Pizzas are displayed for sale in the bakery section of a Wal-Mart de México SAB store in Mexico City. Photo: Susana González/Bloomberg.

In Latin America and the Caribbean there are 43.2 million people who suffer from undernourishment, while 11.6% of food is lost in the region,

which is equivalent to 220 million tons per year, about 330 kilograms per capita. according to the Food and Agriculture Organization of the United Nations (FAO).

This organization estimates that food loss is equivalent to US$150,000 million per year, with waste occurring in all phases of the supply chain, from post-harvest to homes, food services, restaurants and retail commerce.

“Food waste, at least at the consumer level, is also a behavioral problem, because people can't tolerate food waste in their homes, so they send it to landfills instead of turning it into compost or animal feed. “Vineet Shahani, General Counsel of Policy and Corporate Development of a company that created a kitchen container for food waste at home, which can be converted into compost or an ingredient to feed animals, told Bloomberg Línea.

Business around food in Latin America

The growth of foodtech in Latin America has become more noticeable since 2020

, the climax of the Covid-19 pandemic that boosted the demand for food, and one of the challenges has been to reduce food waste, bringing it to the point of being a business opportunity throughout the region.

Figures shared by KPMG to Bloomberg Línea indicate that in the region there are at least 153 companies in the

Agrifoodtech

category

.

“These startups have achieved investments of US$8,000 million in the last five years, of which US$1,700 million correspond only to 2022. This amount represents 20% of all venture capital activity in the region, also representing 5%. of the total investment in agri-foodtech globally,” explained María Paula Peñaranda, Manager of Innovation and Emerging Giants at KPMG Colombia.

During 2022, foodtech companies in the region closed 28 deals, with a total of US$454 million, Peñaranda added.

Business initiatives to avoid waste have spread throughout the region. The examples are diverse: Planet Oliver (Colombia), Nilus (Argentina), Sigu (Peru), among others, with a common objective:

to connect restaurants and supermarkets with the consumer, and offer discounts on products in perfect condition that were not achieved to sell and have a close expiration or expiration date.

This is the case of the Mexican Cheaf, which points out that in its three years of operation it has managed to rescue more than 80% of the available surpluses every day in its allied businesses, accounting for one million transactions and two million kilograms of rescued food. .

“Cheaf has received US$3.5 million from Venture Capital (VCs). Being a completely marketplace business (which does not have any inventory or carry out any type of logistics), the percentage margin is high. Cheaf is a volume business:

the more food it rescues, the more financially viable the company is,”

explained Kim Durand, CEO and founder of the startup.

According to Durand, these types of 'Last Minute' sales impact business profitability. While the percentage of loss from food that could end up in the landfill can vary from 1% to 15% of sales, there are food industry establishments in Mexico and other Latin American countries that have the opportunity to recover more than MXN$30 .OOO net per month, about US$1,760, especially in individual businesses with low margins.

But at the level of large stores, and although the company cannot publish the exact income of its allies, the Cheaf CEO acknowledged that “several of them generate sales of up to seven figures monthly (together from their various branches of the same brand). ”, which Durand highlights as “new income” generated from the same volume of production they had before, “which represents money that would otherwise have gone to a landfill.”

In Mexico, Cheaf works with chains such as Maison Kayser, El Globo, Montparnasse, Tierra Garat, Hotel Ibis, Fiesta Inn, Sanborns, among others. While, in Chile, where it has operated since October 2023, it is affiliated with Cencosud.

Avoiding waste relieves pressure on Latin American consumers

Photo: Taken from Bloomberg.

Mill's Shahani points out that in the United States more than 25% of the average waste is food waste, and of that 25%, 60% comes from residences and not from farms or restaurants.

One of the reasons to reduce food waste, beyond social responsibility indicators, is also inflation, which was at high levels in the last two years in the region, and also in the United States.

“In the United States, consumers pay for waste management directly to the city they live in or through their local taxes. The US waste industry was estimated to be worth US$91.00 billion in 2022. Disposal costs are increasing significantly each year due to rising labor costs, reduced landfill capacity, and increasing regulation. “Shahani specified.

It is how he argues that, if food waste can be reused as animal feed or composting, it can reduce the cost of waste management services for consumers, increase the operational efficiency of the waste industry and reduce the amount of methane emissions.

The container developed by Mill dries and grinds leftovers, turning them into clean, dry dehydrated foods. Once filled, in a process that can take up to four weeks, users can choose whether to compost it at home or in the neighborhood, send it back to the company to become a chicken feed ingredient, or programs that return these nutrients to a community farm. Mill, founded in 2020, raised more than US$100 million until August 2023 for the development of its container and business model, according to Bloomberg data.

“It is a fact that personal economy (purchasing power) has, without a doubt, an influence on families so that they are constantly looking for more and better alternatives to consume quality products at a lower price,” said Durand, CEO of Cheaf , pointing out that users looking for savings are also interested in consuming products from a brand that carries out sustainability actions.

The FAO notes that

the highest levels of losses occur in nutrient-rich foods, such as fruits and vegetables (32%), meat and fish (12.4%).

The data from the Mexican startup shows that in Mexico, the most demanded and rescued products are pastries and pastries, while in Chile the trend leans towards fruits, vegetables and dairy products.

(Taken from Bloomberg Line)