ISRAEL'S THRIVING FOOD-TECH ECOSYSTEM - OPPORTUNITIES AND BENEFITS OF INVESTING IN ISRAEL'S PROMISING FOOD-TECH INDUSTRY - Invest In Israel
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ISRAEL’S THRIVING
FOOD-TECH ECOSYSTEM
OPPORTUNITIES AND BENEFITS OF INVESTING IN ISRAEL’S
PROMISING FOOD-TECH INDUSTRY
JANUARY 2020
ISRAEL’S THRIVING
FOOD-TECH ECOSYSTEM
OPPORTUNITIES AND BENEFITS OF INVESTING IN ISRAEL’S
PROMISING FOOD-TECH INDUSTRY
JANUARY 2020
TABLE OF CONTENTS
Defining the Food-Tech Industry ..................................................................................... 4 Packaging .............................................................................................................................................. 27
Industry Sectors ........................................................................................................................................... 6 Restaurants ............................................................................................................................................ 28
The Ecosystem ............................................................................................................................................. 7 Retail and e-Commerce ........................................................................................................................ 30
Food-Tech Market Characteristics ................................................................................... 10 Consumer Lifestyle ............................................................................................................................... 31
Market Growth Indicators ........................................................................................................................... 10 The Israeli Ecosystem ........................................................................................................................... 34
Global Food-Tech Trends ................................................................................................ 14 Manufacturing Opportunities .................................................................................................................... 40
Sustainability ................................................................................................................................................ 15 Why Invest in Israel Today? ............................................................................................ 42
Novel Ingredients and Production Methods ........................................................................................... 15 Global R&D Leader ...................................................................................................................................... 43
Nutrition Personalization ........................................................................................................................... 16 Start-Up Nation ............................................................................................................................................ 45
Food Delivery ................................................................................................................................................ 17 Invest in Israel – The Israeli Investment Promotion Agency ........................................... 46
Robotics and Automation .......................................................................................................................... 18 Footnotes ...................................................................................................................... 48
Added Values ................................................................................................................................................ 19
The Israeli Food-Tech Ecosystem ................................................................................... 20
A Growing Market ........................................................................................................................................ 20
The Ecosystem ............................................................................................................................................. 22
Food R&D and Product Development ................................................................................................ 22
Food Development ................................................................................................................................ 26
2 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 2020 | 3
DEFINING THE FOOD-TECH
INDUSTRY
Food-Tech is an emerging and dynamic
industry dedicated to improving the
food industry’s entire value chain in a
sustainable manner.
This unprecedented intersection of food
and technology has been disrupting the
traditional food and beverage industry in
various ways, forcing the existing players to re-
think many of their fundamental assumptions
about the market, the costumers and the
manufacturing processes.
4 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 2016 | 5
DEFINING THE FOOD-TECH
INDUSTRY
Industry Sectors practices such as lean manufacturing, smart ERP
and AI-based logistics and waste management
The Ecosystem
The Food-Tech industry consists of five main platforms. Companies in this sector include The food-tech's rich ecosystem is present
sectors. Veolia Environment and Waste Management throughout the entire food-tech value chain,
which specializes in waste management, IBM with supporting its players and technologies and
• Novel food R&D and product design - The Barilla and SIG in food traceability, CleenSonic’s facilitating their activities. The ecosystem positively
industry is rich in cutting-edge food R&D which ultrasonic cleaning system for the food industry, affects the industry, steering technologies, business
improves, enhances and produces a wide range and many others. expertise and resources in promising new directions.
of food products. R&D and product design are
driven by various actors such as corporations, • Packaging technologies – New solutions for 1. Biotechnology and food engineering academic
entrepreneurs, and academic researchers. Within sustainable, efficient and safe packaging are institutions are responsible for many of the
the sector, one might find the development of highly sought-after in the food industry. Food local consumer demand, as well as implement recent breakthroughs in food technologies. Many
innovative ingredients and production processes producers are always on the lookout for food- automatic cooking solutions that can prepare institutions have expanded their technology
such as alternative protein, fat and sugar related waste reduction through the use of food and serve it more efficiently. Retail stores transfer efforts through dedicated companies,
ingredients, as well as functional nutrition aimed degradable and edible materials, for materials utilize big data and AI in logistics in order to and have been providing the market with new
at certain consumer groups. Players in this sector that keep food fresh and healthy for longer make shopping for food cheaper, healthier, and technologies and ideas.
range from young companies such as Beyond periods of time, and for compact and lightweight easier for consumers. E-Commerce is expanding,
Meat and Impossible Foods, to established packaging techniques. Examples of notable aiming to provide a simple, personalized and 2. Food tech incubators and accelerators, like
multinationals (MNCs) such as Tyson Foods companies in this field include Dai Nippon rapid delivery system for foods and ingredients, their counterparts in the internet and high-tech
and Nestle. Printing, Amcor, and Embrapa Food Technology. using applications to increase both comfort and industries, provide entrepreneurs with tools and
value for consumers. Prominent companies in resources to transform ideas into innovative
• Food processing technologies – Food processing • Restaurants, Retail and e-Commerce this sector are GrubHub, Delivery Hero, Swiggy, products.
technologies, which seek to provide a sustainable technologies – The food distribution industry Deliveroo and Meituan-Dianping in the delivery
production process alongside reduced food- is highly diverse and has also been benefiting sector. Multinational, established actors such as 3. Dedicated food tech venture capital firms
waste, healthier and more traceable foods, from innovative food-technologies. Restaurants McDonald’s, KFC and Walmart, among others, play a critical role in the growth of promising
and prolonged shelf life. This sector includes attempt to intelligently customize menus to fit the are also utilizing such technologies. companies.
• Consumer lifestyle – A collection of technologies 4. Governments, albeit new players in the
that enable consumers to personalize their ecosystem, are becoming prominent ones,
diet according to physiological data, eat providing incentives for food-tech actors and
healthier foods, cook faster (and sometimes lowering barriers to entry by providing additional
autonomously), and order food efficiently. A funding to the market.
few examples of companies that employ these
technologies include MyFitnessPal, Noom,
DayTwo, and Purple Carrot.
