"We need to close the gap to the mass market".

Investor Peter Schmetz of Vorwerk Ventures predicts a great future for startups that produce alternative foods. But a few major hurdles remain.

Whether insects, plant-based products, or a burger patty grown from a stem cell: In the coming years, there should be more and more novel foods on supermarket shelves - and Peter Schmetz, investment manager at Vorwerk Ventures, is right in the middle of it. In an interview, he explains why startups developing new foods are likely to take off soon and whether young companies in Germany can even compete with U.S. companies in this regard.

Mr. Schmetz, you want to focus more on foodtechs at Vorwerk Ventures. What gave you that idea?

The food sector as a whole has always been an important topic for us as an investor in consumer tech. The field is huge, from Flaschenpost and Hellofresh, in which we invested, to our investments in the company Alpakas, which delivers unpackaged food, we have invested in various food distribution models. Then, in early 2020, we took a more concrete look at what alternative food products will be out there and how the markets there are likely to develop.

You then probably quickly came across startups developing alternatives to meat products.

Yes, that's where we first got stuck and looked at a whole range of start-ups. I talked to many founders at the time, and then we worked out our narrower focus. Vorwerk Ventures then invested in Planted Foods in Switzerland, for example. The startup produces meat alternatives such as pulled pork from the protein-rich leftovers of sunflower oil production and chicken meat from pea proteins. Meanwhile, I'm looking at everything that's available in Europe for this.

The burger patty grown from stem cells went around the world back in 2013. Aren't you a little late to the game?

That's what I thought at the beginning of 2020 when we launched it. In the meantime, I rather have the feeling that we were quite early. The area for meat alternatives already seemed pretty saturated to me. But with all the technologies, there's still a lot of room for improvement. Basically, the idea is not just to cater to vegetarians and vegans, but also to reach those who like to eat meat. We need to close the gap to the mass market.

How can startups reach these people as well?

The price point is crucial. We as consumers are used to getting food quite cheaply. If the technologies for meat alternatives, for example, are more mature, then these products can also be offered at a lower price.

Classic meat, however, is sometimes very inexpensive.

The meat market is currently extremely subsidized. With plant-based substitutes, we could perhaps start by competing with organic products, which are somewhat expensive. But the fact that meat is often so cheap is indeed a problem. In order to promote animal welfare and reduce CO2 emissions, meat actually has to become more expensive.

And then, of course, there's the matter of taste.

Yes, customers should not think, "och, was quite nice, but next time I'll take the classic product again." But as the technologies become more sophisticated, the taste will also improve. But it's not about competing with high-quality steak. There will always be animal meat, and that's okay.

Couldn't it put many people off if the food suddenly consisted of completely untypical bases?

Of course, when it comes to meat substitutes, it's harder for consumers to understand how they're made and what's in them. But let's be honest: The meat industry also uses hormones on a massive scale, but hardly anyone thinks about it.

What can and cannot be marketed as food in the EU is strictly regulated. Is that putting the brakes on start-ups?

In order for start-ups to be allowed to market their products in the EU, they have to go through a lengthy novel food process. The review by the responsible EU authority often takes two to three years. That is a long time for a start-up. In the U.S., it's quicker; in Singapore, it only takes about six months. But that also has an advantage for European startups: Startups from the U.S. or Asia can't compete for the European market that quickly. And if they get through the European review process, they can be sure that they will also make it in the U.S. and Asia.

Thank you very much for the interview.

Personal details: Peter Schmetz has been with Vorwerk Ventures since 2018. Before joining the venture capitalist, he worked in the treasury department of the Vorwerk Group in Wuppertal, where he was mainly responsible for foreign currency and liquidity management and also helped manage the Vorwerk Investment Fund.