April 12, 2024

F&B Investing Sizzles

F&B Investing Sizzles

Not too long ago, you had to be running the next hot tech startup to win the attention of venture capitalists. But with food & beverage companies expanding into intriguing sectors like aquaculture, regenerative agriculture, and even pet-food related foodtech—along with longer-running favorites like plant-based food—investors are flocking, according to this year’s 2024 Marcum Food & Beverage Industry Annual Report.

VCs sunk $4B into the foodtech sector last year. And it looks like the F&B industry is just getting started. Many companies are looking to generative AI and other tools to do everything from inventing new cocktail recipes to writing menus and solving some of the persistent labor shortages in the industry. F&B companies are also creating and investing in tools and technologies to make their operations more sustainable—something that both consumers and employees value in an era when environmental, social and corporate governance goals (ESG) are front and center. It’s no surprise that 68% of respondents to our annual survey expressed optimism about their sector, up 4% from a year ago.

In a world of change, many investors are discovering how resilient this sector truly is. Though supply-chain constraints and rising costs have challenged the entire industry these past few years, many companies have come up with creative solutions, such as shrinking product sizes, finding creative sourcing strategies, and using tools like self-service kiosks.

And the industry could become even more resilient as companies discover valuable tools like the R&D tax credit and other tax strategies that that can help grow earnings. Even taking steps like donating excess food inventory to those in need can have a positive effect on a company’s financial position by providing enhanced tax deductions.

With the world rapidly changing, there’s a certain comfort in knowing that some things probably won’t change. People will always need to eat unless someone finds a way for a robot to do that for them. In the meantime, consumers will remain on the lookout for new foods to try, restaurants they haven’t been to yet, and great recipes to dazzle their guests, if only because it keeps life interesting. That guarantees a constant stream of ideas for innovators who are paying attention—and will continue to make the sector attractive to investors.

Monday is April 15, otherwise known as Tax Day, and, as with many accounting firms, the weeks leading up to it have been very busy here at Marcum—and not only with taxes. The SEC filing deadline has come and gone, and most private companies need to get their financial statements finished by April 30. Needless to say, everyone on the Marcum team has been busy. Thank you to all of our team members who have been going the extra mile. We truly appreciate all you are doing to make sure that our clients have a great experience working with Marcum.