The Next Entrepreneurial Gold Rush
The nutrition industry is poised to see tremendous growth as consumers plan meals that do more than just fuel the body.
For the past two decades, we’ve experienced life-changing events due to the evolution of technology. Creating, analyzing and transmitting data more quickly than ever has significantly advanced the absorption of information. In the next few decades, we’ll see an even more aggressive expansion, which is sure to alter the entrepreneurial health and wellness landscape.
Related: Why VCs Are Devouring Food Startups
More than 2,000 years ago, Hippocrates proclaimed, “Let food be your medicine. Let medicine be your food.” And, indeed, recent studies have begun to explore in depth the relationship between nutrition and health: Neurologist David Perlmutter for instance established what he proclaimed to be direct links between grains and sugar and autism, depression, ADHD, Alzheimer’s, Parkinson’s and dementia.
T. Colin Campbell’s best-selling book, The China Study, claimed that meat consumption causes inflammation in the brain.
And experts have continued to explore nutrition’s connection to the brain. We know today that food signals our gene expression. Given this knowledge, many people fear eating foods with genetically modified organisms, or GMOs, which could send the wrong signals to our DNA, and possibly alter it.
The good news is that entrepreneurs are tackling this problem head-on, with the exploration of preventative nutrition and innovative choices. By altering our nutritional intake, we can enhance and protect our brains while reducing our exposure to illness, and protecting our DNA. By reducing or avoiding wheat, carbs, meat and sugar, some nutritionists claim we can improve our brain health.
Moreover, by getting a dose of Vitamin D each day, we activate 930 genes -- mostly in our brains. Better health may be as easy as sitting in the sunshine for 15 minutes each day. En route, limiting or avoiding our favorite foods may seem like a sacrifice, but there has never been a more abundant variety of replacement foods on the market.
Go where the puck is going.
As we enter 2017, we are seeing a robust pipeline of food ideas. The sky is the limit when we look at the effects nutritional findings are having on obesity and disease. "Organic," "gluten-free" and "animal-free" are labels fueling the demand for innovative food products. The big categories are sugar-free foods and beverages free of processed sugar and artificial sweeteners.
Brands such as Lara Bar and Nana’s Cookies have made a dent in fruit sweetened snacks that taste better than sugar, and Daily Harvest is proving that consumers will pay for fast nutrition. Nutrition has evolved from a necessary task to a conscious effort to fuel our bodies with the nutrition they need to perform at optimal levels and stave off disease.
The evolution of the food industry
As consumers became aware of the dangers of pesticides, we saw the growth of the organic food industry. The U.S. organic food industry is now a $43 billion market. Next, consumers became well-versed about the alleged risks of gluten. Only 1 percent of the population actually suffers from celiac disease and only 30 percent truly suffer from gluten intolerance.
However, many consumers support claims about inflammation caused by gluten, and opt for a gluten-free lifestyle. The gluten-free industry is now a $1 billion market. Finally, consumers have gained knowledge of the damage sugar may be doing to their health. The sugar–free industry is poised for disruption and is on track to reach mainstream success equal to that of both the organic and gluten-free markets.
The new food groups
For the past 100 years, our government has provided nutritional guidelines. The chart that nutritional experts suggested to the USDA in 1992 would have featured fruits and vegetables as the biggest group, not breads. This chart was overturned at the hand of special interests in the grain, meat and dairy industries, all of which are heavily subsidized by the U.S. Department of Agriculture.
Fast-forward 25 years, and consumers no longer look just to the government to provide guidelines. Information about nutrition can be found and shared on the internet. Given today's abundance of scientific research, entrepreneurs can set off to change the world.
Over the past 20 years, scientific research around nutrition, in fact, has exploded. Consumers are not choosing gluten-free based solely on celiac disease or sugar-free based solely on diabetes. Consumers are choosing to consume the foods, beverages and supplements that will help them optimize their health. Whether it’s clarity of mind or the desire to stave off Alzheimer’s, consumers are planning meals that do more than just fuel the body.
The food revolution
In 2015 alone, $603 million was invested in food and beverage companies in the United States -- and that sum represented nearly double the amount of capital invested in 2014. Preliminary numbers estimate the pace is not slowing down.
Investor Tom Spier, co-founder of EVOL Foods and former COO of Bear Naked, has been an investor in some of the greatest innovations in healthy eating. Those companies include Quinn, a company that is cleaning up the microwave popcorn and pretzel market by stripping out GMOs, artificial flavorings and preservatives, and other synthetic ingredients, and Barnana, a banana snack made with bananas that are too brown to place into the market. Ironically, the browner the banana, the better its sweetness and nutrition level. As more consumers embrace these facts, the world of off-market produce is exploding.
Supply is already stepping up to meet the demand. Christine Mosely founded Full Harvest to expand upon the idea of upcycled food, focusing on creating efficiencies for farms and food manufacturers. On the consumer side, those who want to eat healthy yet balk at the high prices of fresh, organic produce can find savings in their local supermarket.
Whole Foods recently implemented a deal with Imperfect Produce, a home and office produce-delivery company, to provide less than perfect produce. For the deep bargain shopper, Walmart is partnering with CMI Orchards to sell blemished, but still delicious apples, pears and cherries. This all sounds like low-hanging fruit. You might be asking yourself, “Where’s the beef?”
According to the OECD (Organisation for Economic Co-operation and Development), the average American consumes over 54 pounds of red meat (beef and veal) and 105 pounds of poultry (chicken and turkey) each year. Naturally, this category has witnessed a plethora of alternatives. Impossible Foods, Memphis Meats, Beyond Meat and Modern Meadow have collectively raised $255 million in the past five years, allowing them to deliver meat and poultry alternatives that taste like the real thing. Consumers are happy to switch to a plant-based burger in order to reduce the traditional sources' negative impact on the environment.
The last piece of the puzzle includes animal-based products such as milk, eggs and cheese. Adam Lowry, co-founder of Method Products, was quick to pick up on the need for milk alternatives. He launched Ripple and raised over $40 million to make a dairy-free alternative high in protein and low in sugar, without compromising nutrition and taste.
In fact, Ripple has half the sugar and 50 percent more bioavailable calcium than milk, leaving the famous advertising slogan, “Got milk?” a bit outdated. With innovation in dairy milk comes innovation in byproducts. Clara Foods has raised close to $5 million to utilize yeast to produce eggs. The process uses biotechnology to harvest protein identical to that of egg whites, without touching a chicken.
We can ask, “Which came first: the chicken or the egg?” But I think the answer is clear.
This article was modified to reflect that Quinn manufactures popcorn and pretzels, not chips.
Lili Balfour is the founder of Atelier Advisors and creator and host of Finance for Entrepreneurs. She has advised over 100 startups that have gone on to raise over $200 million through Atelier Advisors and taught over 10,000 entrepreneurs around the world through Finance for Entrepreneurs. Balfour has written for, or been covered by, the Wall Street Journal, the Huffington Post and Fox Business, among others.