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Startup in food Tomas Vedsmand GEMBA Innovation 2015

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Tomas Vedsmand
Tomas Vedsmand

Special characteristics of starting a company in the food sector. Different types of start-ups requires different roadmap to succes

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Special characteristics of starting a company in the food sector Tomas Vedsmand tv@gemba.dk, 2015
My background ? Economist, PhD in food innovation ? Business developer and advisor o Seafood advisor o Strategy and innovation advisor in various industries, including food ? Seed venture capital o Invested in approx. 100 new companies, ITC, food technology etc. ? Startup GEMBA Innovation in 2003 with S?ren Kielgast o Innovation, innovation management, business development, strategy o Sector focus: Food, construction, financial services, public-private etc. o www.gemba.dk ? Startup GEMBA Seafood Consulting in 2007 with S?ren Kielgast and Jens M?ller o Specialized in seafood – market analysis, innovation, strategy o www.gembaseafood.dk ? Startup 8ideas in 2012 with S?ren Kielgast and Maximilliano Stern Dahl o Software company developing/selling idea management tools o www.8ideas.dk
GEMBA Team & Focus Innovation management, idea and concept development ? Ideation workshops ? Development of innovative models and business processes ? Project management, implementation, training Strategy and Business Development ? Development of vision, goals, strategy and values Market Research and Analysis Projects ? Quantitative analysis, statistics, etc.. ? Qualitative analysis, lead-user studies, interviews, focus groups, observation studies User-Driven Innovation ? Lead-user analysis ? Observation Studies ? Workshops with involvement of customers, users, experts Sector core competencies ? Food industry ? Maritime sector ? Building/construction industry ? Retail, finance
We know the market will grow dramatically…
But the growth will mainly be in new markets ? A 70 percent increase in food production is needed to meet population growth – mainly in Africa, BRIC (ex Russia), SE Asia, Mexico
World food production OECD-FAO Report (2013): ? Growth in global production towards 2022, but at a lower level than the previous decade. Most of production gains due to (low) productivity ? Robust demand and low productivity keep commodity prices at current high level ? China will influence the food market, remain self-sufficient in main food crops while increasing trade in selected commodities ? Poultry leads meat consumption growth, growth in fish production is from aquaculture ? Developing countries lead growth in global milk production; developed countries dominate exports Source: OECD & FAO 2013
Matured industries and markets ? Take a look at the age of many of the dominating brands – they are old! ? Cooperatives (from the 19th century) still dominate dairy, grain and meat ? In seafood two handfull of companies dominates world production ? Retail chains are created during the intro and growth of supermarkets (1950s-60s) The last decade: ? I see the food sector as much more mature than many other sectors – such as telecom, ITC, pharma, industrial goods etc. ? Sector has in many years lacked start-ups in the ‘traditional’ value creating parts Est. 1903 Est. 1892 Est. 1847 Est. 1866 Est. 1869 Est. 1906 Est. 1930 Est. 1919 Est. 1868 Est. 1837 Est. 1911
Powerful retail chains continue to grow and dominate the food market ? The largest retail chains are among the worlds biggest companies ? Retailers cooperate in purchasing networks to lower prices further ? A few trends: o Discount has won in the last decade o Stable premium market (ie polarization) o More private labels (retailers own labels) o Cost-cutting, promotion o Cross-channel, technology ? Its a needles eye to come through – look for other channels if you can!
Regulation plays a big role in food ? Food safety and traceability ? Declarations and claims ? Trade tariffs ? Animal welfare ? Production quotas and subsidies
BUT SOMETHING NEW IS HAPPENING!
Startup in food Tomas Vedsmand GEMBA Innovation 2015
