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Food upcycling gains momentum in Asia

Source:FoodPacific Manufacturing Journal     Date:2022-04-18
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THE COVID pandemic has highlighted the need to tackle food waste and work on local supply networks. In Asia, consumer demand for sustainable food is on the rise such that even giant brands like Nestlé have taken notice and are looking into upcycled food products. However, some start-ups have to be given due credit for being pioneers in this segment, and three of them shared their experiences with FoodPacific Manufacturing Journal.

RE:Harvest’s pursuit to close the loop opens up opportunities to innovate

Founder of RE:Harvest, Alex Min was working as a management consultant for PWC when health issues prompted him to give up his job and pursue what he has always wanted for a long time – that is closing the loop in the F&B industry in South Korea. He discovered through his research that 70% of food ingredients in Korea is sourced overseas, and half of it becomes food waste. This trend is happening while one out of 11 people still suffers from malnutrition.

“There was an obvious gap between supply and demand, and I thought that if I could upcycle these by-products then perhaps, I could close the loop, thereby effectively providing other sustainable food sources to people in Korea as well as saving the environment,” he says.

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Aside from flour made from by-products of beer and sikhye, RE:Harvest offers its own brand of energy granola bars, granola cereals, and patties. 

As the first company to get into the food upcycling business in Korea, RE:Harvest had to negotiate hard-to-get government certification. And with support from the local environmental protection agency, their company received it within six months.

RE:Harvest  was launched late 2019, just when the COVID outbreak began. “Initially the market didn’t respond well, to be honest. They thought, why should we eat food waste? Why should we eat something that is otherwise left over? What is the value? There were a lot of questions,” says Min.

The team worked on market education using traditional media and organised cooking classes with the company’s upcycled food ingredients. The initial focus was the vegetarian sector. Their clientele soon became loyal customers who championed the products themselves. In addition, the Environment and Social Government (ESG) trend became big in Korea in March 2021 and that also helped boost sales.

The company’s main line of business is flour from by-products of beer and sikhye (a Korean traditional rice beverage). The flour is used for pizza bases, noodles, and pasta.

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RE:Harvest partners with other companies such as OB beer, Olga whole food, and Full Moon to create co-branded products. 

Aside from this, RE:Harvest offers B2C products, their own brand energy granola bars, granola cereals, and patties.rship with Korean companies such as OB beer, Olga whole food, and Full Moon, it has created protein shakes with upcycled food ingredients.

Production is all done in house, and the company is scaling up with a commercial factory to be set up by the second quarter of this year. “We are getting a lot of calls from other companies; we have already signed some of the biggest beer manufacturers in Southeast Asia: Malaysia, Indonesia, and Vietnam. They’re very keen on upcycling their beer by-products for us. We also upcycle tofu by-products in Japan, and we are expanding pretty fast.”

Securing food permits in Southeast Asia, however, is a bit of challenge, according to Min. “It is so new, it is such a different concept, some government entities are difficult to convince. So, we have to show our case studies in Korea, and it is taking a while.”

At the same time, drawing consumers to consider upcycled foods is not easy, he adds. “If you look at it, our flour has two times more protein and 21 times more fibre compared to ordinary flour. In terms of nutritional value, it is fantastic. But every time you have to go into a different market, you have to educate them, and this leads to significant costs and significant lead time. But it is worth it, so we are doing it anyway.”

When it comes to the outlook for the industry, Min is optimistic. The COVID pandemic made people more aware of the environment, and this could bode well for the industry. “I think it is going to grow. When we started out the upcycled food association it didn’t have that many members but I think right now there are more than 150 members. So, we are growing pretty fast.”

In Korea, there is increasing demand for alternative food. Min believes this will positively impact the demand for upcycled food.

“Food upcycling is a necessary measure that we must face. We spend on taking out what is necessary to make a final product. For example, “If we look at an apple, we take out carbs and sugar content and we turn these into juice, but what is essentially left over is the apple without the carbs and sugar, which has very high fibre, and is very rich in minerals and protein. We are throwing all these away. We are creating a huge food waste problem as well as creating a paradoxical situation between consumers and suppliers. Food upcycling is essentially what we need to do to close the loop and it’s going to grow.”

