Food & Drink NewsletterIssue 2: July 2018

Introduction ............................ 1Eco-friendly innovation – shaping the future of the food industry? ............................ 2

Innovation in the agriculture sector ............................ 3Food subscription and delivery services ............................ 4

Swedish furniture, Belgian footballers and a piping hot Costa Rican ............................ 5The future of the vegan lifestyle ............................ 6

In this issue:

Introduction

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Contact us:

Euan DuncanHead of Food & Drinkeuan.duncan@macroberts.com0141 303 1100

Welcome to the Summer edition of MacRoberts’ Food & Drink Sector Newsletter. Summer is now very much upon us and I hope you have had the opportunity to enjoy this wonderful weather. Unfortunately it has, as many primary producers can attest to, created as many problems as opportunities. It’s not something you will hear very often, but thank goodness for some rain.

In this quarterly newsletter, we round up and analyse some of the key, headline-hitting issues for businesses in the food and drink industry.

As ever, a great deal is happening in the sector on a daily (often hourly) basis and there is no shortage of material, as we take a look at eco-friendly innovation shaping the future of the food industry, the use of new technology in the agriculture sector and how it can lead the way with crop insight. We also look at the increasingly popular food subscription and delivery services as well as the future of the vegan lifestyle. Don’t miss our article on the impact your morning coffee can have!

I very much hope you find this interesting, and encourage you to get in touch with our team with any thoughts or comments you have on any topics for future newsletters.

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Eco-friendly innovation – shaping the future of the food industry?In addition to a growing global population and limited natural resources, several other factors are creating a challenging environment for the food and drink sector:

• Changing consumer behaviour• Price pressure from retailers• Lack of growth

Eco-friendly innovations and technologies have been in the news of late, and these have been described as having the ability to potentially drastically change the market and the supply chain.

Some examples include:

3D printed customisable foodWe included a specific article on 3D printing food in our April 2018 Newsletter; however, from an eco-friendly point of view, 3D printed food can lead to less waste by using little more than the amount of ingredients necessary – custom, on-demand production with a minimal generation of waste. 3D printed food has been around since 2012, and technology has now advanced to make use of algae and even insects (see below), as well as food waste. 3D printing also reduces the refining and assembly stage and reduces the need for artificial additives, as a result of the way component layers are created. 3D printed food can be personalised with respect to nutritional values and ingredients as well as flavour, texture and size. There are also attempts to drive down the cost of 3D printers to improve the world’s food landscape – broadening their availability (and that of printer-friendly ingredients) to allow local governments to afford a number of printers for poorer neighbourhoods.

Macro- and micro-algae and insects as a form of proteinThese alternative forms of protein are eco-friendly as they emit far fewer greenhouse gases than livestock and consume way less water, have a comparatively tiny ecological footprint, and are thought to thrive on basically anything, even organic waste. That last point sums up the main ecological appeal of eating insects; growing the grain used in animal feed takes up huge water and energy resources. Even the United Nations promotes insect-eating as a promising, protein-packed way to feed the 9 billion people that will live on earth in 2050. “A benefit of insects as an alternative animal protein source is that they can be reared sustainably on organic side streams (e.g. manure, pig slurry and compost),” their report reads.

Wearable technologyConsumers with a health mind-set increasingly want to understand what their bodies need, and eat accordingly. The demand for wearable tech and self-tracking apps to allow consumers to quantify and record data on their lives (including food intake) is on the increase. On the production side, the future food factory could be filled with everything from smartwatches to smart gloves and augmented reality. Hands-free technology enables workers to scan barcodes of components and if the wrong barcode is scanned, an alert can be sent to ensure the worker doesn’t complete the incorrect step.

Smart shopping toolsThis can be as simple as enhancing the online shopping experience to include online filters to choose organic foods, reduced salt or low carbohydrates. Another example set to rise in popularity is the use of hand-held food scanners in-store which allow users to readily receive information about the nutritional values of foods. This will lead to food companies being challenged to deliver more consistent quality.

DNA scanningThe use of DNA scanning is already being used to personalise diets with scientists using a saliva swab to analyse biological histories to create a targeted healthy eating plan. This is a relatively new concept, but there are UK companies offering it.

A 2015 report entitled “What’s Cooking in Tomorrow’s Kitchen” by Jelle Groot (a Rabobank analyst) gauged the viability and timing of a selection of innovations. It reported that these technologies were already changing consumer mindsets and demands. “Traditionally static consumption patterns have undergone a transformation and we believe there are now three prevalent consumer mind-sets for food buying: sustainability, convenience and health” explained Groot. “Understanding these mind-sets and using appropriate innovations could not only have a game-changing effect on food processors’ businesses, but will be essential to remain relevant in a highly competitive environment.”

