On 4th October 2022, Fresh Del Monte Produce, one of the world’s leading vertically integrated producers, distributors, and marketers of fresh and fresh-cut fruits and vegetables (market cap of ca. $1.2 billion), agreed to acquire a 39% stake in a blockchain technology company, Decapolis.
Tech – Decapollis: Decapolis operates a quality traceability platform intended to bring new and disruptive business models to market. The company's platform uses blockchain-based, compliance-as-a-service software that offers end-to-end food traceability with an unalterable record of quality assurance certifications. These certifications comply with strict quality control standards, enabling businesses to access the goods supply chain throughout the production and distribution process.
Non-Tech - Fresh Del Monte: Fresh Del Monte markets its products worldwide under the DEL MONTE® brand (under license from Del Monte Foods, Inc.). The company also markets its products under the MANN™ brand and other related trademarks. Additionally, it prepares and distributes juices, beverages, and snacks. The products are shipped to retail stores, foodservice operators, wholesalers, and other distributors. Fresh Del Monte also owns a trucking company and uses asset-based carriers to deliver by land and utilises its fleet of ships mixed with chartered refrigerated vessels to deliver by sea.
Note – to see all the other “Techquisition” deals that were announced globally in October 2022, you can access them here.
On 4th October 2022, Fresh Del Monte Produce entered into a definitive agreement to invest in a 39% stake in Decapolis for an undisclosed amount.
Like most other techquisition deals, the market reacted favourably to the investment announcement given the positive outlook associated with the strategic potential of the investment and how it fits with Fresh Del Monte’s business strategy.
Fresh Del Monte’s share price increased by approximately 2.5% from October 3 to October 10 – versus a decrease during this period of 1.8% in the S&P 500 – implying an addition of net ca. $48.5 million, which was highly likely to have been greater than Del Monte's investment consideration, given Decapolis’ small size (e.g., ca. 26 employees).
This net market value increase signals a potentially very high ROI for Fresh Del Monte Produce on the techquisition deal, assuming it can execute on the investment plan.
Founded in 2018, Decapolis’ mission is to support partners, and by extension, the industries in which it operates to provide premium goods for which the end-to-end supply and production chain comply with strict safety and quality control standards.
Decapolis helps food producers increase product profitability and reduce operational costs using the blockchain technology for increased transparency and efficiency of the food producer’s supply chain and distribution processes.
Decapolis works with the World Food Program (WFP) to enable over 600 smallholder farmers to produce in-demand, higher-quality crops, and increase product profitability by accessing new markets.
The investment in Decapolis reflects Fresh Del Monte’s willingness and ability to adapt to technological shifts to better serve to consumer needs.
" We’re excited to begin rolling out this traceability solution to all Fresh Del Monte products"
- Mohammad Abu-Ghazaleh, Chairman and CEO of Fresh Del Monte Produce
The deal rationale revolves around Fresh Del Monte’s technology-driven mission to offer sustainable solutions from which other businesses and industries can benefit.
“We embark on this endeavour with full confidence in our company, our offerings, service, and the people we serve. It will surely be a promising and fruitful venture, a force multiplier to work that positively impacts communities, families, and the future of healthy living and technology for good”
- Abedalrhman Habashneh, Founder and CEO of Decapolis
The size of global food traceability market is estimated to grow from $18.2 billion in 2021 to $35.5 billion by 2029 (CAGR of 8.7%).
An estimated 600 million people, or about 1 in 10 people worldwide, get sick after eating contaminated food.
Approximately 420,000 people die every year from eating contaminated food, resulting in the loss of 33 million healthy life years.
Every year, low- and middle-income countries lose approximately $110 billion in productivity and medical costs as a result of unsafe food.
Companies operating in the food ecosystem consider food traceability system the best tool to recognise the origin of food and its destination. (A food traceability system is a tracking technology that helps to maintain the record of the flow of products from production to distribution).
Companies use this traceability system to make fresh food products available to different end-users, which ultimately helps in reducing food-borne diseases. The food traceability system plays a key role in food investigations as well as in the global food trade as multi-ingredient food is made of materials that come from a variety of food chains & countries.
One of the important factors expected to drive the global food traceability market in the coming years is the advent of innovative food traceability technologies, such as blockchain.
To extend their application base and build their presence in the worldwide market, the market's major players are focusing on advancing these technologies.
Other driving reasons for the food traceability market are rising customer concern about food safety and an increase in food adulteration incidences.
Some examples of the growing development and utilisation of advanced technology-based solutions are infrared, RFID, biometrics, barcode, NFC, blockchain and sensors which are responsible for the food traceability market growth.
Blockchain could be adapted to work within company supply chains, keeping an evolving record of each thing that goes into a product or where it has been.
All the information related to the provenance of the ingredients used, to the shelf, can be viewed by the consumers, which will allow them to gain trust in the product.
In contrast to the current supply chain tracking, which often involves information stored in different electronic formats and hard copies, blockchain technology provides complete information about a product’s sourcing and formulation is available in seconds.
Blockchain enhances the ability to quickly pinpoint potential sources of contamination to efficiently prevent, contain or rectify outbreaks.
Transparency in terms of blockchain food traceability can validate and authenticate food origin and improve the ability to better tackle outbreaks through prevention methods that can help minimise food testing expenses and improve margins.
Blockchain technology, according to the World Economic Forum, is a highly effective method for dealing with supply chain inefficiencies brought on by the pandemic and aims to assist in identifying potential contamination sources throughout the supply chain and taking precautionary measures.
The technologically sophisticated countries, such as the United States, Japan and the United Kingdom are the main ones currently driving the food traceability technology industry. End-users from developing countries are adopting the technology as a result of increased awareness.
Due to increased awareness and knowledge among the general population, as well as improvements in people's lifestyles, emerging nations such as India, China, Korea, and others are in the process of adopting strict traceability systems, resulting in the rapid growth of the food traceability market in Asia-Pacific.
Companies have started investing in blockchain and other traceability technologies to provide transparency to the consumer to know the food product's complete journey.
With increasing awareness and knowledge among the general population, improvements in people's lifestyles and the implementation of technology into daily operations, maintaining high levels of quality and safety for finished products is a top priority for food businesses.
From RFID tags and bar codes to the use of blockchain to increase supply chain transparency, more customers are ready to pay slightly more for products with food traceability and point-of-origin certificate. This can be a revenue generator for those who decide to implement technology into their operations.
The techquisition of Decapolis completely aligns with Fresh Del Monte’s mission to offer best-in-class, innovative solutions for its products and services. The deal should enable Fresh Del Monte to seamlessly integrate technology into its services, offering a unique and innovative solution which fits in the company’s long-term brand strategy.
“Now more than ever, consumers are very cognizant of what goes into their food. With this blockchain technology, they'll know exactly what has gone into the product, and where it has travelled until the moment it was purchased for consumption”
- Mohammad Abu-Ghazaleh, Chairman and CEO of Fresh Del Monte Produce
Fresh Del Monte’s techquisition is a great example of how a traditional business belonging to the food and beverage industry is actively engaged in the journey of transforming itself to deliver greater value to its stakeholders – particularly its shareholders and customers – by properly positioning itself for the future, ready to tackle any disruptions, especially in a pandemic.
The essence of such a transformation unfolding is embedded in a strategy execution approach we have trademarked and call Techquisition™, which my firm, Aquaa Partners, has designed and delivers to its clients every day as an experienced and trusted expert partner.