COVID-19 has put the world on hold. Several weeks into the global shutdown, the economic consequences are becoming more and more palpable – and it is becoming evident how they vary between different types of businesses in the food industry. While plant-based entrepreneurs will need a degree of stamina, the future looks bright.

Retail is booming, food services are pivoting

With the lockdown measures having been in place for multiple weeks, one trend is very obvious across the globe: food services are having a rough time while retail products are booming.1 2 Retailers are struggling to keep pace as the increase in online orders goes beyond those commonly seen during holidays, with shelf-stable staples leading the statistics.3 In contrast, food service businesses are forced to pivot and come up with alternative approaches such as takeout menus, frozen ready-meals, prepped food boxes, or online cooking classes. “Restaurants will do everything they can to majorly diversify their revenue streams from now on, so that should this ever happen again, they will be prepared,” says Sonalie Figuerias from Green Queen Media.4 The upside: while it may be a struggle to quickly get an online store up and running and find alternative distribution channels, those measures will most likely remain in use in a post-corona world and will provide businesses with additional income streams in the future.

Startups: the power of perseverance

At a time when a global crisis lays bare the fragility of our current food system and urges us towards more resilient alternatives, the question is: how are the economic, social, and political implications of the coronavirus effecting innovation?

“Our alumni startups are facing tough new challenges”, says Albrecht Wolfmeyer, Head of the ProVeg Incubator. “Food service has stalled, supply chains are disrupted, and ongoing funding rounds may be postponed. Some investors may also be prioritising existing portfolios, rather than taking on new startups. Now, more than ever, entrepreneurs need to be creative and flexible in order to prevail.”

Startups are adapting and pivoting in their strategies, preparing to launch in the EU instead of in the US, for example, or moving marketing activities online instead of attending events and trade fairs. Others are exploring new forms of financing, such as crowdfunding and grants, in order to generate much-needed cash flow. For example, Plantcraft, a plant-based meat company that was supported by the ProVeg Incubator, is pushing to bring its products to market quicker than planned due to the increasing demand in this food category.

Meanwhile, Incubator alumni startups such as Greenwise, which already have products in supermarkets, are reporting increased sales and rising demand from retailers, as customers stock up on food. “Consumers are buying more than they usually would because they don’t know when quarantine will end,” says Julia Marsel of Greenwise. “As food producers, we have an important duty to keep working in order to provide people with food and prevent shortages.”

ProVeg Incubator as a strong partner

In this time of unprecedented uncertainty, the ProVeg Incubator is continuing to provide startups with stability, support, and guidance. At the end of April, a new batch of startups from across the world will join the Incubator’s accelerator programme, with all workshops, mentoring, and events being hosted completely online.

Coronavirus is undoubtedly presenting challenges, but there are opportunities to be found too. “There is reason to believe that innovative startups will thrive following the crisis,” says Wolfmeyer. “The health and environmental aspects of food will be key focus areas for many consumers in the wake of corona. Healthy plant-based products and alternative proteins may stand out even more and be in higher demand. This would give startups focusing on these types of products a significant chance to prosper”.

Fueling innovation: sustainable investments on the rise

To grasp the current situation, we stare at (half-empty) retail-shelves. To get a better understanding of what the future will hold, it is worth taking a look at where investors are directing their resources. One thing is evident: their trust in the growing importance of sustainable food alternatives remains unbroken. The plant-based holding company Kale United, for example, closed their latest crowdfunding round in just a couple of days, while the plant-based chicken-nugget company Rebellyous Foods recently secured a 6M$ investment.5 6 In mid-April, Singapore launched a new S$30 million (US$21 million) fund to boost local food production, building on the city’s ‘30 by 30’ food self-sufficiency initiative, which has the government investing S$140 million (US$101) in order to meet 30% of Singapore’s food needs by 2030, including significant investments into cellular-agriculture research.7 8

Especially in the Asian-Pacific region, there is growing interest in sustainable investments. Swiss private banking group UBS had stated that its 100% sustainable portfolio in Asia more than doubled since the start of last year, with about 60% of the investments coming from Greater China due to an increased focus on health and the environment.9 While the immediate spike in interest in sustainable investments have been sparked by the coronavirus pandemic, experts believe that the trend will continue. As Wai-shin Chan from HSBC, one of the world’s largest banks, puts it: “In time, businesses will have to rethink the true level of resilience to potential shocks – virus, climate, or otherwise.”10

Transforming the food system to reduce risk of future pandemics

The emergence of zoonotic diseases (diseases which are passed from non-human animals to humans) is strongly linked to industrial animal agriculture. Most of the infectious diseases that have emerged in the last decades were transmitted via animals, including avian flu and swine flu.11 12 13 The mainstream narrative has simplified the cause of the current coronavirus outbreak by linking it to China’s consumption of wild animals. And while it’s true that humans’ encroachment in wild habitats creates opportunities for pathogens to jump to livestock and humans, many of the pathogens of recent concern to human health were transferred from farmed animals to humans via industrial animal farming or the consumption of animal products.14

Changing the global food system by increasingly replacing animal products with plant-based and cultured alternatives is thus the single-most effective measure we can take to reduce the risk of future pandemics.