Mushroom Farm

US: New crop of companies reaping profits from wasted food

Just as Rumpelstiltskin spun gold from straw, scores of new companies are trying to spin profits out of food waste.

Several start-ups are chasing ways to use food waste to make other edibles. Some are aiming to quickly distribute food that is about to be thrown out. And yet others are working to use every last ounce of ingredients.

Food waste, in other words, is now a platform for commerce. The businesses have a lot to work with. As much as 40 percent of the American food supply goes in the trash. Most of the waste comes from consumers and retailers, the government estimates, and in recent years, the issue has resonated, particularly with younger consumers.

The business of food waste is not well tracked; most data available now is on funding for individual companies.

Back to the Roots (pictured above), which is based in Oakland, Calif, and sells products like a mushroom-growing kit that uses coffee grounds, recently raised $5.8-million from individual investors like Michael Pollan and Blake Mycoskie.

EcoScraps, which is based in Utah, and turns food waste into gardening products, has raised $13-million from Peterson Ventures and others, according to CB Insights, a research firm.

“Over the last year, we’ve seen investors put millions of dollars into early-stage brands that appeal to consumers based on their sustainability and transparency,” said Rory Eakin, chief operating officer of CircleUp, a marketplace for investors and early-stage consumer brands.

He cites examples like the Forager Project, Misfit and Back to the Roots. “Many of these emerging brands incorporate food waste and upcycling products” — using once-discarded materials as components of new products — “as part of their brand portfolio.” Others, he says, are working to solve the unusual distribution and logistics challenges posed in using food scraps.

While these businesses need early-stage, venture capital type of investment, some other businesses related to food waste, like large-scale composting, require significant capital investment.

CB Insights has found that Kleiner Perkins, a venture capital firm, and others have put a total of $248-million into Harvest Power, a company based in Waltham, Mass, that processes organic waste into mulch and fertilizer. And Liquid Environmental Solutions, which is based in Irving, Tex, and processes waste water and used cooking oil, has raised $51.6-million from investors including ABS Capital Partners.

Even Beyoncé has gotten involved. She recently joined other ventures to buy a stake in Wtrmln Wtr, a company that makes cold-pressed watermelon juice from melons that cannot be sold in a grocery store.

The company was started in late 2013 when Jody Levy and Harlan Berger decided to do something about the hundreds of millions of pounds of watermelon that are wasted every year. The company does not disclose its sales but said it expects revenue to increase 385 percent this year.

Its biggest challenge was creating a supply chain. Scuffed, sunburned or otherwise unwanted melons can be sold in a secondary market, but prices are volatile, so farmers may just plow them under because hauling them is expensive.

Now, Wtrmln Wtr wants them….

New York Times: Read the full article