Less Innovations, More Tech: M&A Insights of the Food Industry in 2020

Elena Vardanian
08.04.2021
5 min read

After-effects of Covid-19 at the end of 2019 lowered foodtech exit expectations for 2020, but overall it was a good year for digital platforms, including online food delivery, eGrocery, and direct-to-consumer prepared meals. Half of the deals in Food and Farm Tech were represented by US-based acquisitions, similar to 2019, followed by Europe, and Asia-Pacific. Farm Tech saw consolidation among biological companies in 2020. 

Foodtech prominent players

According to AgFunder AgriFoodTech Investment Report, the Innovative Foods category — which includes novel ingredients, alternative proteins, and other general food product companies — wasn’t on fire last year and deals tended to be relatively small and raised over $383 million in 2020. There was more capital-raising activity than exits in most subsectors (1). Several M&A exits were consolidated at Restaurant Marketplaces and food delivery subsectors.

DoorDash
DoorDash at the end of last year had a fateful moment hitting a $400 million IPO, with $102 at opening and $189.51 at closing (2). While the stock market had it’s us-and-downs, price was around $215 in February 2021 and we hope it will regrow again. That can be a positive signal that this year investors are ready to put foodtech on their map.
Just Eat, Takeaway.com, Grunhub
At the beginning of 2020, Denmark’s Just Eat merged with the Netherlands’ Takeaway.com in a deal worth $8.3 billion. In June the combined entity, Just Eat Takeaway, was ready to acquire Grubhub for $7.3 billion (3). The acquisition is not just a big piece of M&A pie on the food delivery plate. It also can be a major competitive move in return for trying Uber Eats to acquire the U.S. company.
Uber, Postmates, Cornershop, DrizlyWhile Uber's essential ride-hailing business has suffered during the pandemic, the company has seen demand for its food-related services. Uber kept building its food delivery empire through the acquisitions of Postmates for $2.65 billion and Cornershop for $459 million. This year Uber had started by gulping down drinks deliverer Drizly in a $1.1 billion deal. Drizly’s online marketplace will be integrated into Uber’s food delivery platform, Uber Eats.
Other large M&As Globally, Deliveroo IPO in the UK and the Woowa Brother sold to Delivery Hero (Germany) for $4.6 billion in South Korea. Beyond these digital food delivery platforms, there were other select large M&A, including Utz Quality Foods’ sale to Collier Creek Holdings for $1.56 billion and Pepsico‘s purchase of US beverage maker Rockstar Energy for $3.85 billion (1).

The cream of the сrop 

Despite the pandemic and slowing adoption of agtech, it was a seed year for Farm Tech M&A. AgFunder’s Report tracked 37 completed deals in 2020, comprising agronomic data and analytics, farm operations and profitability management, irrigation control (Valmont and CropX), and biologicals.

Non-AgriFood companies are coming into the fold such as canadian telecom giant Telus that’s purchasing several agtech companies for a new business unit. Here are the companies that it has acquired to date (4):

  • AFS Technologies (US) – Supply chain management platform (previously acquired Exceedra and Ignition)
  • AGIntegrated (US) – API integration
  • Agrian – (US) – Management platform for precision ag, agronomy, analytics, and compliance
  • Decisive Farming (Canada) – Precision agronomy and farm management expertise
  • Farm At Hand (Canada) – Farm management software
  • Muddy Boots (UK) – Farm-to-food traceability and supply chain management
  • TKXS (US) – Custom data and program management

The Bottom Line

On a short term horizon AgFunder’s experts are looking forward to “see a shift in foodtech exits to include a higher percentage of companies in the Innovative Food and Midstream Technologies categories, as well as ‘better-for-you’ brands”. Food manufacturers will have sufficient amounts of cash after 2020 together with divestitures of old brands may lead to a highly acquisitive 2021 and 2022. Thus, in experts’ opinion two opposite valuation strategies happen to be. Some companies will dedicate to acquisitions that promise future growth while others will increasingly focus on demonstrated profitability. They expect to see a bit of both this year. 

AgFunder’s experts suggest that consolidation in 2021 will be driven by resource efficiency tech and profitability optimization. They expect that carbon platforms and digital measurement, monitoring, and marketplaces to support this sector, will be more efficiently acquired than built. Data collection, analytics, and management players will continue consolidating niche products and services into complete, robust solutions through a single user interface.