6 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 7
DEFINING THE FOOD-TECH
INDUSTRY
FIGURE 1: FOOD-TECH SECTOR MAP
Incubators & VC Funds
Accelerators
Academy Packaging Government
Technologies Restaurants,
Food
Retail &
Processing
e-Commerce
Technologies
Technologies
Novel food
R&D and Consumer
Product Lifestyle
Design
The Food-Tech
Ecosystem
8 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 9
FOOD-TECH MARKET
CHARACTERISTICS
FOOD-TECH is a promising Industry that A second indicator is the evident growth of food- companies (See figure 2). Geographically, China
is disrupting the large, traditional global food and tech’s sub-sectors, which are easier to define and and the US are leading investments with over 50%
beverage market - which is valued at over $8 trillion analyze accurately. For example, the $1.5 billion of all funding headed to companies based in their
and makes up more than 10% of the global GDP. 1
(by revenue) food robotics market is aimed at markets. The Indian, British, German, and Indonesian
food-processing corporations as well as packaging markets are also prominent, as well as Singapore
Although undoubtedly significant, it is difficult solutions, automated restaurants, and home kitchen in the Southeast Asia region, Brazil in Latin America
to estimate the market’s full potential - mainly applications. The technology is expected to grow at and Israel in the Middle East.8,9
because of the dynamic nature of food-tech, which a CAGR of 12.7%, more than doubling to $3.1 billion
makes it hard to uniformly define and study it. While by 2025.5 Another exploding sub-sector is the rapidly
the constant changes brought-about by disruptive expanding plant-based protein market. Currently
technologies and emerging trends make the precise valued at $5 billion, it is expected to grow at a CAGR
market size difficult to evaluate, there are several of 28%, increasing in value to $21 billion by 2025. 6
indicators of its considerable growth in recent years. FIGURE 2: GLOBAL INVESTMENT BY INNOVATION FIELD, 2018
Hand in hand with the investment growth, an
increasing number of food-tech startup companies Robotics
Market Growth are being established. There are currently more
than 1,200 food-tech startups operating worldwide,
Novel Food
1%
6%
Indicators including over 230 companies dedicated to Home & Cooking
researching production of novel ingredients, and 1%
Food-Tech logistics
A leading indicator of the food-tech market growth a similar number dedicated to creating consumer
6%
is the increase in funding through acquisitions, apps.7 Some of these startups have rapidly increased
funding rounds, venture capital firms, incubators in value, with more than 32 food-tech companies Restaurant Marketplaces
and accelerators. The increase in funding for food- surpassing the $1 billion valuation mark as of 2018, Retail and and Mealkits
tech has been substantial, from $60 million in 2006 earning the unicorn status.
Restaurant Tech 42%
30%
to $5.7 billion in 2015,2 and to a record of $11.5
billion in 2018.3 While most venture capitalists and With the first company reaching this status in 1998
accelerators invest in one startup, notably active (OpenTable), the number of unicorns in the market
accelerators such as SOSV and Y Combinator invested has been steadily increasing ever year. Remarkably, 23
in as many as 28 food-tech startup companies in of the 32 companies that have reached the $1 billion
2018. On the VC fund front, notable in their activity valuation are food delivery companies. Similarly, the e-Groceries
are S2G ventures with 20 food-tech investments, 14 biggest food-tech investment deals of 2018 are
30%
and AgFunder with 11.4 comprised of mostly e-Commerce and food delivery
10 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 11
FOOD-TECH MARKET
CHARACTERISTICS
FIGURE 3: LEADING FOOD-TECH INVESTMENTS IN 2018
US
CHINA
INDIA
BRAZIL
Instacart DoorDash ZUME Pizza Brandless Toast Impossible Foods
$600M $535M $375M $240M $115M $114M
e-Commerce Delivery e-Commerce e-Commerce Restaurant Novel Food
US US US US US US
Dada-JD MissFresh Dianwoba 1919 Wines Yijupi
Daojia e-Commerce $450M & Spirits $200M
$500M $450M $288M
e-Commerce e-Commerce
e-Commerce e-Commerce China e-Commerce China
China China China
Swiggy BigBasket.com
$1B $300M
e-Commerce e-Commerce
India India
iFood
$590M
e-Commerce
Brazil
12 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 13
GLOBAL FOOD-TECH
TRENDS
WHILE SOME of the following trends have a short-term impact on the traditional food industry,
others have far-reaching future implications.
Sustainability Many leading multinational corporations such
as Nestle, Pepsico, and Coca-Cola are pledging to
reduce packaging waste, and are on the lookout for
Sustainability in food is all about new solutions to replace single-use plastic.10 This
increasing the production efficiency is also true for the startup ecosystem, with over 70
FIGURE 4: GLOBAL FOOD-TECH TRENDS of food products, prolonging shelf-life, startups worldwide specializing in waste and surplus
using minimal/degradable/recyclable management.11
Sustainability
packaging, and reducing surplus
production as well as food-related
Added Values waste Novel Ingredients and
Robotics and
Automation Arising mainly due to consumer demand, Production Methods
sustainability is already impacting the entire value
chain by providing actual economic benefits, The invention of novel ingredients and
increased efficiency and reduction in the food processes for the production of food
industry’s ecological footprint. that is tastier, more nutritious, more
Novel Ingredients
sustainably produced and shipped, can
and Production
Sustainability has driven the research and be grown in new environments, as well
Methods
Food Delivery
incorporation of various inventive technologies and
as provides alternatives to traditional
processes into the industry. Sustainable production
sugar and animal proteins
lines that reduce waste, water usage and greenhouse
gas emission, are introduced with solutions The food industry is already greatly influenced by
Nutrition from companies such as Aromyx (a developer of the invention of new ingredients. Most remarkably,
Personalization odor biosensors that aid in production process plant-based proteins and cultured meats, fish and
optimization), Just Inc., and Renaissance Bioscience; poultry are quickly gaining popularity,12 due to their
Sustainable packaging, compact and degradable/ associated moral and ecological benefits and their
recyclable, is introduced with innovative products constantly improved taste and nutritional values.
from the likes of IBM’s VolCat technology - which Prominent companies in this market include Beyond
has revolutionized plastic recycling, ChemCycling, Meat, Impossible Foods, Memphis Meat, Future
Tetra-Pak, Eco-Products, and Apeel Sciences; Waste Meats and more. A similar process can be found
reduction and surplus minimizing technologies are in the production of dairy, chicken eggs and sugar
also increasing in popularity and include products alternatives, as well as ingredients that enhance
from companies such as Waste Management, Whole food flavor and scents.
