You’d have to be living on Mars to avoid hearing phrases like local food, locally-raised, and eat local these days. Ninety-five percent of American consumers are willing to pay more for local food while 96% of Americans define local as within 100 miles. Still, only 21% of Americans reported eating locally grown food at least twice a week or more. Despite the popularity of this food movement, which has even encouraged the creation of government-backed programs to put local produce in schools, grocery retailers have struggled to make the trend a staple in their produce departments.
“When you’re a major retailer, it’s harder to work with smaller more complicated suppliers,” says Foodshed.io‘s co-founder and CEO Daniel Beckmann. Usually, mainstream retailers buy from large producers such as Dole or Driscoll’s that can easily meet their demands.
But Beckmann says that Foodshed.io is able to scale local supply, by creating a farmers’ market section in mainstream grocery stores and delivering to mainstream food retailers like Panera or other chains trying to source local. “This involves not only figuring out some sort of system for locating produce but figuring out if it meets quality standards,” he adds.
The New York-based startup is hoping to bridge the gap between local farmers and grocers with its blockchain-driven technology platform that facilitates everything from logistics to helping participating growers figure out what to plant each year. And it recently announced a three-year $15 million deal with midwestern grocer Schnucks, which will use its local purchasing platform in stores on top of co-marketing and branding produce items. Foodshed.io was also recently accepted to The Yield Lab’s North American cohort.
Through the Schnucks deal, Foodshed.io will also work with the company on marketing and reimagining produce departments. This may include app-based notifications to let people know what’s in-season and available at their local Schnucks supermarket. Although Foodshed.io initially reached out to Schnucks, the supermarket chain was quick to bite, according to Beckmann, and had already been working on the problem of sourcing more local produce at a retail grocery scale. The startup is in discussions with a few other currently undisclosed retailers.
For grocery retailers, a turnkey solution to putting more local produce on their shelves carries considerable appeal. As we wrote about in 2018, grocers are failing to meet the then-$20 billion demand for local food. And in the highly-competitive grocery space, retailers are looking to differentiate anyway possible while also providing a memorable, experience-driven retail environment for hard-to-capture customers.
Although some might be quick to categorize Foodshed.io as just another broker, Beckmann sees the company as being more than just a middleman.
“What we are doing is unique because we are working with the retailer to find out what demand is before the season, which takes a lot of variability out of the equation,” he says. “We work with 24 farms in a five-state region and have already located over $30 million in produce we could buy in this area. We help farms get GAP certified, which is a barrier to entry for many farmers and we work with them to make sure crops are up to the standards of retail institutions.”
Foodshed.io is entering a major expansion phase this year after spending much of 2019 testing the systems that it developed. When the company first launched in 2017, skeptics questioned whether it would be able to aggregate the quality or volume that retailers demand. But what Beckmann observed is that most local food systems wait to see what farmers are growing and then wait to see what they might sell.
“In talking to other retailers, this is hard to figure out. We come with a solution that’s already been tried at a trusted retailer like Schnucks. We really had to earn that pilot with them but it’s been helpful. We have a really good model to show other retailers now.”