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Looking Back on 2022 & Looking Forward to 2023

Updated: Jan 31, 2023

Reflecting on the trends that shaped the food tech and retail landscape in 2022, it was a challenging year due to macroeconomic headwinds - but long-term opportunities remain as relevant as ever as we move into 2023 and beyond.

2022 Look Back: Macroeconomic headwinds created uncertainty

The major economic story of 2022 was inflation. Food prices rose 10.4%, outpacing the average consumer price inflation of 6.5%. In response, the Federal Reserve raised interest rates from 0.25% in January to 4.5% in December, resulting in tighter capital markets. Fears of recession created uncertainty for business growth plans, investment and hiring decisions.

How did these macroeconomic headwinds impact key stakeholders in the foodtech and retail environment?

  • Retailers held their ground: Grocery retailers saw an 8.3% increase in annual sales, holding the ground they gained during the pandemic, but rising prices account for much of this growth. E-commerce sales rose by 2.5%, demonstrating the new reality of digital shopping, although this low-digit gain compared to the prior two years reflects the recovery of brick-and-mortar traffic as pandemic restrictions ended.

  • Startups tightened focus: In response to a more restrained fundraising environment, foodtech startups honed their focus on what really matters: finding product-market fit and scaling sustainably.

  • Investors slowed investment: The latest Pitchbook data shows a 77% year-over-year decline in VC foodtech investment, returning to pre-pandemic levels after an exuberant 2020 and 2021.

Overall, 2022 was likely a healthy gut check for all stakeholders to look closely at business fundamentals and focus on what really moves the needle in terms of long-term viability and growth.

2023 Look Forward: Focus on the fundamentals and long-term opportunities

Looking ahead to 2023, we’re seeing reason for cautious optimism in the economy. The Fed’s monetary policy appears to be working, with December’s 12-month inflation rate of 6.5% representing the lowest 12-month rise since October 2021. The December rise in food prices of 0.3% capped 6 months of monthly declines from summer highs of 1.2%. While analysts disagree about whether we will enter recession in 2023, most who believe we will predict it to be mild.

While the current macroeconomic environment still contains uncertainty, we recommend that stakeholders take a longer-term view and focus on business fundamentals and long-term trends and opportunities.

  • Retailers: Continue to transform your fundamental business model and face head-on the new economics and consumer preferences that are reshaping grocery. Identify key opportunities for innovation and bake them into your strategic planning and governance processes. Find ways to speed testing and scaling of new technologies - and turn to trusted third-party partners to help you instead of waiting on homegrown solutions.

  • Startups: Sharpen focus on product-market fit and scalability. Build a deep understanding of the problem you’re trying to solve and quickly iterate your product until you have product-market fit. Build strong relationships with customers and partners who will go to bat for you. Make sure that your strategies are scalable and will generate ROI for your business and your investors.

  • Investors: Strengthen focus on startups with promising or proven (depending on stage) product-market fit and a pathway to profitability. Make sure the leadership teams of your portfolio companies have built thoughtful and realistic projections, and that current commercial partnerships are successful and replicable. Double-down on the companies that you truly believe in to ensure they have sufficient runway.

Let’s seize 2023 as a year of opportunity and growth.


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