Periodic Reporting for period 1 - Fresh Solutions (Fresh Solutions –‘A fresh approach to food packaging’)
Reporting period: 2017-06-01 to 2017-11-30
PROBLEM AND SOCIETAL IMPORTANCE: Food waste is an issue of global significance, affecting food security and environmental sustainability with about one third of all food produced, equivalent to 1.3 billion tonnes per annum, wasted in the food production and consumption systems. In the EU an estimated 88 million tonnes of food is discarded every year. This equates to more than 20% of the total food produced, most of which occurs within the post-production supply-chain with an estimated 61.6 Million tonnes (Mt) of food waste occurring at this level. In Europe, between 40-50% of all food waste is generated by households, accounting for 46.5 Mt/year - equivalent to 92kg per person per year. Approximately 60% of household food waste arises from products ‘not used in time’ (avoidable waste) with a value of more than €60 billion per annum (annual cost of €624 per household/€884 per family) the majority of which are short shelf-life chilled products (perishables). Similar shelf life challenges are found within the Retail sector. For Retailers it is not possible to sell products after their ‘use by’ date and products that approach these dates are usually marked down in price for sale. If this is not effective, then products will simply enter the waste stream with most retailers (despite their efficiencies) operating with significant fresh waste levels. A central focus to address this Global challenge centres around preventing product deterioration and prolonging shelf life with a recognition that even a 1 DAY increase in shelf life could reduce waste levels both in store and in the home by up to 50% for some products. For most member states an increase of just one day could help prevent up to 200,000 tonnes of household food waste, or just less than 5% of avoidable food waste, potentially giving a saving to consumers approaching €600 million on an annual basis and for retailers a direct business benefit of around €100 million in waste prevention alone; increased sales from improved on-shelf availability could be added to this potential benefit.
SOLUTION: It is this global challenge that Four04 Ltd seeks to address, through the continued development of a unique approach to the packaging of perishable food which effectively controls the detrimental effect of condensation, thermal shock (due to movement between chilled & ambient conditions) and the respiration rate of fresh produce which contribute to the build-up of moisture in the packs and mould/bacterial growth. The integrated ‘chemical free’ approach known as ‘Fresh Solutions’ combines a bio-degradable and fully compostable film (Evap) which allows the moisture vapour transmission (MVTR) rate to be tailored, limiting condensation but preventing dehydration, and a novel highly accurate and consistent laser perforation system which creates optimum atmospheric conditions within the packaging. The combined approach offers the proven ability to increase the shelf life of fresh produce by 40% – 100% over current packaging techniques.
OVERALL OBJECTIVES: With support through Phase 1 of the SME Instrument the overall aims of the project have been:
1. To better understand the technical feasibility of integrating Fresh Solutions into existing tray sealing manufacturing processes (lidding and flow wrap) and packaging lines (the dominant packaging format for Fresh Produce) within the EU and U.S (initial markets).
2. To better understand the market potential of the solution and business plan for deployment including updated market analysis within each target region (size, competitive landscape, route to market, pricing and revenue forecast, value proposition, risks, costs).
3. Pilot site identification for upscale and phase 2 activity.
SOLUTION: It is this global challenge that Four04 Ltd seeks to address, through the continued development of a unique approach to the packaging of perishable food which effectively controls the detrimental effect of condensation, thermal shock (due to movement between chilled & ambient conditions) and the respiration rate of fresh produce which contribute to the build-up of moisture in the packs and mould/bacterial growth. The integrated ‘chemical free’ approach known as ‘Fresh Solutions’ combines a bio-degradable and fully compostable film (Evap) which allows the moisture vapour transmission (MVTR) rate to be tailored, limiting condensation but preventing dehydration, and a novel highly accurate and consistent laser perforation system which creates optimum atmospheric conditions within the packaging. The combined approach offers the proven ability to increase the shelf life of fresh produce by 40% – 100% over current packaging techniques.
OVERALL OBJECTIVES: With support through Phase 1 of the SME Instrument the overall aims of the project have been:
1. To better understand the technical feasibility of integrating Fresh Solutions into existing tray sealing manufacturing processes (lidding and flow wrap) and packaging lines (the dominant packaging format for Fresh Produce) within the EU and U.S (initial markets).
2. To better understand the market potential of the solution and business plan for deployment including updated market analysis within each target region (size, competitive landscape, route to market, pricing and revenue forecast, value proposition, risks, costs).