A win-win solution from Crust Group

Creative ways to upcycle food is also the mission of the Crust Group in Singapore. The company was founded by Travin Singh, an avid home brewer who discovered in the course of his research that bread preservation is one of the oldest forms of making beer. He also knew the value of not wasting food. In his childhood home, any leftovers would be made into something new the following day. These formed the basis for his vision: a value-based company that reduces food waste and shows how businesses can be done in the future.

The company uses bread surplus and fruit peels from partner companies to create CRUST beers and CROP sparkling water. By doing so the company helps these partners create new products and earn additional revenue.

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Bread surplus, sourced from bakeries,  is among the ingredients in CRUST beers. 

Marketing & Business Development Executive Jiayu Low says the company is the leading plug & play upcycling platform for food manufacturers and retailers who want to reduce their food waste but who have high barriers in producing a branded product made from surplus ingredients. “Using upcycled ingredients to create a product also creates a sustainability story for businesses and consumers, enabling consumers to make a difference with each purchase, and that is what makes us different with other brands.” 

CRUST targets eco-conscious consumers in their mid-20s to mid-40s. It sells through e-commerce platforms, supermarkets, specialty food stores, eco stores and food and beverage outlets such as restaurants and bars.

Ms Low noted that initially, people didn’t totally understand what the company was doing. “They thought that we were taking food that had been consumed or used by others and turning it into beer. Actually, we were taking surplus bread that hadn’t been used or sold. Now that we are two years old, more people gradually understood what we are doing and perceptions have changed.”

By November 2021, the company has produced 22,500 litres of beer from 1,200 kg of food that would otherwise have been wasted, reducing approximately 2,045kg of C02 emissions.

Singapore is a good hub to connect with and expand into other parts of Asia efficiently, according to Low. It is an easy country in which to do business, and its high level of connectivity and advanced infrastructure are key considerations for any serious player in this sector.

Since its launch in 2018, Crust has penetrated the Japanese market. Each market has its own set of challenges, according to Ms Low.  “Japan being a traditional and ageing population, bringing in a fresh idea revolving around surplus food can be a taboo subject and plenty of education needs to be done. And the start-up culture in Japan is still relatively young as most of the larger corporates are usually the ones spending more on R&Ds and innovation. Whereas Singapore is still a really small and expensive market and it is not a manufacturing hub due to its size and high costs. It is also a market that heavily depends on imports and trade and therefore will never be able to compete in terms of costs with other Southeast Asian markets. But there is a huge shift with more start-ups popping up in Singapore. Also, with more focus on locally grown produce, hopefully costs to produce beverages in Singapore will decrease in the years to come. But government officials in both countries are building policies around ESG and SGDs, which is in the right direction,” she explains. 

When restaurants and bars closed due to the pandemic, CRUST was also unable to distribute its products through those channels. Like many companies in this situation, CRUST started a webstore and expanded into online distribution channels and stores. 

“We kept an open mind and grabbed hold of any opportunities that came. It was also during COVID that we realised we can do so much more than just bread and beer; and with the same ideology of saving food waste and loss in mind, and took the bold decision to pivot from a brewing company into a food tech company,” Low shares.

CRUST is going to launch its CROP products this year and is working on partnerships with various companies in Singapore and Japan. It also plans to scale out into other Asian markets, and later, to other parts of the world. The idea is to create custom beverages that appeal to local taste buds, using surplus ingredients sourced locally, thereby helping different markets reduce their food loss and waste.

Ms Low sees a growing trend in the food upcycling business: the upcycled food industry in 2019 alone amounted to US$47 billion (5% CAGR). “Food waste and loss is one of the biggest yet most underrated problems of the 21st century.  And the reality is, food waste and loss are really hard to manage. This is where CRUST Group comes in to solve the prevalence of food waste and provide value back to businesses in food service and retail through upcycling. We see upcycling as a win-win solution for our partners and it is also the key to food waste reduction,” she says.

Confetti Snacks goes upmarket with upcycled food

Confetti Snacks is one of the pioneers in the food upcycling business in Singapore. Its founder and CEO, Betty Lu says: “When I was travelling, I really loved climbing mountains and hiking but I was struggling to find a good snack…I wanted a perfect snack that was indulgent, delicious and at the same time did not make me feel guilty.” She first started experimenting in her kitchen in Canada, sharing the snacks with family and friends and neighbours.

