Foodtechs in the Latin American market
Technology

The foodtech revolution in the Latin American market

Fazenda Futuro and NotCo presidents talk about how technology has become the main tool for bringing innovation to the food industry

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Brazil is a country of continental size, that has more heads of cattle (213 million) than inhabitants (over 210 million people, according to the latest numbers of the Brazilian Institute of Geography and Statistics, IBGE. This is the reality of a country that, historically, has always cherished and maintained strong ties with the agribusiness segment and which today has the largest commercial herd in the world. As far as the foodtech industry is concerned, however, all that is about to change.

Consumer behavior has changed. Healthier but also more environmentally balanced options are on the agenda, as is the pursuit of increasingly amazing experiences. It is this new audience, not restricted to vegetarians or vegans, that is increasingly making room for foodtechs.

The movement that best exemplifies this is the arrival of vegetable-based burgers in large fast food chains, which represent the fastest way to popularize a new way of producing and eating protein.

Burguer King recently launched the Impossible Whoper burger, promising the taste of meat in a product made from vegetable protein. The analyzes performed by the company after the product launch in the United States showed an 18% growth in the units that offer the product.

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In Brazil, Fazenda Futuro is one of the companies that is following the same path and challenging the current supremacy of the meat industry in favor of an equally tasty but more sustainable solution.

Marcos Leta, Fazenda Futuro's founder
Marcos Leta, Fazenda Futuro’s founder. Photo: Fazenda Futuro

“The fact is that meat consumption today has an impact on the planet, making more and more people aware of these facts and opting for changes in diet. And it is for these people, who want to have a more balanced life, but do not want to give up on what they love to eat, that Fazenda Futuro was created, for example,” said Marcos Leta, founder of the company that bet on vegetable burgers to start changing the reality of its country, in an interview with LABS.

Launched in April this year, the company received its first round of foreign investment two months later. A $ 8.5 million investment from the Monashees investment fund, the same one that has bet on Latin American startups such as Rappi and Loggi, has made the company reach a market value of $ 100 million.

This month, the Brazilian supermarket chain Pão de Açúcar revealed that “hamburgers that look like meat but are 100% made from vegetable protein” already account for 30% of sales in the category. The supermarket offers two brands of this type of product, Fazenda Futuro is one of them.

A revolution beyond animal protein

But the revolution is not limited to the meat industry. Chilean NotCo is another example of foodtech that is reshaping the Latin American market and has already attracted the attention of one of the largest and most innovative entrepreneurs in the world: Jeff Bezos. Amazon’s chairman is among the names responsible for the $ 30 million investment that the company received earlier this year.

With a product portfolio that ranges from ice cream to mayonnaise and milk, not to mention the traditional hamburger, the company has a great advantage: artificial intelligence as an ally to create the perfect formulas and the best flavors using only herbal ingredients.

Luiz Augusto Silva, NotCo's president in Brazil
Luiz Augusto Silva, NotCo’s president in Brazil. Photo: NotCo

“NotCo aims to show that this shift from traditional to alternative products can be much easier when foods are not only functional and sustainable but also tasty,” says Luiz Augusto Silva, the president of NotCo. 

“The technology we employ (Artificial Intelligence) helps us speed up the research and development of our products. Two of our founders, Karim Pichara, Ph.D. in computer science and machine learning expert, and Pablo Zamora, Ph.D. in plant biotechnology and specialist in biochemistry and plant genetics, have developed an algorithm we call Giuseppe. Giuseppe understands the molecular structure of animal foods, crosses this information with that of vegetables we have entered in its database and suggests a combination of vegetables that recreates the food preserving its flavor, texture, aroma and nutritional value,” he adds.

A great year for innovation

“This is a great moment for technology as an enabler and disruptor to solve big problems,” says NotCo’s president regarding the fast growth of foodtech during 2019. And this paradigm shift has never been more representative in Latin America in so many sectors.

In the mobility market, Uber started a real shift to decentralize a market then dominated by taxis, something that led to protests in Brazil and Latin America as soon as the solution arrived in those countries. Despite all the resistance, the company offered a solution to a problem and met a consumer need, no wonder today São Paulo is one of the main markets for the company globally and the difficulties regarding acceptance in Latin American cities is long behind the company’s history.

With a less controversial history, but in a sector as deeply bureaucratic as the animal food industry in Brazil, Nubank also faced the challenge of completely changing the banking sector, bringing innovation to formerly outdated institutions and solving long-standing issues of Brazilians. The result was a huge audience loyal to Nubank that has been reshaping the sector, pushing the banks to rethink their models, in order to face the new competition model. No wonder the Brazilian unicorn is already valued at $10 billion.

READ MORE ABOUT NUBANK:Nubank reaches 15 million clients in Brazil

Now the time has come for the food industry to reinvent itself. “We have gone from being just a trend to become a positive reality with no turning back,” adds Marcos Leta concerning the fast rise of tech solutions in the food market in 2019.

The foodtech business in Latin America

If in 2019 the foodtech firms won their space and opened room for new solutions, by 2020 these companies are expected to go much further. “I think the plant-based market has a lot to grow yet. As we are talking about technology, everything happens very fast, leveraging the level of innovation further and further,” says Leto.

But although the Latin American consumer is open to new technology solutions, the foodtech businesses, just like other disruptive companies in other segments, also need to operate in a regulatory environment that does not comprise their business models to the fullest.

NotCo's founders
NotCo’s founders. Photo: NotCo

For Silva, changing this game is the next big step in the region. “Plant-based foodtech firms in Latin America face the challenge of expanding their scale and being in a regulated sector as a next step. NotMayo, for example, by technical definition does not fit in the mayonnaise classification as it is made without eggs. Regulating plant-based products so that they can compete with traditional ones is certainly a challenge,” he says.

Even so, for entrepreneurs this hurdle is small compared to every opportunity in the region, “from the beginning NotCo sets out to be a global company. Brazil is the largest market in Latin America, so it couldn’t be left out. And we have a great opportunity in the country because the company has the differential of recreating with vegetable ingredients any product that contains meat, milk or eggs”, reveals the president of NotCo. Besides being already in Chile, Argentina, and Brazil, we are considering new countries for 2020.”

Fazenda Futuro's hamburgers
Fazenda Futuro’s hamburgers. Photo: Fazenda Futuro

Meanwhile, Fazenda Futuro’s president also highlights optimistic plans for the company’s next steps. “Currently we are in more than 3,800 outlets, including food services (restaurant and coffee shops), retail and e-commerce. There is also a close partnership with Spoleto which will soon start selling our product and we announced a hamburger made especially for Bob’s that is on sale in more than 150 stores of the fast-food chain and soon will be present in all Brazilian stores,” he says.