3. Pilot site identification for upscale and phase 2 activity.
This 6-month feasibility study has verified a number of technical, practical and economic aspects of the development to support commercial validation and ensure operational requirements are met before market launch. The main findings of the study are presented in the feasibility report, the activities comprising the study being defined as:
T1.1 TECHNICAL FEASIBILITY [1] Finalise the technical potential of integrating the manufacture of Fresh Solutions into existing top seal manufacturing lines including any CAPEX requirements for new lines when replacing traditional Clamshell formats which are common in some of the target markets e.g. the U.S including ROI calculations to justify the investment. [2] To examine the manufacturing process of the solution to identify where further costs can be reduced e.g. the elimination of any phases and reducing waste levels. [3] Evaluation of key KPI’s and requirements that need to be accounted for in manufacturing scale up within the target markets.
RESULTS:
Proven feasibility of technology integration across both packaging formats with KPIs for each manufacturing process defined. Pricing strategy based on Rank Xerox model confirmed and validated within the target markets. CAPEX requirement defined including suppliers. Supply chain in all markets confirmed. Potential for further optimisation of manufacturing process to drive down the current cost of EVAP film by 25% (with perforation), however the decision has been made to reinvest in this activity following market adoption with the cost of material bulk ordering alone currently sufficient to achieve a viable and acceptable price point.
T1.2 MARKET ANALYSIS [1] Finalise market fact bases (sizes, trends, supply chain understanding & requirements, analysis of market conditions within each of the target countries) [2] Updated competitor analysis [3] Finalise list of core stakeholders for project endorsement within each target country. Initial contact made within target pilot locations which will form part of the Phase 2 activity.
RESULTS:
Updated market analysis undertaken for each target country with appropriate partner suppliers for each market confirmed (2-5 year supply agreements for all countries) who can facilitate direct access to leading supermarkets. Full stakeholder analysis (Industry, NGO, Governmental) undertaken to identify key initiatives at a regional and national level per country that seek to address food waste as key targets for dissemination and solution endorsement as part of Phase 2 activity. Full Competitor analysis (current and emerging) has confirmed Fresh Solutions continued superior performance in terms of shelf life extension and price point.
T1.3 PILOT SITE IDENTIFICATION & FEASIBILITY [1] The identification of appropriate sites for pilot manufacturing trials and for supply chain evaluation (initially stone fruit, soft fruit, grapes, packaged salads) including assessment of current costs, performance and waste reduction. [2] Secure commitment through appropriate packer and supermarket chains to evaluate the technology (across the supply chain to assess respiration rates and shelf life performance). Assessment of current practices/performance and definition of KPIs for this purpose.
RESULTS:
7 pilot sites throughout the U.S and 5 in the EU have been identified for Phase 2 pilots with interest confirmed. 3-6-month duration likely at each – considered sufficient for market confidence to facilitate adoption.
T1.4 ECONOMIC, BUSINESS and RISK ASSESSMENT [1] Finalise commercialisation strategy (Pricing, routes to market & sales strategy). [2] A detailed ROI analysis (over 5 years) for each market. [3] Assessment of commercial risks/barriers [4] Develop Phase II work plan/ budget [5]. Definition of strategy for scale up for full commercialisation (scale up/Capex, personnel/ skills/marketing strategies plus partnership agreements [6] Updated FTO analysis and schedule of arising IP.
RESULTS:
Range of market access routes evaluation. Direct sales identified as most appropriate across all markets. ROI calculated based on current packaging spend vs. increase in packaging spend + increase in value from waste reduction to support value proposition. Range of commercial, regulatory, technical and managerial risks evaluated, to be updated during Phase 2 project. Updated evaluation of prior art and FTO search undertaken. A number of new competitive patents identified. None offering significant threat to Fresh Solutions in terms of performance.
T1.1 TECHNICAL FEASIBILITY [1] Finalise the technical potential of integrating the manufacture of Fresh Solutions into existing top seal manufacturing lines including any CAPEX requirements for new lines when replacing traditional Clamshell formats which are common in some of the target markets e.g. the U.S including ROI calculations to justify the investment. [2] To examine the manufacturing process of the solution to identify where further costs can be reduced e.g. the elimination of any phases and reducing waste levels. [3] Evaluation of key KPI’s and requirements that need to be accounted for in manufacturing scale up within the target markets.
