Leaving a food-print

"ANYTHING you can do, I can do better. I can do anything better than you." This famous tune from the 1940s Broadway show Annie Get your Gun springs to mind as Nick Halla, Silicon-Valley-based Impossible Foods Inc's senior vice-president for international, expounds on the plant-based "beef" maker's ethos - or as he puts it, "North Star". "The goal is to create better products than anything animals ever could do. Our research and platform are really designed to do anything animals can do for food, (which) we intend to do better - and to completely replace animals in the food system," says Mr Halla, the company's first employee, who ironically grew up on a family-run meat and dairy farm in Minnesota, midwest America.

The shakedown of a global US$1.7 trillion meat industry has yet to happen in a meaningful way but consumers are increasingly lapping up animal-free meat products, both for health and environmental reasons. That phenomenon has turned into a sweet spot for disruptors and impact investors, with UBS investment bank forecasting that the mock meat market is set to grow from under US$5 billion in 2018 to a mouth-watering US$85 billion by 2030.

No wonder then that Singapore's Temasek Holdings - one of the world's largest state-owned investment firms - has been chomping away at the agri-food scene and unwittingly found itself in the company of red-carpet investors such as Serena Williams, Jay-Z, Katy Perry and Leonardo DiCaprio, to name a few.

Says Temasek's managing director of agribusiness, Anuj Maheshwari: "The protein industry globally is growing at 2-3 per cent every year, driven largely by a developing market. Any solution (alternative proteins) that targets that will have a very big addressable market. So we feel very good about that. We also feel that the solutions coming out of there will eventually achieve parity and will be cheaper than animal-based proteins. That is something that we want to keep on putting more capital behind."

Nothing is impossible

Temasek has thrown its heft behind Impossible Foods, an eight-year-old Redwood City foodtech firm that has raised US$750 million through five investment rounds.

Having counted luminary Bill Gates and Google Ventures as early backers, Impossible Foods first rolled out its record-selling succulent and pink-coloured burger patties in New York three years ago. A year later, 400 eateries had its flagship product on the menu and this year, that number has grown to 17,000 restaurants (and counting) mostly across the United States and including some 500 outlets in Singapore, Hong Kong and Macau.

"That's pretty fast scale, but we still have a long way to go to really have an impact on the food system. We are really just getting started with beef," Mr Halla contends. The company is also working on plant-based pork with mega China on its mind. He adds: "We don't have any time estimates for our next market that we are sharing right now but I will say for China, it's right at the top of the list. It consumes 28 per cent of the world's meat."

The meatless maker, which only last month made its retail debut in upscale grocery stores in Los Angeles and New York, owes its early success to having courted famous chefs such as American restaurateur and TV personality David Chang of Momofuku. After the first bite, the food influencers stomped to social media with ringing endorsements. "They went directly to the opinion makers and consumers who are actually more experimental than the supply chain. So, it was a pull-driven thing and worked well for Impossible," says Temasek's Mr Anuj.

"What we are learning here is that you can't depend on the product chain. Some of the big companies will not want to take the risk. You need to go to consumers with a story that can sell and connects. Only then, the supply chain will reform itself," he adds.

Growing appetite

In the last five years, Temasek has forked out over US$5 billion in the agri-food sector alone, about one third of which involve "early-stage investments". It's a small chunk for an investment firm with a S$313 billion total portfolio but it's growing.

One of the early moves by the investment company unfolded in 2014 with Ceva Sante Animale. Headquartered in Libourne, France, Ceva is one of the world's largest animal health companies and a leader in animal vaccine; in 2017, it made revenues of US$1.2 billion. (Established businesses such as Ceva, Belgian malt producer Boortmalt and German life sciences company Bayer Ag, to name a few, make up another third of Temasek's investment in the agri-food space).

"Ceva was an eye-opener on how technology can make a big difference in our food production system. This is what led us to embark on this journey," Mr Anuj recounts, referring specifically to Ceva's "elegant solution" to protect poultry through innovative hatchery vaccination services.

