From Plate to Purpose: Innovation in Food & Packaging Waste Reduction
Bluestein’s Take
At Bluestein Ventures, our mission is to transform the food system to be better, healthier, and more sustainable. Our current portfolio is creating a more sustainable food system in a myriad of ways (see: Mori, Meati, New Culture, Reel). One area we believe deserves more attention within sustainability is food and packaging waste, which is a massive contributor to climate change and strain on supply chains.
The time for sustainability to take hold is now due to significant shifts in consumer behavior, regulation, and technology.
Sustainability is table stakes for today’s consumers, who increasingly demand that companies reduce waste and increase transparency – but require a seamless experience to adopt new solutions.
New global sustainability regulations and coalitions are accelerating the adoption of sustainable business practices.
Technology is enabling better and cost-effective solutions. Cost is the most important driver for reducing food and packaging waste, especially if it requires significant investment or infrastructure change.
We’re most excited about startups in this space that are not only solving food and packaging waste, but also have some combination of reducing cost, increasing revenue, helping companies reach new consumer segments, increasing transparency, and/or protecting food quality and taste – a tall order but what’s required for mass adoption. Solutions must help companies design out waste from their supply chains, thereby improving the consumer experience and eliminating the need for major consumer behavior change.
The Time for Food and Packaging Waste Reduction Solutions is Now
Food waste creates significant financial and environmental damage – not to mention social damage from growing global food insecurity. Each year, a whopping $1.2T worth of food is left unconsumed across the value chain globally, and the cost of waste is often greater than retailers’ profit. In the US, 40% of food is lost or wasted.2 If manufacturers and retailers collaborated on waste reduction, they could reduce costs by 3-6% and 5-10% respectively, and capture an additional $80B of the market from new businesses.1 Hence why we believe monetizing food waste is a massive economic opportunity, presenting an incremental $155-405B by 2030.3 Environmentally, food waste consumes 25% of global freshwater and accounts for 8% of global emissions, over 4x the emissions of the aviation industry. Reducing food waste and loss is critical to helping the food industry achieve sustainability goals and reduce its large scope 3 (value chain) emissions footprint.
Taking a closer look at packaging, most food & beverage packaging is thrown away after one use; this waste makes up almost half of all municipal solid waste and is usually landfilled or incinerated.4 Current packaging relies heavily on plastics, yet only 2% is effectively recycled, and if this plastic reliance continues, plastics will account for 20% of oil consumption by 2050.5 Packaging solutions such as improved package design and active and intelligent packaging could have a huge positive financial and environmental impact – representing a combined net financial benefit of $4.13B and diverting 650,000 tons of food waste while saving 120B gallons of water annually.7 By 2030, reducing packaging waste could represent an incremental $40-65B economic opportunity, with the global green packaging market valued at more than $408B.3
Consumer Behavior
Consumers are increasingly aware of the negative financial, environmental, and personal health effects of waste – and are demanding change. 60% of consumers feel guilty about wasting food.8 Not only that, consumer demand for plastic-free products is up by 90%, and 43% now report that sustainable packaging is an important factor when making a purchase decision.9, 10
Rising food prices have also played a role in increasing consumer motivation to reduce food waste. In fact, 61% of consumers have expressed strong concerns about growing food prices, and these increased prices have led to more desire to reduce food waste knowing that food wasted is also money lost.11 Beyond cost, consumers care about solving hunger and environmental issues.8
Today’s consumers expect companies to operate in a more sustainable way – and it’s not just Gen Z. In fact, Gen Z has influenced other generations to more heavily consider sustainability in their purchasing decisions.24 More broadly, 61% of consumers think brands, retailers, and supermarkets should do more to help reduce waste and 57% are disappointed in businesses for not caring enough about waste reduction. Consumer interest in shelf-life extension, composting, zero-waste, localization, climate change, food security, and date labels has also grown significantly, representing 69%-278% year-on-year increases in search and social. Along with increased awareness, consumers increasingly accept repurposed waste for livestock feed, fertilizer, and consumer food products.8
While consumer interest in sustainability is high, several factors prevent consumers from switching to a more sustainable lifestyle. First, consumer willingness to properly dispose of or return food and packaging waste is limited and takes time and effort. This is exacerbated by inadequate at-home composting infrastructure in many countries. Second, cultural attitudes typically prioritize appearance over function, leading to overproduction and waste of edible “ugly” food. As such, further education that upcycled food can be equal to or better in cost, taste, and quality is needed.
Regulation
Regulation is also driving sustainable packaging adoption by working to make single-use packaging obsolete. The European Union (EU) and Canada are leading the charge: Canadian businesses can’t use single-use packaging starting in 2024, and the EU already bans single-use and requires businesses to offer reusable packaging.12, 13 Government and business coalitions are also supportive. The United Nations (UN), the US Government (including the EPA, US Department of Agriculture (USDA), and Food & Drug Administration (FDA)), the European Parliament, the Consumer Goods Forum, and over 30 major food companies in the “Champions 12.3” coalition are working toward goals to cut food loss and waste by 50% by 2030 and following federal food waste strategies.16, 17
US regulation has been slower to develop. That said, some states are leading the charge by already enacting bans on single-use.15 There is also a mandate to phase out single-use packaging in national parks and other public lands by 2032.14 This year, food waste reduction is a key US priority as one of only six stated climate commitments and local legislation banning food waste from landfills is being enacted.18 More work around industry standards is needed to harmonize reusable packaging definitions to further support scaling.
