Interview with Joseph Zhou, Investment Partner at Bits x Bites
Joseph will be hosting a round table discussion at the Future Food-Tech Summit in San Francisco on Day 1 at 12.00 regarding Breaking into the Asian Market: What Partnerships and Investment Models Will Give Food Tech Companies the Best Chance of Success
He will also be speaking on a panel on Day 2 at 11.15 regarding
Alternative Proteins: The Plant-Based Protein Revolution Continues
Find out what Joseph had to say ahead of the Future Food-Tech Summit this month:
You’re speaking on the panel discussion on “Alternative Proteins: The Plant-Based Protein Revolution Continues” at the Future Food-Tech Summit in San Francisco. Can you tell us more about your role at Bits x Bites?
I am investment partner at Bits x Bites, China’s first food tech accelerator VC. I look at standout food-tech startups that have potential in the Chinese market. I also mentor portfolio companies on fundraising and growth strategies.
How are Bits x Bites addressing some of the biggest challenges in China’s food ecosystem?
China has 20% of the world’s population and only 7% of its arable land, much of which is contaminated. Food safety and health are also major concerns amongst consumers. In 2016, 500,000 food safety violations were reported. China now also has the world’s largest obese population.
Meaningful innovation is much needed to make China’s food system more sustainable. Around the globe, investors and entrepreneurs are actively pushing the envelope of food-tech, and yet there hasn’t been a strong ecosystem in China to invest in and nurture food-tech startups that are tackling our food challenges. Bits x Bites fills this gap. And by investing across the supply chain, we are making steps to grow this space, one startup at a time.
What is the potential for plant-based products in the Chinese market?
The plant-based opportunity in China is substantial, and its growth rides on the wave of the exploding healthy eating sector. The rising middle class is demanding more natural and premium healthy products that fit into a more healthy lifestyle. From the freshly squeezed orange juice vending machines to the vegan restaurants, evidence of the plant-based momentum is everywhere.
With this backdrop, the startup opportunity in China’s plant-based revolution is still wide open. The majority of meat replacement products on the market have evolved from Buddhist diet traditions with little innovation. Most mimic meat dishes such as vegetarian abalone made of starch and seaweed extracts, or vegetarian roasted pork based on vegetable protein. This leaves a gap for new brands that can draw curious consumers having second thoughts about their meat-eating habits.
The Chinese government has also voiced its support for the plant-based movement. In 2016, it government made a surprising announcement of its goal to reduce domestic meat consumption by 50% by 2030.
What emerging trends in China are key to plant-based companies looking to enter the Chinese market?
China has a growing middle class that is very ready to explore and try new types of food experiences. They are also willing to pay a premium price for them, especially in tier-one cities like Beijing and Shanghai. And brands are recognizing this. For example, Starbucks has chosen Shanghai to open its showcase roastery which is also its largest store anywhere, and AB InBev has also opened a Goose Island Brewery in the Shanghai center where 20 different types of beer are brewed onsite.
The challenge for plant-based companies isn’t to get consumers excited to try it for the first time. The difficult part is whether you can get your target audience to integrate these products into their regular routine and come back for more.
What is Bits x Bites’ investment philosophy when it comes to assessing plant-based startups?
We look at all early-stage companies through three lenses: the product or the technology, the team, and its growth potential for the Chinese market.
We favor teams that are addressing a missing link for Chinese consumers. Our portfolio company Fruggie is an interesting example. Seeing that most Chinese have no appetite for raw or cold food, Fruggie turns a salad plate into a drink that fits with the Chinese palate.
For an international company looking to break into the Asian market, how essential is it that they adapt their product(s) to appeal to the Asian market?
Having a product and a story that builds on a deep understanding of the consumer is universal, not just Asia.
For consumer products, local Chinese entrepreneurs may have an advantage in making food products that consumers can relate to, but that is never a given. The process to prototype, getting quick feedback, and refine is necessary for any team that wants to be successful anywhere.
What are your plans for Bits x Bites over the next 12 months, and how is the Future Food-Tech Summit important to this strategy?
China’s market size is undeniable, yet the community of Chinese food tech entrepreneurs is still small compared to the opportunity. As China’s first food tech accelerator VC, we look to partner with global investors, startups, and food corporations that share our positive outlook of the Chinese market as well as our mission to make China’s food system safer and healthier.
We look forward to starting these dialogues at Future Food-Tech Summit: https://futurefoodtechsf.com/