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Daily news and analysis about the food tech revolution

Future of Grocery

Food Tech News: Kroger Pilots Contactless Pay, How QSRs Could Change the Whole Food System

Had your fill of food tech news for the week? Of course you haven’t. With that in mind, here are a few more bits and bites to carry your appetite for food tech through the weekend.

Kroger Launches Contactless Payments

Kroger launched a pilot for contactless payments in Seattle, WA this week. The test will take place in the grocery retailer’s QFC division, and allow customers to use their mobile phones to pay for groceries. The system accepts a number of payment types: Apple, Google, Samsung, Fitbit, and mobile banking apps. 

Microsoft and Land O’Lakes Bringing More Tech to Rural Areas

Farming technology is all well and good, but farms first need to have access to broadband. As AgFunder points out, 18 to 40 million Americans do not have that connectivity, especially those in rural areas. To address that issue, Microsoft and Land O’Lakes said this week they are working together to bring more connectivity to farms and rural areas.

Hostess Opens Innovation Lab

Hostess Brands has opened a new innovation lab in Kansas that employs researchers, product testers, and bakers creating new kinds of snack cakes. The lab will test and develop new prototypes for food products, which means we could well have a new kind of Twinkie in our hands in the future.

How about now no cow?

If QSRs swapped beef with alternative proteins in their products, they could completely alter the food system. That’s the premises of an excellent new article from Wired, which outlines the problems with our over-reliance on beef and how fast-food chains can use their wide availability and low prices to change consumer attitudes about meat.

Vertical Field to Launch a Geoponic Vertical Farm Inside New York’s Evergreen Market

More vertically grown greens are coming to the grocery store. The Evergreen Kosher Market, a well-known food retailer in Monsey, New York, announced this week it will soon debut a vertical farm from Israeli ag tech company Vertical Field. According to a press release sent to The Spoon, the farm will use technology and geoponics to provide shoppers with onsite greens at the grocery store.

Vertical Field’s farming indoor solution consists of “living walls” where plants grow vertically inside controlled environments and sensors regulate temperature and humidity levels to create ideal grow conditions for each type of plant. Since the environment is sealed off from the outside world, it is free of the usual pests that can infiltrate crops and therefore free of pesticides. And Evergreen being a Kosher market, a partnership with Vertical Field makes sense, as the company’s greens are all Star-K Kosher Certified.

The company’s use of geoponics is unusual in today’s world of vertical farming, where the majority of companies use hydroponics or aeroponics to grow plants. Vertical Field’s system is proprietary, and the company claims on its website that its use of geoponics means lower initial and operating costs, better quality plants, and more crop variety than one would get using hydroponics.

All that said, Vertical Field is, like most others, still focused on leafy greens, which would likely be the only plant type to fit on the company’s wall-like garden structure (see image above). Still, leafy greens are delicate, and more likely to be damaged in shipping than, say, heartier fruit or root vegetable. Placing the farms inside grocery stores removes the distribution portion and therefore several steps from the process between harvesting greens and getting them to consumers. 

While the concept of in-store vertical farms is relatively new, Vertical Fields’ new installation at Evergreen isn’t alone. Berlin, Germany-based InFarm has its pod farms at grocery stores in Canada, Denmark, and at Kroger stores in the U.S. Orlando, Florida-based Kalera works with Publix in the Southeastern U.S. to place farms in stores.

For its part, Vertical Field serves a variety of organizations around the world, including the campuses of Big Tech companies like Apple, Intel, and Microsoft. 

Weezy Raises $1M for Speedy Grocery Delivery

London-based grocery delivery startup Weezy, came out of stealth today and announced it has raised a $1 million pre-seed round of funding. TechCrunch was first to report on Weezy and its news, writing that the round was led by Heartcore Capital with participation with from former execs from grocery-related companies like Tesco, Ocado and Sainsbury’s Chop Chop.

The hook with Weezy is that it promises to deliver your groceries in 15 minutes. It does this through a combination of “strategically located fulfillment centers” in different neighborhoods along with a fleet of electric scooter and bicycle couriers, according to TechCrunch.

Customers use the Weezy app to shop for groceries, which because the fulfillment centers are tucked in neighborhoods, also features goods from local bakers and butchers. Weezy then delivers the order in less than 15 minutes between the hours of 10 a.m. and 10 p.m., charging £2.95 per delivery. Weezy currently serves the Fulham and Chelsea districts of London.

From the sounds of it, Weezy seems to be a speedier Farmstead, which also uses a more localized fulfillment center approach to grocery delivery here in the U.S. (though doesn’t promise 15 minute delivery). This distributed network of smaller fulfillment centers is also what robotics companies like Takeoff and Fabric are looking to build.

