Snacking 2.

0
The startups and investors leveraging new ingredients and
distribution methods to shape the future of food.
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 December 12 13, 2017 | San Francisco, CA

A-ha! is a gathering of Fortune 1000 executives, investors,

academics, and startup founders discussing the next wave of
ideas and technologies that will shape our world.
SPEAKERS INCLUDE

Daymond John Liza Landsman Mudassir Sheikha Benedict Evans

The Shark Group Jet.com Careem Andreessen Horowitz
Star of ABCs Shark Tank President Co-founder & CEO Partner
and CEO Sold to Walmart for $3.3B MENAs $1.2B Unicorn Working Out Whats
Happening Next at a16z
FUBU
Founder/CEO
About the analyst
Zoe Leavitt
Senior Analyst, CPG and Retail
Zoe Leavitt is a senior intelligence analyst at CB Insights covering
the beauty, food and beverage, and retail tech sectors. Prior to
joining CB Insights, she worked in equity research and drove
consumer analytics efforts at the consumer finance group of the
Bank of China in Shanghai.
@zoe_leavitt
Zoe's research has been featured by the New York Times, Wall
Street Journal, Good Morning America, and more. Zoe is a graduate
of Stanford University. zleavitt@cbinsights.com

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Table of contents
9 Is Big Food in crisis?
18 Food corporates stock up on startups
25 New trends in ingredients
45 Longer-term trends to watch: lab-grown meat, supply chain
technology, and more

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Is Big Food in crisis?
The Era of the Activist Investor in Food

August 8, 2017

9
PROPORTION OF AMERICANS WHO BUY GROCERIES Grocers face falling foot
ONLINE, 2017 traffic

While e-commerce
Buys groceries online
increasingly penetrates
grocery, Amazon
23%
captures nearly 20% of
online grocery market
share.

As chains struggle, some

resort to unexpected
methods. Kroger (which
stock has declined 35%+
77% in 2017) recently
announced plans for a
private-label clothing
brand.

Sources: WSJ, Nielsen 10

To survive, food retailers lean on private labels
Having a private brand from a
margin mix point of view has always
been important, but it is even more
important now [and] theres a loyalty
there that passes not just through the
store but into the e-commerce
business as well.

Doug McMillon
President and CEO, Walmart

Source: Supermarket News 11

Private labels heat up CPG brands competition

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Amazon competes on private labels and brick-
and-mortar
Amazons new private labels and Whole Foods acquisition could turn Amazon into a grocery
delivery power-player.

Amazon launches private label CPG brands Amazons patents show a focus on speedy delivery,
which Whole Foods could support

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Startups impact cant be ignored

2016: Chobani becomes the top-selling 2017: Halo Top becomes the top-selling
yogurt brand in America, overtaking pint of ice cream in America and erodes
General Mills Yoplait Unilevers market share
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 Food and Beverage Annual Global Financing History More competitors are on
2013 2017 YTD (11/9/2017) the way

381
(Full-Year Run Rate) Deals to food and
361
beverage startups have
327
set new records every
314
$1773 year since 2013.
(Full-Year Run Rate)
257
Funding dropped last
209 year, due to growth in
smaller-size early-stage
deals. As some of those
new startups continued
to grow, funding has
jumped in 2017.

$577 $1,908 $1,833 $1,027 $1,520

2013 2014 2015 2016 2017 YTD

Disclosed Funding ($M) Deals
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 Unique Investors in Global Food and Beverage New investors help drive
403
2013 2017 YTD (11/9/2017) deal growth

336
Over 400 different funds
invested in food and
beverage startups in
2017 to date, compared
220 to just over 330 last year.
177 Since 2015, new food &
beverage VC funds have
128
launched, while food
corporates have unveiled
new investment vehicles.
30 An uptick in M&A also
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10 14 14 draws in new investors,
who can feel more
2013 2014 2015 2016 2017
confident about exit
Unique Investors Unique Corporates/CVCs
opportunities.
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Corporate investment vehicles spring up

1/1/2015 7/20/2015 2/5/2016 8/23/2016 3/11/2017 9/27/2017 4/15/2018

Timeline shows date of first disclosed investment

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Food corporates stock up on startups
Since 2016, global food leaders have become increasingly active in the private sector
through investments and acquisitions.

