There are now around 4.6 billion people in Asia, roughly 60% of the world's population. The region is also seeing the fastest population growth. This coincides with Asia being the fastest-growing region for wealth. Over the next five years, the number of ultra-high-net-worth individuals (UHNWIs) in the region is expected to grow by about 38%.
Unfortunately, this dizzying pace of growth is threatening the region’s limited resources, with natural habitats and valuable agricultural land being destroyed to accommodate the rapid urban development. As its population and economies expand, Asia is also experiencing a substantial growth in food demand.
For Yuko Takano, these developments offer a unique opportunity for investors. Takano is a member of the equity opportunities team and portfolio manager for sustainable global equity strategies at Newton, a BNY Mellon Investment Management firm.
Her firm’s future food strategy fund seeks to achieve long-term capital growth by investing in companies that will benefit from the heightened demand for food, and those that are instituting agricultural and technological innovation across the global food supply chain.
“Asia is very important to us,” Takano tells The Asset. “Although we may invest either directly, in Asian companies, or indirectly, through some of the global food manufacturers and suppliers.”
Over the next five years, she expects consumers to increase their consumption of plant-based foods globally, and Asia is no exception.
“Since the pandemic, consumers are increasingly focused on their health and consumption of natural or organic products. Our investments in flavouring and ingredients companies are a great opportunity to access this multi-year growth,” she says.
Precision agriculture
Among her fund’s sub-themes, precision agriculture plays a prominent part. “We feel that agriculture is an area where there is tremendous benefit from technological innovation. For example, we are invested in an optical sensor company that assesses a crop’s growth and distributes the right amount of fertilizer.”
However, with many of Asia’s farmers migrating to the cities, there is a danger that technological improvements and innovative disruption in agriculture will lead to increased unemployment in rural areas, especially for those left behind who rely on the sector to make a living.
Not necessarily, Takano says. “Many of these rural areas find lack of labour to be a huge issue, as the younger population migrates to urban areas, so [technological innovation] could actually aid their productivity.”
Asked if she can ever see a point in time where food demand will outstrip supply in Asia, Takano says, “Possibly, as the population grows, but I am not an expert in this area.”
In view of the pandemic, with travel restrictions and social distancing rules in place, Takano is conducting much of the due diligence for prospective companies through online channels.
“We must supplement [face-to-face] meetings with remote calls, but we feel we can get a lot out of those meetings. We have also conducted many calls and analyses with experts in the field, and online and – surprisingly – YouTube… It is a great source for finding out more about, for example, how a food manufacturer’s production process works, or how salmon fishing is done in reality. There are many ways to conduct research, and as a fund manager, we always need to seek out different sources of information.”
Also tapping into the theme of increased consumption of plant-based foods in Asia is Good Startup, a venture capital firm licensed by the Monetary Authority of Singapore, with a mission to remove animals from the global food ecosystem.
Alternative protein
Led by a team of impact investment experts, the firm manages Good Protein Fund I (Fund1), which invests in alternative protein companies seeking to create a sustainable future by using biotechnology to solve food challenges, with minimal environmental impact.
Earlier this month the firm raised US$25 million following the first close of Fund1. The first close was made up of individual investors and family offices including notable investors Anil Thadani (chairman of Symphony Asia Holdings), Tan Kim Seng (chairman of Kim Seng Holdings) and a consortium of senior partners from one of the big three premium consulting firms who invested in their individual capacity as angel investors.
The venture-capital firm believes that sustainable innovation must happen in the global food ecosystem not only to feed the world’s estimated 10 billion population by 2050, which coincides with a 70% increase in protein demand, but to also use processes that have less impact on the environment.
Gautam Godhwani, managing partner at Good Startup, says animal food production contributes more to global warming than transportation and is the leading cause of deforestation, ocean dead zones and species extinction. The reliance on animals for food has also raised human exposure to zoonotic diseases, viruses that can jump from animals to humans.
Commenting on their investment theme, Godhwani says: “For years, food ecosystem stakeholders had to balance the need to meet food security needs while also balancing the toll that animal food production takes on our world. Yet, the growing role of the biotechnology sector in producing alternative proteins can give us the same food we enjoy with less impact on our environment. This can only be achieved by supporting biotech food companies to scale globally, especially in markets that still depend heavily on meat.”
His firm will use the capital raised to invest in a total of 32 companies. To date Good Startup has invested in a variety of alternative protein startups around the world which include Eat Just, Rebellyous Foods, Avant Meats, Turtletree Labs, Cultured Decadence, and Novel Farms.
