For the first time in decades, food security is at the top of the political agenda in Europe.
The BBC recently reported that about 20 million tonnes of grain meant for export have been trapped in Ukraine since February, along with other foodstuffs such as maize and sunflower oil. Meanwhile, from Belgium potatoes to Italian rice, many of the continent’s most important food-producing regions have been severely affected by one of the driest European summers on record.
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As Martin Davalos, partner at the Czech investment firm McWin, told PYMNTS in an interview, “We all know the food system is broken” — but thankfully, not to a point where technology cannot help in mending the broken pieces.
As Davalos pointed out, the introduction of new technologies in sectors such as alternative protein, plastic-free packaging and waste management have the potential to transform the food sector, particularly in reeling in the sky-high inflation and mounting food and energy prices across Europe.
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“You see a lot of food service restaurants adopting alternative protein as a core in their menus,” he noted, adding that while many restaurants already offer plant-based burgers, “that’s only the first iteration.” Going forward, his view is that the range of vegan menu items will include a greater variety of meat substitutes.
See also: Alternative Proteins Take New Shapes Amid Growing VC, Consumer Interest
The second trend spans the entire supply chain, from farm to table. As Davalos stated, consumers want to “waste less food and be able to utilize resources much better,” and there are several technologies evolving to solve that need.
Finally, he observed that single-use plastics will “disappear pretty soon in Europe,” and that food packaging is set to be one of the areas most affected by this change.
In the end, what all three trends have in common is their potential to bring about a more sustainable food system across a region that is facing production and supply challenges on multiple fronts, and can hugely benefit from a more efficient, less wasteful food philosophy.
Supporting X-Border Food Brands
According to Davolos, the pressure on the food system “is the same for everyone,” but some brands are adapting more quickly through digitalization and the introduction of supply chain management in their processes.
To help support the digitization of more brands, the private investment firm — which has already made significant investments in food service companies such as U.K. bakery chain Gail’s and German restaurant chain Vapiano — recently announced its third fund: a €525 million ($527 million) restaurant fund in partnership with a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA).
In addition to capital to scale their operations, Davolos said this fund will create a “humongous distribution network” for FoodTech companies in its portfolio, which is set to grow from the current 1,300 restaurants up to 4,000 once deals are closed.
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The latest fund will also target cross-border restaurant groups with a ticket size of at least €100 million — one of which is U.S. restaurant chain Burger King — that can tap into McWin’s cross-border operational expertise to grow their brands internationally.
McWin acquired a majority stake in Burger King in Germany in 2021 and has since been looking to raise the company’s brand by focusing on new opportunities for growth.
“[Burger King] is a brand that is very good at adopting change and introduces technology quite fast, [but] in some countries across Central Europe, the brand still needs to develop. [That’s why they] want to partner up with us,” Davolos explained.
To further strengthen that relationship, the Czech firm announced earlier this month that with the acquisition of BK SEE Poland, it has reached a new master franchise and development agreement with Restaurant Brands International to manage and grow the Burger King brand and its franchisees in Poland.
The acquisition, the first investment of the McWin Restaurant Fund, is part of broader plans to expand the Burger King brand across Central and Eastern Europe (CEE), with a commitment to open 200+ restaurants in the CEE region.
“You have a very powerful brand and [strong] brand recognition, but there’s also a lot of opportunity and whitespace to cover,” he remarked.
Moving forward, Davalos pointed to the food service and food technology industry as a strong investment category despite the severe impact of inflationary pressure and macroeconomic headwinds on the sector.
Summing up the opportunity, he said, “Valuations are coming down, which makes it a very important time to be investing in food technology. We will be able to invest in companies that we liked a lot six months ago, at better valuations.”
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