Technology
Technological innovations including packaging that overcomes food safety limitations, improved data solutions that prove waste reduction benefits, and advancements in food storage are also driving growth. Improved technology is moving the needle with the corresponding financial benefits from reducing food and packaging waste. In fact, 56% of organizations say reduced costs are a top benefit of food waste initiatives. On average, food waste costs organizations 5.6% of sales and companies save $14 in operating costs for every $1 invested in food waste reduction, which is especially important at a time when every dollar counts. Food waste reduction can also increase revenue from existing and new customers: 91% of consumers prefer to buy food from organizations reducing food waste, and 58% increased spending with these businesses. Further, companies leading in environmental footprint reduction boast 3.3% higher margins versus their peers.8, 17, 19 Finally, we also see that companies claiming “carbon zero” and “sustainable packaging” have 5-9% higher annual growth versus non-claiming peers.20
However, businesses may lack the infrastructure to support new solutions that require changes such as circular packaging collection, sorting, and processing, which could translate into upfront costs and slowed adoption. Food safety also presents challenges; given that quality assurance is essential to building customer trust, businesses may resist process changes that affect food safety protocols. In addition, complex reverse logistics could hinder implementation. Further, the lack of standardized measurement and reporting makes it difficult to assess the impact of initiatives on waste reduction progress and profitability. Repurposing waste may also not lead to net emissions reduction, so a proper lifecycle analysis (requiring more time and resources) may be needed.
The Opportunity
To better understand the landscape, we created a market map of key players within the areas that we’re particularly excited about: 1) New Packaging, 2) Circular Economy & Re-Use, 3) Shelf-Life Measurement, Extension, & Labeling, and 4) Digital Planning & Waste Tracking. We see the biggest opportunity in solutions focused on food and packaging waste prevention, as they typically have the greatest financial and environmental impact versus the investment required.
New Packaging: New types of packaging (films, wraps, pouches, foams, containers, etc.) made of biomaterials that can be composted rather than recycled or landfilled. For example, Sway creates compostable packaging using seaweed, which has added benefits of being both a regenerative feedstock and carbon sink.
Circular Economy: We view it across two dimensions. 1) Food & beverage products or packaging made from materials that would otherwise be landfilled but are instead repurposed. For example, Pulp Pantry converts fresh vegetable juice pulp into upcycled veggie chips. 2) Materials, hardware, and software that enable food & beverage packaging to be reused again and again. For example, Re Company’s closed-loop reusable packaging system helps large food service companies reduce waste using RFID-tracking-enabled return stations and a digital platform that measures impact.
Shelf-Life Measurement, Extension, & Labeling: Technologies that enable food & beverage products to last longer in transit and on shelves and those that optimize supply chain decisions to save costs and enhance profitability, in addition to solutions that help retailers and consumers know when products truly expire. For example, Onethird’s produce sensors enable retailers to scan produce at distribution centers and at the store to predict days until spoilage, improving inventory management and minimizing food waste.
Digital Planning & Waste Tracking: Technologies that help players across food & beverage and packaging supply chains trace, measure, manage, and ultimately prevent waste. One example includes Shelf Engine’s intelligent forecasting, which uses daily store sales data along with real-world considerations to generate profit-maximizing orders and reduce shrink and stockouts.
Evaluative Criteria
To evaluate opportunities in the space, we ask — does the solution:
Boost profitability and efficiency across the value chain?
Facilitate the redesign of products and systems to promote circularity with net positive environmental impact?
Enhance convenience, simplify logistics, have equal or greater functionality versus existing solutions, and promote food safety?
Enable scalability by seamlessly integrating into existing processes, minimizing capital expenditure, engaging customers willing to change behavior, and using plentiful raw materials?
Have defensible IP and/or relationships while minimizing technology risk?
The best solutions support multiple levels of the value chain, facilitate collaboration, drive systemic change that designs out waste, and integrate analytics to improve efficiency and profitability.
What’s Next
This is an incredibly dynamic space that we’re excited to see further develop as more resources, innovative technology, and positive regulation emerge to enable new solutions. At Bluestein, we’re excited to back the next generation of founders building a more sustainable food system. If you’re an entrepreneur in this space or know of one, we’d love to hear from you. You can reach us at info@bluesteinventures.com.
A big thank you to our MBA intern, Abbey Schmitt, for her deep analysis on this space!
Sources
1. Reducing food loss amid the global food crisis | McKinsey
3. New Report: Valuing the SDG Prize in Food and Agriculture
4. The Environmental Impact of Food Packaging | FoodPrint
5. A Guide to the Future of Sustainable Packaging | Sourcegreen
6. Environmental Impact of Food Packaging (linkedin.com)
8. Final-Web-Version-Food-Waste.pdf (capgemini.com)
9. Demand for Plastic-Free Products Is Up by 90%, Says New Study - Brightly
11. Packaged Facts: Food Waste & Upcycling: Trends & Opportunities in Sustainability, 11/29/2022
12. Plan for the Ban: New Year, New Canadian Plastics Regulation Update | McMillan
13. The EU is Cracking Down on Plastic. Will Others Follow? | Bloomberg
14. US to Ban Single-Use-Plastic on Public Lands, National Parks by 2032 | CNBC
15. Single-Use Plastic Ban | Plant Switch
16. Sustainable Management of Food | US EPA
17. Home | Champions 12.3 (champions123.org)
18. North American Leaders Make Historic Commitment to Food Waste Reduction (refed.org)
19. Tackling the 1.6-Billion-Ton Food Loss and Waste Crisis (bcg.com)
20. Do consumers care about sustainability & ESG claims? | McKinsey
21. International Efforts on Wasted Food Recovery | US EPA
22. Food Waste Landscape - October 2021 (agfundernews.com)
23. Reusable packaging: Key enablers for scaling | McKinsey
24. Gen Z Influencing All Generations to Make Sustainability-First Purchasing Decisions