Grocery delivery apps, promising to deliver food and drink in just 10 minutes, have become almost ubiquitous on London’s streets after more than a dozen launched in the last year.
Venture-backed grocery companies have raised over $10bn so far in 2021, according to figures from Pitchbook. Less visible, but no less disruptive, we have also seen the emergence of new supplier and distribution networks for the hospitality industry, infrastructure platforms and payment apps.
Food delivery and food tech has suddenly become central to our lives. In a short space of time, the market has become overcrowded and consolidation was the inevitable next step. Enter SoftBank-backed company Gop Puff. The US-based food delivery operator has bought the British startup Dija for an undisclosed amount of money. The company also bought Fancy, another fast grocery startup, three months ago.
There is a race for market share among these companies. As with the existing food delivery providers, the one to claim the crown will be the one that becomes the default app for groceries or convenience deliveries. There is no doubt that consumers want to shop online for both food essentials and treats. Especially in cities, there is strong demand for frequent and small top-up shops as well as regular grocery shopping.
There is more room to grow than simply takeaway food. The food tech industry will both need to mature rapidly and avoid the mistakes of the legacy grocery sector.
Europe is at an early stage in the evolution of its food tech sector. According to IGD, convenience retail, a subsector of the overall grocery and food market, is estimated to be £45bn in 2021 in the UK alone.
As populations grow and with increasing urbanisation, Europe is likely to see even much greater opportunities for eating out of the home or ordering in. From ordering meal kits, to coffee pods, to baby food and school meals, there is an enormous opportunity here for tech to add value. The opportunities for corporate food – staff meals, events catering – will also return. The frequency and type of food we are consuming in Europe will continue to grow.
In order to get food from a shop or restaurant to the threshold of your front door, multiple technologies need to work in tandem. The real growth opportunity is in delivering a service provider with the flexibility to transcend the different avenues of the food industry. They will need to connect businesses with one another as well as with customers.
After decades of long supply chains and distribution networks, local is once again at the forefront. There has been a resurgence of smaller shops and local community centres, even in massive cities such as London. Service providers need to be able to straddle the demands of getting fast food to people’s home as well as delivering supplies from the local greengrocer or cheese shop.
Two manufacturing trends – robotics and automation – are evolving in parallel with the digitisation of the food sector and will influence the way food is produced, sold and consumed. Startups such as Collectiv Food are networks disrupting the legacy wholesale business, bringing more local produce to restaurants and hotels. Hyper-local networks have the ability to give local farmers and producers an advantage over global supply chains that bring green beans from Kenya and blueberries from Chile.
What we eat and how we buy and consume food is central to our happiness and health. Digitisation is inevitable and will continue to bring disruption and change to our high streets.
Food tech must be able to support both small businesses and international brands, as well as being mindful of the environmental impact of delivery networks. Enabling local shops to have more reach will allow more businesses to reduce their carbon footprint, but it cannot do so by relying on emissions-heavy vehicles.
The food industry has lagged behind in innovation for decades. The pandemic has given it a shock to the system and the longevity of the businesses of the future will be determined by their ability to be nimble and adapt to the changing needs of a new economy.