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

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 Søren 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 Søren Kielgast and Jens Møller
o Specialized in seafood – market analysis, innovation, strategy
o www.gembaseafood.dk
• Startup 8ideas in 2012 with Søren 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
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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 Lagstrøm
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

17. Importance of brand

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