators, innovative food business startups in hydroponics and other growing technologies, robotics, delivery, meal-kits, and even how people eat out, are knocking on the doors of the traditionalists. Add to that the technology that enables consumers to act as watchdogs, and the disruption can already be felt. There’s plenty of room for innovators in this industry.

Preparation and Reduction of Waste

New technologies are now able to flash-freeze fruits and vegetables at the peak of their ripeness, providing these options to consumers in their purest forms and at their peak of nutritional value. This option is just as healthy as eating fresh, and the technology saves produce that would otherwise be discarded because it is too ripe to withstand transport to grocery stores.

Accountability of Producers

Technology has now connected consumers to all sorts of information about how companies are preparing foods and what is actually in them, despite misleading labels. Campbell’s Soup was recently forced to drop 13 chemical ingredients from its recipes; and now restaurants and grocery stores are touting cage-free chickens and range-free cattle as sources of their meats.

Eating Out and In

Technology is also changing the methods by which people eat out. Startups such as Tasty Igniter have developed software that enables restaurants to receive online reservations, orders, and to manage their kitchens.

Other companies are in the business of preparing meal kits for working adults who want to eat healthy but have little time to shop and prepare. They order their kits online and pick them up on the way home, or order in advance a week at a time and have them delivered. Companies like Blue Apron that deliver nationwide to Peach Dish, serving residents of Georgia, use local suppliers of organically grown foods.

Buyers’ Clubs have also hit the food industry. Technology allows these groups to be organized locally and to buy in bulk directly from the producers, eliminating the grocer altogether. Smart innovators have set up buying clubs for schools and other organizations to use as fund raisers.

E-Commerce

Perhaps the most compelling reason that disruption in the food industry has lagged is the issue of delivery. New packaging technology may change this. And now that some of the tech giants, such as Google, eBay and Amazon, are starting to offer same-day delivery, however, this may quickly change. While delivery costs are high, 25 percent of surveyed millennials say they would pay the price for that delivery. Innovators at the local level have a much easier time with delivery, however, and startups in fresh and organic food delivery are making quite a splash. In response, grocery store chains are also using technology to take orders and provide delivery services.

Disruptions caused by technology mean some major changes in consumer behavior and lifestyles in many industries. Food is simply the latest, and it means that startups in this industry will continue to flourish. Big investors are interested and moving on it.

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Dianna is a former ESL teacher and World Teach volunteer, currently living in France. She's slightly addicted to apps and viral media trends and helps different companies with product localization and content strategies. You can tweet her at @dilabrien

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