CB Insight

DINING ON DISRUPTION
The startups and investors reshaping the food and beverage market.
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ABOUT THE PRESENTER
Zoe Leavitt
Tech industry analyst & writer, CB Insights
Zoe Leavitt graduated from Stanford with a focus on Chinese and
journalism. She previously worked with the Bank of Chinas
consumer finance business in Shanghai, and in equity research in
NYC. She currently covers CPG and food tech for CB Insights, and
her work is frequently cited in the WSJ, Bloomberg, NYTimes, and
@zoe_leavitt
other outlets.
zleavitt@cbinsights.com
TABLE OF CONTENTS
8 Funding overview
23 Protein innovation: plant protein, insect protein, and more
39 Seeking superfoods: new inputs with beneficial properties
49 New convenient cooking models
54 Corporate activity and M&A
61 Looking forward: distribution trends to watch
UPHEAVAL: NEW PLAYERS BEAT BIG FOOD
In 2016, Chobani knocked out General Mills Yoplait to become the top US yogurt brand,
with $2B in annual sales. Chobani raised $750M in debt from TPG Capital in 2014.
MARKET SHARE SHIFTS ACROSS SEGMENTS
Source: PwC www.cbinsights.com 9

CORPORATES SCRAMBLE TO COMPETE
KELLOGG LAUNCHES VC FUND TO
INVEST IN FOOD STARTUPS
June 20, 2016
Sources: Fortune, WSJ, Financial Times, Marketing Week, WSJ www.cbinsights.com 10

BIG FOOD HOPES TO JUMP ON HEALTH TRENDS
Source: Fortune www.cbinsights.com 11

AS FOOD M&A INCREASES, COMPETITION
HEATS UP
These companies are getting
pricier [so Big Food] companies
will need to start looking at
potential targets at an earlier
stage in their life cycle.
Nicholas Fereday
Executive Director, Rabobank
Source: WSJ www.cbinsights.com 12

Global food & beverage funding since 2012:
$5.9 BILLION
across
1,300 DEALS
Does not include alcoholic beverages www.cbinsights.com 13
FUNDING OVERVIEW
Amid big funding numbers, what are investors prioritizing?
FOOD & BEVERAGE GLOBAL ANNUAL FINANCING FOOD & BEVERAGE
HISTORY STARTS 2017 OFF
2012 2017 YTD (3/20/17) 338 STRONG
333
(Full-Year Projection) Deals to food & beverage
290
companies grew every
245
year 2012-2016, despite
$2,240
(Full-Year Projection) a funding drop 2014-
204 2016.
154 If deal count and funding

continue at their current
rate through 2017, were
72 on track to see a record
high in funding and
roughly stable deal
$452 $574 $1,862 $1,604 $919 $485 count.
2012 2013 2014 2015 2016 2017 YTD
(3/20/17)
Disclosed Funding ($M) Deals
FOOD & BEVERAGE GLOBAL QUARTERLY FINANCING AND QUARTERLY
HISTORY NUMBERS TRENDING
91
Q112 Q117 UPWARD OVER TIME
84
82 81
78 77 Funding spiked in Q414
70 71 72 and Q415, both times
65 64 boosted by major private
58 equity rounds by
53 57
52 51 Canadian dairy
48
43 conglomerate Agropur.
40
34 32
$56
$112
$185
$124
$232
$126
$267
$414
$394
$787
$163
$210
$458
$773
$164
$169
$322
$265
$485
$99
$91
Q1'12 Q1'13 Q1'14 Q1'15 Q1'16 Q1'17 (thru 3/20)

FOOD & BEVERAGE DEALS BY PRODUCT CATEGORY VARIETY OF DEALS
2013-2017 YTD (3/13/17) ACROSS CATEGORIES
Since 2013, startups

offering condiments &
spices have attracted the
most deals, with
prominent startups such
as Sir Kensingtons
emphasizing health &
sustainability in the
category.
Enhanced waters lead

the beverage category,
with startups selling
bottled water, flavored
water, maple water, etc.
Does not include alcoholic beverages www.cbinsights.com 17

