Innovative Trends That Will Shape Food and Beverage Space in 2022

We speak with Ross Iverson, co-founder and CIO of Manna Tree, about how the food and beverage space is evolving in response to the pandemic times, and innovative trends that investors should keep an eye on for 2022.  
 
Can you tell us a bit about the company’s philosophy? 
 
Me and my founding partners, Gabrielle Rubenstein and Brent Drever, believe that improvements in health, well-being and longevity are attainable through innovation in food and nutrition. Bringing together our complementary skills and experience with a shared passion for this strategy, we created Manna Tree to invest in companies that are at the convergence of secular trends accelerating the transformation of the food sector. Manna Tree identifies and invests in category leaders in food production and consumer products that are winning in this transformation. In addition to focusing on delivering private equity level returns, our philosophy is to partner with founders of companies we invest in and that align with our mission because we view the world through same lens as company founders.
 
What were some of the biggest food and beverage innovation trends in 2021?
 
We’re at the early stages of this food innovation cycle. In 2021, big food companies started to realize that their product portfolios needed to shift to provide better ingredient quality. We have seen companies make upgrades to ingredient integrity, traceability and take into consideration animal welfare -- anything to validate that the product will help rather than do damage. 
 
We’re seeing gut health, brain health, reduced or alternative sugars and increased fiber as some of the many trends in the beverage, health and wellness industries. More industry players are taking natural plants and ingredients and sneaking these healthier calories into foods that are regularly consumed. Technology enablement had already started to innovate the supply chain in 2021 and will continue to do so over the next decade, which will provide an efficient way of getting these healthy calories onto the plates of consumers.
 

In 2022, what trends and issues do you think will impact or shape the food and beverage space?  
 
Consumer concerns related to the environment and the desire for novel ingredients with natural additives are transforming how people look at food and how they’re connecting with the brands they consume. To address this, companies have been adapting with products such as natural additives and plant-based foods. We continue to see meat alternatives at record numbers, but the sell-through data is still too early to determine which categories will prove most popular. As consumers demand healthier choices, companies have leaned on ingredient technologies to improve processed foods by reducing sugar and increasing fiber. This is in addition to several other functional ingredients and products that are starting to flood the market. 
 
Is there a specific trend in the food and beverage space that you think investors should especially keep an eye on? 
 
Investors should be mindful of the human-health aspect and that consumers recognize what is both improving their health and making them sick. We believe that the next decade will be pivotal for how consumers will connect to and rely on brands. Investors are becoming more aware of adoption cycles of new innovations in food and supply, and we expect this to continue to be a key in the market in 2022 and beyond. Investors should keep in mind that just because a product can solve a health issue doesn’t mean the consumer is ready to adopt at scale. Being aware of timing and product or ingredient education would help navigate what is considered a worthy investment.  
 
One investment trend has been indoor agriculture, and with a record amount of capital raised in 2021, we think it’s important to highlight how practical this conversion will be for a supply chain and investments moving forward. We are seeing that some investors are getting clearer on ESG / social impact mandates.
 
As the world continues to grapple with the pandemic, how do you see the food and beverage space changing or evolving in response to the pandemic times? 
 
During the pandemic, data showed 88% of Americans were metabolically unhealthy. This data began to create movement in society around the pending danger of obesity and diabetes. In fact, nearly 85% of COVID hospitalizations were linked to poor metabolic health. This has sparked a consumer desire for natural ingredients that assist in healthier diet such as reducing sugar content and increasing fiber. The link between gut and brain health will further propel consumers to switch to brands and products that are transparent about their use of natural ingredients. One example is that beverage companies are finding ways to support gut health at an increasing rate, and traditional foods, like cultured dairy and fermented products, are becoming a larger part of consumer awareness. 

This interview originally appeared in our TradeTalks newsletter. Sign up here to access exclusive market analysis by a new industry expert each week. We also spotlight must-see TradeTalks videos from the past week.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Technology Investing Stocks