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Nestle investments and acquisitions, 2017 YTD Nestle looks to healthy
Green lines signify investments; orange lines signify acquisitions food and distribution

As part of Nestles focus

on its frozen food and
pet food businesses this
year, it acquired healthy
frozen meal startup
Sweet Earth and human-
grade pet food brand
Terra Canis.

It invested in meal
delivery startup Freshly,
with an express interest
in direct-to-consumer
distribution for shopper
data collection.

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Blue Bottle acquisition
opens new experiential
retail channels for Nestle

In Sept17, Nestle
acquired consumer
coffee brand and
artisanal caf chain Blue
Bottle for $700M.

Blue Bottle previously

raised $115.5M from
Index Ventures, Google
Ventures, and others.

The deal grants Nestle its

first foothold in brick-
and-mortar, while
focusing on premium
customers.
20
Unilever Investments and Acquisitions, 2017 YTD Unilever acquired 5 food
Green lines signify investments; orange lines signify acquisitions companies this year

Unilever acquired 2 tea

companies (Tazo and
Pukka Herbs), organic
condiments startup Sir
Kensingtons, Australian
ice cream company
Weis, and Brazilian
organic biscuit company
Mae Terra.

These deals show focus

on natural foods.

Orange lines represent acquisitions; green lines represent investments 21

 Kelloggs focuses on plant-based breakfast
In October, Kelloggs acquired natural energy bar startup
RxBar for $600M. RxBar had been largely revenue
funded, with only an $830K debt round in 2016.
Kelloggs began to invest through Eighteen94
Capital this year, backing moringa food startup Kuli
Kuli, smoothie startup Bright Greens, and mushroom
protein startup MycoTechnology.
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301 Inc. Investments Strategy: General mills
Q415 2017 YTD invests in vegetable
products

301 Inc. (of General

Mills) has invested in
several plant-based food
startups, along with
Good Culture, which sells
snackable cottage
cheese.

Rhythm Superfoods,
which sells kale chips,
has now raised over
$16M in total, including a
$6M Series D in January.

Green lines indicate number of investments into each startup 23

Acre Venture Partners Investments Strategy: Acre invests in
Q116 2017 YTD distribution and food
safety

Acre Venture Partners

(affiliated with
Campbells Soup) has
made distribution
investments including
food waste startup
Spoiler Alert and farmer
intelligence platform
Farmers Business
Network.

Its most recent

investment, Impact
Vision, focuses on food
safety, as does Sample6.

Green lines indicate number of investments into each startup 24

 Meanwhile, JAB turns
itself into major food
services player

Since acquiring Peets

Coffee in 2012, JAB has
ramped up its coffee
activity, acquiring Caribou
Coffee and Einsteins in
2014; Keurig, and Krispy
Kreme in 2016; and
Panera and Brueggers in
2017.

Post-JAB, Peets, Caribou,

and Panera made further
acquisitions, and Peets
made its first equity
investment into Revive in
Aug17.
Orange lines signify acquisitions; green lines signify investments 25
How are startups shaping new ingredient
trends?

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Plant protein
Startups are experimenting with pea protein, mushroom protein, and more, leading to
manufacturing innovation that may bring these ingredients further into the mainstream.

