View PDF of Report

EXECUTIVE SUMMARY

To begin 2021, GCA is launching its Food & Beverage Technology sector coverage to include each stage in the Food & Beverage value chain, from Production and Processing to Retail and Foodservice. This all-encompassing “farm-to-table” approach aims to evaluate the role, impact, and ultimately the advantages of applied technologies among 5 principal categories:

• Application Software
• Data & Analytics
• Marketplaces
• Internet-of-Things
• Automation

Since 2017, more than $29.7b has been invested into at least 980 F&B technology businesses, whereas 410+ have been acquired by ~290 buyers for an aggregate transaction value of $65.2b ($626.6m average transaction value). Common investment themes have included:

• Automation replacing relatively expensive marginal labor as technology improves and competition increases
• Actionable steps via precision control of known variables; and analysis & prediction of uncontrollable events
• Focus on sustainability; both regulators and consumers demand rigorous tracking throughout the supply chain

In this issue we highlight the Food Production vertical – including ~2.02m farms in the U.S. – the vast majority of which are family-owned and operated. Specific market observations include:

• Innovation continuing to drive overall productivity and output volumes; farmers have managed to produce more over the long-term with fewer and/or relatively cheaper inputs
• Although land values have risen steadily, along with debt capacity, so has contract labor wages, which represent up to 50% of production costs in certain markets (e.g., lettuce, fresh tomatoes, spinach etc.)
• Profitability is elusive; short-term price volatility caused by fluctuations in production output, combined with input price volatility and unpredictable environmental factors wreak havoc on farmers’ ability to predict and stabilize their financial prospects
• Given the negative impact of over-production on commodity prices, some farmers appear to be better off optimizing operations for profit rather than yield by controlling intermediate inputs (e.g., seed, fertilizer, pesticides etc.) more precisely
• That said, farmers are seeking to leverage technology to better measure, analyze and control each aspect of production – to the extent possible – making informed operating decisions within and between seasons