Rice Krispies, mac-and-cheese, lasagna and other nostalgic ‘comfort foods’ have never been more popular, while a mix of pandemic-related factors has made it tougher for startups to innovate.
Everyone has a slightly different take on what constitutes comfort food, but it usually involves carbohydrates, a dash of nostalgia and what people crave when they feel stressed. There’s been plenty of stress in the last two years and likely more to come. Americans have flocked to comfort food in what advertisers used to say, over and over, “these uncertain times,” and it’s benefited some of the biggest companies in the $1 trillion U.S. food market—Mondelez (Oreos), JBS (meatloaf), Nestlé (Hot Pockets), Unilever (Ben & Jerry’s) and General Mills (Cheerios). The list goes on.
At the same time, food startups offering innovation—the thrill of the new—have experienced some historic flameouts. At least 13 food companies went public in 2021, and almost all of them have tanked.
Shares of BeyondMeat, a company that’s betting Americans will want to be environmentally conscious by eating more plant-based meat, has lost $6 billion since March 2020, bogged down by weak sales growth. At Vita Coco, a healthier soft-drink company, stock is down one quarter from its October debut. AppHarvest, a tech-enabled greenhouse grower of tomatoes and berries, has dropped 86% after the company reported its first-year results of $9 million in revenue on a loss of more than $160 million. The stock prices of Stryve, which manufactures air-dried jerkies, and Zevia, which makes a Stevia-sweetened energy drink, have also fallen since going public last year. For Oatly, a milk-like beverage made from—well, oats, revenue has risen 50%, but investors aren’t convinced. Its market cap is down to $3 billion from the $10 billion valuation of its July IPO.
In the heady days before the pandemic, many new-product launches were driven by a desire to cash out in a flashy and lucrative acquisition. Dave points to 2019, when the food industry unveiled nearly 20,000 new products. Covid-19, however, led to a retrenchment that changed the calculus. “The bigger buyers have gone away,” Dave says. The reversal halted a decade-long boom in food entrepreneurship. “It’s undermining innovation,” he says.
Read the full story on Forbes: forbes.com/sites/chloesorvino/2022/03/11/covid-19-has-pushed-americans-back-to-grandmas-kitchen-where-meatloaf-not-beyond-meat-is-on-the-menu/?sh=641f50d2341f
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