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The Spoon

Daily news and analysis about the food tech revolution

Eden

Zest Labs Sues Walmart for $2B Alleging Food Waste Tech Theft

Fighting food waste is a big problem with a big business opportunity for the growing number of companies trying to reduce it. Whenever there’s big money to be made, lawsuits are sure to follow. Sure enough, yesterday Zest Labs and its parent company, Ecoark Holdings, sued Walmart for $2 billion over Walmart’s Eden technology, which aims to reduce food waste by improving the shelf life of produce (hat tip to Silicon Valley Business Journal).

As we’ve written before: “Zest Labs offers Zest Fresh, a sensor-based logistics system to measure produce freshness. Zest Fresh assigns each pallet of produce an individual code that marks product type and data related to its exposure to the elements which would impact its spoilage. That information is uploaded to the company’s proprietary cloud where the data can presumably be tracked by anyone in the value chain from farm to distributor.”

According to Zest, the company met with Walmart in 2015 to demonstrate its technology for the retail giant, and from Zest Labs’ lawsuit announcement: “During this time, Zest Labs’ proprietary information and trade secrets were shared with Walmart, including members of Walmart’s executive leadership team.”

In March of this year, Walmart announced its Eden technology. The company said it monitored food freshness, and was developed over a six month period, starting with a company hackathon. From a Walmart blog post announcing that technology: “Eden’s suite of apps helps Walmart associates better monitor and care for fresh fruits and vegetables that are waiting to be shipped from distribution centers to stores. That could mean more efficiently ripening bananas, predicting the shelf life of tomatoes while they’re still on the vine, or prioritizing the flow of green grocery items from the back of the store to the shelf.”

Part of Walmart’s approach, the company told Business Insider at the time, was the use of tracking devices on cases of produce.

Zest believes similarities between the two are not coincidental. Again, from the Zest Labs lawsuit announcement:

“This concern led to the action we have taken today, which was to file a lawsuit with the federal district court in Arkansas claiming that Walmart has violated the Arkansas Trade Secrets Act and the federal Defend Trade Secrets Act. In addition, we are also filing claims for unfair competition, unjust enrichment, breach of the covenant of good faith and fair dealing, conversion and fraud. We believe strongly in the need to protect our intellectual property, recognizing the importance of preserving the value to our shareholders and customers. We are asking the court for over $2 billion in damages, based in part on Walmart’s claim in their March 1, 2018 announcement that Eden will provide that measure of benefit to Walmart over the next five years.”

The grocery sector is ripe (sorry) with competition. Giants like Walmart, Amazon, Kroger and more are fighting each other for your food dollars. Any edge in reducing costs from food waste or extending shelf life of produce is worth a lot of money to companies at that scale. Just last month, Costco started using Zest’s technology for its produce. And elsewhere in the fight against food waste, yesterday Apeel raised $70 million for its plant-based peels that prevent food degradation.

For those wanting more information on the lawsuit, the case is Zest Labs, Inc., et. al. v Walmart, Inc., case number 4:18-cv-500-JM, in the United States District Court for the Eastern District of Arkansas, Western Division.

AgShift Raises $2M, Reveals RJO as First Client

Today AgShift, a startup that uses computer vision and deep learning to reduce food waste, announced its first client: RJO Produce Marketing. This news comes just days after AgShift raised $2 million in its first seed round

Agshift uses its technology to attack food waste generated in the supply chain. Right now food inspection is done manually at different points along the food system, with workers literally eyeballing product to assess its quality using their own judgment, which can vary.

“The food supply chain is fragmented,” said Miku Jha, Founder and CEO of AgShift. “Inspections are done by different people at different points.” The results, according to Jha, are “subjective and inconsistent.” One person’s Grade A is another person’s Grade B.

Jha wants to take the subjectivity out of this process with — what else? — a mobile phone app. Instead of just looking at a piece of fruit, inspectors at wholesalers and distributors hold the produce up to the phone’s camera and take a picture (like depositing a check via mobile app, the software guides you for proper positioning). AgShift’s software in the cloud analyzes that image to quantify its bruising, color distribution, average size, mold, etc. to determine its quality.

Using the USDA’s produce guidelines (or a customized set of specifications), AgShift says its software can objectively give fruit its proper rating, and provide precise reasons why it made that choice. According to Jha, this level of consistency throughout food supply chain will deliver higher-quality produce to consumers.

It will also reduce food waste on multiple fronts. AgShift analyzes color distribution better than the human eye. So if, for example, it sees some strawberries that are 90 percent dark red at a shipping point, it can tell suppliers that it is more ripe. Then the suppliers can divert those riper berries to closer destinations, rather than running the risk of them getting spoiled on a cross-country trip.

AgShift can also reduce food waste by removing human judgment from the equation. Right now, vendors and buyers might dispute the rating of a food shipment. This can lead to canceled orders and food getting thrown out. With a computer generated rating, lower quality food can be assessed earlier in the supply chain and re-sold at a lower price or re-purposed, rather than discarded.

Industry watchers may note that AgShift sounds a lot like the Eden technology Walmart recently rolled out at its grocery stores to prevent food waste. Walmart is obviously a giant and a master of the supply chain, but Eden appears to be Walmart-specific. AgShift’s agnostic platform will give it a broad range of potential customers.

AgShift’s platform is already in trial use by a number of companies, the first of which to be publicly announced is RJO Produce Marketing. According to the press release, RJO provides “quality assurance inspections, in-depth market analysis and category management services for key perishable commodities.”

While the two million raised by AgShift is a rounding error for a company like Walmart, it’s just the start for this startup. The Sunnyvale-based company was founded two years ago and currently has 12 people working in their California and India offices. Jha said the money will be used to fund R&D and expedite the product.

Jha’s mission with AgShift is a global one. As she points out, we spend a lot of time talking about growing more food for a growing population — but a good first step is reducing the amount of food we waste right now.