27
Protein giants hedge their bets
Meat producer Tyson Foods
invested through Tyson New
Ventures into plant protein
startup Beyond Meat in October
2016.
Meat producer Cargill invested
in lab-grown meat startup
Memphis Meats in August
2017.
Dairy producer Dean Foods
invested in Good Karma, which
sells dairy-free probiotic yogurt
beverages, in May.
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Tyson Foods braced for meatless future

Plant-based protein is growing

almost, at this point, a little
faster than animal-based, so I
think the migration may
continue in that direction.
Tom Hayes
CEO, Tyson Foods

Source: Quartz 29
Turning plants into burgers and chicken strips

Description: Beyond Meat offers

plant-based vegan burgers,
chicken strips, and beef crumbles
that aim to taste just like animal
meat. Its products are sold in
Safeway, Target, Walmart, Kroger,
Publix, and other stores.
Disclosed Funding: $40.5M
Select Investors: Kleiner Perkins
Caufield & Byers, Tyson New
Ventures, Collaborative Fund, 301
Inc., Obvious Ventures
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PEA PROTEIN Pea protein sees recent
Products from private startups that raised funding 1/1/2016 10/27/2017
growth powered by
startups

Led by Ripple Foods,

startups have begun to
integrate pea protein,
enticing incumbents
such as Campbells Soup
to follow.

Startups are integrating

pea protein into meat
substitutes, dairy
substitutes, and protein
powders, creating supply
chains that can continue
to scale.

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Can pea protein replace milk?

Ripple sells a vegan milks and

creamers made from peas. It has
no gluten, soy, lactose, or nuts, but
has higher protein than nut milks
and higher calcium than animal
milk. Ripple sells at Whole Foods,
Target, and other stores around the
US.
Disclosed Funding: $43.6M
Select Investors: Khosla Ventures,
Blueberry Ventures, Google
Ventures, Prelude Ventures
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From plant molecule to meat substitute

Description: Impossible Foods is

designing burgers from plant-
based ingredients, using
molecules also found in meat to
make them taste authentic. It is
currently served in roughly 200
restaurants and partnered with
Sysco and other B2B distributors.
Disclosed Funding: $258M
Select Investors: Khosla Ventures,
Horizons Ventures, Bill Gates,
Google Ventures
33
Impossible foods rolls out production facility,
plans to serve 1K restaurants
We score zero points if a
vegan or vegetarian buys our
burger. The more of a meat
lover they are, the more they
are our target customer.
Patrick Brown, MD, PhD
Founder & CEO, Impossible Foods

Source: Quartz 34
MUSHROOM PROTEIN Mushrooms mix with
Products from private startups that raised funding, 2014 2017 YTD
protein shakes and
energy drinks

Reishi mushroom and

other varieties have
begun to spread
throughout food and
beverage startups.

Reishi mushrooms are

often believed to have
anti-inflammatory
properties and to support
the immune system.

35
Kelloggs backs mushroom sweeteners
MycoTechnology designs mushroom-based flavoring and protein ingredients for food &
beverage companies. Its bitter blockers aim to make foods taste sweeter without adding extra
calories by, for example, removing bitter aftertastes from tea, coffee, beer, cacao beans, pea
protein, aspartame and stevia, and more. In August, MycoTechnology raised a $42M Series B
from S2G Ventures, Eighteen94 Capital (Kelloggs fund) and others.

36
CHICKPEAS Chickpeas flavor
Products from private startups that raised funding 1/1/2016 10/27/2017
enables versatile uses

Chickpeas are gaining

popularity as a plant-
based source of fiber and
protein that can be easier
to digest than other
beans.

Startups are offering up

chickpea snacks, as well
as chickpea-based pasta
and chickpea-based,
vegan cookie dough.

37
SPIRULINA, SEAWEED, ALGAE Spirulina promises
Products from private startups that raised funding 1/1/2016 10/27/2017
health benefits

While many cultures

have long eaten
seaweed, spirulina (a
type of algae) has lately
taken off as a potential
superfood among
certain startups.

Hum Nutrition, Aloha,

and others use it in
protein powders, while
startup Oppo relies on
spirulina for a low-calorie
ice cream substitute.

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 Could seaweed support edible packaging?
Research institutions and early-stage startups are promoting edible, biodegradable, seaweed-based
packaging.

Evoware produces seaweed-based food packaging, Skipping Rocks Lab designed seaweed-based,
including food wrappers, instant coffee packets, edible water bubbles to replace plastic water
and seasoning packets within instant noodle cups. bottles. It has raised $1.1M.

