As consumer demand for sustainable products grows, upcycled ingredients are emerging as a solid business proposition with environmentally friendly credentials, and both small startups and major multinationals are getting involved. However, work is needed to improve consumers awareness, say stakeholders.
Market research company Euromonitor included environmental concerns in its top 10 global trends that are impacting consumer demand throughout 2022.
“Eco-anxiety is driving environmental activism and purchasing decisions. In 2021, one-third of global consumers actively reduced their emissions and one-quarter used carbon offsets to compensate for them,” it said. “Climate Changers make more sustainable choices whilst demanding action and transparency from brands.”
Using upcycled ingredients can resonate with consumers by offering a solution that addresses such concerns.
Mintel research suggests that people may see products made from upcycled food waste positively. Fifty-eight percent of Canadian shoppers say they are concerned about food waste, and they rate it just behind packaging waste (63%) as a concerning environmental issue. In the UK, 43% of people agree that limiting food waste is one of the most important factors when making food and drink purchasing decisions.
A growing number of startups are centring their entire portfolios or production methods on upcycled food ingredients.
However, giant multinationals are also embracing the concept. Via its wholly-owned subsidiary EverGrain, AB InBev, the world’s largest brewery, launched a plant-based barley drinking milk made with brewer’s spent grain under the consumer-facing brand TakeTwo. In Australia, Nestlé launched a carbonated soft drink made using cascara, the husk that surrounds coffee cherries which, although packed with polyphenols, tends to go to waste.
One entity working to increase the number of brands embracing upcycled ingredients is the Upcycled Food Association. Its CEO, Turner Wyatt, told Fi Global Insights it wanted to double the growth rate of the upcycled economy. However, Wyatt noted that challenges remain.
“While 80% of consumers would be interested in upcycled products, currently less than 10% of consumers know what they are! This means there are millions of consumers that we need to reach to educate them about what upcycled products are; the more people we educate, the more people who will buy upcycled products.”
The Upcycled Food Association currently has over 190 members across more than a dozen countries around the world. Last year, it launched a third-party certification programme and created a trademarked logo – Upcycled Certified – that brands can add to their product packaging to inform consumers that it contains upcycled ingredients. At the time writing, almost 200 products and ingredients had become certified.
“When testing the Upcycled Certified [logo] in a consumer trial, the most common associated words were sustainability, and food waste solution,” Wyatt said.
Wyatt explained that, since the certification scheme launched relatively recently, many certified products were still working through their previous packaging. However, the first Upcycled Certified products with the on-pack logo were starting to appear on supermarket shelves, and the Association is conducting research on how much the logo impacts product sales.
“The cost [of becoming certified] depends on company size and how many products are included in the application,” he added. “The time needed also varies but many brands get through the process in just a handful of weeks.”
Food waste has established itself as an emerging business category driven by a growing focus on climate change, concerns about supply chain disruptions, and validation from food waste success stories, according to Alejandro Enamorado, capital and innovation manager at ReFED, a US non-profit dedicated to ending food loss and waste in the US through data-driven solutions.
In the US, private food waste investment reached $4.8 billion (€4.52bn) in 2021 compared to $3.7b (€3.48bn) for 2020, equivalent to around 30% growth, fuelled by more deals and higher valuations. However, Enamorado sees room to grow this further, particularly as this growth was moderate compared to overall venture capital in the US. (By comparison, startups in the US raised around $300bn (€282.85bn) last year, an increase of around 100% from 2020, he said).
“Investment into food systems should continue despite a recessionary environment. From retailers to grocers, many are recognizing that curbing food waste is good for both the planet and business,” Enamorado wrote.
“Climate change-driven impacts will continue to pressure businesses, as food input prices risk increasing due to fluctuating growing conditions, water scarcity, and other extreme weather events (on top of pandemic-driven price increases). More big businesses are setting explicit food waste reduction sustainability targets.”