Entrepreneurs and capital are flowing into food driven by technology What sucks in food Growing population Unmet consumer demands Food waste Food safety Distribution of fresh food Productivity and innovation pressure (competition) Do cool shit opportunities New and active ingredients Technologies for analysing and extracting active compounds New production processes Web/IT solutions Smartphones/tablets penetration New consumer preferences
Startup in food Tomas Vedsmand GEMBA Innovation 2015
Different types of food start-ups ? Different roadmaps to success New start-up in the food sector - What is your uniqueness? Product innovation Technology/process innovation Business model innovation Science-based Often life-science, long time to market, IPR, food-regulation, capital requirement, ‘pharma- like’ Market-based Fast to market, uniqueness, scalability, ongoing innovation, brand, business model, user-driven Making production at faster/lower cost and with better quality Potential big gains due to scalability Not trivial to implement Web-enabled, combining IT and food Matching users and producers Solving challenges of transport and logistics
Case science-based product innovation : TeeGene
Case market-based product innovation: RAW BITE? RAWBITE REACHES THE TOP Reaching the top of Mera Peak, Nepal (6,476 metres), mountain climber and adventurer Kenneth Lagstr?m Rawbite was founded in Denmark by three entrepreneurs who seeked a natural energy bar with no additives and a good taste. The idea behind Rawbite was to create a simple, honest and healthy product easy to bring along and enjoy anywhere. This idea resulted in the organic fruit and nutbite, Rawbite – and with considerable succes since. www.rawbite.dk
Importance of brand
Case science-based technology/process innovation : Dacofi A new faster, cheaper and more compact filtration process to be used in beer brewing, potato-powder production etc. Developed by researchers at DTU Food, spin-out with patent, many years underway. www.dacofi.dk
Case business model innovation: The Food Assembly New extremely successfull business concept for matching local food producers with local customers based on lokal networks, social media and a comprehensive web-platform. New, innovative business model where revenue is shared among local hosts and the mother compant The Food Assembly. Click picture for video www.thefoodassembly.com
What sucks? Science-based Product Innovation Business Model Innovation New technology – But what problem can we solve ? Business idea Put it out and iterate Ramp-up Get the best people - and money How do we solve the problem with technology ? Business idea IPR R&D + Business team NPD and learn ? Testing with industry partner etc. Venture capital Different roadmaps to success – two examples What does food regulation say? Value proposition Building B2B sales channels / partnerships Serial entrepreneur + IT (+industry) Business angel (industry) Building B2C sales channels Scalability Business Plan Sell and learn Commercialize Commercialize
Understand the food value chain As in any business: Its deadly important to understand YOUR value chain Some key questions you should ask yourself: ? Where in the value chain are your idea? ? Which value to your offer the value chain – and to whom? ? Are you playing with or against the players in the value chain? ? What will the reaction from the others in the value chain be, if your idea is realized?
Example Dairy ? If I suggest a new enzyme for making a nutricius and healthy energy yoghurt – how would that influence the value chain? ? On the surface – not much – but what if it requires: o New processing equipment from another supplier o Different packaging o A new sales channel to for example fitness centres, which imply new distribution partners ? Then I dramatically need to change the value chain Enzymes/s tart-up New supplier of equipment New packaging partner New distribution partner New sales channel New consumer group
Now we should be cautious about too many food ventures! Dont forget! ? A compelling value proposition ? Uniqueness ? Solve users jobs-to-be- done ? Scalability ? Competencies/team ? Realistic budget and roadmap