FOOD & BEVERAGE: MOST WELL FUNDED VC-BACKED STARTUPS
RANK COMPANY
DISCLOSED
SELECT INVESTORS RANK COMPANY
DISCLOSED
SELECT INVESTORS
ACROSS SECTOR, TOP
FUNDING FUNDING
STARTUPS FOCUS ON
Coca-Cola,
Boulder Brands Google Ventures,
BEVERAGES
1 $196M Investment 6 $115M Index Ventures,
Group, Leonardo True Ventures More than half of the
DiCaprio
most highly-funded
Bill Gates, Khosla
Ventures, Google
Campbell Soup, startups focus on drinks.
Google Ventures,
2 $183M Ventures, 7 $100M
Kleiner Perkins
Horizons
Ventures
Caufield & Byers Two Impossible Foods
NewSchools and Hampton Creek
3 $146M
Venture Fund,
Revolution, 8 $92M
Oak Investment
Partners, RRE
aim to replace animal
Catamount Ventures protein with plant protein.
Ventures
Greenmont Google Ventures and

Nestle, Lurie
4 $124M
Investment Fund
9 $56M Capital Partners,
Stonyfield Farm
Khosla Ventures each
invested in three of the
Bill Gates, Khosla
Ventures, Dr Pepper top startups.
5 $120M Horizons 10 $55M Snapple Group,
Ventures, Kobe Bryant
Founders Fund
MARKET MAP: THE FUTURE OF THE GROCERY STORE THESE STARTUPS
HAVE RAISED ROUGHLY
$2B IN FUNDING
FOOD & BEVERAGE DEAL SHARE BY COUNTRY US DOMINATES FOOD
2012-2017 YTD (3/20/17)
STARTUP LANDSCAPE
Over 80% of deals to

2% 1% 7% food & beverage startups
1%
United States 3% since 2012 have gone to
India 5%
US-based startups.
United Kingdom
France
Canada
Other
81%
THE UNITED STATES OF FOOD STARTUPS NY, CA, CO ARE FOOD &
BEVERAGE HOTSPOTS
NY-based All Market,

maker of Vita Coco
coconut water, is the
most well-funded startup
on the map with $208M
(though not VC-backed).
CA ranks second with

Suja Juice, with $196M.
VA places third with

Shenandoah Growers
with $47M, followed by
MN and CO.
WHAT ARE THE LEADING TRENDS IN FOOD &
BEVERAGE PRODUCTS?
xxx www.cbinsights.com 22
Plant protein takes off
Plants are increasingly replacing traditional meat and dairy products.
SMART MONEY VC FOOD & BEVERAGE INVESTMENTS VEGETABLES EARN
1/1/2013-3/1/2017 SMART MONEY FOCUS
The majority of smart

moneys food & beverage
investments is in plant
protein.
Unlike flavor
innovations, plant
protein has the potential
to disrupt the entire meat
and dairy industry.
The CB Insights smart money list is a
data-driven list of the top 24 venture capital
firms, based on past performance and exit
history.
Green lines indicate number of investments into each startup www.cbinsights.com 24

PLANT PROTEIN BRINGS BENEFITS
For the environment and for personal health
Source: Washington Post www.cbinsights.com 25

PLANT PROTEIN: VENTURE-SCALE RETURNS?
Value of the US beef industry:
$105 BILLION
In 2015
Startups that create viable processes for plant protein could scale beyond single-product
verticals to ultimately could serve multiple billion-dollar industries.
Source: US Dept of Agriculture www.cbinsights.com 26

PLANTS CAN REINVENT THE BURGER
Impossible Foods uses molecular engineering to create burgers from plant-based inputs, using
no antibiotics or hormones. Its burgers are currently available at a limited number of restaurants,
and they aim to taste, and even bleed, just like meat burgers. Impossible Foods raised $183M in
disclosed funding from Khosla Ventures, Google Ventures, Bill Gates and others.
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 www.cbinsights.com 28

MEAT LEADER BACKS PLANT PROTEIN
In Tyson Foods first investment through Tyson New Ventures, the meat giant backed plant
protein-based burgers & frozen meat. Beyond Meat is currently sold in Walmart, Target,
Safeway, and other stores.
TYSON PREDICTS PLANT PROTEIN GROWTH
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 www.cbinsights.com 30