Surplus, Karma, NoWaste and Olio, among others.
14 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 15
GLOBAL FOOD-TECH
TRENDS
Novel foods also play a part in the growth of the New food products and ingredients enable the Yet another corresponding market is the menu of consumption is becoming increasingly important,
functional foods and nutraceutical products market. creation of more diverse and beneficial foods, such personalization platforms, which offer new recipes with one-third of consumers worldwide using a
Using genetically modified organisms (GMOs) as well as alternative protein sources that support vegan to match food trends or a change in seasons, as well restaurant or meal delivery service, and 7% ordering
as new breeding efforts, corporations are researching diets, sugar alternatives that aid in preventing and as personalized menus to consumers and restaurant delivery at least once a week.13 Therefore, some of
and designing new foods and ingredients. These living with diabetes, and foods with heightened owners. Examples of companies in this market are food-tech’s earliest and biggest global investments
new ingredients are being used for specific functions health benefits. The.Fit, McDonald’s Dynamic Yield, and Tastewise. were directed at the food delivery sector.
such as manufacturing foods tailored towards
infants or elderly consumers, aiding with different Players in this sub-sector are plentiful and of high
illnesses or providing heightened health benefits.
Companies invested in such solutions include DSM’s
Food Delivery value. A few prominent examples include DoorDash
(North America), GrubHub (North America), UberEats
development of functional foods and nutraceuticals, (Global), Delivery Hero (Global), Deliveroo (Europe),
and Kellogg’s investment in a mushroom-based
Food delivery platforms are on the Just Eat (Europe), Takeaway.com (Europe), Ele.me
functional ingredient company. rise, catering to the ever-increasing (China), and Meituan Dianping (China).
demand for the delivery of fresh
food and groceries to consumers in Due to its success, many actors are trying to
Nutrition a reliable, cheap and timely manner. enter the food-delivery market, hoping to gain the
Personalization Food delivery has become the new upper hand over their competitors. Examples include
standard for food consumption Postmates’ recent testing of autonomous food
delivery robots in California;14 India’s Swiggy, which
Personalized nutrition utilizes large
Responsible for one of the biggest disruptions runs its own cloud kitchen services that prepare
amounts of data in order to better Smart personalized diet solutions and in the food industry, the delivery trend was one of meals for its takeaway services in a cost-effective
understand the human biological technologies are complementary tools that provide food-tech’s earliest and most influential trends. Ease manner, dramatically cutting costs; and Zomato’s
system, and then to effectively the user with access to general knowledge based on
apply the relevant new findings to large amounts of data, as well as personal insights
consumers to improve their diets. based on sensorially gathered or manually entered
Some of the elements that influence data.
the personalization of diets include
age, genetic heritage, gut biome, Complementing this trend are personal
lifestyle choices, health issues and wellness coaching applications, which utilize data
moral preferences and expertise to instruct users on healthier, more
personally suitable lifestyles. Leading companies
Personalization is driven by two main in this sector include Diet.ID with a personalized
technologies: new food products and functional diet assessment and insight digital solution,
innovations, and data analysis coupled with artificial Ava’s nutrition coaching platform, Viome, Noom,
intelligence. MyFitnessPal, and Shopwell.
16 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 17GLOBAL FOOD-TECH
TRENDS
expansion into fresh produce sourcing to cut costs
and provides higher quality produce for their delivery
Autonomous solutions driven by artificial
intelligence can be used to create a completely
Added Values
platform.15 automated restaurant experience, from a fully Various, diverse technologies and practices
automated table reservation system to robots
Consumers are looking to buy food originate from this consumer demand-based trend.
cooking and serving foods and beverages. Prominent from corporations that promote added One example is the introduction of digitally native,
values such as fresher and healthier
Robotics and examples include Spyce, a completely automatic
healthy restaurant operating in Boston; AB InBev, products, made with traceable
vertically integrated brands (DNVB) in the food
industry, which result in eliminating mediation
Automation ingredients and transparent production prices while increasing quality, traceability,
methods, sourced responsibly, and accountability and sometimes freshness of food
Automated robots are set to made safe through proper inspection delivered to consumers. Blockchain is used to
revolutionize almost every aspect of and processing increase traceability, with companies like Auchan,
the food industry value chain Walmart and Carrefour having already implemented
The added value trend has been influencing this technology.20 Using blockchain, consumers
The incorporation of robotics and automation in almost all actors in the food industry, forcing them can scan a specific product’s QR code to receive a
food manufacturing meets the increasing demand to adopt practices and technologies that contribute detailed report on its origin, production process and
for cost and energy efficient food processing . Giant
16
to these values. 19
delivery information.
