REAPING PROFITS FROM WASTED FOOD
‘A KIND OF UBER FOR REFRIGERATED TRUCKS’
Just as Rumpelstiltskin spun gold from straw, scores of new companies are trying to spin profits out of food waste. Some are aiming to quickly distribute food that is about to be thrown out. Others are working to use every last ounce of ingredients.
“I’m convinced there’s a business that’s a kind of Uber for refrigerated trucks,” said Jesse Fink, a founder of travel site Priceline who now calls himself a food-waste evangelist.
The businesses have a lot to work with. As much as 40 per cent of the U. S. food supply goes in the trash. Most of the waste comes from consumers and retailers, the government estimates, and in recent years, the issue has resonated, particularly with younger consumers.
The business of food waste is not well-tracked; most data available is on funding. For instance, Oakland, Calif.- based Back to the Roots, which sells products such as a mushroom- growing kit that uses coffee grounds, recently raised US$5.8 million from investors including Michael Pollan and Blake Mycoskie. EcoScraps, which is based in Utah, and turns food waste into gardening products, has raised US$13 million from Peterson Ventures and others, CB Insights says.
“Over the last year, we’ve seen investors put millions of dollars into early-stage brands that appeal to consumers based on their sustainability and transparency,” said Rory Eakin, chief operating officer of CircleUp, a marketplace for investors and early stage consumer brands.
He cited examples such as the Forager Project, Misfit and Back to the Roots. “Many of these emerging brands incorporate food waste and upcycling products as part of their brand portfolio.” Others, he said, are working to solve the unusual distribution and logistics challen- ges posed in using food scraps.
Some of the new businesses can bootstrap operations, since they are essentially using inexpensive or free scraps from others. But many have been financed.
Cerplus, for instance, raised a small amount from friends and family late last year and got US$ 20,000 from Y Combinator in exchange for securities if Cerplus has a financing round or sells for more than US$ 100 million. Launched in January, it links farms and wholesalers with food on the verge of going to waste with restaurants and other businesses.
“We let people know what’s available and offer a pretty good discount,” said Zoe Wong, cofounder and chief executive.
On a recent day, Cerplus was offering organic artichokes for US$ 1.30 a pound and ripe bananas for US55 cents a pound, minimum order 40 pounds. The company serves the San Francisco Bay Area and has shipped more than 13,000 pounds of food to more than 60 clients, Wong said.
“Plenty of these businesses need early- stage, venture- capital type of investment,” said Fink, who is a trustee of the Fink Family Foundation, which has focused on how to reduce food waste.
Even Beyoncé has gotten involved. She recently joined other ventures to buy a stake in Wtrmln Wtr, a startup that makes coldpressed watermelon juice from melons that can’t be sold in a grocery store. The company was started in 2013 when Jody Levy and Harlan Berger decided to do something about the hundreds of millions of pounds of watermelon wasted every year. Wtrmln Wtr does not disclose sales but said it expects revenue to increase 385 per cent this year.
Its biggest challenge was creating a supply chain. Scuffed, sunburned or otherwise unwanted melons can be sold in a secondary market, but prices are volatile, so farmers may just plow them under because hauling them is expensive. Now, Wtrmln Wtr wants them.
“It’s definitely created a new opportunity for us,” said Chandler Mack, whose family grows potatoes and watermelons in central Florida.
Retailers, wholesalers and food service companies may reject entire semitrailers of produce if they spot a single crushed box or carton, and then producers must scramble to figure out how to get rid of the produce to avoid extra transport costs.
“There are typically 22 pallets on a truck, which is what helps keep food costs low in this country,” said Roger Gordon, co-founder of Food Cowboy. “But if no one is going to pay the bill for all that, the easiest place to deliver it is a dumpster.”
His company uses a mobile app to connect rejected truckloads of fresh foods to charities and other organizations. It maintains a database with details about loading docks, refrigeration and other equipment to help it co-ordinate.