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Supporting long-term health

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PROBIOTICS Probiotics see continued
Products from private startups that raised funding 1/1/2016 10/27/2017
momentum across
categories

Kombucha has moved

into the mainstream
(supported in part by
PepsiCos 2016
acquisition of KeVita)
and startups are
integrating probiotics
into snack foods,
condiments, protein
powders, and more.

41
PROBIOTIC INVESTMENTS AND ACQUISITIONS A variety of food
Green lines signify investments; orange lines signify acquisitions companies back
probiotics

KeVita, a leading
kombucha startup, was
acquired by PepsiCo in
Nov16 for $200M.

In its first equity

investment, Peets Coffee
invested in Revive
Brands, a kombucha
startup, in August.

42
Recently funded startups using collagen Collagen promises
health and beauty
benefits

Most recently, collagen

nutrition startup Vital
Proteins raised $19M
from Cavu Venture
Partners. Vital Proteins
sells online and at Whole
Foods and other stores.

Bulletproof, which
promotes butter coffee,
integrates collagen, and
health/beauty elixir
startup Dirty Lemon
offers collagen drinks.

43
Prebiotic fiber and stevia help shoppers feel
healthy
Startup Halo Top became the top-selling pint of ice cream in the US this year. It promotes itself
as a high-protein, low-calorie option, encouraging buyers to eat the whole pint in one go. Its
ingredients include prebiotic fiber, guar gum, carob gum, and stevia. It recently released vegan
and dairy-free options based on coconut milk, and announced plans to open its first brick-and-
mortar shop in LA.

44
Bone Broth Earns Convenient Packaging
Nona Lim sells organic, gluten-free soups, broths, and noodles in Asian flavors. It recently
launched a line of heat and sip cups for bone broth. Nona Lims investors include Harbinger
Ventures and Echo Capital Group, and sells directly to consumers and in Whole Foods and other
grocery stores around the US.

45
 Can bottled meals
support healthy
lifestyles?

Soylent has raised

$71.5M at a $100M+
valuation to sell drinkable
and powdered products
that it says could sustain
humans, replacing other
$100M valuation meals.

Soylent aims to help

consumers improve their
health and reduce their
environmental impact.
However, Canada
recently banned Soylent,
signifying possible future
struggles.
46
Long-term trends to watch

47
Lab-grown foods continue to grow

48
 What is lab-grown
meat?

Lab-grown meat is made

using a brewing-type
process, in which
cultured cells grow atop
a base serum.

The cost of lab-grown

meat has fallen
significantly since 2013,
when MosaMeat debuted
a $300K synthetic
hamburger. Today, it
costs around $11.

Source: MosaMeat 49
Price falls for true lab-grown meat

Description: Memphis Meat is

producing real meat from self-
reproducing cells, with no need for
live animals. It first produced
synthetic meatballs in 2016 at
$18k per pound, and in 2017 it
unveiled the worlds first cell-
cultured duck and chicken at $9k
per pound.
Disclosed Funding: $3M

Select Investors: Indie.Bio, New

Crop Capital, SOSventures
50
From animal as factory to lab as factory

Meat today basically is made

using pre-historic technology,
using animals to turn plants
into this very special category
of food.
Patrick Brown
CEO, Impossible Foods

Source: Techcrunch 51
Lab-cultured meat brings environmental benefits Cultured meat faces
high retail cost but low
environmental cost

Cultured meat supply

chains have yet to be
established, and its
production costs remain
extremely high.

Once its price falls and it

becomes more
mainstream, it could
significantly reduce land
use, water use, and green
house gas emissions.

52
 Whats the holdup?

While the cost has fallen

significantly, startups
and research institutions
have yet to produce lab-
grown meat at scale.

Notably, cultured meat

production still relies on
an animal-based
material, fetal bovine
serum. Discovery of a
successful algae-based
serum would aid in
cultured meats progress.