"There are many hidden parts in our food system. That's exactly why it needs to change and be more transparent. Vaccines in animals is a simple example - it can avoid the need for antibiotics, be it in the chicken from Malaysia or shrimp from Vietnam," explains Mr Anuj. Temasek, he adds, is investing in better solutions with each investment driven by three lenses - productivity, sustainability and commercial.

It also invests in funds and accelerators such as the New Protein Fund which was set up by Big Idea Ventures, a Singapore and New York-based venture capital firm that focuses on plant-based products and new protein alternatives. The Fund's first investment was Shiok Meats, a Singapore-based startup that is developing lab-grown seafood and meat.

Fill the plate

Another one of Temasek's early bets was Pivot Bio - a California-based biotech startup that is developing nitrogen-producing microbes from a crop's own roots as an alternative to chemical nitrogen fertiliser. Temasek participated in the US agriculture firm's US$70 million Series B funding round last year which was led by Breakthrough Energy Ventures - a US$1-billion fund created by a group of billionaires including Mr Gates, Jeff Bezos and Jack Ma.

The startup's appeal to Temasek was clear. Pivot Bio found a way to supply a clean alternative to synthetic nitrogen for crops, starting with corn, which would reduce fertiliser-linked pollution.

"This is discovery... not invention. This organism was already existing and we tested it through metabolic engineering," says Mr Anuj, adding: "This is the kind of company we want to back. The ones that are reimagining how things can be done."

Temasek director Dheeraj Mehta sits on Pivot Bio's board. Elsewhere, Mr Anuj serves on the board of Ceva while John Vaske, Temasek's North America head, is on the Farmers Business Network - an online farmer-to-farmer marketplace and the largest US farmers' network which, apart from Temasek, counts Google and Kleiner Perkins as investors.

Having Temasek directors on board is more an exception than the rule given the investor's long-standing governance model of leaving the operating or business decisions to the boards and management teams of its portfolio firms. Where it holds seats in the corporate boards could indicate Temasek's potential contribution to the companies given its girth in network and expertise.

Temasek is also invested in Perfect Day Foods, an agri-tech startup based in California that makes animal-free dairy milk by employing the science behind fermentation. Companies such as these have brought the sexy back to the global food market and are a hit among investors as their business is defensible (rivals cannot replicate the technology). Plus, they have a "bigger environmental story attached to them", which gels nicely with Temasek's investing playbook.

More heft than deep pockets

"Where we want to be seen as a different kind of investor is by bringing this ecosystem (of portfolio companies) for companies to work together and learn from each other," notes Mr Anuj.

For example, back when Ceva was looking to break into the tough Indian market, another one of Temasek's portfolio companies, a diversified Mumbai-based agri-firm Godrej Agrovet, was rethinking its investment in an Indian veterinary firm that it had acquired many years back.

Long story short, through Temasek's connections, the firm Polchem (which specialised in the avian and dairy sectors) would prove to be a better fit for Ceva which then acquired it from Godrej in 2016.

Temasek is also able to help businesses navigate the challenging Asian market. "Asia is complex. China is different from South-east Asia that's different from Japan and so forth. Each market is different and has its own nuances and regulatory set-ups," points out Mr Anuj.

Singapore's status as Asia's gateway adds to what Temasek can bring to the table for its portfolio companies. Sweetening the proposition further is the city-state's strides in the agri-food space that is being led by its "30 by 30" goal - for Singapore to provide 30 per cent of its nutritional needs by 2030 versus currently where it imports more than 90 per cent to meet food demand.

From indoor vertical farms to the world's first-of-its-kind floating fish farms, Singapore is embracing technology and innovation to grow more food sans sizeable land and labour.

Homegrown Sustenir Agriculture, which Temasek has ploughed capital into, is one such company that has been able to produce quality vegetables and fruits indoors through LED lighting and advanced controlled environment technologies.

"The local ecosystem and vibrant food scene makes Singapore a promising place for early-stage agri-food companies to set up operations here," says Mr Anuj.