But Ms. Lu wanted to set up not just any food business but one that can be a force for good. In her travels, she found out about some of the challenges facing the world. “Nearly 1/3 of edible produce are thrown away every day, about 2.9 trillion pounds yearly, either due to a crop surplus or imperfections…causing a lot of carbon emissions as they decompose, contributing to global warming. At the same time, 8.6 million people die from hunger every year because they don’t get enough food on the table. Seeing this made me think about how I can use food to address the major problems facing the world today.”

Thus, Confetti was born, a company that uses “ugly food” or crop surpluses to produce its snacks.

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Confetti snacks are gently cooked with minimal oil at 86 degrees Celsius to maximise the vitamin content. They are made up of carrots, radishes, mushrooms, and okra, which are all very low in starch and calories.

The company tapped focused groups and pop-up events and festivals to gauge interest and demand. The initial response was overwhelming and it attracted venture capital funding to scale production and supply to various market channels in Singapore. Confetti Snacks can now be found in supermarket chain stores like Cold Storage, hotels, specialty shops, as well as leading online retailer Shaw’s. Currently Confetti has 161 distribution points in Singapore and 43 retailers across the US–its strongest market.

“Majority of Americans are eager to try world flavours, they want a snack that brings people to a culinary journey around the world and allows them to indulge with a clear conscience” says Lu. She added that the US market is the largest snack market worldwide, and is easily scalable given its population of 308 million. It is also easy from a labelling standpoint since the same language is used throughout the country.

For all other markets, Confetti works with distributors who purchase containers from the company. Middle east and Singapore are also strong markets because of their high disposable income.

In the future, Confetti Snacks will also be distributed in European countries like Switzerland, Scandinavia, UK, France or Spain. The company will be targeting first-tier cities where there are premium supermarkets. “Our snacks are gourmet snacks ranging between $5 and 6. We cannot really sell in emerging markets because most of the population won’t be able to afford our snacks. We need to focus on very premium markets.”

The company’s main clients are young professionals, like millennials, with strong disposable income and who care for environmental causes.

Confetti’s brand positioning is very strategic. “Our snack is very playful, fun, vibrant, and colourful. We are targeting the younger crowd, the new generation working professionals,” says Lu.  “Seventy percent of millennials prefer snacking to having a proper meal and Confetti Snacks is a form of permissible indulgence. Confetti chips are light, airy and crunchy and do not leave that greasy mouth feel.” These snacks are cooked with minimal oil very gently at 86 degrees Celsius to maximise the vitamin content. Raw ingredients are carrots, radishes, mushrooms, and okra–ingredients that are very low in starch and calories.

Confetti Snacks have been featured on the Michelin Guide, won the best upcoming snack of the year by APAC Insiders, and was awarded Tasty Singapore Brand Ambassador three years in a row since 2019. “People like the fact that it’s colourful, it’s delicious, and at the same time, it is contributing to humanitarian causes.”

The company is working with humanitarian organisations like Red Cross and the United Nations food programme, donating goods and a portion of their proceeds for emergency food aid for those who are facing severe malnutrition or hunger, due to the refugee crisis, genocide, war or natural disasters.  “It is like a Robin Hood strategy where we sell to wealthy or upper middle-class clients but then at the same time, we use some of the proceeds to help the poorest people in the world who are living in less than one dollar a day. It goes full circle like that.”

The company has its own challenges. “We need to think outside the box and be very creative because we don’t have millions of dollars to throw into advertising. How can we become a household brand and claim market share even though we have very little money? How can we make the money work as long as possible and as hard for us as possible in the shortest amount of time? Is there any marketing strategy that will allow people to notice us whether it is by press or by influencer marketing, or being seen in certain events, or sponsorships or certain programs that really put us in front of people, or getting international press to write about us because they find our story very meaningful and compelling.”

“The other thing is distribution. I personally had to sit in front of every buyer’s office and pitch the product to them to get it on the shelf. The snack industry is very, very competitive. I have 500 people behind me trying to pitch to the same buyer and trying to get the same shelf space…We have to convince the buyer that this is a better product, that it is a very exciting innovative concept…. It takes a lot of time and energy but at the end it’s quite meaningful because the ethos and the mission drives us to put 200% of our effort into it.”

Lu is also optimistic about the future, saying that purpose-driven brands that are economically and environmentally sustainable really appeals to consumers.  She believes that upcycling and reducing food waste can help solve the climate change challenge and create a sustainable and resilient food system that will benefit not only consumers but also entire countries.

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