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The Spoon

Daily news and analysis about the food tech revolution

Grocery

Food-X Gets $2.6M Grant to Build Out its E-Commerce Platform

Food-X Technologies, which creates a software platform to help retailers facilitate their online grocery shopping and delivery, announced last week that it had received a $2.6 million Canadian (~$1.95M USD) from from the Digital Technology Supercluster.

The Digital Supercluster is a collaboration between the Canadian government and private businesses including Microsoft, Adaptech and AltaML. The $2.6 million is basically like a grant and there is no equity in Food-X involved. (There is also no relation to the Food X accelerator here in the U.S.)

Food-X Technologies provides a platform that helps retailers throughout the entire e-commerce process: from the integrating with consumer-facing ordering through back-end fulfillment across all food categories (frozen, fresh, etc.), to inventory management and delivery route optimization.

The company is similar to U.K.-based Ocado, which builds out massive robot-powered warehouses. In the U.S., Ocado has partnered with Kroger to build out a number of fulfillment centers across the U.S.

Food-X has been doing online grocery since its early days as a CSA in 1997. The company has grown since then and now serves Western Canada and has a partnership with Walmart for grocery fulfillment.

The new money comes at an opportune time for Food-X. The COVID-19 pandemic has spurred a boom in online grocery shopping. Here in the U.S., grocery e-commerce hit $7.2 billion in sales during the month of June. Up in Canada, the CBC recently reported that online food buying is up 107 percent since the beginning of the pandemic.

As the pandemic continues to wax and wane in different parts of the world, the question now is how much of this online shopping is the new normal for people. Food-X now has a bigger warchest to find out.

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.

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.

Vertical Farming Could Help Us Build a More Equitable Food System

One of the recurring questions vertical farming companies face is how they are going to get their locally grown, supposedly healthier wares to more than just those with disposable income. So far, the answers have been few and far between, but that could be changing. Towards the end of last week, ABC7 reported that New Jersey-based AeroFarms and World Economic Forum have partnered with the City of Jersey City to distribute greens free of charge to communities in need.

While AeroFarms actually hinted at the news back in June, it’s worth reiterating here because it underscores the point that vertical farming can — and should — play a much bigger role than simply providing greens to high-end groceries and restaurants. 

This is the first partnership between a city municipality and a vertical farming company in the U.S. Through it, AeroFarms will build 10 vertical farms in senior centers, schools, public housing, and municipal buildings around Jersey City. Collectively, the farms are expected to produce 19,000 pounds of vegetables annually, according to AeroFarms. Greens will be free of charge to residents, and the initiative also includes healthy eating workshops and quarterly health screenings.

The idea, of course, is to get healthier foods and food habits to those in food-insecure communities.

Speaking to ABC7, Jersey City Director of Health and Human Service Stacey Flanagan said that while food security has always been an issue, “with COVID it’s just exacerbated that.”

Her point is an important one. We talk about the ways in which the pandemic has forced us to rethink our eating choices and habits. Thanks in no small part to the pandemic, plant-based foods are on the rise, consumers are vying for space on CSA waitlists, and vertical farming companies are now releasing models of their high-tech systems for individual homes. But it’s a small number of consumers that have the time or money to explore those options.

For many, a $10 pack of alt-meat or a $500 at-home farm remain out of reach in terms of accessibility and affordability. As JourneyFoods’ CEO Riana Lynn reminded us recently, our eating is not equal, and lack of access to food is less the issue as lack of access to nutritious food: “Even when we are braced with an overwhelming lot of food options, they almost always lack the nutrient-density need to curb away from negative outcomes.” 

As it is right now, vertical farming, because of its focus on leafy greens, can’t adequately feed a community in the sense of it providing a healthy balance of proteins, vitamins, and calories. But it can play a role in bringing more nutritious elements to that community, which is what AeroFarms’ new partnership seems to be about. And we’ve seen promising news in the recent past that shows these farms will grow more than arugula one day: strawberries and even wheat, for example. 

AeroFarms isn’t alone in trying to bring more food equity to the vertical farming sector. Boston-based Freight Farms works with Miami’s Lotus House, a facility and resource center for women and children experiencing homelessness. The farm works in tandem with Lotus House’s Culinary Center, supplying both food and education to residents.

Over in Chicago, Wilder Fields has taken an abandoned Target store located in a food desert and turned it into a massive vertical farming facility to supply 25 million heads of lettuce to local grocery stores. The facility will also house an educational and retail component, and sell greens for cheaper than you would find at, say Whole Foods.

North of the border, Elevate Farms and North Star Agriculture Corp. are building out farms in isolated parts of Northern Canada, where food insecurity is rampant. 

All of these efforts (and quite a few more) suggests vertical farming has a dual role to play in future. If it can prove itself scalable, which it seems to be doing so far, it can provide a healthier alternative to traditional farming. And it can help lead the charge for food and food tech companies when it comes to creating more equality in our food system.

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.

Afresh Adds $12M in Funding for its AI Approach to Fresh Food Stocking at Grocery

Afresh, a startup that uses artificial intelligence (AI) to help grocery retailers manage fresh food inventories, announced today that it has raised a $12 million follow-on to its Series A round of funding. The round was led by returning investor Innovation Endeavors with participation from Food Retail Ventures, Maersk Growth, Impact Engine, Better Food Ventures and existing investor Baseline Ventures. This brings the total amount raised by Afresh to $20 million.

A grocery store’s fresh food sections (think: produce, bread etc.) are trickier to manage than the aisles of CPG products as fresh foods have a limited shelf life and expire. The goal is to keep a store stocked with enough product that they don’t run out, but not so much that there is a lot that goes to waste.

That’s where Afresh says its technology can help out. As we wrote previously:

Afresh’s technology uses machine learning to analyze customer data and forecast product demand. Retail managers can then use the Afresh software to order the exact amount of fresh food that they’ll need — no more, no less.

Of course, maintaining fresh food stocks in-store has only gotten trickier since COVID-19 hit in full force. When the pandemic first started here in the U.S., panic buying translated into lots of empty store shelves. Since then buying habits have shifted too, with record numbers of people buying groceries online. All of these new buying patterns need to be taken into account as we adjust to this current pandemic and brace for any resurgences of the virus.

Afresh isn’t alone in its mission to cut down on food waste and help grocery retailers better manage their inventories. Crisp uses data and AI to offer a similar service to grocers. And online grocer Farmstead is built around algorithms that help it predict and better manage its inventory.

Though the world seems to be in a continuous state of unpredictable flux, we all still need to eat. Hopefully technology like Afresh’s can help mitigate any future shocks to the food system.