Food-Tech: The Next Big Thing for the City? A Discussion about Food Investments on the Occasion of NYC’s The Fancy Food Fair

New York City is the hyphen-tech capital of the world. Almost every industry uses technology to redefine how we work: think of finance (fin-tech), healthcare (health-tech), or advertising (ad-tech). However, one of New York’s premier sectors hasn’t yet been disrupted, as we seem to hear much less about food-tech.  

To learn more, we met with a food investor to ask him what he was hearing about in the City. To cut a long conversation short: very little.

He acknowledged there were a few notable efforts underway, including Farmshelf in Brooklyn. However, Farmshelf, which specializes in vertical farms, is suffering from high energy prices and the pandemic. Another example of promising innovation is Stone Barns, a New York favorite which founded the farm-to-table movement for our region with their farm in Pocantico, one hour north of the City. Stone Barns’ goal is to double the number of people that one head of cattle can feed. The investor said that such an effort might fall short of what is needed in the future.

“Don’t get me wrong; it’s the right direction. It’s just not enough to address food shortages or climate change, or to make a strong investment case,” the investor said.

Last year, UN Secretary General Antonio Guterres convened a Food System Summit in New York to discuss these challenges. The UN summit identified seven innovation areas that are needed to transform the food sector. While New York has no shortage of big thinkers, it seems that too few have yet focused in the food sector.

The City, and the United States as a country, are at a structural disadvantage regarding food and food-tech, which may explain why we hear less about this sector here. While the City is very diverse in its food choice offerings, the nation is not. The United States has, more or less, one food culture – you can fly anywhere for a few hours and can get the same food anywhere. This is not the case in Europe; Denmark’s New Nordic food movement is almost unheard of in Italy, for example.

(Interestingly, the Danish government recently announced the most extensive European investment, more than €150 million into plant-based food research.)

The one-culture disadvantage is one reason why the United States is at lagging behind in food-tech investment, but it doesn’t tell the whole story. China’s Shenzhen area, for example, is one of the most innovative food regions in the world, and that country is stridently emphasizing a one-culture outlook.

Another factor is consolidation, the investor said. With 70% of the U.S. food market controlled by large food companies, it is highly concentrated, making it difficult to innovate and for innovations to spread (listen to a recent New York Times Daily episode - “Who Do you Want Controlling Your Food?” - for more on this). 

Food represents a significant opportunity for a city like New York, as no other place has such a strong mix of ingredients for new food concepts to break through and scale: the City’s proximity to capital, media, talents, and customers (“New York Loop”). New York City also offers the best testing ground in the US, as various ethnic neighborhoods allow any product to be tested globally within a few short subway rides.

We asked the investor what promising concrete food opportunities he sees for the City in the future. He gave an example of a trend and a product. First up is fermentation, which he says is largely overlooked as an opportunity. He believes that we are likely to see new fermentation-based food innovations pop up almost as often as craft breweries in the neighborhoods. As for the product opportunity, the investor points to oat milk, as he believes it is incongruous that we ship large and heavy packages of oat milk instead of oat powder. 

Without a doubt, everything food-related will receive significant attention in the near term, driven by global food shortages and the need to do things differently. There also have been ten different innovation incubator programs here in the last decade, and they will position New York City well to become home of the next Chobani.

Most exciting, unlike with all other hyphen-tecs, we can judge innovation by smelling and tasting this one. The next opportunity is at NYC’s The Fancy Food Fair on June 12-14, 2022.