Not living in London, we haven’t had a chance to try out the service, but one question we’re curious about is how large a Weezy grocery order can be. If they are delivered via bike and scooter, that means a week’s worth of groceries for a family is probably out of the question. But then again, this type of quick service is probably geared more towards last minute items or nice-to-haves rather than replacing full-on shopping trips.

Weezy is certainly launching at an opportune time. The COVID pandemic has spurred record amounts of online grocery shopping as people limit trips to physical stores. With the pandemic’s waves, Weezy’s speedy delivery will certainly make it an attractive option for families still stuck at home.

Wawa Goes Beyond Standard Convenience Store Fare With a Plant-Based Breakfast

Like most other types of food businesses, the convenience store is changing due to the pandemic, and that includes what’s on the menu when it comes to food. In line with that, today, convenience store chain Wawa announced a partnership with Beyond Meat to bring a plant-based breakfast option to its stores.

Dubbed the Sizzli Breakfast Sandwich, the new item will use Beyond’s Breakfast Sausage product. As of today, it’s available at 650 Wawa stores in the Mid-Atlantic region and will be available in all Florida stores from August 10 onward.

In certain parts of the country, namely the Mid-Atlantic, Wawa is practically iconic in the world of convenience store chains. But like many food businesses nowadays, it’s having to reinvent itself in the wake of changing consumer demands around healthy eating and massive shifts in how people get that food.

The chain already offers its “Wawa Your Way” menu, which offers healthier options and caters to various dietary needs/preferences (gluten-free, plant-based, etc.).

Adding a plant-based option to the menu is the obvious next step. Consumer demand for plant-based proteins has surged during the pandemic as ugly truths about the meat industry continue to come to light. The whole of the alternative protein category, including plant-based meat, is expected to grow to $17.9 billion by 2025.

But plant-based options isn’t the only change Wawa has introduced recently to meet new consumer behaviors. With more people staying at home, or just wary of mingling with strangers in public settings, the company has had to turn its attention to serving folks off-premises. Wawa struck a delivery deal with DoorDash in April, then launched curbside order and pickup in June. Just this week, the chain announced its first-ever drive-thru location, which will begin construction in August in Falls Township, PA.

Wawa’s announcements follow moves by other well-known convenience store chains to shift both their formats and products to meet the current times. 7-Eleven expanded delivery and introduced a new pickup feature in July. It too has a partnership with DoorDash. Over in Tokyo, Uber Eats is delivering food from Lawson Convenience stores. And let’s not forget cashierless checkout’s march into the convenience store realm, led by Zippin, Aramark, and others.

Wawa’s news from the week is further proof multiple intersections are happening right now between convenience stores, grocery stores, and restaurants, and between plant-based diets and traditional ones. Expect more of these lines to blur as the entire food industry continues changing at the pace of the pandemic.

Amazon Q2: Online Grocery Sales Tripled Year-Over-Year

Amazon announced its Q2 earnings yesterday, and unsurprisingly, the company’s grocery business went gangbusters during that time. Amazon said that its online grocery sales tripled in Q2 compared with the same time period last year.

Of course, this growth can be attributed to the COVID-19 pandemic, which was in full swing during the last few months. With large swaths of the country sheltering in place, people were pushed into grocery e-commerce. So much so that online grocery shopping experienced record sales month after month in Q2, hitting $7.2 billion in June.

This sudden demand for e-groceries caught every retailer, including Amazon, off-guard. Overwhelmed by demand, Amazon had to put new Amazon Fresh and Whole Foods delivery customers on a waitlist before they could place any orders.

To help ease the strain Amazon even went to more extreme measures, like converting the first of its full-on grocery stores in Woodland Hills, CA into a delivery-only fulfillment center. According to its earnings release yesterday, the company has increased grocery delivery capacity by more than 160 percent and tripled grocery pickup locations.

The COVID tide is raising all grocery retail boats as restaurants yo-yo between being open and closed. Amazon’s news comes days after grocery retailer Albertsons said that sales rose 21 percent to $22.8 billion for the quarter ending June 20, and that digital sales more than tripled.

The question Amazon, Albertsons and the entire grocery industry now face is how much of this record e-commerce spending is permanent. We’ve had basically five months of restricted movement/lockdowns, which is plenty of time for a new habit like buying groceries online to set in. Will people stick with it? And specifically for Amazon, will this alter any of it plans as it expands its real world grocery footprint? Amazon did debut its new smart shopping cart during Q2 as well, which indicates that it still expects people to shop at brick-and-mortar stores in some fashion in the future.

