WHAT is the hottest start-up sector today? Is it fintech? Logistics? Or drones? Even though those sectors are really worth paying attention to, I believe that food tech is one of the most exciting industries in the start-up world today.
The food industry is relatively old and static. It has not been disrupted by technologies for a long time. However, the potential impact of innovation in food is massive. As the saying goes, "You are what you eat". We can significantly better the quality of our lives by improving the way we eat. In recent years, start-ups across the globe have already shaken up the food industry in many ways. Even a big company like Amazon recently made aggressive moves by launching AmazonGo, the world's most advanced grocery store, and bought Whole Foods, the leading grocery chain in the United States.
Let's look at some popular food-tech business models and how they are improving the way we eat.
Three kinds of food start-ups
Meal Kits: Gaining popularity in recent years, meal-kit start-ups provide customers with raw ingredients in pre-portioned packages, ready to cook. Meal kits come with clear instructions of how to put meals together in a simple, step-by-step fashion. The most popular meal-kit start-ups are Blue Apron (USA, initial public offering in 2017) and HelloFresh (UK, $363.99 million raised).
Meal kits provide several benefits to customers. First, they save customers time spent in shopping for ingredients at grocery stores. Second, they help reduce food waste, since everything is portioned perfectly for each meal. And finally, they offer transparency to customers, who know precisely what ingredients go into each dish. Meal kits provide a great balance between convenience and control by making cooking efficient and fun again.
Food-ordering platforms: With several players already in Thailand, we are probably most familiar with this food innovation. Food-ordering platforms give customers a way to browse menus from restaurants or independent vendors before placing orders via a website or an app. The food is delivered or picked up by the customer. Popular start-ups in this category are GrubHub (USA, initial public offering in 2014), Deliveroo (UK, Series E, $474.59 million raised), and Doordash (USA, Series C, $186.7 million raised).
Since the ordering process is all-digital, food vendors no longer need expensive storefronts or service staffs to sell their food. This then allows more vendors to sell their food and customers to have a greater variety of food options. Customers in niche markets, like vegetarian or diet foods, find food ordering especially beneficial.
Full-stack food company: This up-and-coming type of food tech start-up handles everything in the supply chain, including sourcing ingredients, menu creation, cooking, and delivery. Normally, they offer rotating menus of 4-30 items daily, with customers placing orders through a website or app. This is a relatively new kind of start-up, but there are already a couple of successful players in the market, including Munchery (USA, Series C, $125.42 million raised) and Freshly (USA, Series C, $107 million raised). Even though it is the toughest business model to pull off, if done right, a full-stack food start-up can provide superior benefits compared to other business models. With a business model with a highly efficient supply chain, most capital can be spent on the quality of the food itself, resulting in higher "bang for the buck" for customers. For example, if you were to buy a steak of similar quality to Munchery in a traditional restaurant, you would probably have to pay much more.
Local start-ups offer promise
As you might have noticed, most of the companies I mentioned above are from the US and UK. What about Thailand and Southeast Asia?
Though most players in the food start-up scene in Thailand are foreign, there are a couple interesting local companies. For example, JQ Seafood Crab, founded by a Thai female entrepreneur who has a family business catching seafood, started selling freshly cooked seafood through her Facebook page a couple of years ago. Her company is doing an IPO this year with estimated sales of $$28 million in 2018. Indie Dish, the rising tech start-up in dtac Accelerate, is positioned as a marketplace for clean and healthy food in Thailand.
Customers can enjoy their healthy meals by simply downloading the Indie Dish app. Moreover, with Indie Dish's nearly one-year experience selling healthy food, they are now stepping up a notch by creating their own food selections of Thai classics that use all-natural and healthy ingredients.
They are adopting the business model of a full-stack food start-up. Other companies in Southeast Asia using a similar model are Dahmarkan (Malaysia) and Grains (Singapore), both of which have raised over $3 million in total. Thailand is named "the kitchen of the world". Food is one of the things that we are most proud of. Hopefully we will see more local entrepreneurs venture into the food-tech industry in the coming years.
Darin Suthapong is co-founder and CEO of Indie Dish and from dtac Accelerate batch 5.