Agility Update August 2023
Welcome to the August issue of Agility Update. In this issue, we draw your attention to the rise of activist investors, both ultra-engaged individuals and professional investors seeking to force the unlocking of value. Also in this issue are articles looking at investment opportunities in ‘upcycling’ food waste like grape skins and seeds from winemaking and in beauty tech supporting the twin quests for youth and perfection. Enjoy the issue till our next one in November.
Beware! Activist Investors are Multiplying
Our board member readers may like to prepare themselves for increasingly aggressive and engaged investors. Recent high profile board spills – at DNA sequencing company Illumina in the US, and AGL in Australia – are a warning of increasing shareholder activism. The AICD (Australian Institute of Company Directors) prediction is to expect more of such board spills as professional investor activists seek opportunities to unlock value. Indeed, the co-founders of UK-based activist investor group Snowcap called Australia an “incredibly ripe hunting ground”.
Outside of boardroom proxy fights, securities class actions are also expected to increase. International law firm Allens are expecting to see corporate governance and risk management focusing on more generalised governance and culture issues, and the adequacy of systems and controls; as well as climate change claims made against companies and government relating to the non-disclosure and management of climate change risks. See also Allens’ latest Class Action Risk 2022 report.
For board members under increasing scrutiny to maintain fierce independence from the company CEO, US Corporate Board Member magazine’s advice is to prepare themselves to answer 4 questions:
- Are the board members you serve truly capable of being independent and committed to their fiduciary duty to shareholders?
- Can the board you serve on hold honest debates with opposing views and arrive at decisions in the best interest of shareholders?
- Under which circumstances would you consider publicly opposing members of your board or the CEO to shed light on a situation that was material to the growth and survival of your company?
- Under which circumstances would you consider resigning from your current board position due to disagreements with the CEO or board chairman?
Food Upcycling Profits are Real
With the mainstream media focus on food – including cost, insecurity, supplies, and waste – investors may like to explore the food upcycling trend that is gathering pace.
The upcycled food products industry is defined as the food industry segment that transforms food by-products, surplus, or other edible food materials that would typically be discarded, into new food products including snacks, bakery products, beverages, condiments, and pet food or other value-added items. According to Future Market Insights, the global products from the food waste market is estimated to reach US$55.12B in 2023, and the sales of food waste product are expected to expand at a CAGR of 5% to reach US$85.905B by 2033.
Growth drivers are both push and pull – businesses looking for ways to cut costs and build new income streams, and consumers seeking more eco-friendly and sustainable food options. Governments are also in the mix. For example, Australia’s Federal DCCEEW (Department of Climate Change, Energy, the Environment and Water) has set a goal to halve food waste by 2030. Food waste costs the economy around A$36.6B each year. Across the supply and consumption chain, we waste around 7.6M tonnes of food equivalent to about 312kg per person, or 1 in 5 bags of groceries, costing each household some A$2,000 to A$2,500 per year.
Businesses already upcycling food products include:
- Melbourne-based Yume which operates an online marketplace that connects businesses with surplus food to buyers who can use it, such as food manufacturers or charities.
- US company Outcast Foods which upcycles surplus fruits and vegetables into nutrient-dense powders that can be used in smoothies, baked goods, and other food products.
- US company Upcycled Foods, renamed from Regrained, which upcycles spent grain and non-grains from food manufacturing into snack and value-added foods.
- Craft breweries Local Brewing Co and BrewDog who turn unsold bread and fruit from Coles supermarkets into beer.
- Zero-waste restaurants that source seasonal ingredients locally and directly from farmers, use reusable food containers, and compost unusable food scraps, like these 13 eco-friendly restaurants in Australia.
Fight Food Waste Cooperative Research Centre’s list of Australian startups and pilots include:
- Viridi Innovations collaboration with Swinburne University of Technology for a novel procedure to extract polyphenols from grape seed extract. According to CSIRO, the 350 kilo-tonnes of grape skins and seeds (grape marc) left over from winemaking are the most abundant food loss stream in horticulture in Australia.
- A University of Adelaide project with South Australian potato growers to convert the current 100,000 tonnes of rejected potatoes per year into raw potato starch that sells for A$500-800/tonne, or even higher value refined starch for high-end applications in the pre-biotic and functional food sectors.
- The Queensland Government’s Department of Agriculture and Fisheries (DAF) project to extract high-value nutrition and bioactive-rich powders from 30-40% of the total tomato and capsicum crop, worth ~A$300M, from the Bowen & Gumlu region that is currently discarded.
Beauty Revolution Offers Double-Digit Growth
A significant beauty revolution is underway that has the potential to disrupt traditional skincare companies and distribution channels. The trends gathering pace point to a beauty industry future that is technology-driven, personalised, and sustainable.
Big Data, Virtual Reality, Artificial intelligence (AI) and Machine Learning (ML) are already at the backend of many beauty companies delivering mainstream consumer products and services. Examples include:
- L’Oreal Paris’ virtual try-on service. Try it for makeup here, and for hair colour here.
- Glossier uses customer engagement and data to inform its product development.
- Skinceuticals’ AI-powered skin analysis tool CUSTOM D.O.S.E. recommends and mixes personalised corrective serums for customers.
- Companies, many with direct-to consumer models, create personalised skincare products to meet individual customers’ needs and preferences. See 9 Beauty Brands That Offer Personalised Skin Care Products.
According to InsightAce Analytic, the global AI in Beauty and Cosmetics market size is expected to reach US$13.34B in 2030, with a CAGR of 19.7% from 2021 to 2030.
The juncture where beauty and medical science meet is another exciting area, with the global skincare devices market expected to reach US$24.8B by 2030, growing at a CAGR of 13.0% from 2023 to 2030. The facial cleansing brushes from Swedish beauty tech company Foreo are already familiar to many. Gaining traction are LED light and microcurrent devices offering non-invasive procedures targeting skin concerns like acne, and/or promising skin tightening and other anti-aging benefits (Hello Boomers!). Examples include the microcurrent devices for facial toning and lifting from NuFace and the LED mask by Omnilux.
For more on beauty tech and trends see 30 Notable Beauty Startups in 2023 by Exploding Topics, The 10 most innovative companies in beauty of 2023 by Fast Company, and 19 successful beauty startups you must know in 2023 by Enterprise League.
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