Like everything in the world right now, we’re watching it change in real time, and its unlikely anything will be settled by the end of Q3.

Woodman’s Market Adds Badger Technologies’ Robots for Shelf Scanning

Badger Technologies announced yesterday that its shelf-scanning robots will be roaming the aisles of Woodman’s Markets throughout Wisconsin and Illinois come the end of the year.

According to a press release sent to The Spoon, the robots will “monitor product availability, verify prices and deliver precise location data for more than 100,000 items at each location.” The plan is for the robots to be present in all 18 Woodman’s locations by the end of 2020.

The last time we wrote about Badger was January of 2019, when Ahold Delhaize ordered 500 of them for its GIANT/MARTIN and Stop & Shop stores. Those robots however, were being brought on to detect spills and other messes. (The robots didn’t even clean those up, they just alerted staff when there was a mess.)

Unlike that previous use case, Woodman’s, is using Badger’s robots to help automate inventory management. Woodman’s is far from the only store using robots for this purpose. Giant Eagle and Schnuck’s stores use Simbe Robotics’ Tally robot. And Walmart expanded the use of Bossa Nova’s shelf-scanning robot to 300 locations last year.

Pre-COVID, robots in grocery stores were seen as a threat to human jobs. Retailers like Walmart typically defended the increased automation because robots can do the manual, repetitive tasks — like monitoring inventory on store shelves — faster and more accurately than a human. Badger claims that its robots can detect out-of-stock items with more than 95 percent accuracy, and incorrect or mispriced products with 90 percent accuracy. Additionally, robots can work all day without getting and don’t need to take breaks.

During and post-COVID, however, those labor arguments may be shunted to the side as retailers and customers alike seek to cut down person-to-person interactions. Robots don’t get sick, don’t cough and can be easily sanitized by wiping them down.

Another argument in favor of more robots could be more accurate, real-time inventory data for stores and customers. With a robot roaming the aisles providing more precise item stocking information, retailers can better manage product flow and provide more accurate inventory data for people shopping online (which is happening in record numbers).

Robots are having a bit of a moment, thanks to this pandemic. Elsewhere today, online grocer FreshDirect announced a robot-powered micro-fulfillment center that is being built out by Fabric. With the coronavirus surging and re-surging around the world, robots and automation are likely to continue their march into retail throughout the rest of this year and into next.

Impossible Foods Now at Trader Joe’s, Plans to Expand Retail Presence 50x in 2020

Trader Joe’s, the quirky and beloved supermarket chain, announced yesterday that it now carries Impossible Foods’ plant-based ground beef (h/t to Business Insider). But TJ’s is just one stop for Impossible’s aggressive expansion plans this year as the company said as part of yesterday’s news that it plans to expand its retail presence 50x this year alone.

The company has been aggressive with its retail growth throughout this year, and that appears to be accelerating. In April, Impossible was at 1,000 retail locations. In May that number bumped up to 2,700. In June that number reached 3,000, and as part of yesterday’s news Impossible said it was now available in 5,000 stores. (Trader Joe’s has 503 locations.)

Not bad for a product that was only available at select restaurants just last year.

This rapid retail rollout across the U.S. coincides with the COVID-19 pandemic that helped create a surge in consumption of plant-based products. At the same time, the pandemic has resurfaced ethical issues around the production of animal-based meat here in the U.S., especially as meat packing facilities became hot spots for coronavirus transmissions.

In addition to being more available at grocery stores, Impossible launched its own direct to consumer sales channel, allowing consumers to buy its burgers in bulk.

It’s been a busy year all around for plant-based meats. Beyond Meat created its own bulk packaging, bringing the price of its plant-based burgers down closer to traditional meat. Beyond also launched another plant-based chicken pilot with KFC in Southern California, and started selling plant-based sausage at retail. Impossible’s plant-based sausage is now featured in Burger King and Starbucks’ breakfast sandwiches and is available to all restaurants in the U.S.

With a little less than half a year remaining in 2020, I expect the news around plant-based won’t be slowing down anytime soon.

FreshDirect to Use Fabric’s Robots for Grocery Fulfillment in D.C. Area

Online grocer FreshDirect announced today that it has partnered with Fabric to build out an automated, robotic grocery e-commerce facility in the D.C. Metro Area. This is the first public U.S. partnership announcement for Fabric.

Using a system of totes and racks, Fabric creates automated systems for shuttling grocery items around a warehouse to fulfill e-commerce orders. Fabric will be building out an existing 10,000 sq. ft. When it opens later this year, the new FreshDirect facility in which it will be able to process 500 – 1,000 orders per day. Each order will take just minutes to fulfill, enabling FreshDirect to have a two-hour delivery window for customers in the D.C. area.

