January 20, 2023 | Eul Basa

Food Waste Start-Ups On The Rise As Grocers Go Green

Food waste continues to be a growing problem in today's world. According to the UN's Food Waste Index Report, there were about 931 million tonnes of food wasted in 2019, accounting for 17% of total food production globally. Households were responsible for two-thirds of the food waste, while retail and foodservice were responsible for the remaining one-third.

Today's venture-capital firms are hoping their latest efforts will help eliminate the issue once and for all.  Some startups are experimenting with artificial intelligence to better quantify customer demand, while others are using programs to help streamline the logistics of selling irregularly-shaped produce that grocers often turn down. Automating these processes would help ensure that there isn't a surplus of perishables on the shelves, but also enough of them to keep up with consumer needs.

There is a growing demand for these novel solutions, and big companies are looking to food waste startups in particular for them. In fact, mentions of "food waste" on corporate earnings calls have tripled since the second quarter of 2016, according to CB Insights. Additionally, companies that are developing food waste technologies have increased their funding to $170 billion between January and June of 2021, which is approximately $20 billion more than all that was raised the year prior.

Currently, the main focus of these food waste startups is to tie up with large supermarket chains that are willing to allow their technologies to be used in their businesses. Given that some investors are still unsure about taking the plunge, a more united effort towards the food waste problem by grocers and restaurants alike would make the investment look a lot more appealing. A key issue is that, despite the increasing interest in food waste solutions, there are still not enough companies that are willing to pay for them.

Still, the COVID-19 pandemic has helped keep the spotlight on the food-tech sector as more people relied on online shopping for their groceries. In any case, investing in such startups could be promising in the months to come.

“I think most [companies] in general are feeling more pressure — and I mean that in a good way — to focus on environmental, social, and governance (ESG) efforts,” said Adam Boutin, a partner at Capital One Ventures.

“It’s just a win-win for the environment, for grocery stores, for the industry. Mountains of produce in grocery stores might look good to consumers, but it’s important to stock only what is needed."

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