food processing MNCs are already developing and
utilizing these solutions in their operations, with
the likes of JBS testing meat processing robots,
and Tyson Foods investing $215 million in robotics which has incorporated intelligent beverage FIGURE 5: TRENDS HYPE CURVE
in the past five years.17,18 Another important role dispensing monitoring that increases supply planning
for robots in processing is to increase food safety and efficiency; and McDonalds’ recent acquisition of
by autonomous inspection of products, as well as Apprente, aimed at incorporating automatic speech
Robotics and
by automated maintenance and cleaning of food recognition and interaction technologies in their Automation
production lines. drive-throughs. Novel Ingredients
and Production
Methods
HYPE
Smart and autonomous delivery robots and Lastly, another use for autonomous robots is
Food Delivery
vehicles are already in use for customer delivery in the home-kitchen environment, by using smart
Nutrition
services and for improved logistic operations. These home and IoT technologies. Examples, already in Personalization
include the use of autonomous trucks for logistics the market, include Moley Robotics’, Miso Robotics’ Sustainability
Added Values
operation, automated warehouse solutions for and Samsung’s autonomous kitchen robot arms;
increased efficiency and safety in food inventory GammaChef’s smart robotic cooker; and Genie’s
management, and ground and airborne vehicles that pod technology that automatically cooks healthy
Discovery Peak of Disillusionment Enlightenment Plateau of
can deliver food and groceries quickly and reliably. vegetarian food at the push of a button. expectations productivity
TIME
18 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 19THE ISRAELI FOOD-TECH
ECOSYSTEM
ISRAEL IS home to one of the most vibrant,
forward thinking food-tech ecosystems in the
A Growing Market FIGURE 6: ISRAEL: INVESTMENTS BY INNOVATION FIELD, 2018
world, which makes it a desirable innovation hub. These unique market characteristics have created
This ecosystem’s growth and prowess have been promising food-tech opportunities for entrepreneurs Robotics
instrumental in fostering cooperation and bringing and investors - and Israel promptly became home
12%
Novel Food
in investments from some of the world’s biggest food to some of the most promising innovations in the
21%
corporations such as Coca-Cola, Mars, Mondelez, food industry, and to approximately 300 food-tech e-Groceries
Tyson Foods, Nestle, Danone, AB inBev, Starbucks, startups.21,22 However, much like the global food- 4%
PepsiCo, McDonalds, Heineken and Unilever. tech market, the Israeli market is still young, with
124 of the startups having been established in the
Behind the Israeli food-tech ecosystem’s past three years alone.23 Another sign of the market
Restaurant Marketplaces
excellence on a global level are several unique being in its early stages is the amount of investment
and Mealkits
characteristics. rounds achieved by startups, with 30% of them either
19%
bootstrapped or having undergone a seed funding
First, the country’s history of food and water round only.24 Furthermore, Israel has yet to see IPOs Home & Cooking
shortages created a demand for ingenuity in food of food-tech companies. 27%
and agriculture, thereby promoting the formation
Retail and Restaurant Tech
of advanced scientific and technological knowledge Despite its early stage, the Israeli market is growing
and expertise. Second, Israel is home to some of considerably and seeing an increasing amount of
17%
the first academic technology transfer companies investment. Food-tech investment has doubled
in the world, with a strong connection between the between 2013 and 2018, from $52 million to $100
academic and business sectors, and an advanced million.25 As of October 2019, food-tech investments
culture of technology transfer. Third, Israel’s food for the year have been $135 million total, nearly
culture is affected by the existence of its many tripling food-tech’s annual investment in the span The market has seen an increasing amount Yield their largest acquisition in the past 20 years.30
immigrant communities, which demand a variety of 6 years.26 Funding rounds are gradually becoming of acquisitions, with one of the biggest exits in
of flavors and have a unique openness to new ones. bigger, with companies in different innovation fields Israel’s history occurring in the food-tech industry: With the increasing attractiveness of Israel’s food
Last, the Israeli consumer has a sophisticated palate, raising large sums. Examples include Hinoman (2017, International Flavors & Fragrances purchased the innovation, many international companies have
and is willing to pay more for higher quality food $15 million), DouxMatok (2019, $8 million), Nutrino Israeli Frutraom for $7.1 billion in October 2018. 28
begun investing in business partnerships with the
products. (2018, $8 million), and Bringg (2019, $25 million).27 The same year saw the acquisition of SodaStream Israeli food industry. Prominent examples are Danone,
by PepsiCo, at a company valuation of $3.2 billion. 29
which owns 20% of Strauss Health’s operations;
Another large acquisition is that of Dynamic Yield, an and AB InBev’s acquisition of Weissbeerger and
AI high-tech company that develops personalization its recently announced innovation hub in Tel-Aviv.
and decision logic technologies. McDonald’s has Additional investors include General Mills, Mars,
recently announced it will purchase the company Cargill and ADM.
for more than $300 million, thus making Dynamic
20 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 21THE ISRAELI FOOD-TECH
ECOSYSTEM
In addition to financial backing, start-ups will printing method developer Aleph Farms, Redefine with Israel’s Innovation Authority and with its
benefit from the full range of Frutarom’s know- Meat and more. support. Eshbal has access to the world’s most
how, expertise, and corporate synergies. advanced food technologies as well as the ability
to utilize knowledge and expertise in order to
On May 8, 2018, International Flavors & supply high-end food products both nationally
FRUTAROM
Fragrances acquired Frutarom for $7.1 Billion. and globally.
Founded in 1933, and headquartered in
Haifa, Frutarom is one of the largest flavor and In addition, the company's subsidiary -
fragrance companies in the world.
The Ecosystem ESHBAL FUNCTIONAL FOOD
Eshbal Functional Foods Labs Ltd. (EF2L), was
founded as a collaboration of leading industrial
The company develops, manufactures Food R&D and Product Development players in this groundbreaking field, and offers
and markets an extensive variety of flavors Founded in 1940 in Kibbutz Maanit, this the opportunity of significantly shortened cycles
and ingredients which cater to customers in Israel is well-known for its expertise in research company is a food manufacturer active in for innovative food products, food supplements
many industries such as food & beverage, taste, and development, and food R&D and product design several local and international food sectors. and medicinal foods, from initial development
fragrance, pharmaceutics, nutraceuticals, food are no different: R&D is present across all sectors of The company produces nutraceuticals, stage to global market penetration.