Source: MosaMeat
53
 Broader fermentation tech gains traction
Ginkgo Bioworks designs custom microbes
for clients in order to produce new materials
through fermentation. It has worked with
Cargill and others and its work has
applications for food, cosmetics, industrials,
and more.
Disclosed Funding: $161.3M
Select Investors: OS Fund, Viking Global
Investors, Data Collective
Finless Foods is using biotechnology to culture
fish cells in the lab, creating synthetic fish. Its
founders say culturing fish is more cost-efficient
than culturing meat, as it requires less energy.
The startup is first focusing on Bluefin Tuna, and
aims to launch in 2019.
Disclosed Funding: $200K
Select Investors: IndieBio, SOSV
54
Replacing the cow, inside and out

Description: Modern Meadow is

bioengineering animal-free
products, starting by editing DNA
to manufacture collagen to
produce animal-free leather.
Beyond leather, the company
patented a method to produce
meat from cultured muscle cells.
Disclosed Funding: $53.4M
Select Investors: Sequoia Capital,
Collaborative Fund, Artis Ventures,
Horizons Ventures
55
New supply chain and distribution technology

56
Ikea invests in
AeroFarms

AeroFarms grows greens

without sun or soil in an
indoor aeroponic farming
system, which it says
uses 95% less water than
field farms and 40% less
water than hydroponic
farming, while growing
plants 2x faster. This
leads to 130x greater
productivity per square
foot.

Ikea participated in
AeroFarms $40M Series
D in October 2017.
57

Apeel uses agricultural byproducts
to create ultra-thin barriers that
shield the surfaces of fresh fruits
and vegetables, helping them stay
fresher longer and reducing the
need for pesticides. It is currently
piloting projects and aims to roll
out commercially in 2018.
Disclosed Funding: $40M
Select Investors: Andreessen
Horowitz, S2G Ventures, DBL
Partners
Cultiva uses food-grade
phospholipids to create barriers on
the outside of plants, improving the
quality and texture of produce and
lengthening shelf life after harvest.
It is already used commercially on
blueberries, cherries, nuts, apples,
and stone fruit.
Disclosed Funding: $5.9M
Select Investors: Nevada Business
Department
Biotech can lengthen
food supply chains and
support freshness
Startups are seeking
natural methods to help
produce stay fresher
longer.
Longer shelf lives would
help farmers, who could
sell to markets further
away and take longer to
negotiate on pricing; and
grocers, who would
realize savings from
reduced spoilage.
58
Apeel patent pictures show benefits
Photos from a recent Apeel patent application show the difference between fruits coated with
Apeels formula and uncoated fruits; the uncoated fruits tend to shrink, shrivel, and grow moldy.

Patent: Plant extract compositions and methods of preparation thereof 59

Blockchain can increase supply chain
efficiency and transparency
Food and ag tech accelerator Terra (sponsored by Rabobank and RocketSpace) backed three blockchain-for-
food startups in its 2017 program.

60
IBM brings Walmart,
Tyson Foods into
blockchain fold

This summer, IBM

announced a consortium
with six major food
producers to apply
blockchain to the food
supply chain to improve
food safety and
ingredient transparency.

Blockchain can help

brands track sources of
contamination far more
quickly, reducing the
impact of compromised
foods.

61
 Changing points of sale
As alternate distribution channels gain traction, CPG brands will need to adapt distribution
strategies to get their products into consumers homes.

On-Demand Delivery Subscription Services

Automated Ordering &

Personalized Suggestions
Co-Working & Co-Living Spaces

Next-Gen Vending

62
D2C activity hits the
food space

The first generation of

D2C brands tended to
focus on apparel and
accessories, but now
startups are launching
digital-native brands of
lower-margin food and
snacking products.

D2C basics brand

Brandless recently
launched after raising
$52M from Google
Ventures, NEA and
others.

63
 CPG brands experiment with pop-ups
Lipton Tea, owned by Unilever, hosted a one- Startup Dirty Lemon, which sells detox drinks,
day pop-up in Manhattan this summer in recently opened a pop-up shop in Soho, in
partnership with Bobby Flay. Manhattan.

64
Startups meet consumers where they are

In the office in Ubers and at home.

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