The report states that adoption of such new technologies will probably take time as challenges lie in scale, cost competitiveness and consumer acceptance, and that significant research and development, marketing and promotional efforts are required to develop products with alternative eco-friendly ingredients at an acceptable price level. Food companies need to be proactive and develop their strategies around the changes if profit margins are to remain unaffected.

Switzerland’s second largest supermarket chain Coop is testing consumer appetite for less common alternatives to beef and pork, having introduced a mealworm burger pattie and meatballs. These also contain rice, carrots, oregano and chilli. The burgers cost twice the price of their organic beef burgers, and almost five times as much as the least expensive burgers in its online store. The decision comes after Switzerland revised its food safety laws, paving the way for the production and distribution of insect-based food.

It is impossible to predict the future, but it is clear that technologies are already changing consumer mind-sets and demands. It remains to be seen whether mealworm burgers will be hitting the shelves near you soon!

Dawn MacPherson is an Associate in our Real Estate team, and advises clients on a range of matters including sales, purchases, lettings, finance and development work.Contact: dawn.macpherson@macroberts.com

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Innovation in the agriculture sectorThrough our membership of the international legal network Advoc, our contacts at Law Office Milošević in Serbia, where there is a growing tech sector, have introduced us to Agremo, a cloud-based software solution, which uses insights extracted from drone-collected imagery to improve agricultural processes. By using drones and one of the many Agremo reports (the reports translate the drone images into valuable information), it becomes possible to detect plant health issues, count plants, accurately assess losses and make better-informed decisions.

As Ramón Pagán, Mapping Expert and President of Caribe Drones, said, “After introducing mapping and crop analysis reports to farmers, they could see their field from another perspective. Agremo is helping us bring essential information to farmers which was impossible to get until recently.”

With the help of different Agremo reports, growers, agricultural consultants, input producers and insurance companies are able to successfully plan, monitor and analyse agricultural activities and find out what is happening on their field at any given moment throughout the growing season.

Currently, Agremo offers analyses that allow users to count plants, analyse fields for weed, pest, diseases, water stress and even assess flowering levels. So far, Agremo analyses have been performed on more than 90 plant and crop types, including corn, soybean, trees, potatoes, and many more.

The data from the Agremo reports can be used to estimate sowing quality, find the location of problem areas, spot potential yield loss, evaluate replants, assess damages, harvest planning and even for inventory management decisions. Especially large growers can benefit from this kind of information and save thousands of euros every season.

In another recent case, a large-scale grower spotted a major Cercospora infestation on his sugar beet field with drone technology and the Agremo plant stress report. The plant stress report showed the exact size and location of problem areas, which allowed him to determine losses and evaluate the treatments he had chosen for this field. He shared his story on our blog: How to spot plant disease and weed with drone technology.

This corn stand count shows users the exact number of corn in the according area and outlines the exact location of problem areas, which is extremely

valuable information for every grower. The report in this example helps the grower spot losses early on, determine whether or not to do replants and

afterward, assess replants.

Agremo is available on the DroneDeploy app market or as a web app via www.agremo.com. The web app lets you store all maps in one place, share results with others, compare different maps and much, much more.

Join the drone community on Twitter via @AgremoApp and read more about drones in agriculture at www.agremo.com!

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Food Subscription and Delivery ServicesCould the dreaded weekly food shop soon become a distant memory for consumers? With food delivery services such as Deliveroo and UberEats promising to deliver your favourite takeaway and restaurant food right to your door, and food subscription boxes – providing you with your meals for the week and instructions on how to cook them – growing in popularity, we may see the traditional supermarket becoming less and less popular as we struggle to find time to fit these tasks into our ever-busying lives.The food and drink sector in the UK has undergone a significant shift in the last five years, away from more traditional dining options – food cooked at home, a takeaway or eating out at a restaurant – and more towards convenient food delivery options which are delivered straight to your door.

Here, we look at the growth of two in particular:

Food Subscription ServicesPreviously, for those of us who cook at home, we relied on our own inspiration for mealtimes mid-week. Generally, we tend to cook the same things (easy and quick classics or old favourites!) that may lead us to become bored with our post-work meals. For many families, there just isn’t time after work and after-school activities to plan, buy the ingredients and cook a delicious, interesting meal every night.