Whats next in proteins?
PEAS & CHICKPEAS CAN BE VERSATILE
Banza: the chickpea pasta Biena: the chickpea snack Wink: the pea-based ice cream
Disclosed Funding: $5M Disclosed Funding: $100K Disclosed Funding: Undisclosed
Distribution: Target, Fairway, Distribution: CVS, Stop & Shop, Distribution: Whole Foods,
Wegmans, Whole Foods & more various health stores
PEA PROTEIN RECREATES MILK
Ripple makes pea-based, dairy-free milk. Ripples milk has the same protein as dairy milk
with the sugar, and also has less sugar and more protein than almond milk. Ripple is
gluten-free, dairy-free, and nut-free. It is currently sold at Target, Whole Foods, Safeway, and
other stores, and is backed by Google Ventures, Khosla Ventures and others.
BIG FOOD ATTACKS
PEA PROTEIN
General Mills filed a

patent in 2016 (not yet
approved) for using
chickpeas as a dairy
substitute for non-dairy
milk or ice cream.
Insect protein gains buzz
INSECT PROTEIN MEDIA MENTIONS OVER TIME INSECT PROTEIN GREW
2012-2016 WINGS LAST YEAR
Cricket-based protein bar

startup Exo caused a
news bump in March
2016 with a $4M Series
A.
Sources: Techcrunch, FinSMEs, Agrimoney, Forbes, Entrepreneur, CNN, SVA NYC www.cbinsights.com 36
HOW MANY WAYS TO EAT CRICKETS?
Exo sells paleo, gluten- Chirps Chips sells chips Bitty sells high-protein,
free protein bars. and cookies. grain-free baking flour.
Funding: $5.3M Funding: <$1M Funding: $1.2M
Select Investors: Select Investors: Select Investors: Arielle
AccelFoods, Dentsu MassChallenge Zuckerberg, The Florence
Ventures Group
INVESTORS SEE MASSIVE CRICKET MARKET
[The] total global market expands to

$371B when considering the
applications for crickets and cricket
ingredients in pet food,
nutraceuticals, livestock feed, and
other industrial uses.
Lauren Jupiter
Managing Partner, AccelFoods
Source: Wired www.cbinsights.com 38

Seeking the next superfood
Startups are experimenting with beneficial ingredients such as probiotics to attract
consumers and corporate attention.
SUPERFOOD: THE ENDLESS QUEST
WILL CHICKPEA WATER BE THE NEXT
KALE?
May 6, 2016
Sources: USA Today, Forbes, Fox News, Olive Oil Times www.cbinsights.com 40
MEDIA DISCUSSION OF KALE OVER TIME SUPERFOOD TRENDS
2012-2016 RISE AND FALL
Kale discussion shot up

through 2014, but has
been relatively stable
recently.
Superfood trends can spike and fall www.cbinsights.com 41

COCONUT WATER FUNDING SLOWS
Coca-Cola acquired coconut water brand Zico and major players Vita Coco and
in 2013, and media discussion peaked Coco Libre last raised in 2014.
Funding: $208M Funding: $24.4M

Valuation: $665MM
WHILE TREE WATER GETS ITS START
MEDIA DISCUSSION OF CHIA OVER TIME CHIA DISCUSSION
2012 - 2016 PICKS UP
Startups including The

Chia Company, Health
Warrior, and Chia Viva
contributed to growth in
discussion of chia seeds.
Chia can be used in

foods or drinks, and it
contains protein,
antioxidants, and
calcium.
IS MORINGA HEATING UP?
In Kelloggs first investment through Eighteen94 Capital, they backed Kuli
Kuli, a startup selling drinks and energy bars based on moringa, a plant Kuli
Kuli calls the new superfood.
MEDIA DISCUSSION OF PROBIOTICS OVER TIME PROBIOTICS GROW AS
WIDE-RANGING CPG
TREND
Probiotics are live

bacteria that aid
digestive health, and are
found in yogurt and
fermented foods.
Brands are looking to

probiotics across food,
beverage & beauty.
Most recently, General

Mills invested in
Farmhouse Culture,
which makes probiotic
snacks and drinks.
Sources: FoodDive, Telegraph, Fortune, FoodIngredientsFirst, Forbes www.cbinsights.com 46

PROBIOTIC STARTUPS TACKLE A VARIETY OF AREAS $32M TO PROBIOTICS
IN 2016
Product: Probiotic 2016 saw the first

