Have you seen the BuzzFeed special video on how the Americans try bizarre Russian foods for the first time? The borscht or a food blockbuster for everyone coming to the Eastern Europe and Russia may be the only knowledge about the situation here with food technologies and gastro-startups.
I set out to do nothing else than change this perception.
“You don’t come into cooking to get rich” – says a Hell’s Kitchen chef Gordon Ramsay, and that quote illustrates the Russian food tech market in 2015-2016. Alexey Menn, an investor with a food project in his portfolio, estimates that it would take 3-5 years for the market to endure the test and grasp the potential of foodtech in Russia. But the rapidly inflating ambition of local entrepreneurs triggers them to do business even with a clear understanding that the magical payday won’t happen any time soon.
The industry itself is a lucrative place for VCs who continue to step in with billions of dollars, approximately $2.06 billion invested in the first half of 2015, focusing on farmers, tech companies to home cooks and biomedical companies that offer solutions on how to reduce waste and use of chemicals.
It’s hugely laudable for entrepreneurs to tap into the food market in Russia, since the Moscow counter-sanctions forced the players to find new suppliers, fight for local apples and tomatoes when the European products started being kept out of the market and to search for new solutions, since selling the European products is extremely expensive due to the currency rate.
A conference on food tech takes place in Moscow on February 28th with the one of the investment platforms for VCs and startups in Russia StartTrack leading the game. It leaves an impression that 2016 could be the year when vodka and caviar-brand is to be questioned with new food projects getting the popularity and becoming more appealing.
So, what opportunities does Russia represent for an entrepreneurial or VC soul?
Opportunity #1: Home Kitchens
Switching from a fast food track into quality mode is a world trend with WholeFoods getting its momentum in the US and the Russians gradually realizing the need to eat right.
Olga Zinovyeva, CEO and founder of ELEMENTAREE, is a Russian entrepreneur with the Silicon Valley mindset quite unusual to the local market. She created a foodtech startup that delivers sliced and portioned cooking ingredients for meals, that are easy to prepare in just 30 minutes. The week package is cheaper than supermarket of relevant quality. A fast, healthy and balanced food from ELEMENTAREE costs about 5.5 euros a day. They also have subscription packages for customers with dietary preferences or those aiming to lose weight safely. Glamorization of home kitchen food attracts mostly women with university education background and work experience in the international companies.
ELEMENTAREE is creating sometimes even meals inspired by haute cuisine. Copyright: elemetaree.ru
The company cultivates the style of healthy food and makes it a conscious choice for customers to eat right. They promote the trend through publications in mass media, blog on the website (honestly, it’s not yet a standard in the Russian startup community to have a company’s blog!) and beautifully designed social media posts, that may solidify the CEO’s plans to expand the service to other cities from Moscow, and being able to customize products to every client’s need.
Opportunity #2: Say “Russian” Cheese
The Russians have never been that into cheese. While banning the French Brie, Italian Parmesan and Gorgonzola were the Moscow retaliation to the Western sanctions over the Ukrainian crisis, it suddenly caused a stir for local farmers. Gourmet restaurants and luxury hotels, as well as an ordinary Russian with his or her food preferences for the Italian or French recipes, started looking for alternatives and the story made a coupe for the agricultural business in Russia.
Making cheese is art for Sirota Photo: Parmezan.ru
Oleg Sirota with a background in IT business decided to grasp the potential of the trend and introduce good local cheese products to the market. He failed at making Parmesan, due to the insufficient supply of milk of good quality during winter, but was unfazed to make Gorgonzola, Winekase, Bierkase and Bergkäse. In 2016 he plans to build his own cattle barn and make 100 tons of cheese. Quite a feasible task!
Playing it cheese will be a fashionable thing to do in Russia in food tech.
Opportunity #3: Skolkovo Entering The Foodtech Vogue
The dot.com mania still prevails over the Russian startup culture, but the trends from 2015/2016 make it possible for food tech wizardry to get attention from the first innovation support institution in Russia – Skolkovo.
Matrix Business Center is one of the the landmarks of Skolkovo Innovations Center. Photo: Sk.ru
Skolkovo BioMed cluster set a goal to attract 70 residents in 2016 focused mostly on technologies in agriculture, including plant agriculture, livestock and aquaculture innovations, industrial microbiology, innovations in processing of agricultural products, forestry and forest technologies.
In July they organize SmartAgro summer camp for innovators and scientists across BRICS countries. “Things look to get tougher this year, but agriculture appears to be rebounding briskly,” admits Fred Weir.
Opportunity #4: In A Nerdy Way
Moscow State University Science Park is a place with its own can-do culture. Ivan Afanasov, a mentor and creator of Biotech accelerator in MSU, says he got an impression from Singapore-Stanford Biodesign program and decided to implement the same idea in Russia. The experts from the industries and VC funds verify every problem the students and young scientists are trying to solve, the most promising ones are to be accelerated for several months, and afterwards viable 2-3 business ventures are expected to enter the market as a result of this nerdy endeavor.
In a short-run we’ll definitely see some of the ambitious projects fueling the Russian food tech like natural sport supplements, irreversible indicators of products’ defrosting, dietary tartlets and methods to detect antibiotics in milk.
Hope, we’ll manage to overcome political and food stereotypes in the near future and use the word “oil” only in the kitchen jargon just to paraphrase Gordon Ramsay:
“You used so much oil, Russia is already claiming they weren’t involved.”