Companies have been experimenting with ways to turn byproducts and waste into food for decades. It is over the last two or three years that the upcycling trend has really taken off in food and beverage, however, propelled by a newfound awareness of the global food waste crisis.
Let’s take a look at the markets for upcycling around the world and the latest trends that are driving their growth!
Upcycled food is a market with big potential
Future Market Insights estimates the market size for products made from food waste is $52.91 billion dollars1 in 2022, expected to grow at a CAGR of 4.6% to $83.26 billion by 2032. Yet, with so much potential, the market for upcycled food and beverages is still nascent and brimming with possibilities.
One of the most exciting aspects of this market is its sustainability. Upcycling presents companies and startups with an opportunity to convert something that was waste into a value-added product. We’ll outline the food waste situation in regions below as an indicator of opportunity.
How the world is waking up to upcycled food and beverage
Upcycling took off over the past few years thanks to increasing awareness about the scale of the global food crisis we introduced last time2, alongside growing trends towards sustainable business. To add to this, the COVID-19 pandemic has stretched global supply chains, giving businesses what has been dubbed a “once in a lifetime opportunity”3 to tackle food waste and make more with less.
Meanwhile, consumers have become more health and sustainability-conscious due to pandemic era lifestyle shifts. Upcycled foods tend to utilize highly nutritious ingredients, such as naturally sweet and potassium-rich cacao fruit or fibre-packed spent grains, giving them extra appeal.
In short, we find ourselves in a world where consumers and companies alike are whetting their appetite for upcycled foods.
The events driving the upcycled foods trend
In 2015, the U.N. declared its ambition to end food waste, setting a 50% reduction by 20304 as target 12.3 on their menu of sustainable development goals. This galvanized governments around the world, including the U.S., Japan, most of Europe, and many more, to adopt the target as an official policy. Upcycling has been the go-to solution of choice, not only by policymakers but also companies, to achieve waste reduction targets. Let’s take a look at some of the recent events that are helping to shape the upcycled food and beverage market around the world.
Upcycled Foods Logo Mark Developed in the U.S.
In 2021, the U.S. based Upcycled Foods Association (UFA) developed a certification for foods that are made from ingredients that would otherwise have been lost or wasted. The UFA certification logo will be awarded to products that meet requirements, acting as a logo mark on packaging to guide consumers towards more sustainable purchases. The 141 products certified to date will have the ability to prevent 703 million pounds5 of food waste annually according to the UFA.
Supermarkets start taking action
Supermarkets worldwide have started championing sustainable upcycling practices in order to reduce the significant amounts of food waste for which they are responsible. U.K. grocer Morrisons has started selling “Wonky Veg”, for example. Whole Foods in the U.S. began food donation programs6 to ensure products feed mouths rather than landfills. Also, as the number of upcycled products on the market grows, they’re starting to get dedicated shelf space in stores like MOM’s Organic Market in the U.S..
Startups using tech to tackle food waste
Recently, tech companies are finding ways to add value and save waste in almost every aspect of food products’ life cycles. For example, Apeel Technologies raised $250 million in 2021 for their tech that uses wasted peel and seeds to make an edible coating7 that doubles the shelf life of fruit and vedge. Food waste is also being given a second life beyond food as innovators, like Japan’s PEEL Lab or Italy’s Orange Fibre, are using fruit to make everything from yoga mats to blouses. In short, there’s no shortage of startups who are building markets for food upcycling with innovative tech.
Big players bet on upcycling
According to Spoonshot, interest in upcycling grew by over 128% in business media8 last year. This reflects the growing number of producers who, hungry to reduce the impacts of food waste on their businesses and the planet, are investing in upcycling. For example, CPG giant Unilever has seen success with upcycling wasted ice cream9 into a new ice cream, Cremissimo, one of their top-selling flavours in Germany.
Upcycling activity is also trending in industries that typically produce large amounts of byproducts, such as brewing, chocolate production and fruit and veg producers. Chocolate companies such as Nestlé and Barry Callebaut have used waste from the bits of cacao fruit that ordinarily aren’t used to make products such as cocoa pulp KitKats. ABInbev recently invested $100 million10 to build two plants in Belgium and St.Louis, Missouri, for processing byproducts into protein and functional ingredients.
Large organizations will play a key role in introducing upcycled products to the mass market, both as producers, and also investors in startups that can help them utilize their side-streams.
With so much global upcycling activity, let’s see who’s shaping regional markets.
Food waste in focus
In North America, food waste takes up around 30 - 40% of the food supply.11 Of this, approximately $161 billion dollars worth of waste could be eaten. Canada’s landfills aren’t any cleaner when it comes to wasted foods, the annual cost of which piles up to $31 billion dollars.12 Needless to say, it’s an expensive problem and one that’s attracting a lot of attention from governments and companies. Let’s meet some!
ReGrained is a California based startup that uses patented technology to transform leftover malt from the brewing industry into a nutrient-rich flour for baking. They raised $1.5 million USD in 2021 and formed a strategic partnership with Japanese grocer Oisix Ra Daichi to sell their products in the Japanese market.
Pulp Pantry is a growing upcycling startup that produces chips from waste made by juiceries and produce companies. In 2020, they received $150,000 in funding via a grant from organic drinks company Orgain.
Matriark Foods is a social enterprise that upcycles produce trimmings from farms into healthy products for institutional food services such as schools and hospitals. In 2021, U.S. grocer Kroger invested $250,000 in the startup.