Product: Product: Probiotic
Kombucha water Indian lassi drink meaningful probiotics
investments, with several
startups raising a total of
$32M, and deals have
continued into 2017.
Product: Probiotic Product: Product: Probiotic
kimchi, kraut, Personalized ice cream In March, 301 Inc, the
chips, and drinks. probiotic kits venture arm of General
Mills, led a $6.5M
investment into
Farmhouse Culture.
Product: Probiotic Product: Probiotic Product: Probiotic
pickles, kimchi and yogurt products skin care products
kraut
SYNTHETIC BIOLOGY ATTACKS INDUSTRIES THE NEXT STEP: CAN
BIOTECH CREATE THE
NEXT SUPERFOOD?
Synthetic biology
companies are designing
synthetic meat and dairy
products, animal-free
gelatin, cloned wine, and
more.
STARTUPS LAUNCH NEXT-GEN PRODUCTS
Perfect Day, formerly Muufri, is Califia Farms makes plant-based Geltor is aiming to create animal- Miraculex is designing a plant-based,
creating animal-free, vegan milk in creamers, bottled coffees, and free gelatin in the lab. calorie-free sugar substitute.
the lab using milk proteins, rather flavored enhanced milk with
than plants. matcha and other ingredients.
MycoTechnology designed an Apeel creates an invisible, tasteless Willow Cup aims to offer plant- Chinova Bioworks aims to create a
organic, mushroom-based protein spray that extends the shelf life and based, dairy-free coffee and tea natural antimicrobial agent that
that reduces bitterness in foods. stress resistance of fresh produce. products, such as a cold-brew latte protects beverages from spoilage
that foams upon shaking. and increases beverage shelf life.
How can we combine convenience & health?
Startups are tackling these two timeless priorities via delivery and subscription options, new
ingredients, and more.
INSTA-FOOD
ATTRACTS INVESTORS
Soylent has raised

$21.5M to sell drinkable
and powdered products
that it says could sustain
humans, replacing other
meals.
Soylent aims to improve

personal health and
reduce the environmental
impact of the food
system.
In 2015 Soylent earned a

$100M valuation.
BIG FOOD SNAPS UP
JERKY STARTUPS
Hershey acquired Krave

Jerky in 2015, followed
by General Mills
acquiring Epic Provisions
in 2016 and ConAgras
acquiring Thanasi Foods
(maker of Dukes meat
snacks) in 2017.
Before its acquisition

Whos next? Krave raised $22M &
reached $35M in annual
sales; the deal was
reportedly $200M-
$300M.
MEAL KIT GLOBAL ANNUAL FINANCING HISTORY 2016 SAW FUNDING
2012 - 2016 DROPOFF
31
31
While deals held steady

in 2016, funding fell
nearly 50%.
Berlin-based meal kit

giant HelloFresh boosted
15
2015 funding by raising
12 two rounds worth $211M
in total, while Blue Apron
raised $135M.
5
HelloFresh also raised
2016s largest round, a
$11 $22 $137 $455 $237
$88M Series G.
2012 2013 2014 2015 2016
BUT NICHE DIETS
MAINTAIN MOMENTUM
Sun Basket raised this

years largest deal to
date, with a $15M Series
C, earning a $41.6M
valuation.
Investors include
Baseline Ventures,
Vulcan Capital,
Correlation Ventures, and
PivotNorth Capital.
Corporate activity
New accelerator programs, recent deals, and M&A activity.
FOOD & BEVERAGE ANNUAL GLOBAL M&A HISTORY NEW M&A RECORD IN
2012-2017 YTD (3/20/17)
2016 AS CORPORATES
SNAP UP STARTUPS
Acquisitions of food and

beverage startups have
grown since 2013.
This year to date, CO-

based Fresca Foods
bought Open Road
Snacks & Front Range
Snacks, MA-based Home
Market Foods bought
Perfect Fuel, and
Sweden-based Cloetta
5 2 5 14 17 4 bought Candyking.
2012 2013 2014 2015 2016 2017 YTD
(3/20/17)
M&A Deal Count
NOTABLE RECENT M&A
DEALS
Purchase valuation: $286M 2016 saw a new high in

food & beverage M&A
activity with 17 deals,
including Hormel Foods
acquiring Justins peanut
butter for $286M,
PepsiCo acquiring KeVita
Purchase valuation: $200M kombucha for $200M,
and Dr. Pepper Snapple
Group acquiring Bai
Brands antioxidant low-
calorie beverages for
$1.7B.
Purchase valuation: $1.7B

CORPORATE PARTICIPATION FOOD & BEVERAGE CORPORATE FOOD
GLOBAL ANNUAL FINANCING HISTORY DEALS LOW, BUT
2012-2017 YTD (3/20/17) 42 GROWING
(Full-Year Projection)
Corporates increasingly
participate in equity
investment deals in the
food & beverage space. If
24 $321 deals continue at their
(Full-Year Projection)
current rate, we should
16 see a record high this
year.
12
9
6
Since mid-2015, several
4 corporates launched new
$20 $16 $158 $251 $235 $69
investment vehicles,
contributing to deal
2012 2013 2014 2015 2016 2017 YTD
(3/20/17) growth.
Chart displays equity investment deals (not including M&A) in which corporations participated www.cbinsights.com 58
SELECT FOOD-FOCUSED INVESTORS ACTIVITY NEW CVCS MEET
2014-3/1/2017 FOOD-FOCUSED
VENTURE FUNDS
As food corporates
launch new funds, many
have co-invested with
food-focused VCs, such
as CAVU Ventures, New
Crop Capital, and S2G
Ventures.
Food-focused VCs have

also been highly active in
their own right since
2014, with several new
funds.