Some of us often find we buy food during our weekly food shop and this ends up going to waste as we haven’t utilised that particular ingredient in our meals that week.

That’s where food subscription services have come in, to rescue us from mundane mid-week meals and provide us with inspiration and the exact ingredients to create delicious meals every night!

So how does it work? Established companies like Hello Fresh and newcomers like The Fitness Food Company and Athleat (which both specialise in fresh meat deliveries for those bulk-fitness minded individuals) allow you to create an account and order a certain number of meals per week. These are then delivered to your house with cooking instructions and you have meals to cook for the week (and no waste!).

The first company to launch the subscription concept in the UK was Graze – offering health snack boxes to be delivered to your house at regular intervals (weekly/monthly/you choose). The popularity of such an idea led the way for other companies to start offering similar services and the popularity of these has grown exponentially over the last five years.

The Subscription Economy across the world has grown rapidly and has been a great hit with consumers due to the ease with which it can be set up, the originality and difference in the products delivered each time and the time and effort it takes out of meal planning/preparation.

With these food subscription boxes, you can have all of your meals (or some of them) delivered each week with the exact ingredients and a recipe card with instructions on how to prepare the meal – no waste, no fuss and no prior thinking required.

It seems food subscription services are here to stay – so the next time you are considering what to cook for dinner, maybe let someone else decide!

Food Delivery Services

We all used to have to trudge down to the nearest takeaway if we didn’t fancy cooking, or use the takeaway delivery service (which was often much longer and seemed more hassle than it was worth!) – however, now companies like Deliveroo and UberEats will pick up your food and deliver this to you. Such companies also allow you to get takeaways from outlets that previously didn’t do home deliveries, such as fast food restaurants like McDonald’s and sit-in only restaurants.

This growth has given consumers much more choice about what kind of takeaway food they can now get, both during the working day and at home in the evenings. Most of the deliveries within city centres are between 15 and 20 minutes (which is generally much faster than the usual 40 minutes for the local takeaway delivery service) and are not much more expensive than the takeaway itself (most delivery charges around Glasgow City Centre are around £2.50-£4).

With our lives becoming more and more busy, the food and drink sector in the UK has capitalised on this and innovated to become more helpful to us and provide solutions to some age-old “not enough hours in the day” problems.

The food and drink sector has always been a flexible and dynamic economy that has frequently adapted to meet the ever-increasing and differing needs of the consumer. With such changes in consumer habits and needs, businesses need to be able to adapt quickly.

We advise a number of food and drink companies in relation to business growth, process changes to products/services, branding issues and regulatory changes that could impact on their business.

Rebecca Henderson is a Trainee Solicitor in our IP, Technology & Commercial team.

Contact: rebecca.henderson@macroberts.com

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“Together We Thrive” is the tagline. HSBC’s most recent multi-million pound advertising campaign celebrates a plethora of quintessentially global goods and services, now forming a familiar part of our collective daily lives. Alongside Swedish flat pack furniture, continental cars, multinational (but mostly Belgian) premier league footballers and Korean technology, HSBC references the pre-Brexit national introspection with a pointed reminder of the internationalism enshrined in the fabric of our society.

Alas, we are not here to mull over the wider message. Instead, whether we start the day with a “Colombian, Guatemalan, or a piping hot Costa Rican”, is our focus for contemplation. Indeed, of the nod to all things global which have earned their protected places within current UK popular culture, coffee may be most pervasive. Many guises. And many things to many people. A caffeinated crutch. Salvation from perpetual lack of sleep. Or self-prescribed performance enhancer. Sacred daily ritual. Or dependence. A source of mental and physical marginal gains. And that which ensures we are supercharged on caffeine and ready to face the day.

Shop keepers and pub landlordsAmidst the myriad array of options we almost all have our drink of choice. Flat white or long black. Americano, latte, mocha or cappuccino. Single, double or triple shot. Iced. Or extra hot. Filter, espresso, batch. And so on. And ever expanding. Much, it would seem, like our unrelenting appetite for the black stuff. So much so, indeed, that a once proud nation of shopkeepers, latterly pub landlords and goers, has been unceremoniously usurped by the sight and sound of its population slurping coffee. As local pubs close at a rate coffee shops are opening, the latter are apparently on course to outnumber the former in the UK by 2030.

