NCFIL Executive Director’s Perspective: April 2022
April 20, 2022
NCFIL Facility + Business Update
NCFIL has been abuzz since September 2021. As the pandemic waned, several start-ups inquired about NCFIL’s assistance to move their products toward commercialization.
Several companies NCFIL worked with over a year ago moved quickly to launch products, only to be stymied by supply chain shortages and contract manufacturers with little to no capacity for start-ups. Nonetheless, NCFIL has seven products with two entities in the queue for scale-up as supplies and line time become available.
NCFIL Customer Portfolio
NCFIL’s customer portfolio experienced a shift in the past six months. We previously worked predominantly with domestic entrepreneurs. More recently, we’ve transitioned to working with international entrepreneurs and several large multinational companies.
Healthy eating continues to dominate the project portfolio balance with several dairy- and meat-alternative projects. Other areas of particular interest include plant-based proteins and bioactives extracted from whole foods. We have worked on 30-35 projects at any given time during the past 9 months.
New NCFIL Personnel
Like most US companies, NCFIL struggles to hire new personnel. However, in the past nine months, we’ve added Strategic Operations Specialist Dede Beaver, Product Developer Chris Patillo and Senior Food Scientist, Ryan Walker. NCFIL is actively recruiting for several positions including a Food Safety Specialist and Pilot Plant Operators.
NCFIL continues to attract customers and compelling projects. Our reputation continues to be built by word of mouth, and several media outlets have acknowledged NCFIL’s work. We’re excited to be deeply engaged in the plant-based food space and intrigued by future projects.
NCFIL Director Perspective
Food Sector Slowdown?
Crunchbase News ran a recent blog asking an important question: are good times over for startup valuations and the ecosystem as a whole? Last year (2021) was a record year for venture capital investment across all sectors; the alternative protein market alone saw a record $5 billion in investment.
Is a slowdown in the food sector forthcoming? If so, will it be caused by inflation, geopolitical tension, interest rate increases, and continued fallout from the pandemic? Certainly, these issues will instigate a slowdown, but it probably will not have a lasting effect.
Plant-Based Food: Fertile Hunting Grounds
As the global population continues to expand toward 10 billion people, food entrepreneurs and established food companies will continue to allure consumers to purchase new concepts and products. Consumers’ awareness of healthier eating and environmental sustainability should continue to thrive, providing the impetus to increase purchase intent.
While inflation may deflate this or cause consumers to seek less expensive alternatives, plant-based foods will continue to be fertile hunting grounds for multinational food companies. Their ability to win back a share of consumers’ buying power is enabled by offering lower priced products produced by gains from operation efficiencies.
Food Entrepreneurs Need Some Luck
In 2022, entrepreneurs in the food space will need some good old-fashioned luck as they struggle with supply chain shortages as well as identifying contract manufacturers to accommodate smaller production runs. Unfortunately, contract manufacturers will be challenged to increase their capacity if cash is difficult to obtain or more expensive because of rising interest rates. If a co-manufacturer is fortunate to have money “in the bank,” it may still be hindered by supply chain shortages for building materials and long lead times for new equipment.
If venture capital slows as predicted in 2022, new food companies will either need to wait it out or find novel models for identifying cash infusion into their businesses. For example, the industry is seeing an increase in convertible notes that allow a startup to get money. This will ultimately impact how much owners are willing to give up control of their company.
A Positive Spotlight
The news is not all negative in food investment. In the past two months, Next Gen Foods Pte. raised $100 million in Series A funding to launch their plant-based chicken products in the US. In fact, the entire chicken-alternative space is currently active with both Impossible Foods and Beyond Meat recently announcing new offerings in the food service space.
Thank you for reading this month’s perspective. These are the views and opinions of the NCFIL Executive Director and may not reflect the opinion of others at NC State. Let’s discuss how the North Carolina Food Innovation Lab can work with your company to develop and launch new plant-based foods.