Fintech is a buzzword that has developed in financial markets. It refers to companies that combine technology with financial services to introduce new competition in the vast banking and insurance markets.
The concept of new technology companies bringing disruptor business models to the huge financial industry has been welcomed by investors who have backed numerous companies entering the sector.
I argue an equally exciting but lower profile business is developing around the idea of ‘foodtech’.
These are food companies that embrace technology to sell and market new forms of food.
The companies involved include traditional food companies, new entrant businesses and high-tech firms including Amazon.
By developing and introducing new food products, and new means of selling and distributing those products, these foodtech enterprises are challenging the existing structures used to produce and sell food.
In the process some business models will fail and others will prosper as they grab the opportunities being provided by this wave of innovation.
Technology is changing the food industry in a number of ways.
At its most basic, the development of sophisticated websites are allowing consumers to pick and choose products that can be delivered to their homes directly and in a timely manner.
At its most sophisticated, technology is providing advances in data analysis and science which is allowing the development of foodstuffs that have clear advantageous attributes for consumer wellbeing.
The progress in genomics, coupled with big data analysis, is allowing food R&D teams to consider food products that will target benefits for consumers, which could not have been contemplated before.
While sounding far fetched it may not be long before certain foods can have unequivocal health benefits for consumers in targeted areas of the body.
The speed at which these products are being introduced appears to be accelerating as technology is brought to bear.
Add that dynamic to the fast changing way in which consumers are accessing food.
A short decade ago food retailing was dominated by so-called big box retailers, who built huge out-of-town shopping centres where consumers typically went for once-a-week large shopping trips. Today, that pattern of consumption is changing quickly.
Consumers now use technology and access to smaller stores and home delivery options to purchase food.
This is changing the balance of power between retailers and food producers.
Whereas before big retailers could dictate terms to manufacturers, as they were the only show in town for food companies, the picture is different now.
You can see signs of this in the progress of a number of Irish companies; including Greencore, Kerry, Applegreen, and Glanbia.
Greencore has majored on food-to-go solutions that allow innovative retailers match the changing needs of consumers.
Kerry is developing solutions for companies that support home delivery and online consumer patterns.
Both Glanbia and Kerry are developing foods that better address the health needs of consumers and, in so doing, are finding favour with a wide range of consumers that access their products through physical and online platforms.
Applegreen is thriving in a market where food on-the-go is growing quickly at forecourt retail stations.
These changes in the food sector underline how dynamic the industry can be. It also underlines the strategic importance for food companies to stay nimble and invest in trending themes across the food industry.
If the aforementioned companies had not invested in new technologies and products, they would now be missing the profitable trade available from fast moving consumer habits.
Investors should keep a close eye on how foodtech develops.
I think it is a huge opportunity for Irish food companies, and those third level institutions that are close to the sector.
Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.
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