Wake up and smell the coffee…Such prevalence has borne a backlash of sorts. A concerted pause for thought around coffee and its wider impact on the environment, culminated recently in national news coverage shedding light on the staggering volume of waste which the industry generates. ‘Single use’ hybrid plastic-paper cups, coffee pods, unrecyclable wholesale and retail packaging and coffee ground waste have caused consternation amongst consumers and environmentalists across the country. Rightly so. 2.5 billion cups ending up in landfill in 2011 and rising. If the constituent caffeine hit is not keeping the powers that be awake, statistics such as that surely are. A proposed then postponed “Latte levy” was the answer. Until a recent u-turn. Carrot rather than stick now appears to be the answer to a nation’s addiction.

Innovation the salvation Like the ongoing global treaties in equal rights and beyond, the industry itself has been tasked with taking responsibility. A self-imposed #coffeeconscience, if you like. Indeed, financial incentives to use re-useable cups are already common, with Starbucks, Costa, Pret and more all offering discounts to discerning consumers. And as a direct consequence of that development, more and more re-useable cup manufacturers are producing new and innovative solutions to be the ‘go-to’ travel mug for our daily dose of ‘get-go’. The recent Glasgow Coffee Festival made its own statement in the quest to cajole continued culture change, banning disposable cups over its weekend exhibition and saving, it says, nearly 20,000 cups from landfill in the process. The Scottish Government became the latest organisation to announce their own ban from their offices in the hope of saving 450,000 cups per year from a similar fate.

Independent speciality shops are in many ways leading the charge with more fully compostable cups appearing, ditching style for substance in the interest of something greater. Slick branding sacrificed for a bigger cause. With more than a hint of tail wagging the dog, the major franchises have been slightly slow to follow, pointing to their long-standing efforts to encourage reusable cups as noble enough for now. The many thousands of ‘single use’ cups they each churn out every week in comparison, of course, remains a rather inconvenient truth.

The fact that the UK apparently has the capacity to recycle all of the millions of ‘disposable’ hybrid paper-plastic cups, with factory infrastructure already existing and able to process the volumes of cups currently thrown away, is as baffling as the startling landfill numbers. A lack of specific recycling bins and consumer education means only a fraction of 1% of all cups reach said facilities. Joining those dots is surely a priority for the major chains and government going forward.

Soil conditioners, cosmetics and coffee wasteOn a smaller scale, places such as the Good Coffee Cartel, based in Glasgow, are pioneering re-useable wholesale and retail packaging for the thousands of tonnes of coffee going from roaster to consumer up and down the country on a daily basis. Using re-useable tins and drums in substitution for plastic packaging, they and a growing band of other coffee roasters are promoting sustainability as top priority across their processes. In the wake of Blue Planet’s call to arms, expect the wider industry to sit up and take note across the packaging spectrum. And Colonna, based in Bath, is one of a number of brands at the forefront of the development of high quality compostable coffee capsules in response to the domestic waste problem presented by the now ubiquitous home coffee machine.

The innovation doesn’t stop there. Glasgow-based Revive Eco now deals in recycling used coffee grounds, from which oils and other useful products can be extracted for numerous beneficial applications. Soil conditioners and cosmetic products now feature ingredients extracted from coffee ground waste and as extraction technology improves, many more chemically enhanced products may turn to more naturally sourced ingredients in a similar manner. So while you smugly sip your skinny, decaf, caramel, vanilla, organic, veggie, vegan, gluten-free Frappucinos, you might actually be saving the rainforest.

Checks, balances and changing conversationsIt feels very much like an industry catching its breath and coming to terms with scale and sustainability. The commercial going was so good for so long that no-one dared utter the words check or balance. In many ways it is also an industry where sustainability must be sacrosanct. With raw materials sourced from poor countries, from farm to point of sale, the global economic dynamics place international wholesalers and retailers in an acute position of responsibility.

Re-useable and fully compostable cups, sustainable wholesale and retail packaging, more efficient delivery methods and innovative applications for coffee ground waste do not address the economic power imbalance, but they do mark an ongoing shift in the collective industry conscience in terms of the waste conversation. Innovative solutions are helping to stimulate the wider debate and beginning to meaningfully confront the many challenges facing the industry. The pioneering independents, the sector’s major players, and a nation of coffee drinkers, it seems have plenty to ponder over their Colombians, Guatemalans and piping hot Costa Ricans going forward.

Craig Houston is a Solicitor in our Real Estate team, specialising in commercial property and energy.

Contact: craig.houston@macroberts.com

Swedish furniture, Belgian footballers and a piping hot Costa Rican

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How has TheVeganKind progressed since it was founded in 2013?

