Some considerations for the $54Billion upcycle food market – Nairametrics

Some considerations for the $54Billion upcycle food market – Nairametrics

What you might say immediately comes to mind when countries like China, India and Nigeria are mentioned in one sentence.

Well, if you say ‘large populations’, you would not be wrong. But what if I told you that particularly in these times when nearly 750 million people globally face severe hunger and food insecurities, these three countries are the world’s largest and most complicit food wasters?

This is particularly troubling for Nigeria considering about a third of its population is multidimensionally poor.

Globally, 30% of all food is wasted.  This translates to +1.3Billion tons of waste a year. These mostly end up in landfills, much of which constitute more than 80% of the methane gases depleting our ozone layer.

China wastes about 91 million tons of food a year, followed by India, 69 million tons, and then Nigeria, 38 million tons. According to Allied Market Research LLC, food waste, particularly from these three countries, contributes to over $20 billion of wasted food, annually. Enough to feed a small country. Unfortunately, the guiltiest sectors within these countries are homes, farms, food service industries (event halls/eateries), and then manufacturing (mostly breweries, etc.)

With inflation becoming a rising concern for many countries, a growing number of start–ups are finding creative ways to upcycle wasted foods and make a tidy profit whilst helping to preserve our environment. A 2022 market research conducted by Allied Market Research LLC found, that the global upcycled foods market size in 2021 was worth $53.7billion. It is projected to reach $97billion by 2031, growing at a CAGR of 6.2%.

Upcycling food can be defined as a process that involves transforming surplus foods, food wastes and their byproducts, into safe, nutritious, and appealing second meals or other byproducts. These are typically created using sustainable and ethical methods that reduce food waste and promote a Zero Waste economy.

The upcycle food market is segmented by; Type, Source, Distribution and Region. However, the most important of these is Type and Source.

  • By Type (end-product(s)), these include snacks, bakery products, beverages (alcoholic/non-alcoholics), biochemicals, condiments, personal care products, and animal and pet foods.
  • By Source, the market is classified into household food waste, agricultural food waste and industrial (mostly restaurants, brewery & distillery wastes).

Some examples of upcycled food products, by source, include;

1. Home

Fruits, i.e., pineapples, mangos, bananas and oranges are rich sources of vitamins and micronutrients.

However, did you know that their skins/bark, in some cases, contain even higher levels of antioxidants than the fruits themselves?

Some companies are now providing disposal materials and even paying homes in the USA to offer up their food wastes which are then re-converted, mostly through hydrolysis, into healthy fruit/energy drinks and through other means into consumable lactic acids, or bioethanol(s) useable by manufacturing concerns.

2. Food Service Industry

About 10% of ingredients used to make restaurant/canteen meals are wasted even before these meals reach customer plates.

For the Buffet/Event Hall Industry, research shows that about 44% of perfectly edible foods are discarded after events, thus making this, the sector with the highest potential contributor to the upcycled food market.

Some companies are now buying used and undesirable vegetable oils from restaurants/ kitchens, and converting them into renewable diesel for automobiles whilst some are converting these discarded oils into industrial lubricants and soaps.

When it comes to sustainable packaging, some American companies are now manufacturing recyclable cups, bowls, takeout bags, napkins and trays from compostable fiber materials made from excess bamboo shards and selling them to restaurants and buffet halls.

3. Agricultural

Through a process known as ‘Vermicomposting’, companies are using worms to break down organic farm waste i.e. decomposing fruits, vegetables, grain residues, and even manure, into a nutrient-rich soil amendment for farms and other farm uses.

The worms consume the waste and produce castings (worm manure) sold as a fertilizer. This process can fortunately be done on either small or large scales.

Organic farm wastes can also be gathered and broken down, through ‘Anaerobic digestion’, to produce biogases used to generate electricity or heat for farming animals and activities.

Also, rather than disposing through burying, animal bones are bought by companies and through various methods, turned into gelatin, bone char, bone ash, biofuels, or powders sold for either fertilizer, pharmaceutical, energy or cosmetic purposes.

The rising upcycled food products market is believed to be fueled by rising global inflation, thus forcing businesses to search for more affordable food sources to transform wasted food into–marketable products.

Also, as the demand for eco-friendly products expands, consumers are consequently becoming more aware of the adverse environmental impacts of food waste and increasingly patronizing creativity.

The increased popularity of Vegan diets is another matric forcing companies to devise new upcycled food products that serve a diverse and growing dietary preference.

Additionally, damage due to poor food storage and handling during transportation or long haulages/freighting is further influencing market growth.

As a result, these, sometimes, ‘undesirable’ produce are creatively being repurposed into the global food chain.

For example, some vegetables and fruits, like berries, that have very short shelf lives and spoil easily, still produce viable and valuable seed oils. A commodity of particularly high demand in the cosmetic and pharma industries, sometimes worth millions of dollars.

Add to this, increased government initiatives, investments and partnerships in food/waste recycling, and packaging which is incentivizing private companies, in both small and large countries, to construct food waste management facilities to help reduce dumping in landfills and offer governments newer revenue collection opportunities, and one thing is certain, especially as dwindling living wages become a serious consideration amongst governments and households, the global upcycled foods market is a growing sector that can be started on any budget and consequently scaled as required.

The major limiting factors of faster growth within the space, however, are competition from traditional foods, production type, and setup costs…

 Brain Essien is a financial analyst and business process consultant, with expertise in investment banking, business plan formulation and pitch deck design, crowd/private equity and seed fund brokerage.

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