RESULTS:
Proven feasibility of technology integration across both packaging formats with KPIs for each manufacturing process defined. Pricing strategy based on Rank Xerox model confirmed and validated within the target markets. CAPEX requirement defined including suppliers. Supply chain in all markets confirmed. Potential for further optimisation of manufacturing process to drive down the current cost of EVAP film by 25% (with perforation), however the decision has been made to reinvest in this activity following market adoption with the cost of material bulk ordering alone currently sufficient to achieve a viable and acceptable price point.
T1.2 MARKET ANALYSIS [1] Finalise market fact bases (sizes, trends, supply chain understanding & requirements, analysis of market conditions within each of the target countries) [2] Updated competitor analysis [3] Finalise list of core stakeholders for project endorsement within each target country. Initial contact made within target pilot locations which will form part of the Phase 2 activity.
RESULTS:
Updated market analysis undertaken for each target country with appropriate partner suppliers for each market confirmed (2-5 year supply agreements for all countries) who can facilitate direct access to leading supermarkets. Full stakeholder analysis (Industry, NGO, Governmental) undertaken to identify key initiatives at a regional and national level per country that seek to address food waste as key targets for dissemination and solution endorsement as part of Phase 2 activity. Full Competitor analysis (current and emerging) has confirmed Fresh Solutions continued superior performance in terms of shelf life extension and price point.
T1.3 PILOT SITE IDENTIFICATION & FEASIBILITY [1] The identification of appropriate sites for pilot manufacturing trials and for supply chain evaluation (initially stone fruit, soft fruit, grapes, packaged salads) including assessment of current costs, performance and waste reduction. [2] Secure commitment through appropriate packer and supermarket chains to evaluate the technology (across the supply chain to assess respiration rates and shelf life performance). Assessment of current practices/performance and definition of KPIs for this purpose.
RESULTS:
7 pilot sites throughout the U.S and 5 in the EU have been identified for Phase 2 pilots with interest confirmed. 3-6-month duration likely at each – considered sufficient for market confidence to facilitate adoption.
T1.4 ECONOMIC, BUSINESS and RISK ASSESSMENT [1] Finalise commercialisation strategy (Pricing, routes to market & sales strategy). [2] A detailed ROI analysis (over 5 years) for each market. [3] Assessment of commercial risks/barriers [4] Develop Phase II work plan/ budget [5]. Definition of strategy for scale up for full commercialisation (scale up/Capex, personnel/ skills/marketing strategies plus partnership agreements [6] Updated FTO analysis and schedule of arising IP.
RESULTS:
Range of market access routes evaluation. Direct sales identified as most appropriate across all markets. ROI calculated based on current packaging spend vs. increase in packaging spend + increase in value from waste reduction to support value proposition. Range of commercial, regulatory, technical and managerial risks evaluated, to be updated during Phase 2 project. Updated evaluation of prior art and FTO search undertaken. A number of new competitive patents identified. None offering significant threat to Fresh Solutions in terms of performance.
An updated competitor analysis was performed within the project. Although a number of new innovations have entered the market notably within Artificial and Intelligent packaging (Gas-Scavengers/Antimicrobial/Modified-Atmosphere/Flagrance-Control) no emerging or established solutions offer significant shelf-life extensions beyond current levels primarily due to an inability to effectively control BOTH gas & moisture of the product. At a target cost price/Kg to that of standard film (part of planned R&D future activity), product flexibility and most importantly shelf life extension (4-10 days vs 1-2 days), Fresh Solutions continues to outperform all current solutions.
As a technical and market evaluation activity (end deliverable being a technical report which will feed into an updated business plan and Phase 2 submission), no socio-economic results have been achieved within the project other than confirmation of the potential of this truly disruptive solution. Such results will be the direct consequence of piloting and market launch within the next phase of the project across the supply chain from the packers of fresh produce through to product suppliers, supermarkets, regulatory and Governmental and the public consumer (fiscal, environmental and employment impacts).
As a technical and market evaluation activity (end deliverable being a technical report which will feed into an updated business plan and Phase 2 submission), no socio-economic results have been achieved within the project other than confirmation of the potential of this truly disruptive solution. Such results will be the direct consequence of piloting and market launch within the next phase of the project across the supply chain from the packers of fresh produce through to product suppliers, supermarkets, regulatory and Governmental and the public consumer (fiscal, environmental and employment impacts).