Where are we coming from in food system innovation, and where are we going?
This is a question that I am asked almost every day by very well meaning entrepreneurs and investors who are attempting to create a mental model for understanding the innovations happening in food.
Food is one of the biggest markets, and also one where innovation happens in very slow cycles. This is true for 3 reasons-
- the market is so big that change takes time to permeate.
- farms and farmers have traditionally been hard to reach geographically, which creates latency in information transfer and learning.
- Food is special to consumers- it transmits culture, so we don't want it to change, and it transmits sickness, and we don't want innovation that kills.
Mostly, when we think about food innovation, we think about laboratories and GMOs and the word synthetic.
Some of us think thats cool, some of us think thats totally horrific, but we ignore the fact that the Slow Food movement is as much an innovation in food systems as eggless mayo.
After thinking on the subject for some time, I propose the following 2x2 as a simple, rational way of understanding where ideas and changes fall inside of food systems.
For an absurdly long time, food was slow and diverse because thats how you made sure you didn't starve. Diversity meant that if climate was particularly brutal in one direction or another, you didn't lose all of your growing crops, just a subset of the total calories available to you. Slow was a necessity because the industrial revolution was very late to food.
From 1945 or so onwards, two guys really pushed agriculture out of the lower left corner- Norman Borlaug and Earl Butz. Driving science and policy respectively, they drove us towards a modernized, commoditized, mechanized food system.
Starting in about 2000, America started to get suddenly suspicious of the food coming out of that top right hand corner. Highly commoditized, frictionlessly delivered calories started to look like a good way to get sick and die young. We started to panic, and to reassess.
by 2006, we had The Omnivore's Dilemma and Slow Food USA. Slow Food arose as a reaction against the impossibly quick calorie delivery systems we were eating, and Michael Pollan effectively questioned the role of the big commodities in our food system (corn, specifically). Suddenly, there were two camps- the mainstream food system eating commoditized, frictionless food, and the Pollan camp eating "slow", diverse foods that were the antithesis of this movement.
If you had the label this axis with actual food, it would look like this-
Filling in around the two camps-
From 2006 onwards, innovation in either of the two camps was becoming more and more difficult- creating "slow food" that was better than what was being served in high-end restaurants was impossible, and creating "fast food" that was cheaper than what you could get at McDonald's was impossible.
From 2006 to 2016, our food innovation has mostly been in the two other camps-
- fast, frictionless foods that are also diverse, and
- highly commoditized foods that were connected to the values of "slow".
Some amazing businesses have been built in the top left corner and bottom right, respectively.
Chipotle proved you could make food values-oriented and "slow" while selling commodities- their menu is still basically corn-based, but better corn. Corn fed to animals outside. Corn rolled into healthier shapes.
Sweetgreen and others have proved that diversity can be bundled and delivered at high-speed and low-friction through innovations around the supply chain and a focus on selection over price.
Innovation is now breaking all 4 quadrants-
Coming into 2016, we're innovating again in all 4 quadrants-
Soylent shattered what we believed to be the upper limits of calorie-delivery systems. There has been much ink spilled over the evils of soylent, but I think its amazing to see this quadrant fully played-out; we have arrived at Peak Fast Food. You don't call your business Soylent unless you understand the sweet irony of creating the perfect commodity.
Hampton Creek shattered what we believed to be the remix potential of commodities. The ability of Hampton Creek to be "slow" in value while also create a product made of commodities with no "slow" credibility a feat of both technology and marketing. They have expanded what is possible in the commoditized food space, while also proving that moral high ground in food, and an association with the "slow' is a critical part of making a powerhouse CPG.
Blue Apron shattered what we believed to be the limits on diversity in a convenient form. The food eaten by the Michael Pollans of the world is unquestionably more delicious- it is also much more time, much more money, and much more of a pain in the ass than eating a big mac while driving down the highway.
Meal kit startups (don't hate me for using Blue Apron here, if you're a fan of another version) have helped to crack the code in how to bring the values of diverse, sustainable food systems into the bright light of modernity. Strip away the cumbersome food pickup from a well-meaning hippy farmer. Strip away the peeling, washing, soaking, fermenting. Strip away the waste, the traditional recipes that feed a family 5 times larger than the norm, strip away the anxiety of the recipe.
You are left with a frictionless meal that delivers you the satisfaction of the "slow".
Good Eggs Proved that "slow" is hard, and really, really worth it. The rise and fall of B2C "slow" food delivery companies is a familiar tune in SF and NYC, but GoodEggs really exemplified what is possible in the space. As they continue to grow out of a rocky end-of-year, the dream of "slow" food continues.
10 Predictions for this year in Food
You’re caught up in innovation in food over the last 50 years. So what happens this year?
- More ways of delivering “slow” values in frictionless ways. We’ve got one heck of a model in meal kits, but the game is not yet played out. Startups with great ideas in this space will rise this year to prominence. As these new ideas start to come forward, the dominance of the meal kit model will start to fade. The winners will be the companies who embrace not just frictionless, but habit-forming.
- Soylent will be unstoppable. This is one of those classic “first they laugh at you…” stories- Soylent will be worth a billion dollars by December 2016. A major CPG brand will launch a clone of Soylent with a ton more sugar and fat in the recipe.
- The Great Chipotle Illness Scare of 2015 will drive innovation around how to grow more diverse foods in a commoditized ways. Freight Farms is a great example of a company poised to win like crazy on this theme. Positive public sentiment around “slow” and diverse food will weaken as the spectre of unsafe food starts to assert itself.
- Supply constraints in “slow” food will get weirder and weirder. This is the year that consumer preferences will start breaking supply models for stable purchasing. In layman’s terms- we’ll hear more stories about shortages of foods that no one grew or cared about in 2012.
- New Ingredient creation will be a thing. Creating new foods, not just new recipes, will be a big focus of early R&D innovation. Recipe innovation will get more and more quantified in the next 5 years, so the logical next step is pushing up into creating new foodstuffs. New ingredients.
- McDonald’s will become more like Chez Panisse, and Chez Panisse will become more like McDonald’s. As the year draws to a close, we’ll have seen the launch of initiatives in fast food to become more like the hyper-local, diverse and sustainable restaurants of the world, and we’ll see those values start becoming more and more interested in commoditization and frictionless experience design.
- The Biggest companies in food will start to question when they’re buying “slow” food rivals. The Annie’s acquisition for General Mills for approaching a billion dollars shows just how hard it is for “fast” food companies to innovate in other quadrants. You can bet they’ll start finding ways to buy into these competitors before they become this expensive.
- Kitchen hardware companies in food will prove to be too early.Current kitchen gadgetry is not going anywhere, because consumers are questioning the very value proposition of cooking at home. Selling new kitchen hardware to consumers will be a deadly vertical until these companies start to build friction-reducing services around their products.
- The MIT Open Agriculture initiative will get a for-profit, closed-source copycat in Silicon Valley. If someone does not do this by December, I will, like Werner Herzog, eat my shoe.
- Venture funds investing in all 4 quadrants of the food system will close this year. They’ll be small (20–100m) and they’ll blend elements of private equity into their composition so they can accelerate CPG brands, but they will close funds this year and they will find great deals. Existing software-based venture funds will slow the pace of funding in the space because the majority of VCs see “food stuff” as one category, not four.
Bringing it all back home
The Sistine Chapel of internet-enabled commerce is going to be food & food systems. Those that have a firm hold on this are going to have a great 2016.
I am collecting opinions on this subject- hit me up at email@example.com if you have ideas on food in 2016.
Caithrin Rintoul, CEO, Provender