Food waste impacts the whole of society, including the field of alternative protein. Nick Cooney, managing partner of Lever VC, explains how companies and investors in the space aim to tackle the global problem.
This week, the UN and its food security-focused arm, the Food and Agriculture Organization, celebrate the International Day of Awareness of Food Loss and Waste.
Food waste is a chronic problem undermining all the efforts, energy and land required to feed the world. Food waste can happen at any stage of the supply chain from harvest to retail, and in food services and households.
The issue of food waste also affects the operations of private companies and investors in the food sector, reducing their revenues. Nick Cooney, managing partner of the alternative protein investor Lever VC, explained to us why the issue is important to Lever VC’s portfolio, and how companies in the space could help to reduce the amount of food thrown away.
Food waste is clearly a large societal issue. Why is it also an important issue to tackle for private companies and investors?
Waste is exactly that — waste — and so just as letting food that’s been produced go to waste means you are getting all of the environmental costs and impacts of food production with no benefit, you are also getting the financial costs and impact with no benefit.
Waste means profit margins get eroded and in some cases, customers can be lost (if, for example, the product is expiring on shelf at retailers). It’s always a complete negative for companies and for funds like Lever VC that invest in those companies.
The main areas where waste can occur and where attention has to be paid is on the production side and on the retail sales side. On the production side, production lines can be more efficient or less efficient in terms of what percentage of the ingredients end up on the production line floor and from there going into the trash can.
On the sales side, how a product is packaged and the shelf life that is able to be achieved matters a lot. Shelf-stable products will have minimal loss and waste, but frozen products have some risks (transit times can take too long, products can get stuck in storage and get too close to their expiration dates, or companies can produce too much).
Chilled products — those sold in a refrigerated case — are where the real risk lies. Products don’t have a long enough shelf life, and if logistics aren’t carefully planned, there can be a significant amount of product that goes bad and has to be tossed. That loss is usually going to be absorbed by the company one way or another, either directly in terms of having to eat the lost costs of the expired products or indirectly in terms of lost retail accounts.
So for private companies and those that invest in them, cutting waste on the front end and carefully presenting loss and waste on that back end are important for preserving margins as well as keeping retail customers.
Can you explain the importance of food waste to players in the alternative protein space?
There are a few ways to answer that but I think one of the most important things to note here is that reducing food waste is another major benefit of the alternative protein sector.
For one thing, meat and dairy represent two of the largest contributors to food waste, at least in developed regions like the U.S. and Western Europe. In the U.S. for example, a whopping 50% of seafood, 22% of meat, and 20% of milk gets wasted.
But in many ways, even more important than the direct loss is the indirect loss. Meat and dairy protein is incredibly resource-inefficient to produce relative to plant-based proteins (beans, legumes, peas, high-protein grains, and similar). Chicken and pork production generates 2–3 times the amount of greenhouse gas emissions as plant-based meat, and pork and milk produce more than 10 times the amount of greenhouse gas emissions of plant-based meat on average.
Part of that difference is caused by methane emissions from animals, but most of it is caused by the fact that it takes many pounds of grain to produce one pound of chicken, pork or beef, and a heck of a lot more water, land and energy.
So from an environmental perspective, a pound of seafood or chicken going bad and being thrown out is dramatically worse than say a pound of plant-based meat or a pound of grain getting wasted. A pound of chicken being wasted means many pounds of grain have been wasted up the value chain.
Food waste of animal protein is also particularly tragic when you consider the lives of animals raised for meat. Based on the food waste data and farm animal production data from the EU, we can see that just in Europe alone there are several billion animals that are put through miserable lives and killed in excruciating ways each year only to be eventually thrown in the trash can as food waste.
While I wouldn’t say a desire to reduce food waste is a primary motivator for entrepreneurs that launch companies in the alternative protein sector, it is certainly the case that to the extent the alternative protein sector continues to grow and take market share from conventional animal protein categories, it will significantly reduce food waste, both on the front end (less product going into the trash) and particularly on the back end (a lot of grain, water, and other resources conserved upstream in the production process).
What are some of the main challenges to reducing food loss and waste globally?
I’m not an expert on food loss and food waste but it’s clear that there are a lot of challenges. Some of these are on the levels of production and supply chain logistics, and it seems very likely that some progress can be made here.
Many of the challenges come from individual consumer choices (buying too much, letting food go bad, not eating leftovers and so on), and those consumer-based causes of food waste would I imagine be the most difficult to tackle because they involve a huge number of individual decisions.
What are the most exciting alternative protein innovations in motion that could make a real difference in the campaign against food waste?
There are certainly some companies in the alternative protein sector that are using or looking into using food waste as part of their ingredient input stream.
For example, from Lever VC’s portfolio, The Better Meat Co. in the U.S. is looking at the potential to use food industry waste streams to “feed” the growth of its mycoprotein meat alternative. We’ve seen other companies looking at incorporating waste streams into fully plant-based products, as well as alternative protein companies working with innovative packaging that extends shelf life and thereby reduces waste.
Companies producing real meat and dairy protein from cultivation or precision fermentation (from Lever VC’s portfolio, this would be companies like Mission Barns, Avant, Bluu, CellX, TurtleTree and Bond Pet Foods) will be offering to buyers and end consumers meat and dairy proteins that have significantly longer shelf lives because they are produced from the cellular level and they don’t have the bacteria that conventional meat or dairy products have and that jump-start product spoilage.
But I think the most exciting thing of all is simply the growth of the alternative protein category. Utilizing waste streams and reducing direct food wastage are both great things, but simply shifting a larger percentage of the meat and dairy categories to alternative proteins will have the biggest impact on food waste of all because of the upstream resource conservation that generates.