additives, and cosmetics. Frutarom markets the food industry, from food processing companies medicinal foods, sugar-free and gluten-free
and sells over 10,000 raw materials and 70,000 to research centers. Long established companies products, syrups, and dry mixes. Eshbal's
products to more than 30,000 customers in 150 include Frutarom, with its wide array of flavors, production capabilities include the mixing
countries. It has 92 R&D labs and 110 sales & fragrances and ingredients both in Israel and abroad, of various powders and cereals, cooking and
marketing offices throughout the world, employs Eshbal Functional Food’s innovative solutions in preparation of syrups and liquids, baking and
5,500 people and operates 73 production specialty foods and nutraceuticals, and Galam. packaging of gluten-free products, and diverse
facilities in Europe, North America, Israel and Other major food processing companies, such as packaging technologies. The company focuses
Asia. Tnuva and Strauss, run innovation incubators in on functional food ingredients that affect health
collaboration with the Innovation Authority (see beyond their nutritional values, incorporating
In April 2018 the company announced that later sections for additional details). development and production capabilities for
FUTURE MEAT TECHNOLOGIES
it will launch FoodNxt, an innovation lab for retail brands, private labels, and B2B.
food-tech startups in northern Israel which Alongside the major food producers, Future Meat Technologies is a lab-produced
will focus on the development of all-natural entrepreneurs are constantly bringing new disruptive Eshbal Functional Food exports to the United meat startup based in Jerusalem, founded in
ingredients for the food and beverage industry technology to the market. Israel’s biggest promise in States, England, Russia, the Ukraine, Denmark, 2018.
worldwide. Frutarom was selected by the Israel this sector is in alternative food source innovation. and other countries.
Innovation Authority to operate the innovation Just recently, Tyson Foods invested in Future Meat The startup developed a technology for
lab for three years. Each start-up chosen by Technologies in an estimated $14 million investment The company has an R&D team that non-GMO (non-Genetically Modified Organism)
Frutarom for FoodNxt will enjoy financing of round.31 Other Israeli companies developing includes some of Israel’s leading experts in food production of meat directly from animal
up to $280,000 to reach a proof of concept. alternative meat production methods are 3D meat development. The team works in coordination cells, without the need to raise or slaughter
22 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 23THE ISRAELI FOOD-TECH
ECOSYSTEM
animals. The company focuses on developing With current small-scale production costs of Alternative protein solution companies include The company developed a nutritious,
a sustainable and cost-effective production $150 per pound of chicken and $200 per pound Hargol’s grasshopper protein farms, Flying SpArk’s plant-based liquid egg that tastes, looks, and
method of fat and muscle cells in small-scale, of beef, the company plans to release its hybrid fruit fly protein, SuperMeat’s cultured chicken meat functions like a real egg and can be used as an
rejuvenating bioreactors. Due to its rapid growth products, at a competitive cost level, from its products, Kinoko-Tech’s mushroom-based protein, egg substitute in any recipe.
cycles, producers can adapt to market demand, pilot production facility by 2021. A second line ChickP’s chickpea seed protein, and Hinoman’s
changing their growth capacity as needed. of 100% cultured meat products at a cost of less Mankai protein plant. The product is made up of the selection of
than $10 per pound is to be launched by 2022. non-GMO proteins and has the properties of a
The model is expected to utilize 99% less Other examples of “faux-foods” include ZeroEgg, real egg. Although the egg replacement market is
land and emit 80% less greenhouse gasses As of October 2019, Future Meat has raised winner of the Food-Tech 2019 startup competition a crowded one, the company boasts two unique
compared with traditional meat production. a total funding of $16.2 million. for its vegan egg replacement; Yofix, a manufacturer attributes: the versatility of the product, and its
of vegan, soy-free yogurt and dairy alternatives, and cost effectiveness.
winner of PepsiCo's European Nutrition Greenhouse
Program; Tamiz’s almond-based dairy replacement As of December 2018, the startup raised
products; and Amai Proteins’ sugar-replacing a total funding of $1.5 million. It is also the
FIGURE 7: ISRAEL’S ALTERNATIVE PROTEIN MARKET proteins. Additional innovative companies have winner of Calcalist's 2019 Food-Tech Innovation
been producing novel ingredients for the food Competition, in association with Tnuva.
processing sector, for example Phytolon, which
develops sustainable and healthy food coloring
SuperMeat technologies, based on research conducted at the
Poultry
Weizmann Institute of Science and supported by
Aleph Farms
Clean Beef Hargol Trendlines’ incubator.
Cricket
Redefine Meat BETTER JUICE
Clean Beef
Flying SpArk Better Juice is sugar reduction startup
Future Meat
Clean Beef
PROTEIN Fly
founded in 2017 in Ashdod.
Kinoko-Tech The company’s flagship device utilizes non-
Mushroom
ZEROEGG GMO micro-organisms in order to convert the
Hinoman natural sugars found in fruit juice into non-
Mankai
ChickP Plant-based egg substitute startup ZeroEgg digestible compounds such as dietary fiber,
ChickPea is a portfolio company of The Kitchen FoodTech while maintaining flavor and nutritional value.
Hub, founded in 2018 in Ashdod. This technology could reduce 30%-80% of all
24 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 25THE ISRAELI FOOD-TECH
ECOSYSTEM
the sugars in orange juice, which is especially Israel’s biggest food and beverage company, in The group operates The Kitchen FoodTech throughout Israel, and over 80% of its raw
beneficial for conforming to new FDA and EFSA terms of revenue, is Tnuva Group, acquired by Bright Hub, a technological incubator founded in materials come from Israeli agriculture, with
standards. Furthermore, Better Juice uses micro- Foods in 2015 at a $2.3 billion valuation. Tnuva
32
2015 which provides seed funding, mentoring, more than 1,600 farmers counted among its
organism activity and continuous bioconversion recently joined the Sparks FoodTech consortium industry connections, and a full set of operational 6,500 suppliers.