UFA certified Take-Two brands itself as the world’s first producer of upcycled plant-based milk, which they make using spent grain from ABInbev. The startup launched in 2020 and grew quickly to expand into major grocers, including Whole Foods.
A recent winner of FoodHack’s 2022 demo day13, Hyfé use fungus based fermentation to produce low-carb, protein-rich flour from wasted food industry side streams.
Trendi is a Canadian startup that is developing BioTrim technology to help farmers and businesses turn their food waste into nutrient-dense chips that can be upcycled into new products. They also make and sell smoothie vending machines that use BioTrim. Trendi received $2.5 million CAD in funding in 2021 to develop their business.
Food waste in focus
South America faces a paradox. 47 million14 people in the region are undernourished, yet 223 kg of food is lost and wasted per person each year. The culprit here is likely underdeveloped supply chains which result in overproduction and then wastage.
Founded by native Brazilian, Caue Suplicy, in 2013, Barnana partners with farmers across Latin America to upcycle unwanted banana and plantain into dried banana chip snacks. Since its founding in 2013, the company has raised over $18 million in funding and grown to be the number one banana chip brand in North America.
Food waste in focus
The EU, which generates 88 million tonnes of food waste annually15, signed off on a landmark Farm to Fork Deal in October 2021. The agreement aims to overhaul the European food system to make it more sustainable, which includes taking steps to reduce food waste. These companies have already set to work!
Mycorena is a Swedish biotech company that ferments food waste to create mycelium protein. In March 2022, the company raised the equivalent of $26.8 million dollars in the largest ever Series A funding round for a Nordic alt-protein startup.
Seasoned specialist in plant-based protein, Schoten Europe produces a meat substitute with leftovers from their tempeh products. The spicy and mild minces are available via retail, out-of-home, and industrial channels.
Agrosingularity is a Spanish food tech company that upcycles plant-based waste products into natural ingredients and additives that can be used by food producers. In 2021 the company closed a $1.2 million seed funding round to scale up production.
This Danish startup has developed a process to upcycle food waste, including animal protein, into flavour enhancers that are bursting with umami flavours. In 2021 they received 385K Euro pre-seed funding to expand beyond their retailers in Denmark.
Rubies in the Rubble
This U.K. based upcycling company produces condiments such as ketchup and chutney from veggies destined for the trash. The company has grown fast, raising over 300K GBP in crowdfunding in 2019, and securing major partnerships, including providing the ketchup for Honest Burgers’ vegan burger last year.
Africa and The Middle East
Food waste in focus
The Near East and North Africa are estimated to waste 250kg of edible food per capita.16 This equates to a cost of $60 billion for the already resource poor region. The rapidly innovating region is already cooking up some upcycling solutions however!
This UAE based startup upcycle food waste from supermarkets into animal feed and fertilizer using Black Soldier Fly larvae. Circa Biotech aspire to tackle some 2,000 tonnes of food waste generated by UAE residents annually. They were selected for the Catalyst Incubator which is helping them scale with access to lab space and cash.
Food waste in focus
Food waste in Asia is a big issue. In China, for example, over 30% of food17 is estimated to be wasted, enough to feed about 30 to 50 million people. In the South-East Asian region, 50% of all waste is food waste according to a recent FDI report. Japan is a paradox when it comes to upcycling and food waste. Strongly averse to anything Mottaiani, or wasteful, on the one hand, yet so overly obsessed with a freshness that each year millions of tonnes of food is thrown away well before its expiry date. With so much food being thrown out, these innovators have decided it’s time to bin wasteful habits.
This growing startup from Singapore upcycles leftover bread into craft beer. CRUST has already received funding to enter Japan and get a slice of the nations’ bubbling $110+ million beer market. They plan to launch a new line of sodas and sparkling waters made with upcycled fruit and vegetables, CROP, in Japan in Q2, 2022.
The world’s largest producer of fruit and veg also produces a whole lot of waste. To get this under control, Dole Thailand upcycles over 80% of “ugly vedge” into edible products and practical goods. Dole plans to open an upcycling plant in the Philippines in 2022 to make high-value food additives.
Food waste in focus
Data from Forbes18 suggests that Australia wastes a modest 2.5 million tonnes of food per year. Yet, on a per capita basis, Australian households are amongst the most wasteful in the world. Data on New Zealand’s households suggests they waste an average of 122 thousand tonnes of perfectly edible food per year.
I am Grounded
This Australian startup seeks to reduce the 20 billion kilograms of coffee fruit waste produced annually by upcycling it into a nutritious energy bar. They launched in 2019, selling their product via Amazon, and today via independent retailers too.
Australian startup Aqua Botanical produces drinking water that combats water scarcity. Their solution extracts, filters and fizzes water from juice concentrate production to create tasty new water. They won beverage of the year in 2019.
New Zealand based startup upcycled unwanted fruit and veg to make plant-based cheesecakes. The company won the national Food Starter competition in 2021, receiving grants and the opportunity to sell its products in supermarkets.
Disclaimer: this article was originally written and published by MarketShake by GourmetPro.
MarketShake by GourmetPro is Japan’s food and beverage industry innovation publication. MarketShake publishes bi-weekly newsletters that summarize all the need-to-know information about an emerging trend in Asia’s F&B industry, with a focus on Japan. We conduct on-the-ground research with consumers and experts to bring you actionable insights about Japan that aren’t available anywhere else. Market Shake is curated by GourmetPro, Asia’s premier network of food and beverage industry experts.
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