While this is the first U.S. facility for Fabric (née Common Sense Robotics), the company has two operational fulfillment centers running in Israel. Steve Hornyak, Chief Commercial Officer at Fabric, told me during a phone interview this week that his company has many more partnerships that will be announced soon, and that Fabric has seen a surge in demand.

“We got thrust five years into the future,” said Hornyak, adding that customers that had planned on implementing automation for e-commerce fulfillment in 2021 or 2022 are accelerating those timelines and starting the projects now.

There are 7.2 billion reasons grocery retailers are rushing into automation right now. The pandemic and subsequent stay-at-home orders pushed grocery e-commerce into multiple record-setting months in a row, hitting $7.2 billion in June. FreshDirect itself was hit hard in NYC during the height of the pandemic, at the beginning of the e-commerce surge, with delivery windows near impossible to get for most people. The inability to accept as many orders presumably translated into lost business for FreshDirect.

Hornyak said that the biggest issue for retailers Fabric is talking with is capacity. How do they increase the number of e-commerce orders they can fulfill? “Doing it manual sort-and-pick is arguably unprofitable,” said Hornyak. And while Fabric definitely has an incentive to bemoan the cost and speed at which humans move when picking items for an online grocery order, he has a point. Robots can just fulfill orders faster and for longer.

That’s why there are so many retailers investing in automated fulfillment. ShopRite and Albertsons both have programs with Takeoff Technologies, which builds micro-fulfillment centers in the backs of existing grocery stores. Walmart has a trial going with Alert Innovation. And Kroger is building out standalone automated warehouses powered by Ocado’s automation technology.

While we don’t know what permanent impacts the pandemic will have on buying behavior, large swaths of consumers have now had five months of new habituation, including buying their groceries online. As more automation gets built out, theoretically, delivery and curbside pickup options will get faster, which will attract more consumers, and an automated virtuous cycle will be born.

Coca-Cola Adapts Digital Marketing to Our New Pandemic Normal

In the abstract, it’s easy to know that the pandemic is affecting everything. But it’s when you get down to the nitty-gritty practical level that you fully understand just how COVID really is impacting everything. Like, for instance, how important pictures are when people are buying your products online.

Marketing Interactive has a story up about moves Coca-Cola is making to adjust its marketing efforts in the wake of coronavirus. From that story:

The company will enhance its brand presence on the “virtual aisle”, investing in high-quality content such as photos, videos and product descriptions, to ensure its brands look as good online as they do in store.

Coca-Cola is also working with retailers to increase the visibility and attractiveness of their products on screens, ramping up SEO, and working with restaurants to make sure its drinks are featured on menus.

It’s no surprise that Coca-Cola would be making these moves. Online grocery shopping has had record adoption and sales since March, thanks to the pandemic, reaching $7.2 billion in June. While restaurants yo-yo between being open to in-person dining and closed as the virus waxes and wanes, one thing for certain is the move to more contacless experiences. These new contactless measures will include digital payments and menus becoming standard.

Of course, Coke’s moves are also coming on the heels of a 28 percent drop in sales for the company as high-volume customers like restaurants, ballparks and movie theaters all shut down because of the virus.

While Marketing Interactive focused on Coke, it’s safe to assume that every CPG brand is making similar moves. If the only way consumers can interact with your brand is through a screen, then companies better make sure that that imagery is optimized for multiple types of screens and that those images look good.

In the 80s, Coca-Cola’s ad slogan was “Have a Coke and a smile.” Smiles are a definitely harder to come by nowadays, but with its new marketing efforts, Coca-Cola is making sure you still get your Coke.

Chinese Online Grocer, MissFresh, Adds $495M in Funding

MissFresh, a Chinese online grocer, announced yesterday that it has raised a $495 million funding round led by China International Capital Corp., with participation from new investors ICBC and the Abu Dhabi Capital Group, as well as existing investors Tencent, Goldman-Sachs ans Tiger Global. This brings the total amount raised by MissFresh to $1.4 billion.

That is a lot of money, even by today’s frothy standards, and reportedly gives MissFresh a pre-money valuation of $3 billion. For comparison, here in the U.S., grocery delivery startup Instacart has raised a total of $2.1 billion with a valuation of $13.7 billion.

This funding also highlights how online grocery shopping isn’t just big business in the U.S. The COVID-19 pandemic has forced lockdowns around the globe, spurring massive adoptions of online grocery shopping. In the U.S. online grocery shopping has experienced month after month of record customers and sales since the pandemic began, hitting $7.2 billion in June.

