The concept of “upcycling” is becoming an eye-catching product differentiator for suppliers and product developers, as well as a means to reduce food waste.

There are plenty of hurdles to overcome, as told by experts at a panel discussion called “Turning Waste into Profit” at IFT FIRST in Chicago. 

Estimating the Impact

The scale of food waste and the impact on the environment is staggering. According to some estimates, 25% of all global produce is left to rot in the field.

According to food rescue nonprofit Feeding America, 119 billion pounds of food is wasted in the U.S. This equates to 130 billion meals and more than $408 billion in value.

Meanwhile, a recent report by the U.S. Environmental Protection Agency (EPA) indicated food loss and waste amounts to 170 million metric tons of carbon dioxide equivalent GHG emissions, which is equivalent to the CO2 emissions of 42 coal-fired power plants.

“Ninety percent of the produce industry is offline,” said Christine Moseley, founder and CEO of Full Harvest. “Our food system is wildly inefficient, and having some data and transparency can go a long way in saving time and money, and improving revenue streams. Full Harvest is digitizing the marketplace because it’s such a simple step to access this huge portion of produce which isn’t sold, which is helping buyers save more by being able to source directly from farms. We don’t actually have any direct competitors.”

Moseley noted that most of the food waste that takes place due to lack of digitization involves food which is fresher, because it’s disposed of at the source. “The supply chain inputs are where most of the waste is happening and where one can make the biggest difference.”

It’s also important to account for the water, land, fertilizer, and fossil fuels that go into a crop, all of which are wasted if produce fails to make it to the market, noted Dan Kurzrock, founder and CEO of Upcycled Foods, Inc. and co-founder of ReGrained.

Biggest Barriers

According to Kyle Parker, trader at MGM Marketing, Inc, a procurement company which resells food byproducts for use in animal feed and other applications, one of the biggest hindrances to this market is stigmatization about salvaged food byproduct from siloed quality assurance departments at larger corporations.

“While several companies have green initiatives and are sending the right message to consumers, they often lean toward landfilling everything, and treating disposal as a cost of doing business for what could be turned into profit,” Parker said. “When a food product becomes out of spec, and can’t be reprocessed in order to create food, there’s often this total breakdown where people skip straight to the landfill step all too frequently.” 

In order to develop a successful upcycled product at large scale, innovators must balance the needs of sustainability teams, quality assurance teams, and others whose agendas don’t often line up.

“The more departments you have in a given company, the more competing interests you have as well within that single entity,” said Parker. “You need to thread the needle of ESG, quality, and legal aspects, and address all concerns in a single audience to develop a company-wide goal.”

Beyond competing agendas, many large companies often view the status quo as the path of least resistance. “The ‘easy’ thing to do is to buy the number one product that comes off of a given field,” said Chuck Templeton, senior managing director at S2G Ventures. “But looking at number two products implies there will be a less consistent supply, and less continuity in one’s business. Now, there’s many more entrepreneurs and innovative companies looking to solve those inconsistencies for companies like General Mills with product streams designed specifically for those companies.” 

Kurzrock stated that the upcycled food industry is still mostly comprised of startup companies that work hard to convince larger and less-inclined manufacturers to connect supply with demand. The onus of creativity is, for the most part, on the startups. 

“Today we’re mostly working with manufacturers and processors on things considered byproducts, so people aren’t treating these materials as losses but as waste. We’re failing to take into account the full value of crops. Commercial breweries take sugar out of the grain, leaving behind fiber, protein, and flavor, which have functional value and a great sustainability story. They’re in the business of making beer, not food, and so it’s up to us to connect the dots between supply and demand.”

Motivating Investors

“The consumer awareness of climate impact, and nutritional issues on the whole, as well as an overall climate which is rewarding innovation has opened up a lot of opportunities,” said Templeton. “We’re realizing that if we solve food waste, the impact would be so huge that it could even eliminate the need to employ other technologies in order to become more sustainable or reduce climate impact.”

Brands that can achieve the level of consistency demanded by the biggest players in the food industry will make leaps and bounds for the upcycled food industry on the whole, noted Moseley. “Some of the biggest companies in the world were approaching us 3 or 4 years ago,” she noted. “Danone, for instance, developed a line of three SKUs called Good Save, which is one of their top sellers with a storytelling angle about food loss. It’s easy to debunk the myth that you can’t have healthy, sustainable, and affordable all at the same time.”

Above all else, what large multinational food companies do best is source ingredients and establish supply chains, noted Kurzrock, and before long, finding the right thing and not just the easiest thing to source will carry much more weight.

“Three quarters of global organizations have committed to the United Nations’ Sustainable Development Goals to reduce food waste and hunger, but only 15% feel that they’re on track to get there. The tools exist and the desire is there to create the kinds of outcomes that everyone wants,” he said. “Innovation doesn’t have to be done in a silo, and companies have a great opportunity for collaboration.”