The hunt for upcycled food unicorns is on
Three-quarter of businesses in the global upcycled food space are fundraising this year. Turner Wyatt, chief executive at the Upcycled Food Association, describes this category and the opportunities ahead
Some of the most important industrial innovations of the 21st century have been driven not by asking, ‘where is the most value?’ but by asking, ‘where is the most waste?’ These are the same question, aren’t they?
The gig economy was conceived via the question of the wasted value of people’s cars or homes while they sit unused most of the time. The American oil boom driven by hydraulic fracturing and directional drilling was conceived through questioning the value of the oil left behind between conventional drilling wells.
Now, a new industry is being formed by questioning the astounding value of 40% of all food that slips through the cracks.
The Food and Agriculture Organization of the United Nations estimates that the economic losses associated with food loss and waste are around $940 billion a year. Boston Consulting Group found that lost value to be about $1.2 trillion a year.
So, if the value of the food going to waste is close to $1 trillion, that’s a good estimate of the value of the industry to commercialise said waste.
Last year, Future Market Insights found the current value of the industry that is reducing food waste is around $47 billion, with an estimated compound annual growth rate of 5% over the following decade. So, there’s a long way to go, or in other words, there’s a lot of value yet to be realised.
The food waste revolution
When I started working in the food waste industry a decade ago, there was no industry to speak of. Food companies weren’t even measuring their waste, much less doing anything to reduce it.
Now, in the midst of the food waste revolution, companies have well-developed food donation operations and are now refining their waste reduction strategies.
The food industry is coming to terms with the money and energy it puts into producing every last calorie and resolving that it’s worth getting value out of every last calorie, too.
Last month, food waste created its first unicorn when high-profile investors, like Katy Perry and Oprah Winfrey, contributed to Apeel Sciences’ $250 million fundraising round, bringing the value of the start-up north of $1 billion.
Based in California, Apeel makes an edible coating for produce that slows natural biodegradation, therefore extending the shelf life – and value – to growers, distributors, and retailers.
Upcycled food: A new category
Food waste is a complex issue, and there’s a little bit of food that gets wasted at each link along the supply chain. Even if these companies are wildly successful (I hope they are), virtually eliminating spoilage related to shelf life issues, there would still be a remarkable amount of food going to waste.
Take for example food that never makes it off the farm due to market disruptions (ahem, Covid-19), or nutritious byproducts from food manufacturing – think pulp leftover from juice or plant-based milk production, spent grain from beer brewing, or the fruit we don’t use from the cacao or coffee plant.
Innovative companies have recognised the value in utilising these food types from farms and manufacturers by upcycling them into new products and ingredients.
Their collective vision is to establish the world’s most powerful sustainable food category, that gives consumers the opportunity to reduce food waste every time they shop for food.
In the not-too-distant future, consumers will be able to fill their whole shopping trolley with upcycled products from every aisle and the perimeter, similar to the role ‘organic’ plays today. And that’s not a moonshot metaphor, that’s what science is telling us.
A 2017 study from Drexel University showed that consumers conceive of ‘upcycled food‘ as a stand-alone food category, analogous to ‘organic’ or ‘conventional’.
Two separate studies in 2019, one from Mattson and other from the University of Otago, showed that more than half of consumers want to buy more upcycled food. This is probably because almost all consumers – 95% –want to reduce food waste in their lives.
To accelerate the vision of an upcycled product category, upcycled food businesses formed the Upcycled Food Association late last year to align messaging and serve as a centre of gravity for the emerging industry. I am honoured to serve this organisation as chief executive.
So far, we have teamed up with Harvard Law School, the Natural Resources Defense Council (NRDC), World Wildlife Fund, ReFED, Drexel University, and others to officially define ‘upcycled food, and we have plans to launch a product certification programme and consumer education campaign later this year.
Our membership has also grown to 90 companies across 14 countries; from start-ups to big multinationals and publicly traded companies; consumer-packed goods to ingredient suppliers; from product developers and food scientists to retailers.
“A recent survey from Upcycled Food Association found that there are already at least 400 upcycled products on the market.”Turner Wyatt, chief executive Upcycled Food Association
Why has such a diverse group of businesses come together to create this industry? I think it has to do with a statement I originally made in an article I wrote for Sustainable Brands in May when I asked readers to prove me wrong: “In light of a capitalistic food system, reducing food waste is the only place where the values of the environment and the values of business inherently overlap.”
To date, I’m still waiting for a compelling argument to the contrary. When such a coordinated effort across the entire value chain takes place, a special opportunity emerges.
As consumer demand for upcycled foods is accelerated, and the wasters of yesterday become the ingredient suppliers of today, consumers will come to expect to see the upcycled food certification as they fill their carts.
A recent survey from Upcycled Food Association found that there are already at least 400 upcycled products on the market. Our efforts are focused on elevating these products and creating a world habitable to new ones.
These efforts include activating investment in the industry. The same survey found that about three-quarters of upcycled food businesses are fundraising this year.
So, who will be the next food waste unicorn? My prediction: an upcycled food company.