Apeel-coated produce is poised to take over grocery store shelves
When Apeel Sciences, a startup that’s developed a plant-based coating to extend the shelf life of produce, launched its first pilot program in May, it had a bold hunch: Its tech, which slows the rate at which produce oxidizes (read: shrivels and goes bad), would enable grocery stores to significantly cut down food waste.
As it turns out, their suspicion was correct. Since it began stocking Apeel-coated avocados four months ago, Harps, a grocery chain in the Midwest, has reduced the amount of the popular produce it’s had to throw out by 60%. Given that the U.S. wastes, on average, 50% of all produce–and likely more for a finicky item like avocados–this represents a significant turnaround, and one that’s boosted sales in the category by 10% for the around 80 participating Harps stores.
Harps, according to Apeel CEO James Rogers, is also seeing a 65% boost in its profit margin on avocados as a result of the partnership. “They ran the pilot program for two months, then actually ended it early and just signed on for the whole year,” Rogers says. “Now every avocado in their stores is Apeel.” For Harps, Rogers says, the economics just made sense. If Harps purchases 1,000 avocados to sell, previously, they might have thrown away 400, but the Apeel coating has driven that number down to 100. That’s 300 more avocados that they can sell–both reducing waste and boosting profits.
In America, food waste is not only a sustainability issue–it’s a massive economic black hole. Each year, people in the U.S. throw away an average of 400 pounds per person, and retailers lose a combined $18 billion per year on tossed produce (globally, food waste accounts for $1.2 trillion down the drain). Through its rapidly scaling partnerships, Apeel is working to position itself as one facet of the solution to this problem.
Having only hit markets a few months ago, it’s making significant strides. The startup, whose tech can anywhere from double to quadruple an item’s shelf life, has over $110 million in investments from the likes of Andreesen Horowitz and Viking Global, as well as the support of the Gates Foundation. Its partnership with Costco, which started selling Apeel avocados through its Midwestern stores in June, hasn’t yet released their numbers, but in all likelihood they’ll show similar results as Harps. And not to be left out, Kroger, the largest grocery retailer in the U.S., announced that it too will begin selling Apeel avocados, starting in its 109 Cincinnati-area stores and expanding outward. The partnership is part of Kroger’s Zero Hunger Zero Waste campaign, which aims to eliminate waste across the company by 2025.
Like Harps and Costco, Kroger will start by selling Apeel-coated avocados, but aims to expand to quickly to other produce categories. Kroger VP of produce Frank Romero told Forbes that just by eliminating all waste from produce, the grocery chain could see a $1 billion lift in revenue.
Even as grocery chains are beginning to flock to Apeel, drawn by its potential to dramatically reduce food waste and boost revenue, the startup itself is determined to scale gradually. They’re rolling out coated citrus products next across all three of their partner retailers, and in November, they’ll move into asparagus.
Rogers is perhaps most excited about the asparagus rollout, as it showcases what he believes to be one of the biggest benefits of Apeel’s tech. “For certain product categories, the tech can actually impact modes of transport for moving produce,” he says. Today, 95% of asparagus that is grown in Peru, one of its primary countries of origin, is air-freighted to the U.S. and Europe to minimize its time in transit and ensure it can sit on shelves long enough to be purchases. While moving asparagus by sea vessel would be the more environmentally sustainable option–air travel guzzles up to 5 million barrels of oil per day–it eats up too much time, and as such, asparagus has the highest carbon footprint of any produce variety.
But the Apeel coating “allows distributors to get an extra several weeks of shelf life from asparagus, so instead of having to use air freight for Peruvian asparagus, they can put it on a sea vessel and import it, which equates to the carbon savings of taking 100,000 cars off the road,” Rogers says.
While Apeel, for now, is focused on growing its U.S. footprint through partnerships with retailers and distributors, their work with Peruvian growers nods to the fact that the startup aims to go global. If Apeel is able to equip international produce with enough longevity to survive lengthy trips and an extended shelf life, Rogers sees potential for U.S. grocery retailers to begin diversifying their sourcing to reflect a more global produce crop.