The celebrity status of food has moved beyond television to the loftier realm of finance and billionaires, adding a new twist to tech futurist Marc Andreessen’s prediction that software would eat the world. Software dollars are now helping decide how the world eats.
In software billionaire celebrity Bill Gates’ interactive blog feature called “The Future of Food,” he lists three food companies he sees as paving the way: Beyond Meat (meat replacers), Nu-Tek Food Science (salt replacers) and Hampton Creek Foods (egg replacers). Gates and fellow billionaires Tom Steyer and Li Ka-Shing of Hong Kong are among those who have invested $6 million in Hampton Creek.
Silicon Valley is getting in on the action too, putting almost $350 million into food technology companies over the past year, up 7 percent from the year before and from less than $50 million in the midst of the recession, according to CB Insights. Food tech deals were up 37 percent, including Yelp’s IPO and Aramark’s spin-off of the online take-out service Seamless.
Even celebrity icons are satisfying food start-up cravings, with Matt Damon, John Legend, quarterback Tom Brady and his supermodel wife Gisele Bundchen backing a company called Unreal that makes candy without corn syrup, hydrogenated fats, GMOs, artificial flavors and colors and preservatives. Unreal is the brain child of Nicky Bronner, the son of Digitas founder Michael Bronner.
And even a few legacy companies are attracting celebrity investor attention, most notably last year’s buyout of Heinz by Warren Buffett and 3G Capital (best known for buying Burger King). That deal followed Buffett’s successful 16-year ownership of Dairy Queen, and he has since been rumored to be eyeing Campbell Soup and Kellogg’s. In predicting his next food target, everyone hangs on Buffett’s explanation upon buying Heinz: “It’s our kind of company. It’s got a group of fantastic brands.”
This flurry of food financing is not a fluke. It’s the result of consumers’ growing interest in what they eat and drink, including a willingness to pay more for foods they consider high quality. The definition of quality food has changed over the decades, from processed “perfection”—TV dinners, rows of neatly stacked canned vegetables, uniform loaves of white bread—in the ‘50s and ‘60s to the current idea about fresh ingredients and interesting flavors. The money is following that trend, because investors see opportunities for innovation and profit.
There’s also a streak of do-good-ism, as people deeply involved in the world of food become increasingly conscious of its impact on their bodies and the environment. Hampton Creek’s founder and CEO, Josh Tetrick, put it well: “Part of the reason you’re seeing all these V.C.’s get interested in this is the food industry is not only… massive, but like the energy industry, it is terribly broken in terms of its impact on the environment, health, animals,” he told The New York Times.
Most of the money is going toward a seemingly endless list of food start-ups, many at the confluence of food and technology:
Other start-ups focus on food more than technology, including the salt-, meat- and egg-substitute companies that Bill Gates highlighted. There’s also Kite Hill cheese, a brand of almond- and macadamia-milk cheese created by Whole Foods and Lyrical Foods. And at least five new ways to get your cricket protein, according to Sustainable Brands. Two of them are Exo energy bars, created by Brown University roommates, and TED Talk-inspired Chapul—each of which raised tens of thousands of dollars on Kickstarter.
Like Julia Child reaching celebrity status in the genre of television cooking, which originated as a way to promote ration-friendly recipes during World War II, food companies have ridden the benevolent wave of consumer culture to the celebrity heights of finance. Now that they’ve reached them, there’s no limit to the food and beverage innovations they might create.
As leaders in the study of American food culture, The Hartman Group has been tracking how Americans shop for food since the 1990s. From one-stop shopping to multichannel shopping to online markets and click-and-collect, we continue to track consumers’ evolving perceptions, needs, habits and relationships with food retailers. New to the 2017 report is a special section on the expansion of the discount grocery channel, the emerging fresh-format channel and smaller-footprint retail formats.