to process large volumes of juice with little effect - alongside Tempo and the VC firms Finistere and services for early-stage ventures operating in
on overall costs. OurCrowd - to establish “Fresh Start”, a government- all areas of the food and beverage value chain. The group has recently won a government
backed food-tech research center. Second to Tnuva tender to construct a $100 million food-tech
Recently, the company has partnered is Strauss Group, currently valued at $3.4 billion on Alpha Strauss is the company’s venture arm, incubator in the northern region of Israel, as
with Citrosuco S.A, Brazil, one of the largest TASE, which boasts business relationships with many which engages in the connection between the part of a collaboration with Finistere VC, crowd-
orange juice producers worldwide. As part of multinational companies. Strauss can take credit technology manufacturers and venture capital funding based OurCrowd VC, and Tempo. The
the partnership, Citrosuco will set up a pilot for numerous innovations in the food-tech market, funds, market service providers, government incubator, operating under the name Fresh Start,
program for the production of low-sugar orange as the company has been investing and promoting representatives and strategic partners. Alpha is scheduled to open in 2020.
juice, using Better Juice’s technology. startups through its incubator, The Kitchen, and VC Strauss also promotes FoodTech IL - the main
fund, Alpha VC. event of Israel’s Food-Tech’s ecosystem. Along These two giants are closely followed by
Better Juice won the "Most Innovative with the community, the event has grown over Osem, owner of the Tivall brand, one of the first
Technology" award at the 2018 Startup the years from a few dozen participants to over manufacturers to introduce meat substitutes to the
Innovation Challenge at Health Ingredients one thousand. market; the Neto brand - an investor in Future Meat
Europe (Frankfurt). Its technology was developed Technologies; and Tempo, which is also invested in
in conjunction with The Hebrew University and the aforementioned Fresh Start incubator. MNCs are
The Kitchen Hub incubator. also present in this sector, with Coca-Cola, Heineken
STRAUSS GROUP and Unilever food producing facilities in Israel.
As of March 2019, the startup raised a total
funding of $600K. Strauss Group Ltd., founded in 1933, is an TNUVA GROUP
international Food & Beverage company and
Packaging
among the largest food manufacturers in Israel. Founded in 1926, Tnuva Group is one of
The company focuses on dairy products, coffee, the largest, leading food groups in Israel, with With their economic and ecological benefits,
Food Development
water, snacks, salads, and dips. It employs a workforce of 6,500 employees. In 2014, it sustainable packaging technologies have not
Despite its sophisticated palate and a demand for over 14,000 workers across 20 countries in 29 boasted a revenue of NIS 7 billion. The majority skipped the attention of Israeli innovators.
innovative food products, Israel’s local food market is production sites. As an international company, part of Tnuva’s activity takes place in Israel, with Prominent examples include TIPA, a manufacturer
limited by its relatively smalls size. As a result, many Strauss works in collaboration with international its products supplied daily to approximately of degradable, flexible and durable plastic-like bio-
of Israel’s food processing giants have established corporations such as Danone, Haier, Sao Migel 18,000 retail points across the country and to materials for the food industry; Tadbik’s flexible
global business partnerships in an attempt to gain etc. The group’s sales totaled NIS 8.6 billion over 7 million customers. packaging technologies; and NanoAF, which designs
access to other markets and leverage the Israeli food in 2018, of which its international operations biocompatible and ecological packaging materials
research expertise. accounted for 54%. The company has 36 production sites that resist bio-fouling, thereby increasing product
26 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 27THE ISRAELI FOOD-TECH
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shelf-life. NanoAF’s technologies were developed at Awards. In addition, Google’s shopping site provides insight promoting sustainability and profit,
Yissum, the Hebrew University's technology transfer has recently begun shipping its products in was acquired by AB InBev in 2018.
company. packaging produced by the Israeli company.
As of September 2019, the startup raised a
DYNAMIC YIELD
total funding of $48 million, from investors such Dynamic Yield was founded in 2011 in Tel
as Li Ka-Shing’s Hutchison Whampoa, Hearst Aviv and employs approximately 180 people.
and Blue Horizon. WEISSBEERGER
The startup developed a platform which
TIPA helps companies enhance marketing and WeissBeerger is the developer of Beverage
increase revenue by adapting their website Analytics, a platform that provides breweries
Restaurants
Founded in 2010, TIPA is a compostable content to customers' preferences. with real-time feedback on bar operations and
plastic company. It has over 40 employees and Restaurants in Israel are a major sector of the consumer behavior. The startup was founded
is based in Hod Hasharon. country’s food industry. Facing challenges like As of November 2018, the startup raised a in 2011 in Tel-Aviv, and employs over 60 people
food ordering apps and food delivery platforms, total funding of $80 million. In March 2019, it was
TIPA designs and manufactures plastic-like restaurants in Israel are developing innovative acquired by the global McDonalds Corporation WeissBeerger has developed Internet-of-
bags and packaging materials that are fully solutions to stay attractive. for $300 million. Things analytics tools that include sensors in beer
compostable, as an alternative to conventional taps, refrigerators and other important points in
plastic packaging. The company’s compostable The biggest fast-food chain in Israel, McDonald’s, McDonald's, which operates some 38,000 the supply chain. This, in order to provide bar
plastic is made up of 20%-60% plant-based recently re-introduced its delivery services and branches worldwide, stated it will use Dynamic and restaurant owners as well as brewers and
ingredients, and disintegrates under compost launched new technologies such as McTouch-to- Yield's technology to better personalize its beverage manufacturers independent data, such
conditions within 180 days. table ordering, McCoins member club currency, and outdoor digital drive-thru menu, with varying as whether the beer served to the customer was
RightHear - accessibility solutions for handicapped choices based on time of day, weather, current poured at the right speed and temperature,
TIPA’s packaging is as durable and consumers. McDonald’s employs an order and restaurant traffic and trending menu items - and whether it was poured from a fresh barrel, and if
impermeable as traditional plastic packaging pick-up app, and recently acquired the Israeli AI also to offer customers additional choices based the barrel should be replaced. Big data systems
and is good for a range of products, such as fresh personalization technologies startup Dynamic Yield, on existing selections. gather information about drinking habits in
produce and frozen goods. TIPA’s packaging in order to promote personalization in restaurants the bar and analyze them with insights about
also expands beyond the produce aisle, as the and services. Another prominent restaurant chain in the customer behavior. According to the company
company also produces packaging for fashion country is Aroma Israel, with sales of $284 million website, bars which have used the company's
retailers. in 2018 and 214 retail locations. In 2018, Aroma
33
tools have increased revenue from each beer
launched an order-and-pick-up app which includes tap by 32% and reduced beer wastage by 50%.
