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New value chains from the world of food & beverage

To improve competitiveness within a key Made in Italy industry, it’s necessary to invest in new proposals that can enhance tradition by means of technology.

Let's begin from Context

According to the 2020 edition of the Istat Report on the competitiveness of production sectors, the agricultural food chain represents 4.1% of the Italian economy in terms of added value, being among the pillars upon which to focus for the country’s economic revival. And as is well known, innovation remains a key dimension in transversally boosting competitiveness within all economic sectors.

However, the penetration level of innovation into the Italian agrifood sector presents significant differences. As the food world struggles to improve competitiveness through its focus upon integrating innovation, the world of beverage, holding steadfastly to tradition and mainly thanks to the e-commerce push, manages it much better. Here two platforms, Tannico and Vino75, serve as examples - each allowing even small producers to sell directly to final consumers without going through large-scale distribution.

So why’s it difficult for young startups to find space for growth in food?

There are many players in food today, most of which focus on logistics and distribution, these being at the end of the value chain. Here, with land presided over by such titans within the industry as Glovo and Deliveroo, it’s not easy to emerge. Here’s why startups need to go beyond delivery and e-commerce services to ensure less hassles in scouting for a competitive advantage – as did Soplaya, the marketplace that connects small food artisans with niche restauranteurs.

As Italia Venture I Fund partner Laura Scaramella of CDP Venture Capital explains: “Being digital and a copycat of grand success stories will no longer suffice now. The interesting startups are those which can redefine value chains and create new business models they then render efficient as new economies of scope or scale that often disintermediate the traditional players." 

Within this context, Cortilia is an interesting example of a value proposition, having forged direct connections between small producers and consumers. Also, with the aid of digital technology, it has created a value chain that’s different and optimized.

So there are interesting prospects

With its funds, CDP Venture Capital is investing in companies that view the final part of the food value chain innovatively.

But for startups it’s not always necessary to replace traditional industry to find room for growth. Another important innovation lever is that of integrating the physical with the digital. That’s because if it be true that e-commerce has also established itself in the grocery sector and that 59% of purchase decisions occur online then it’s equally true that about 90% of purchases still take place via traditional physical channels. And it’s most likely to remain so for many years to come. "So it’s important we work on building an evolved, omnichannel experience for consumers that’s fluid and free of causal interruption between connected devices and physical stores," suggests Laura Scaramella.

DoveConveni, a company within the Italia Venture I Fund portfolio, has interpreted this trend with originality. Besides having digitized flyers advertising available discounts in stores, geolocated for users, DoveConveni continues to improve its value proposition to consumers by creating solutions aimed at improving the online shopping preparation experience in physical stores. An example is the “DoveFila” service, which alerts users to where shops are less crowded in response to social distancing needs of the Covid-19 emergency. And not only. DoveConveni offers its customers, namely physical stores and brands, a possibility to significantly improve the efficiency of launched trade marketing campaigns - all thanks to very precise profiling of those end users to be reached as well as software solutions that give real-time campaign performance visibility in terms of footfall conversion in physical stores.

What about the next wave of disruption?

So far we’ve mainly focused on improving prospects at the end of the industry value chain. Yet once we broaden our gaze, the potential for disruption emerges.

“We must intervene throughout the entire value chain, starting from primary production and transformation,” asserts Laura Scaramella, “because it’s precisely in the first two phases of the chain that high-potential situations can yield to new solutions.”

From precision agriculture to alternatives to meat, space still remains in abundance for startups that choose to focus upon research as differentiating factor for growth, ever carried along by such transversal megatrends as health & wellness and sustainability.

For such as these, CDP Venture Capital supports innovation at every stage of their development, "providing capital, skills and networks," with the aim of stimulating the ecosystem in all its parts. "By accelerating the growth curve of really innovative startups, it becomes truly possible to render innovation of the entire value chain more effective and accelerated such that,” says Laura Scaramella, “ultimately, a supply chain as important as the agrifood sector has impact upon the real economy of the country.”

But what, then, is the role of deep tech?

In sum, over the next few years we will see a change in the way food and beverages are produced and processed. As such, advanced technologies like artificial intelligence or AR / VR, to name but a few, are set to enter the food & beverage sector.

It’s precisely to support the most sophisticated tech-driven propositions, applicable to all economic sectors of the country, that CDP Venture Capital has made three new funds available: one already launched and two in the process of being activated.

The first is the Tech Transfer Fund, dedicated to technology transfer through selective co-investment in promising groups and investment in specialized vertical funds. And here’s how skills, patents and intellectual property can land within the startup ecosystem.

The second is the Accelerators Fund, which aims to support the creation and / or development of vertical acceleration programs within strategic sectors by investing in startups that participate in the programs supported by the fund.

The third is the Corporate Venture Capital Fund, which aims to involve certain leading Italian businesses. It will invest directly in some industrial sectors that are key to the country with the primary objective of becoming an important tool to supporting innovation for Italian companies. This is now a necessary condition for maintaining competitiveness, paying attention to aligning the strategic objectives of corporate innovation with those of startup growth - often facilitated by the ability of founding teams to forge commercial and product development partnerships with corporates.

The ecosystem supporting innovation in Italy