- A food-tech startup called Apeel Sciences has landed a $US70 million funding round led by Viking Global Investors, Andreessen Horowitz, Upfront Ventures, and S2G Ventures. Previously, the Bill and Melinda Gates Foundation had invested in Apeel.
- The company has created an invisible, edible coating designed to be sprayed on produce to extend shelf life. The company says its avocados last twice as long as nonorganic avocados.
- The coating slows the decaying process.
- In June, Apeel introduced its avocados at Costco and Harps Food Stores locations throughout the American Midwest.
Avocados are known for their short shelf life. By the time the beloved fruit hits a grocery-store shelf, it will last about a week before it gets too ripe.
A Santa Barbara, California-based startup called Apeel Sciences has invented an edible coating that it says will double an avocado’s shelf life. Food suppliers spray the product on the produce before it ships to grocers.
So far, the startup has developed products for more than three dozen crops, including asparagus, peaches, lemons, pears, and nectarines.
On Tuesday, the company announced it received an additional $US70 million in a funding round led by Viking Global Investors, Andreessen Horowitz, Upfront Ventures, and S2G Ventures. Walter Robb, Whole Foods Market’s co-founder and former co-CEO, will join Apeel’s board as well.
In June, Apeel debuted its longer-lasting avocados at Costco and Harps Food Stores locations throughout the Midwest. This is the first time the startup has sold its produce. (Harps Food Stores, a regional grocery chain, has 87 locations. Costco is much larger, with more than 500 wholesale locations across 44 states and Puerto Rico.)
Harps reports that, over the past two months, it has seen a 65 percentage-point margin increase and a 10% lift in sales across the Haas avocado category. This may be due to Apeel’s claim that it helps food retailers reduce food waste, since its avocados can last longer than traditional ones.
Made of leftover plant skins and stems, the coating acts as a barrier designed to slow the decay process. After the coating dries, it locks in moisture and acts as a shield against natural gases (e.g., oxygen and ethylene) that make avocados ripen.
Slicing open an Apeel avocado will break the shield, and at that point it will brown just as fast as a normal avocado.
“Refrigeration has been used to increase produce quality during transportation and storage, but you lose the benefit of refrigeration when a fruit sits on a grocery store shelf or on a kitchen counter,” CEO James Rogers told Business Insider. “With our technology, we’re able to dramatically reduce the rate that clock is ticking.”
The US Food and Drug Administration has approved Apeel’s first products as “generally recognised as safe,” meaning they’re OK to eat and sell. In 2017, the company received approval to use the coating on organic produce, though the avocados at Costco and Harps will not be. They will also cost the same as any other conventionally grown avocados.
Last year, Apeel moved into a 105,000-square-foot facility, and at least six farms in Southern California, Kenya, and Nigeria are now using Apeel’s products. In the past several months, the company finalised negotiations to work with over two dozen packing houses and several farms in Mexico, Peru, and Chile to prepare for its commercial rollout.
Farms and food-packing houses have been able to buy Apeel’s products since early last year. It’s usually sprayed on produce during the wash cycle, before it’s sorted and packed to go to retailers.
The coating is made of discarded materials from organic produce – anything from pear stems to leftover grape skins to grass clippings. But the formula differs for each fruit or vegetable.
The company is also working on a second product called Invisipeel that is designed to keep insects away. Invisipeel is not yet widely available.
Below is a time-lapse comparison the company created to show Apeel’s effect on a variety of fruits and vegetables.
The coating could help stores and farmers reduce waste from produce that has ripened too quickly. Since Apeel’s plant-based product controls the rate of decay, the company offers Costco and Harps a less costly way to preserve produce (the idea being that grocers will discard fewer spoiled avocados and thus save money). This is one major reason the locations will offer Apeel’s fruit at the same price as other nonorganic avocados with a shorter shelf life, Rogers said.
If Apeel starts selling more types of produce at Costco, it could also give the chain an advantage over its competitors, including BJ’s Wholesale Club and Whole Foods. Costco is known for its low-cost produce, but as Whole Foods lowers its prices following its sale to Amazon, the wholesaler may be looking for ways to differentiate its fresh food.
Rogers plans to expand the types of produce Apeel sells and to grow geographically, too. Asparagus could be next.