Temasek is in conversations with companies looking to expand to Singapore, he lets on. One already has - earlier this year, Impossible Foods set up base in Singapore with a local office and launched its new Impossible 2.0 product in the market. Since its first international debut in Hong Kong in April 2018, followed by Macau shortly after and Singapore in March this year, Impossible Foods has seen a six-fold jump in sales to date in the region, according to Mr Halla.

"What I love about coming here (Asia) is that there are so many different dishes, cuisines and creativity out here versus just burgers in the US. With raw ground 'meat', they (chefs in Asia) can do whatever they want and it's fun to see," he adds.

The Olam way

SINGAPORE-HEADQUARTERED Olam International, which made revenues of S$30 billion in 2018, is by far the biggest slab in Temasek's agri-food portfolio.

Listed on the Singapore Exchange and majority-owned by Temasek, Olam operates in 60 countries across North and South America, Africa, Europe, Australia and Asia and produces nearly 50 crops ranging from cocoa, cashews, almonds, tomatoes, herbs, turmeric to rice, dairy and animal feed.

It boasts a sourcing network of over 4.8 million small-scale farmers - a "big deal" but still only a fraction of the farming community across the world, says Olam's executive director and chief operating officer, A Shekhar.

The agri-food giant continues to work tirelessly to connect the first and last miles of the fragmented supply chain and has sustainability at the front and centre of its operations.

"It is really about how we can together catalyse the small-scale farmers to become more profitable, viable and environmentally sustainable. That's the first challenge. And, on the last mile, how do we ensure that we can deliver on the promise to consumers demanding more from us," says Mr Shekhar.

With one-third of all food produced lost or wasted and a global population that is set to increase from 7.7 billion to nearly 10 billion by 2050, pushing food demand up, that's an arduous task.

Olam has been absent from the agri-tech venture capital scene, preferring instead to build its own in-house technology in its efforts to produce the right kind of food using fewer resources in terms of land, water, farm inputs and waste elimination to meet the rapidly growing food demand.

One of its initiatives is OFIS or Olam Farmer Information System, a platform that collects data from farmers that is used to provide personalised farm management plans such as fertiliser usage, farm rehabilitiation and transparent pricing to better their bankability.

So far, some 250,000 farmers from over 20 countries have signed on and the aim is to have half a million farmers by next year on the platform.

"People think it's just a bunch of words but that's what our tagline 'Re-imagine Global Agriculture and Food Systems' means to us," explains Mr Shekhar.

Chew on this

Ever-changing consumer behaviour has galvanised the sector with food "traceability" becoming the bible for food producers alongside the growth of the middle class, particularly in Asia.

That's only going to get more pronounced with 65 per cent of the world's middle-class residing in Asia by 2030, according to The Asia Food Challenge Report that was launched by PwC, Rabobank and Temasek last month.

Throwing down another challenge across the food chain is the low trust level among Asian consumers over the quality and safety of domestic agricultural produce.

Temasek's managing director of agribusiness Anuj Maheshwari emphasises: "The old mindset when we buy food in fancy packagings and not worry about how it was made no longer works." For example, following food safety issues in China from fake rice to canned luncheon meat to the global horsemeat scandal, some supermarkets there have launched blockchain platforms that allow consumers to scan QR codes on product packaging that include details on the source farm, journey along the supply chain and information on product inspections.

"This whole trend of consumers demanding more traceability and transparency on the nature of how we source, supply and reach consumers and how we deliver on the promise is a challenge. That pressure is not going away," Mr Shekhar points out.

He cites the example of chocolates. "The fact that it comes from cocoa, which involves no child labour nor deforestation is a big deal today. So, we need to link up the supply chain from the first to last mile."

With that in mind, in April 2018, Olam launched the groundbreaking "AtSource" - a digital B2B dashboard that provides instant access "from field to factory gate", be it inputs from its cocoa farms in Ghana and Côte d'Ivoire, coffee plantations in Brazil and Vietnam, or onion and garlic growers in California.

"It is really a customer engagement tool where they can pick and choose which of the many indicators are relevant to them and be able to provide the back-end traceability to them," adds Mr Shekhar.