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Startup in food Tomas Vedsmand GEMBA Innovation 2015

  • 1. Special characteristics of starting a company in the food sector Tomas Vedsmand tv@gemba.dk, 2015
  • 2. My background ? Economist, PhD in food innovation ? Business developer and advisor o Seafood advisor o Strategy and innovation advisor in various industries, including food ? Seed venture capital o Invested in approx. 100 new companies, ITC, food technology etc. ? Startup GEMBA Innovation in 2003 with S?ren Kielgast o Innovation, innovation management, business development, strategy o Sector focus: Food, construction, financial services, public-private etc. o www.gemba.dk ? Startup GEMBA Seafood Consulting in 2007 with S?ren Kielgast and Jens M?ller o Specialized in seafood – market analysis, innovation, strategy o www.gembaseafood.dk ? Startup 8ideas in 2012 with S?ren Kielgast and Maximilliano Stern Dahl o Software company developing/selling idea management tools o www.8ideas.dk
  • 3. GEMBA Team & Focus Innovation management, idea and concept development ? Ideation workshops ? Development of innovative models and business processes ? Project management, implementation, training Strategy and Business Development ? Development of vision, goals, strategy and values Market Research and Analysis Projects ? Quantitative analysis, statistics, etc.. ? Qualitative analysis, lead-user studies, interviews, focus groups, observation studies User-Driven Innovation ? Lead-user analysis ? Observation Studies ? Workshops with involvement of customers, users, experts Sector core competencies ? Food industry ? Maritime sector ? Building/construction industry ? Retail, finance
  • 4. We know the market will grow dramatically…
  • 5. But the growth will mainly be in new markets ? A 70 percent increase in food production is needed to meet population growth – mainly in Africa, BRIC (ex Russia), SE Asia, Mexico
  • 6. World food production OECD-FAO Report (2013): ? Growth in global production towards 2022, but at a lower level than the previous decade. Most of production gains due to (low) productivity ? Robust demand and low productivity keep commodity prices at current high level ? China will influence the food market, remain self-sufficient in main food crops while increasing trade in selected commodities ? Poultry leads meat consumption growth, growth in fish production is from aquaculture ? Developing countries lead growth in global milk production; developed countries dominate exports Source: OECD & FAO 2013
  • 7. Matured industries and markets ? Take a look at the age of many of the dominating brands – they are old! ? Cooperatives (from the 19th century) still dominate dairy, grain and meat ? In seafood two handfull of companies dominates world production ? Retail chains are created during the intro and growth of supermarkets (1950s-60s) The last decade: ? I see the food sector as much more mature than many other sectors – such as telecom, ITC, pharma, industrial goods etc. ? Sector has in many years lacked start-ups in the ‘traditional’ value creating parts Est. 1903 Est. 1892 Est. 1847 Est. 1866 Est. 1869 Est. 1906 Est. 1930 Est. 1919 Est. 1868 Est. 1837 Est. 1911
  • 8. Powerful retail chains continue to grow and dominate the food market ? The largest retail chains are among the worlds biggest companies ? Retailers cooperate in purchasing networks to lower prices further ? A few trends: o Discount has won in the last decade o Stable premium market (ie polarization) o More private labels (retailers own labels) o Cost-cutting, promotion o Cross-channel, technology ? Its a needles eye to come through – look for other channels if you can!
  • 9. Regulation plays a big role in food ? Food safety and traceability ? Declarations and claims ? Trade tariffs ? Animal welfare ? Production quotas and subsidies
  • 10. BUT SOMETHING NEW IS HAPPENING!
  • 12. Entrepreneurs and capital are flowing into food driven by technology What sucks in food Growing population Unmet consumer demands Food waste Food safety Distribution of fresh food Productivity and innovation pressure (competition) Do cool shit opportunities New and active ingredients Technologies for analysing and extracting active compounds New production processes Web/IT solutions Smartphones/tablets penetration New consumer preferences
  • 14. Different types of food start-ups ? Different roadmaps to success New start-up in the food sector - What is your uniqueness? Product innovation Technology/process innovation Business model innovation Science-based Often life-science, long time to market, IPR, food-regulation, capital requirement, ‘pharma- like’ Market-based Fast to market, uniqueness, scalability, ongoing innovation, brand, business model, user-driven Making production at faster/lower cost and with better quality Potential big gains due to scalability Not trivial to implement Web-enabled, combining IT and food Matching users and producers Solving challenges of transport and logistics
  • 15. Case science-based product innovation : TeeGene
  • 16. Case market-based product innovation: RAW BITE? RAWBITE REACHES THE TOP Reaching the top of Mera Peak, Nepal (6,476 metres), mountain climber and adventurer Kenneth Lagstr?m Rawbite was founded in Denmark by three entrepreneurs who seeked a natural energy bar with no additives and a good taste. The idea behind Rawbite was to create a simple, honest and healthy product easy to bring along and enjoy anywhere. This idea resulted in the organic fruit and nutbite, Rawbite – and with considerable succes since. www.rawbite.dk
  • 18. Case science-based technology/process innovation : Dacofi A new faster, cheaper and more compact filtration process to be used in beer brewing, potato-powder production etc. Developed by researchers at DTU Food, spin-out with patent, many years underway. www.dacofi.dk
  • 19. Case business model innovation: The Food Assembly New extremely successfull business concept for matching local food producers with local customers based on lokal networks, social media and a comprehensive web-platform. New, innovative business model where revenue is shared among local hosts and the mother compant The Food Assembly. Click picture for video www.thefoodassembly.com
  • 20. What sucks? Science-based Product Innovation Business Model Innovation New technology – But what problem can we solve ? Business idea Put it out and iterate Ramp-up Get the best people - and money How do we solve the problem with technology ? Business idea IPR R&D + Business team NPD and learn ? Testing with industry partner etc. Venture capital Different roadmaps to success – two examples What does food regulation say? Value proposition Building B2B sales channels / partnerships Serial entrepreneur + IT (+industry) Business angel (industry) Building B2C sales channels Scalability Business Plan Sell and learn Commercialize Commercialize
  • 21. Understand the food value chain As in any business: Its deadly important to understand YOUR value chain Some key questions you should ask yourself: ? Where in the value chain are your idea? ? Which value to your offer the value chain – and to whom? ? Are you playing with or against the players in the value chain? ? What will the reaction from the others in the value chain be, if your idea is realized?
  • 22. Example Dairy ? If I suggest a new enzyme for making a nutricius and healthy energy yoghurt – how would that influence the value chain? ? On the surface – not much – but what if it requires: o New processing equipment from another supplier o Different packaging o A new sales channel to for example fitness centres, which imply new distribution partners ? Then I dramatically need to change the value chain Enzymes/s tart-up New supplier of equipment New packaging partner New distribution partner New sales channel New consumer group
  • 23. Now we should be cautious about too many food ventures! Dont forget! ? A compelling value proposition ? Uniqueness ? Solve users jobs-to-be- done ? Scalability ? Competencies/team ? Realistic budget and roadmap