This post is one in a series for ImpactSpace as a part of their inaugural 2015 fellowship. I am writing about current issues in the impact field throughout the summer. Join the discussion by commenting here or on Twitter, @hongkonghaiti.

Imperfect more to love

Ugly is Beautiful – When It’s Not Going to Waste

Food waste is a bigger problem than most of us realize. This is because six billion pounds of fruits and vegetables are tossed before they ever get close to a grocery store. The Natural Resources Defense Council says this produce – amounting to 26% of American produce – is rejected because of “cosmetic imperfections.” The produce is then left to rot, producing methane emissions and taking up space in landfills. At the same time 80% of Americans don’t eat enough produce and millions in the U.S. experience food insecurity daily.

In California – where just 13% of adults eat enough vegetables – a new Bay Area company wants to reduce waste, lower costs and make money. Enter Imperfect, which successfully raised 103% of their funding goal on Indiegogo in May and has received a slew of good press. (I learned about Imperfect from a friend who invested in the company.) In their own words,

“We believe every fruit and vegetable deserves to be loved. That’s why we give you the chance to buy ugly produce straight from the farm that costs 30% less than produce in grocery stores. By purchasing Imperfect, you get affordable, healthy, delicious produce delivered to your door. And you can feel good about your purchase knowing that you are reducing food waste on California farms and protecting the environment.”

Imperfect has an all-star founding team with strong expertise in reducing food waste. I spoke with Ben Simon, who co-founded the Food Recovery Network in 2011 to reduce waste by recovering leftover food from campus dining halls and donating it. With the success of the network, Simon and his co-founder, Ben Chesler, looked for ways to make an even bigger impact. They settled on commercial grocery stores and connected with Ron Clark, who had spent 15 years “scoring ugly produce” for food banks in California.

Simon said that the idea for Imperfect came from a life-changing visit to a commercial farm. When he saw the sheer amount of food being wasted – watching tons of fresh produce being dumped – he was shocked. Imperfect has had a fast trajectory since. The company began last November, the founders became full-time this spring, and are wrapping up their first round of financing.

Imperfect is not the only one with (potato) skin in the game. EndFoodWaste.org is an education and advocacy platform dedicated to increasing awareness and calls for change. The site is promoting a petition on Change.org that states:

“We want Walmart and Whole Foods to combat food waste by marketing ugly produce as they do traditional produce using a fun campaign like the French supermarket giant Intermarché did with its “Inglorious Fruits and Vegetables Campaign.” Stores in Europe, Australia, and Canada have started selling imperfect produce, offering it at an average of 30% off, and it has increased store traffic and total sales.”

(If you haven’t yet seen Intermarché’s short video on its “Inglorious Fruits and Vegetables” campaign, it’s amazing and can be viewed here.)

How it Works

These initiatives share a cause, a penchant for clever hashtags (ex: #whatthefork) and the goal of achieving scale by partnering with grocery megabrands. Imperfect is on track to be the largest for-profit enterprise in the field that works on reducing food waste at it source. Here’s how it works:

Imperfect biz model

As their website explains, Imperfect sources ugly – but perfectly edible – produce from farmers, who are able to earn money from food that would otherwise have gone to waste. Imperfect has a subscription program that delivers seasonal produce boxes (similar to CSA boxes) to you for 30% less than traditional produce costs in a grocery store. Starting this month, consumers will also be able to find imperfect fruits and vegetables at the California grocery chain Raley’s for a pilot program called ‘Real Good Produce.’

The Timing is Ripe

The timing for Imperfect seems just right. The European Union declared 2014 the year against food waste. Data show that following decades of admonitions, Americans are finally eating less overall, though 4 out of 5 of us are still “produce deficient.” Meanwhile, despite a stronger economy, Americans are still more focused on saving money than spending it.

Cutting down food waste is also environmentally friendly. For starters, reducing the amount of fruits and vegetables left to rot will help cut down on a source of methane emissions, which are much more potent than carbon dioxide. Imperfect emphasizes that embracing the “uglies” is especially important in light of California’s ongoing mega-drought, saying “we’re also proud that every pound of produce we sell prevents the 25-50 gallons of water it takes to grow a pound of produce from being wasted.” A Grist article elaborates:

“Eighty percent of our water, 10 percent of our energy, 40 percent of our land is used to grow our food,” says Peter Lehner of the NRDC. And, according to this NRDC report, up to 40 percent of the food produced never gets eaten. “It’s crazy.”

In other words, Imperfect seems to be right on trend. The question remains, though – is it also good business?

Good for the World, Good for Business?

Up to now, farmers have been either letting food rot in the fields, trashing it, or – less commonly – donating ugly produce to food banks. Six states offer some tax credits to farmers who donate ugly fruits and vegetables. Current incentives aren’t strong. NPR reports that “It’s a lot easier and cheaper just to basically throw [unmarketable produce] away…there’s got to be an economic incentive.”

Imperfect wants to shift this approach by focusing on consumers and supermarkets.They will be focusing on classic fruits and vegetables (think apples, tomatoes) rather than trendy or specialty produce (kale, kumquats). Because Imperfect is focused on scale, they have elected to start by partnering with conventional farms and large supermarkets rather than small organic farms and local grocers. (Conventional farms also tend to generate more waste.) Simon says that Imperfect is “also investing heavily right now in building out our organic and small and medium size farm supply chain in California” to offer an organic box as soon as possible.

Part of what sets Imperfect apart is that it is a Social Purpose Business (SPB) rather than a non-profit. Simon explained that in practice, this means that Imperfect’s social goals are written into its bylaws and the company will makes its decisions based on this mission as well as its finances. SPBs have a lot in common with benefit corporations (“b-corps”), which have become increasingly prominent. Doing good and doing well are no longer considered mutually exclusive.

Imperfect also chose the route of an SPB model for financial reasons. They knew they needed about half a million dollars in capital and wanted to be able to seek investment. Their successful Indiegogo campaign helped engage their friends and family, create buzz and generate press coverage. But doing a seed funding round is also necessary. As Simon put it, Imperfect is for-profit because we want to “do well for ourselves in the process of doing good.” Imperfect’s pace and ambition fit right in amongst the frenzy of tech start ups trying to flourish in Silicon Valley.

So far, Imperfect has had a fast, successful launch. They are wary of scaling too quickly, but Simon told me that they plan to expand their box subscription service to the top 20 cities in the U.S. within the first five years. The Imperfect team anticipates that they will break even on the delivery produce boxes within 6 months and hope that partnerships with supermarkets will allow them to scale up to new regions before then.

The future looks bright for Imperfect. There are few companies tackling this issue, and Simon believes that Imperfect is on track to be the largest for-profit initiative working on reducing food waste at its source. If it is, don’t be surprised if you start seeing ugly – but tasty – carrots, apples and potatoes at your own local grocery store.

What Do You Think?

We want you to weigh in! Comment here, join us on Twitter, and let us know your thoughts on social enterprises, efforts to reduce food waste, and other impact trends on the rise. Have an idea for a social enterprise to highlight? You can nominate your favorite companies and organizations for a post!

Next up: controversy about how benefit corporations (b-corps) should measure their success.

Past Articles on Social Innovation in the ImpactSpace Series

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