The bruised banana. The blemished apple. The brown bit at the bottom of that Iceberg lettuce.
U.S. grocers generate 16 billion pounds of food waste annually, and the U.S. as a whole sends 119 million pounds of food waste to landfills each year. Even though technology has been shifting the way retailers manage inventory, consumer behavior continues to perpetuate the issue.
Waste360 recently connected with Ryan Begin, CEO and founder of Divert, which has been using advanced technology to improve food recovery and create supply chain efficiencies since 2007.
In 2010, the company partnered with Kroger to build the largest anaerobic digester in the United States. In March 2023, Divert entered a $1 billion infrastructure agreement with Enbridge on the development of food-to-renewable natural gas (RNG) facilities across North America.
Begin discussed how the food supply chain has evolved in the past 15 years and the challenges of scaling technology solutions to combat food waste and insecurity.
Waste360: Can you tell me about how the concept for Divert started and how the business has evolved?
Begin: We started the business in 2007 with a focus from day one on grocery stores' wasted food. The general view of the industry has matured over the last 13,15,16 years because it's not just the idea that we need to keep food out of landfills. It's also asking what is happening.
Why is wasted food being generated? When you start pulling wasted food out of the waste stream, you start to look at it very differently. You ask, "Well, why are we throwing this whole pack of strawberries away?" Because there's one moldy strawberry. And then you say, "Well, why aren't we donating this?"
Then, you understand the complexity around food donation and the logistics and volunteer work that has to be in place to make that work. You start to realize pretty quickly that we have a very fragmented food system. That even if it's optimized, there's still a lot of room for improvement. Part of that is for us: Keeping wasting food out of landfills. There is a significant need for infrastructure, but it has to be responsible infrastructure. We cannot deploy technology or infrastructure in a way that we are inadvertently driving food into energy production. If you look at a lifecycle analysis on a carbon intensity basis, it's completely inefficient to pull good food out of a supply chain.
[Divert] looks at ourselves as the end of the pipe. Within that position, we can see what is leading the food supply chain, and we have better insight than most. We have it on a very large scale across the country that allows and informs our position about how to go upstream to reduce food waste, and then we can actually measure the output of that. We're also incentivized because of the way that we work with our customers where, in our contract with them, every time we can get more food donated, it's better for the retailer to help their margins. It helps us as a mission. So that's really how we've evolved the business over the years.
Waste360: Where are the food gaps in retail and how does technology such as Divert connect the dots for recovery?
Begin: When we built our facility with Kroger in Southern California, it was the first time that you could see wasted food come back from, at that point, 330 stores. So, you just stand on the receiving dock and you would see these bins of wasted food come back from all of these retailers. And you just have to stand there and look at it and say, "What are we throwing all this food away for?"
People who have been in the retail industry for 30 years and worked inside stores, put their hands on their heads and say they've got a problem. But how do you fix that problem? I think part of that is recognizing most of the wasted food issues are due to humans. It's on the consumer side where we want the perfect apple. If I'm at the grocery store and I'm going to pay full price for an apple, it better not have a blemish because the one right next to it is perfectly fine. Retailers don't want to be perceived as secondary produce retail locations.
If you look at how produce sales and retail have grown, it's what brings individuals into retail locations. But then if you go inside the walls, it's the pallet of food that's delivered to the grocery store that sits on the back dock not for 45 minutes, but for four hours. And it's because somebody didn't move that into the produce cooler. It's not doing FIFO - first in first out. If you're running a good FIFO process, how do you measure all of these practices?
It's not like selling food is different at Whole Foods than at Stop & Shop. It's the same process. Whole Foods is buying strawberries from Driscoll. They're probably using a universal carrier. It's all the same process. So any best business practices within the store? That's really where we look at optimizing. You start to understand that once you optimize that process, you can start to understand how food enters the supply chain. Is something happening through food upstream in the supply chain? And then correcting for those behaviors.
Waste360: Do you have any specific examples of what you have witnessed upstream?
Begin: One specific story that I experienced happened at a retail location we were launching. We were on the produce floor and I saw a gentleman shelving iceberg lettuce. I noticed that he was tossing one out of every six into the trash bin. I went over and I looked at the lettuce. I looked at the iceberg and it looked perfectly fine - just like all the other ones on the shelf. So I said "Hey, you know, just kind of curious, what are you seeing that is driving you to toss these?" and he said, "I was told to look for any brown."
Then, he grabbed that head of iceberg lettuce. He flipped it over and pointed to the stem on the bottom. He said, "it's brown; so, I didn't want to throw them all away because I figured that would be really bad. I figured one out of six is the right number and that I'm not going to get in trouble."
That's an example of human behavior, education and training. Nothing really needs to change other than an awareness that the bottom of iceberg lettuce is always going to be brown. That is acceptable brown. So it's communication. It's training. It's feedback. And so how do you introduce that into the retail world where there is labor turnover, staffing challenges and really complex environments? How do you dovetail into that to make it a streamlined process?
Waste360: It sounds like there's a huge public education component that needs to happen when it comes to shelf life and food storage.
Begin: I think that we have lost respect for food. I think it's too easy to get strawberries in February, and when we don't have perfect-looking strawberries in February we're like hey, what's going on? I'm going someplace else.
Waste360: Aside from consumer education about food waste, what challenges have you seen with the scalability of technology that can be used to combat this issue?
Begin: I think the challenges are around operability. When you go into the retail sector, there are different stakeholders, and despite best efforts, there are always going to be siloed responsibilities.
Merchandising is responsible for getting products pushed out the front door and pricing it right. Operations is always looking at managing staffing. I think the same thing can be said of restaurants and other food venues such as cafeterias. Everybody has to be very cautious about where they put labor because you could be overstaffed and theoretically solve some of these things. So, how do you build tools that plug into addressing multi-stakeholder challenges and perceptions to get to the solution, and then your price point without adding too much complexity?
I think awareness is part of that journey, getting all of those stakeholders on board. And so is using data, not your gut. With our IoT tracking platform, we ingest data from their trash and from their food donations. We track other commodities leaving grocery stores. We track how much wasted food is from individual stores and we use that data to triangulate which stores are performing and which stores are not. Then you can start having a more educated discussion around what we're seeing and what we can offer. Then, we measure the impact and actually see the changes.
How do you convince somebody in the retail sector or restaurant space, both very tough businesses, that they should invest their dollars into another solution because they're constantly bombarded? Nobody really gets into the business of supporting the operators. And I think that's where Divert is and where we excel
Editor's Note: Hear more from Ryan Begin, founder and CEO, Divert at WasteExpo in New Orleans during the session Food Waste Reduction Technology, Infrastructure, Supply Chain Efficiency; Best Practices and 50% Reduction by 2025 at Live Venues.