It’s worth pointing out MissFresh’s business model, which foresakes big, centralized warehouses in favor of smaller distribution centers. There are 1,500 of these smaller distribution hubs located closer to residential areas allowing for faster delivery and a a reduction in cold chain costs. We see this type of centralized versus distributed distribution models playing out between companies like Kroger, which is building large robotic fulfillment warehouses that cover large geographic areas, and Takeoff Technologies, which builds micro-fulfillment centers inside existing supermarkets, closer to where people actually live.

The question now is exactly how much consumer behavior around grocery shopping has permanently changed because of the pandemic. Will convenience and lingering fears over the virus continue to push grocery e-commerce even higher? MissFresh, at least, now has the money to find out.

Misfits Market Raises $85M Series B for its Online Oddball Food Marketplace

Online grocery subscription service Misfits Market announced today that it has raised an $85 million Series B round of funding. The round was led by Valor Equity Partners with participation from Greenoaks Capital, Third Kind Venture Capital, and Sound Ventures. This brings the total amount of funding raised by Misfits to $101.5 million.

Founded in 2018, Misfits Market started out selling imperfect or “ugly” produce boxes via subscription. The company has since expanded into other categories. It now sells all manner of packaged food considered imperfect because of things like inventory trucks being sent to the wrong location or labels printed backwards on items.

You may think that you can’t build a business on misprints, but as Abhi Ramesh, Founder & CEO of Misfits Market explained to me phone last week, you’d be wrong.

“There are a ton of manufacturing errors,” Ramesh said, “We purchased 50,000 units of olive oil because [the] label was printed backwards. Things like that happen constantly in the food system — manufacturing errors, mislabels, short coded items.”

Misfits claims that customers who buy these imperfect items save an average of 25 – 50 percent of retail prices. The catch however is that these imperfections are not consistent. That particular brand of olive oil isn’t going to misprint labels every month. Ramesh told me that while there may not be brand consistency, there are enough manufacturing issues across the industry that his market can still offer olive oil, it will just be a different brand from month to month.

Like so many other grocery related businesses during the COVID pandemic, Misfits Market has seen a surge in usage. According to today’s press announcement, the company has seen a 400 percent spike in consumer demand and has made 400 new hires since March.

Misfits Market isn’t the only company in the ugly food game. Imperfect Foods and Hungry Harvest do much the same thing.

Right now, Misfits Market only delivers to zip codes across the eastern half of the U.S. Consumers sign up for the service by choosing one of two different box sizes for produce, with the smaller one costing $22 and the larger going for $35. From there, they can access the other imperfect items in the marketplace. Ramesh said that eventually, Misfits Market will become more like Costco, where you pay a monthly membership that gives you access to the full store.

With $85 million now in the bank and a bigger customer base, they’ll be able to buy up even more misprinted product misfits.

Noops Closes $2M Pre-Seed Round, Launches Oatmilk Pudding in U.S.

Noops, a new company that makes plant-based pudding snacks from oat milk, today announced its U.S. launch online and in some retail locations. The company also announced it has closed a $2 million pre-seed round led by 25madison, with participation from Unovis/New Crop Capital and Siddhi Capital. 

Noops said in today’s press release it will use the funds to further develop its product, expand into more retail and foodservice outlets, and expand marketing efforts.

On its website, Noops lists oat milk, date paste, and sunflower seed protein as the main ingredients of its pudding snacks. All ingredients are organic, and the puddings contain zero added sugars. Noops says each serving contains five to seven grams of protein, five to seven grams of fiber, and half the carbs find in regular pudding snacks at the grocery store. 

Starting today, the snacks are available to pre-order online, and the company will launch at certain retailers (specifics weren’t named) and via Instacart later this month. Right now, the products are only available in the U.S.

Like many products derived from plants and alternative ingredients, Noops’ snacks ring up high in terms of price point right now. An eight-pack of 135g cups costs$39, while a 24-pack costs $84. That’s considerably higher than, say, a three-pack of 115g Swiss Miss puddings that will run you about $3.50 bones. It’s less astronomical, though, than something like Magic Spoon’s $40 for a four-pack of 7-oz. alt-sugar cereal.

On the whole, demand for plant-based products products continues to rise. And Noops is wise to sell its wares directly to consumers via its website. Since the pandemic hit, many companies have taken this route to reach customers who prefer e-commerce to mingling with strangers at the grocery store. Noops joins the likes of Impossible, Planterra, Beyond, and other plant-based brands in offering or planning to offer their products via e-commerce shops.