Just over a year ago two young entrepreneurs approached the Swedish grocery chain ICA offering to take their rejected fruit and recycle it into bottles of high quality fruit juice that ICA could buy back and sell in their supermarkets. This would reduce waste, generate income for both companies and benefit the environment and society. Simple and very effective – as some of the best ideas are. This circular approach to resources and waste management was recognised as serving as a source of inspiration for the whole of the retail trade in the region and the initiative was shortlisted for the Nordic Council Environment Prize 2017.
Peter Hägg was the senior category manager at the ICA fruit and vegetable division when he started up this project with Rescued Fruit – now called Rescued – back in 2016. Peter is currently responsible for sponsorships at ICA and is involved in sponsoring selected humanitarian causes such as the Red Cross and the Pink Ribbon Childhood Foundation. Peter will return to his previous position in the fruit and veg team later this year.
The ICA Group is a retail company with 1300 grocery stores in Sweden. The fruit and vegetable section of the business where the Rescued Fruits initiative was first launched is situated in Helsingborg and employ upwards of 80 people working within category development and the buying and replenishing of fruit and vegetables for all the depots within Sweden.
‘This circular approach to resources and waste management was recognised as serving as a source of inspiration for the whole of the retail trade in the region’
Rescued, then called Rescued Fruits was founded in Helsingborg in 2015. The background was that there is too much good fruits and vegetables thrown away, unnecessarily. Rescued, salvage fruit and vegetables which otherwise would be wasted, fruit and vegetables that do not fit into corporate production. For example, bruised apples, wrong sized pears or weird-looking carrots. They check, sort and wash everything gently and then turn the goodies into great juice. The different kinds vary depending on the season, which means flavours vary too. The juices are sold mainly in coffee shops, restaurants and selected grocery stores in Sweden. Rescued now has 8 employees and has increased revenues by 237 % during the period 2016-17.
Here Peter Hägg from ICA talks to Fruit Juice Focus about his experience of the Rescued initiative he helped to launch and why it is important today that ideas such as these should be replicated worldwide.
Fruit Juice Focus (FJF): How did ICA get involved with Rescued, how did this whole idea come about?
Peter Hägg (PH): Normally it is not very easy for a small company, such as Rescued was then, to just walk into the offices of a large company like ICA and say we have a business idea can we have a contract please! Which is exactly what Truls Christenson and Cecilia Larsson did when they approached us at the Helsingborg offices of ICA. It did help that at the Helsingborg offices we have a forward-thinking management team which were able to speed up the acceptance and commencement of the project.
These young entrepreneurs came into our office during the autumn of 2015 having just turned 29 and 19. And talk about good timing! The initial meeting with Truls and Cecilia took place one month before we were setting up the strategy for the coming year.
They had some interesting questions regarding our business. They observed that the ICA operation in Helsingborg imported a large amount of fruit and vegetables and suggested that there must be waste in our supply chain.
I was thinking about that for a while and I thought no, we don’t have much waste really. Especially not for apples where we know we have one of the smallest percentages that we record as waste in our warehouse – it’s barely 1.8% or close to this.
But when I then looked at what 1.8% was in actual kilos it turned out to be 8000 kilos of apples which equates to approximately 11,000 bottles of juice during the course of one year. I then thought in more detail about the waste aspect of our business.
Of course, those kilos I referred to above for apples are not constant from one week to another at that same level. It can vary a lot over time. It could be just a small amount of damaged items or it could be a complete container that is deemed as being of unsuitable quality or damaged in some way that has arrived and is sitting in our warehouse. This might mean 24 tonnes of fruit is not usable.
On these occasions we call the supplier and discuss what to do with the fruit since the quality is not in line with the agreed specification.
Do they want us to sort it? This would cost some money. Do they want us to send it back? This would cost the supplier money organising return transport. Or do they want us to try selling it for a discount price? Thereby reducing all profit and sometimes reducing normal turnover of accepted fruit with normal margin. If the above solutions are rejected the products will end up as landfill gas (biogas) and that will also end up as a dumping cost for each pallet. These are the normal solutions for a container of rejected fruit that arrives at our Helsingborg depot.
After reflecting on this we realised that Truls and Cecilia’s proposal could make sense and we agreed to talk more.
FJF: Can you explain in more detail what Rescued were proposing?
PH: The business idea Rescued put on the table was that they would take all rejected fruit off our hands. Truls and Cecilia didn’t want to pay for the fruit because then, as they pointed out, it’s not waste. ‘We want to take care of the real waste’ they said. We at ICA could throw them all away but it would cost us at least EUR10 per pallet to do this so it’s a cheaper way for us just to send it to Rescued for free than to get rid of it.
The plan that we agreed was that we would send to Rescued from our depots all the rejected, unusable fruit that we couldn’t sell in our stores. They would then process it into fruit juice, bottle and label it as ICA private label. We would buy the finished product back into our warehouse and then stock it for sale in our retail outlets.
Having secured this deal with us Rescued were able to go to their bank and report that they had a contract with a major customer – ICA – thus securing a business loan to set up their factory and install the machinery needed to commence operations. The team behind Rescued made that happen within six months.
‘The business idea Rescued put on the table was that they would take all rejected fruit off our hands’
FJF: When did the first bottles of Rescued juice start rolling off the production line?