301 INC: INVESTING IN VEGETABLES STRATEGY: GENERAL
Q415-2016 MILLS 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.

ACRE VENTURE PARTNERS: PROCESS OVER PRODUCT STRATEGY: ACRE
Q415-2016 INVESTS IN
DISTRIBUTION
Acre Venture Partners

(affiliated with
Campbells Soup) has
made distribution and
sustainability
investments, including
biology-based
personalized diet startup
Habit & food waste
startups Spoiler Alert and
Back to the Roots.

LOOKING FORWARD: whats next in food &
beverage?
We may see distribution shift away from the store and into the home through personalized
food options, grocery delivery, make-at-home technologies, and on-demand ordering.
THE DEATH OF THE GROCERY STORE?
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
MEAL KITS AS SALES CHANNELS?
QUAKER OATS PARTNERS WITH CHEFD
TO BRING YOU A BREAKFAST MEAL KIT
December 6, 2016
Sources: FoodDive, CNBC, The Daily Meal, FoodDive, Evening Standard www.cbinsights.com 64
CAMPBELL SOUP INVESTS IN HABIT:
DNA-based personalized diet startup
THE FUTURE OF ON-DEMAND DINING?
THE EXPANSION OF MAKE-AT-HOME?
Perhaps the bioreactors will

eventually be simple enough that
everyone will have their own [algae
food producer] at home that makes
food on demand.
Rob Rhinehart
Founder, Soylent
Source: Motherboard www.cbinsights.com 67

@zoe_leavitt
QUESTIONS?
CBINSIGHTS.COM
@cbinsights

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DINING ON DISRUPTION

With CB Insights we can quickly and reliably

See what other customers have to say at http://www.cbinsights.com/customer-love www.cbinsights.com 5

Source: PwC www.cbinsights.com 9

Sources: Fortune, WSJ, Financial Times, Marketing Week, WSJ www.cbinsights.com 10

Source: Fortune www.cbinsights.com 11

Source: WSJ www.cbinsights.com 12

154 If deal count and funding

Q1'12 Q1'13 Q1'14 Q1'15 Q1'16 Q1'17 (thru 3/20)

Disclosed Funding ($M) Deals

Since 2013, startups

Enhanced waters lead

Does not include alcoholic beverages www.cbinsights.com 17

Greenmont Google Ventures and

Over 80% of deals to

NY-based All Market,

CA ranks second with

VA places third with

The majority of smart

The CB Insights smart money list is a

data-driven list of the top 24 venture capital

firms, based on past performance and exit

Green lines indicate number of investments into each startup www.cbinsights.com 24

Source: Washington Post www.cbinsights.com 25

Source: US Dept of Agriculture www.cbinsights.com 26

Source: Quartz www.cbinsights.com 28

Plant-based protein is growing

Source: Quartz www.cbinsights.com 30

Disclosed Funding: $5M Disclosed Funding: $100K Disclosed Funding: Undisclosed

General Mills filed a

Cricket-based protein bar

[The] total global market expands to

Source: Wired www.cbinsights.com 38

Kale discussion shot up

Superfood trends can spike and fall www.cbinsights.com 41

Funding: $208M Funding: $24.4M

Startups including The

Chia can be used in

Probiotics are live

Brands are looking to

Most recently, General

Sources: FoodDive, Telegraph, Fortune, FoodIngredientsFirst, Forbes www.cbinsights.com 46

Product: Probiotic 2016 saw the first

Soylent has raised

Soylent aims to improve

In 2015 Soylent earned a

Hershey acquired Krave

Before its acquisition

While deals held steady

Berlin-based meal kit

Sun Basket raised this

Acquisitions of food and

This year to date, CO-

Purchase valuation: $286M 2016 saw a new high in

Purchase valuation: $1.7B

Food-focused VCs have

Green lines indicate number of investments into each startup www.cbinsights.com 59

301 Inc. (of General

Green lines indicate number of investments into each startup www.cbinsights.com 60

Acre Venture Partners

Green lines indicate number of investments into each startup www.cbinsights.com 61

On-Demand Delivery Subscription Services

Automated Ordering &