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FoodTech industry: What are the business opportunities in LATAM?
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FoodTech industry: What are the business opportunities in LATAM?

The way we eat is changing. We’ve become more health conscious and more interested in the way our food is made, and where it comes from. The term “superfood” is no longer savvy marketing lingo only used by experts but rather one that appears in many cafe and restaurant menus. The way we consume food has changed as well. Gone are the days when you would call your local takeaways to make an order before going to pick it up yourself, or waiting 1-2 hours for delivery on a Friday night. Now it is all digital. Schedule your favourite sushi to be delivered to your office at lunch while you’re walking to work. Then, instead of battling weekend traffic, have your groceries delivered within an hour after ordering. The weekend has suddenly become yours again and you’ve got more time to do the things you actually enjoy.

FoodTech firms are constantly finding ways to disrupt the way we think about food. It’s not only focused on consumption either. Firms are looking at how the industry can become more sustainable, create less food waste and innovate traditional supply chains. Companies like Uber Eats, Corner Shop and Rappi have changed the whole food delivery process and our expectations and attitudes towards food along the way.

There are now various summits held throughout the world that brings the people together who are creating this innovation. Annual Food Tech summits are held in business hubs such as London, Mexico City and Barcelona, among others. There are also FoodTech focused accelerators to help start-ups in the industry, such as FoodForward in Italy and Food Future Co and Food-X in the US. FoodTech start-ups are gaining attention from venture capitalists as investment in this sector continues to grow. A region as large and varied as Latin America holds considerable opportunities for the FoodTech industry. 626 million people spread over diverse geographical areas poses not only challenges for food production and security but also a wealth of business opportunities.

Delivery and Ordering

The digitising of processes is redefining expectations. Everything is happening a lot faster and with a higher degree of personalisation. Convenience is king. Latin America’s food delivery industry is one of the most competitive out there and has received serious investment. As internet usage increases in the region, more Latin Americans now have access to FoodTech. Dominant apps such as Rappi, PedidosYa and iFood compete well against global giant UberEats. While delivery services may be costly in other countries, it is relatively cheap to maintain such services in Latin America, which provides good profit margins for firms.

While apps in this market are somewhat saturated, there still remain opportunities in business-to-business transactions between providers and distributors and niche food markets. Apptite is a Brazilian start-up that connects local chefs to customers who are looking for healthy, home-cooked meals during the week. It differs to its competitors that sell mainly fast-food. It enables these chefs to become their own bosses and takes away the need to engage in marketing or hire a restaurant space. Weak transport infrastructure in rural areas means food transport services must be adapted to fit the environment, and there lies room for innovative solutions.

Sustainable Water Usage

Food is integral to our survival as humans. Climate change threatens the resources and processes we’ve become dependent on. Meat production is a serious contributor to global warming. Therefore, we need to adapt. To reduce and manage the environmental impact on future generations, FoodTech can help secure sustainable food production processes. Parts of Brazil, Central America and Mexico can be prone to drought. How can companies ensure the provision of food with limited water supplies? Food production is already being affected as crops struggle to grow in warmer and drier conditions. Innovation can modify agricultural processes to keep up with growing demand, in a sustainable way. Firms with the know-how to develop sustainable food products and services can find opportunities in Latin America. Agritech can play an important role here. Countries with sophisticated expertise can engage in knowledge and process transfer in Latin America agricultural hubs. As agricultural products are key to many of Latin America’s export markets, governments will increase their attention to these areas.

Likewise, countries with advanced water management systems can implement agricultural practices that use less water. Plant-based alternatives that are less dependent on water can be introduced to communities traditionally reliant on animal products. This will help businesses and communities maintain food production in a more sustainable manner and ensure consistent income. Incorporating a company in a key market such as Brazil or Mexico can act as a gateway to other Latin American markets. Trade agreements such as MERCOSUR provide opportunities for foreign firms to take advantage of zero tariffs.

Food Waste

The Food and Agriculture Organisation of the United Nationals (FAO) reported that 33% of all food produced for human consumption is wasted. FAO estimates that “food losses in Latin America would be enough to satisfy the dietary requirements of 300 million people.” Considering hunger and poverty are issues in Latin America, start-ups looking to redistribute food waste or recycle it for other uses will find success.

Bio Natural Solution is a Peruvian start-up that looks to reduce fruit and vegetable waste, by creating a completely natural product that extends shelf life by 200%. This product not only serves a benefit to consumers at home but also restaurants, grocers, schools and catering companies. Considering the large amount of fresh fruit and vegetables grown in Latin America, innovative ways to preserve, store and recycle food are areas start-ups can target.

Health, Hygiene and Quality

Latin America suffers from problems with both hunger, malnutrition and obesity. While the cost of nutrient-rich food like milk, meat and eggs continue to rise, people are forced to seek cheaper food options. Often these are not healthy alternatives. There are opportunities for firms to provide viable solutions to low-income families’ food needs.

Furthermore, there is an urgent need to provide platforms that educate families about the importance of healthy eating.  Now, well over 250 million Latin Americans are overweight. However, obesity has the potential to reach all corners of society. A 2018 U.N. report stated that 7.3% of Latin American and Caribbean children are obese, above the global average of 5.6%. Start-ups have a well-earned reputation for finding innovative ways to solve societal problems. There are endless opportunities for firms with specialised expertise to assist in areas of nutrition and health.

What Next?

Start-ups are supported by many Latin American governments in regards to company formation, tax requirements and visas for foreign nationals. Incorporating your business as a foreigner is easier than you may think. Local accelerator programs can help with funding. Firms that can provide back-office services such as legal and accounting services will ensure you comply with local regulations. Latin America can be a complex business market to navigate, some working with local experts can help secure your success in the FoodTech industry.

Ideas that have gained success in other countries may work in Latin America but they need to be moulded to the market, adapted to their needs and expectations. Latin America has already produced a wealth of FoodTech firms. Some have already been acquired by multinationals for serious amounts of cash. Others continue to operate independently. Either way, the opportunities in the FoodTech industry in Latin America remain fruitful.

Submitted by Biz Latin Hub

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