The company received the Transformational a club member discount. On the startup scene,
Solution Award in the category of Waste, Water, WeissBeerger, which developed a beverage analytics In January 2018 Anheuser-Busch InBev, the
and Land at the 2019 Transformational Business platform that tracks beverage consumption and world's largest brewer, acquired WeissBeerger
28 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 29THE ISRAELI FOOD-TECH
ECOSYSTEM
for an approximate $80 million. Anheuser- has 15,000 employees, 358 stores spread across The startup operates a digital supermarket transfer company. Another example of using high-
Busch InBev owns more than 400 beer brands 533,000 square meters and four online logistic that guarantees fast deliveries within four hours tech for smarter food consumption is Water.io. The
worldwide including Becks, Stella Artois, Leffe centers covering 12,000 square meters. The with no delivery charge. It employs some 35 company manufactures SmartCaps, sensor-packed
and Budweiser. The company operates in North group's 2018 revenues totaled NIS 12.8 billion. people and has its headquarters in Rishon IoT caps that can be placed on any product, including
and South America, Europe and Asia, and has Its shares are traded on the TASE. LeZion. water and juice bottle, powdered foods and medicine
offices in the USA and the UK. and even pills.
Shufersal is Israel's most significant player in In June 2019, the Israel-based drugstore chain
the e-commerce market, with at least 16% of the Super-Pharm, together with local manufacturer Israeli startups are also tackling the home kitchen
chain's revenue originating from online sales. and distributor of Coca-Cola products The appliance sector, with different solutions for making
Retail and e-Commerce
Central Bottling Company Ltd. and Tel Aviv- cooking healthier, faster and easier. One example is
While Israel only has 17 national food retailers, 34
Much like in other countries, new players are based Union Tech Ventures, invested a combined Genie, an autonomous pod-to-plate solution that
recent years have seen them in intense competition, trying to capitalize on the increasing demand for both sum of approximately $10 million in the startup. cooks vegetarian meals in three minutes, providing
driving them to constantly improve the purchasing food delivery and e-commerce. One example is Quik, What makes Quik so unique its ability to make a speedy and healthy choice of foods to consumer
experience. In search of a competitive edge, food an online supermarket that guarantees the delivery short term deliveries, within the same day - a with little to no effort. Another example is that of Deep
retailers have also become the major e-Commerce of fresh foods and food products within 4 hours, rare concept in the pharma field. Its service Learning Robotics, a robot developed to study human
players in the market, seeking to cater to the free of delivery charges. Another innovator trying to matches the worldwide trends including fast cooking and to replicate actions through computer
demands for ease-of-consumption. revolutionize e-commerce, both in Israel and abroad, and personal service. vision and learning software. Deep Learning Robotics’
is Bringg. The company caters to customers in over product is already being used as an autonomous
Shufersal is the largest retailer with $3.8 billion in 50 countries, offering the retail and restaurant sectors packaging robot in industries around the world.
revenues in 2018, marking a year-over-year revenue a comprehensive AI and ML based logistics platform.
Consumer Lifestyle
increase of 8.4%.35 Shufersal is also the biggest Israelis also use international food e-commerce
e-Commerce food player, with 16% of its revenues platforms, most notably iHerb and Vitacost. Another promising field for the Israeli food-tech
originating from online sales. Other major players
36
ecosystem are food-tech and wellness apps and
are Rami Levi Hashikma Marketing with a $1.5 billion products.
revenue in 2018, Dor-Alon Retail (also known as DAYTWO
AM:PM), Merav-Mazon Kol, Bitan Wines, and Victory. One leading app is DayTwo, whose product is
a microbiome-based personalized nutrition and DayTwo is a microbiome-based precision
medical diagnostic tool. Such technology is expected medicine company which develops personalized
QUIK to provide useful insights for food manufacturers nutrition, diagnostics, and therapeutic solutions
in the future, enabling the development of highly using artificial intelligence and machine learning.
SHUFERSAL Quik is an innovative service for purchasing personalized food products. As with many other Founded in 2015, it has offices in Tel Aviv and
products online, founded in 2017 by BringBring success stories in the food-tech industry, the San Francisco, with 85 employees.
Founded in 1958, Shufersal is the largest Solutions LTD. technology behind DayTwo was developed by Yeda
supermarket chain in Israel. The Shufersal Group - the Weizmann Institute of Science technology The company developed a microbiome
30 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 31THE ISRAELI FOOD-TECH
ECOSYSTEM
human discovery platform that offers a glycemic measures the volume of a liquid, solid or powder Ltd. was founded in 2010 in Rishpon.
control solution for people with type II diabetes. in a container and relays the data via Bluetooth
The platform provides its customers with technology to an app, which then filters it The company developed a single-serving,
personalized nutritional recommendations through the customer’s preferences and funnels pod-based cooking robotic device which uses DEEP LEARNING ROBOTICS
through a smartphone app, based on mapping it to the manufacturer. The platform allows the patented artificial intelligence and machine
and analyzing the individual's intestinal manufacturers to aggregate the data, analyze it, learning methods to cook a meal in three Deep Learning Robotics (DLR) is a technology
microbiome - for the purpose of maintaining and use it in their marketing logistic. In the future, minutes. company that specializes in robotics, computer
balanced blood sugar levels and leading a this technology could help customers plan their vision, and machine learning . The company was
healthier life. meals for the week, protect them from allergic The device performs a sequence of actions founded in 2015 in Ashdod.