PH: It was June of 2016 that things began to move and we were in a position to start selling bottles of Rescued through our stores. We generated a lot of attention both in the media and with our customers due to the fact that no one had done anything like this before.
FJF: How has the operation developed? What obstacles have you and Rescued experienced along the way and how have they been overcome?
PH: One of the hard parts for the Rescued team is to make the operation viable where the quantities of fruits are fluctuating. To combat this as the company developed they have taken on a number of other big importers around Sweden providing them with an economy of scale which has made a big difference. Also at ICA we have run trials with some of our bigger retail outlets where they send back any waste from the stores to our warehouse and then we transport it on to them for processing.
What we also did from the beginning was a conscious decision not to make any profit from this project. We decided that it was a great thing to be able to rescue fruit that somebody had planted and nurtured and grown from the soil and transported it across the globe only to have it rejected and on the verge of being destroyed. We all felt that this was a terrible waste, so we are doing this for a good cause.
We made a small investment for the first year for every bottle that we sold to be able to make this work and to start in a good way. And now since the volumes have grown we have started to break even.
Since we launched it as a private label brand it has enabled us to use internal marketing resources to tell the story about rescued fruits and promote the product in Sweden.
Meanwhile they have also developed their own brand at Rescued which are now selling to restaurants, coffee shops and bars in Sweden. They have managed to create a really good premium label and are able to sell at premium prices in these restaurants and cafes with the result that nearly 80% of their turnover comes from their premium brand. ICA is now only a small part of their business.
FJF: What happens when there is not enough damaged fruit in the ICA chain? Do you slow down production of the bottled juices or do you supplement it with undamaged fruit? How do you manage that situation?
PH: We have discussed combining damaged fruit with industrial contracted fruit but we have never done it. I don’t think it’s a bad idea because in order to have an operation that’s running to save as much fruit as possible if there is 80% rescue or there is 100% or 70% it shouldn’t really matter because it’s also important that the shelves in the stores are always filled up with juice.
If you leave an empty space on the shelves someone else will take the spot. We have not taken a decision to combine with industrial contracts yet. It could happen in the future. For now we have sold the juice in the category of fruit and vegetables. In that specific category in the stores you set something up every day and then you compare it from one day to another and decide how you will present the fruit and vegetables section. It’s not like an ordinary shelf of bottles of drink for example. We have accepted that during certain times of the year there will be a shortage due to lack of fruits.
It is a very good thing that in the ICA stores we are able to display the fruit juices right next to the apples in the stores and this demonstrates to the consumers that ICA are very much responsible for what we do.
Together with Truls and Cecilia we have also set up the diplomas whereby we reward the stores who are good at sending back the fruit and we can send them a diploma to pin up on the wall that says thank you for rescuing 200kg of fruit made into delicious juice. Most companies like ours always have empty space on the lorries going back to the depots as we are still transporting crates or rolling container pallets and rejected items from the stores. There is always transport for that so there isn’t any extra cost to us transporting this back to the depot – it’s just that we are filling up the trucks better.
‘We reward the stores who are good at sending back the fruit. We send them a diploma that says thank you for rescuing 200kg of fruit made into delicious juice’
FJF: You say the price for these juices is higher than the standard pricing due to the more labour- intensive production methods?
PH: Yes, that is correct. Even if the product is cheap (free in effect) you still need to collect the fruits. And when it comes into Rescued’s warehouse they need to store the fruit properly. Rescued also need to sort it before they commence juice production. For instance, they need to take away all the most damaged fruit and all the stickers on the apples – and we have a lot of stickers – and this is a process that needs more attention and involves more cost than a juice factory. And this is what makes our juice a bit more expensive when you relate it to everything else. Also, there are small things such as the handicraft of tasting the products and the mixing process to produce a delicious juice which adds to the cost. Remember, apple varieties vary and create different challenges that need to be handled by adding ginger, lemon or cinnamon to achieve perfection.
Consumers are prepared to pay a premium price because they recognise that this is a good cause and the delicious result is worth every penny.
‘Consumers are prepared to pay a premium price because they recognise that this is a good cause and the delicious result is worth every penny’
FJF: Are you considering extending this process beyond apples?
PH: We have used pears. We started with marmalade from pears then we discovered after a while that one pear is one jar of marmalade and Swedish people don’t each much marmalade so we can’t rescue that much. We have also created a juice with pears and lemons and that works quite well. We also use different ingredients like lemons to be able to spice the juice even if its apple content of say 80% we can still use lemons and ginger and other similar ingredients. We can use different flavouring products when we have waste on those as well.
FJF: Can you quantify how much fruit has been rescued since the initiative was introduced?
PH: By mid-2017 after the first 12 months since launch, approximately 33,466kg of fruit has been saved from ICA’s warehouses and ICA stores corresponding to 54,336 bottles of juice. This continues to grow on a monthly basis. We look forward to hearing from companies in other countries and regions on how they might be introducing the same processes to their rejected fruit. Everybody can win from this initiative.
We are so proud and happy for the cooperation with ICA. We have learned a lot from each other along the way. I still remember when it all began. Now it feels surreal that that we managed to fill the first 20 000 bottles with a funnel and a measuring cup. There are a lot of new things in the pipeline and we are looking forward to rescuing more fruits and vegetables working together with ICA
Truls Christenson, one of the initiators behind the project at Rescued.