Brilliantly! When we first set up, TVK was just an idea – which became a logo, which became a website with no traffic or customers, which became a product, which became a business. We never knew how far it could go, but we just knew (as a couple, as much as anything else) that we had a recipe for success. We were excited from the very first night Karris had the idea. We knew the idea was sound, and that our backgrounds allowed for us to make it a success if we were willing to put in the extremely hard work!

From your experience, is the vegan lifestyle more popular now than when you founded TheVeganKind?

It is growing at an almost exponential rate I would say. More and more people are becoming aware of the fact the consumption of animals is contributory to a lot of health ailments. Further, there are people who are vegan because it is now accepted widely that the animal agriculture industry causes more greenhouse gases than every mode of transport in the world combined. So, taking all those things into account – and also knowing you can get burgers, steaks, sausages, cheeses, ice creams etc. in a plant-based format – more and more people are seeing the logic in leaving animals off their plates. Add to the mix that Ariana Grande and Lewis Hamilton are vegan... I must be making a strong case here?

Have you seen an increase in interest following the first “Veganuary”?

The trend has been upwards. In 2018 there were 168,500 people who took part in Veganuary. In 2017 it was 59,500 and 2016 was 23,000. 2019 is going to be astronomical. The plant-based food sector is blowing up right now.

How do you see the industry progressing?

Silicon Valley investors are all over it, and companies like Beyond Meat creating their ‘bleeding’ Impossible Burger are proof that you do not need to kill an animal so you can eat. They identified that it is haemoglobin which is sometimes missing from a plant-based burger in order to satiate a carnivore. They extracted haemoglobin from leaves, injected it into a plant-based burger patty to make it ‘bleed’... it hits the UK soon and we will definitely be stocking it. They are just one example of food tech which has a very low carbon footprint which chooses to use plants for good. The industry is booming. Ground-breaking documentaries such as “Cowspiracy” (co-produced by Leonardo Di Caprio) and “What the Health” are major hits on Netflix with millennials. Whether people go vegan, or simply reduce their meat intake, I’d be delighted either way – for the sake of my grandkids and great grandkids.

The future of the vegan lifestyleOwing to the rise in popularity of the vegan lifestyle, in part due to the launch of Veganuary in recent years (i.e. vegan January) and positive publicity about the lifestyle and environmental benefits of adopting the diet, we thought now would be a great time to catch up with one of our clients, TheVeganKind (TVK), whose vegan subscription box delivery service is going from strength to strength.

TVK was founded in 2013 by Karris and Scott McCulloch, and within four months of its conception the first box was shipped. The company now supplies two types of subscription box: the Lifestyle Box (containing a range of food/beauty products, such as granola, lip balm and chocolate) and the Beauty Box (containing a range of skincare, cosmetic and beauty products such as body butter and shower gel), and has recently launched an online Vegan supermarket.

TVK’s Scott McCulloch took some time to talk to Angela Mills and Amy Drew about how his business has developed over the past five years.

It is clear that the vegan lifestyle is increasing in popularity and creating genuine demand from consumers for a wider range of products. Alongside this, the average consumer (whatever their diet preference) is more informed now than ever before and keen to know more about food production methods, the supply chain and the journey food makes before reaching the plate.

Angela Mills is a Solicitor in our IP, Technology & Commercial team, advising on commercial, data protection and intellectual property issues.

Contact: angela.mills@macroberts.com

Amy Drew is a Trainee Solicitor in our Construction team.

Contact: amy.drew@macroberts.com

Food & Drink at MacRobertsMacRoberts’ Food & Drink team provides specialist legal support at every stage of the supply chain: assisting ingredients and final product manufacturers with supply agreements and supply chain liability; helping businesses address their logistical needs in relation to high-value, high-volume and perishable goods; advising on packaging and advertising requirements and obligations, and overcoming limitations, in different markets; offering innovative solutions aimed at protecting and enforcing rights with regard to proprietary processes and brands.

We have a comprehensive grasp of the ever-changing food and drink environment, and keenly appreciate the increasingly complex supply chains which operators and businesses must navigate. The result is legal services designed to meet the needs of food and drink operators, delivered by thought-leading legal experts.

Contact us or find out more at www.macroberts.com/food-drink

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Our lawyers are more than just lawyers, we are industry experts with unrivalled commitment to the sectors in which our clients operate. Keeping up-to-date with relevant law, industry challenges, and technological advancement is not just part of the job – it is a reflection of our enthusiasm. This dedication has allowed our firm to thrive, winning the favour of some of Scotland’s largest organisations and projects throughout the years.

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