reactions, and help achieve nutritional goals. such as heating, cooling, microwaving, and
According to founder and CEO, Lihi Segal, steaming and offers over 30 menu items and DLR developed a vision-based robotic
DayTwo is the only evidence-based, actionable, The company has signed agreements with a variety of dishes including breakfasts, soups, controller that uses advanced machine-learning
microbiome platform in the market today. a dozen companies in the food, beverage, pasta, noodles, and baked goods. Meal pods algorithms in order to enable robots to learn and
pharmaceutical and personal care industries, combine freeze-dried fruits, vegetables, and replicate tasks by observing humans performing
As of October 2019, the startup raised a total including the German chemicals giant Bayer meats as well as raw ingredients such as herbs, them. The robotic device captures 3D images
funding of $53 million. as well as Danone. spices, and grains. The technology uses three of a user performing the intended task on a
types of heat: precision microwave targeting, specific object, and translates them into robot
Last January, Mey Eden, an Israeli bottler of the company’s patented steam technology, control language.
mineral water, included a Water.io cap in each of and conduction heating via the cradle that
several hundreds of thousands of its six-packs. holds the meal container. After scanning the The technology is used in food manufacturing
The supply sold out in six weeks – less than meal, the algorithms know how much water and packaging facilities in Israel and Australia.
half the time both companies expected – and to add, the extent of the three heating types to Many companies in these industries are small
boosted sales by 60% compared with packs that use, and when to properly cook each element and cannot bear the high capital expenditures
WATER.IO did not include a smart bottle. within the container. and, more importantly, the ongoing operating
and programming expenses associated with
The innovative smart packaging company, The company operates two lines of adapting industrial robots to their constantly
Water.io, was founded in 2015 in Ness Ziyyona. production in Israel and one in Chicago, with a changing needs. For this reason, the DLR
combined manufacturing capacity of around 30 technology, which can be programmed over
The company develops IoT smart packaging million meal capsules a year. The company has and over again by personnel who are expert in
solutions, which include disposable sensors recently begun marketing its smart oven and the processes and tasks but have no robotics
within packages that capture data about product meal pods in the U.S. and Australia. knowledge, is a unique solution.
volume, temperature, homogeneity and use. GENIE
As of April 2019, the startup raised a total As of August 2015, the startup raised a total
The platform provides a technology that Israeli smart-oven company Genie Enterprise funding of $10 million. funding of $500K.
32 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 33THE ISRAELI FOOD-TECH
ECOSYSTEM
ecosystem, contributing to Israel’s status as one of VC firms – Many Israeli VC firms have been
food-tech’s leading hubs. providing the necessary capital needed to allow
the country’s various food-tech startups to grow.
Academia - Israeli Academia has been enriching Among these firms are Trendlines - which invested
BRINGG YISSUM
the market with groundbreaking technologies and in Hargol’s grasshopper protein company; JVP, which
Founded in 2013, Bringg is a Tel-Aviv ideas, utilizing years of scientific research expertise. Founded in 1964, Yissum is the technology recently entered a cooperation agreement with Mars;
based delivery logistics platform that enables Israel is home to one of the oldest tech transfer transfer company of The Hebrew University of OurCrowd and Finistere Ventures, which are part of
enterprises to efficiently manage their complex companies in the world, Hebrew University’s Yissum, Jerusalem. the Sparks FoodTech consortium invested in the
delivery operations. The company, which which is credited for the development of thousands National Food-Tech Center incubator; Agrinnovation
employs over 70 people, has its headquarters of various technologies - and has contributed to over The company serves as a bridge between - which is part of Yissum and has invested in ChickP
and R&D center in Tel Aviv, field headquarters 21 success stories in the food-tech industry alone. 37
cutting-edge academic research and a global and Future Meat; FoodLab - which has invested in
in Chicago, and offices in New York. community of entrepreneurs, investors, and NextFerm and InnovoPro; PeakBridge VC, which
This uniquely advanced culture of tech-transfer industry organizations. Since its inception, recently invested $5 million in Tastewise; Pitango -
The company developed an innovative SaaS in Israel has created an effective bridge between Yissum has registered over 10,000 patents investors in DouxMatok’s sugar reduction technology;
tool, which was first used by small businesses entrepreneurs and the academy, promoting both covering more than 3,000 inventions, licensed Medstrada, which recently announced a collaboration
and is now also employed by the likes of the growth of the scientific community as well as over 950 technologies, and produced over 150 with Cornell University, and many more.
Walmart, Panera Bread, and Coca-Cola and the transference of more advanced knowledge into spin-off companies. Yissum is involved with
others in the enterprise market. Bringg enables the consumer market. long term industry-university collaborations,
the companies to run complex delivery and startup creation and support, enterprise-directed
dispatch operations in real-time from first to last Overall, 16 tech transfer organization are research and more.
mile, and enjoy visibility and traceability across operating in Israel. These include the Weizmann
the supply chain, all while providing customers Institute’s Yeda, which contributed technology to Yissum has been collaborating with Hebrew
with a seamless experience. microbiome innovator DayTwo; the Technion’s T3, University’s HUgrow, an acceleration track that
which developed the food-tech behind startups further supports the development of early stage JVP
As of January 2019, the startup raised a total Algafalafel and OlfaGuard; and Bar-Ilan’s Birad whose research, together with the Robert H. Smith
funding of $57 million. technology and knowledge were sold to consumer Faculty of Agriculture, Food and Environment. Founded in 1993 by Erel Margalit under the
wellness startup ContinUse. 38
This collaboration has resulted in valuable famed Yozma program, Jerusalem Venture
technological innovations with significant Partners (JVP) has invested in over 120 companies
commercial potential. in Israel, the US and Europe.
The Israeli Ecosystem
The Israeli food-tech ecosystem - consisting of Some of HUgrow's graduates include With over $1.4 billion raised through 8 funds,
Academia, VC firms, Incubators and the Government producers of GMO-free cultured meat, Future and a rich network of strategic and business
- supports the different sectors and players operating Meat Technologies; Better Juice - which reduces partners spanning the world, JVP has led some
in the field. Together, they create a vibrant food-tech sugars in fruit juices; Bactusense, and ChikP. of Israel’s largest and most noteworthy exits.
34 | ISRAEL’S THRIVING FOOD-TECH ECOSYSTEM 35You can also read
