Big Money Joins Fight Against $1 Trillion in Wasted Food
(Bloomberg) -- There’s gold in keeping bananas yellow.
Companies fighting food waste in the U.S. attracted about $125 million in venture capital and private equity funding in the first 10 months of 2018, according to a report from ReFED, a coalition of nonprofits, businesses and government agencies. This amount is expected to rise.
Luring funding are products like smart tags that change color when milk goes bad, a mist to prolong the shelf life of fruit and software to help grocery stores order just the right amount of produce so they throw less away.
The solutions have skeptics, but the problem is generally acknowledged as an economic and ethical calamity. Every year, 1.4 billion tons of food—a third of global production—ends up in landfills. By some estimates, this adds up to nearly $1 trillion of annual squander and the production of about 8 percent of all human-caused greenhouse gases. At the same time, nearly 800 million people go hungry every day.
“Investors are seeing that food waste is a big business opportunity,” said Michelle Masek, head of marketing at Apeel Sciences Inc., which formed a partnership this month with a major European supplier of avocados that will use a water-based solution the company says extends the ripeness as many as four days.
The challenge is that individuals—not restaurants, supermarkets or farms—are among the main offenders. In the U.S., about 43 percent of all the waste happens at the end of the supply chain, in home kitchens, according to a 2016 ReFED report. A study from the Natural Resources Defense Council found 68 percent of what’s trashed is still edible.
People are aware of their shortcomings, according to a 2016 survey. They feel guilty, but not guilty enough to make a difference.
But not everyone is sold on the idea that the answer lies in more stuff.
“I worry about this food-tech, food-waste boom becoming a food-waste bust,” said Elizabeth Balkan, director of the NRDC’s food-waste program. If consumers want to throw away less food, what they have to do is plan better and store smarter, she said. It does “require lifestyle adjustments, but it shouldn’t be things that require a lot of costs and newfangled devices.”
The hope for serious change, and the greatest opportunity for investment, rests with grocery stores, where narrow margins and tough competition from Walmart Inc., Amazon.com Inc.’s Whole Foods Market and European transplants Aldi and Lidl provide bottom-line incentive. Not only is revenue lost from tomatoes gone mushy and expired cheddar, there’s the added expense of getting rid of it.
“When they started to realize the cost of food waste, we started to see a change,” said Anne Greven, global co-head of food and agriculture innovation at the Dutch lender Rabobank.
Startups have stepped in. FoodMaven, which sells discounted surplus food and what it describes as “imperfect produce” to restaurants and commercial kitchens, announced $10 million of investment in January, from members of the Walton and Pritzker families, on top of $8.6 million from a first round of funding. Afresh Technologies, which taps machine learning to help retailers buy just enough to keep inventories in balance, followed a $1.7 million seed round in January 2018 with an undisclosed, but larger, funding round that closed in December.
Related: Hedge Fund Viking Invests in Battle to Keep Avocados Ripe Longer
Other companies include Bluapple, maker of a gas-absorbing device for refrigerators that claims to add a few more days to berries and greens, and Ovie, which says its Smarterware combines Tupperware and sensors to let you know how much time that leftover fruit salad or beef stir-fry has left. Companies like Copia and Goodr are making food donations easier.
Older companies, too, see the benefit of new products to address the problem. Newell Brand Inc.’s Rubbermaid advertises the containers in its Fresh Works line as capable of prolonging the life of items like strawberries and leafy greens.
Walmart “looks at food waste in a more holistic way,” said Stephanie Feldstein, population and sustainability director for the nonprofit Center for Biological Diversity. For example, the biggest U.S. retailer cut strawberry delivery time from farm to store by 50 percent, adding two to three days to the berries’ usable lives.
Through its Customer Value Program, Walmart reduces the price on items that will expire soon to increase the likelihood they’ll be purchased and created a standardized date label to lower the chances anything goes bad at home. Walmart donates to local food banks what doesn’t get sold.
“Waste, at its heart, is an expense,” said Laura Phillips, Walmart’s senior vice president for global sustainability.
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