Upcycled Foods, Inc. Shifts From CPG To Focus On Ingredients

Upcycled Foods, Inc. is moving away from packaged goods and using its expertise in repurposing food byproducts to position itself as an ingredient platform.

Based near San Francisco, Upcycled Foods (UP, Inc.) formally announced an expansion of its portfolio with five food ingredients as it shifts the business’ focus from selling branded products to a business-to-business company leveraging its expertise in the upcycled food category.

The 10-year old company was an early adopter of the upcycled food trend, using spent brewers’ grains to produce puffed snacks, snack bars, pastas and baking mixes from its flagship ingredient ReGrained SuperGrain+. But co-founder and CEO Dan Kurzrock said that growing the brands has become more about proof of concept as the business transitions into the ingredient space.

“From the beginning, we saw the consumer products as a means to an end of being an ingredient supplier,” Kurzrock said. “We do not have much focus on our own CPG products anymore. It’s all about bringing this to life commercially in B2B.”

Building an upcycled CPG company is different from building an ingredient supply business. The new framing is a “more compelling business model” for UP, Inc. because it “underestimated early on how much of a distraction having a consumer brand could be from the larger mission” of bringing more upcycled food and ingredients to market, Kurzrock said.

The company classifies its new ingredients in two ways: core ingredients using ReGrained SuperGrain+ as an additive to make a value-added product and expanded ingredients where UP, Inc. acts as an intermediary sourcing (not manufacturing) upcycled ingredients. The company insists that it has more ingredient products ready to be announced in the future but it depends on market conditions.

In January, UP, Inc. and bakery ingredient supplier Puratos inked an exclusive supply agreement to use ReGrained SuperGrain+ in a new product – recently announced as the SuperGrain+ Sourdough System. Following that, Up Inc. announced a partnership with food and ingredient maker Kerry to make upcycled protein crisps with use applications for protein bars and snack products. Rounding out the upcycled company’s core ingredient portfolio is a multigrain flake produced in collaboration with California Cereal Products.

The company’s expanded ingredient portfolio includes an arabica coffee leaf product meant for beverage applications and a cacao fruit syrup that can be used for sweet-savory applications in sauces, marinades or as a sweetening substitute.

UP, Inc. will also act as an intermediary for food companies, consulting and co-producing new value-added upcycled ingredients, Kurzrock said. “Our company’s strategy is much more focused on identifying the gaps in the market for solutions that can be filled with upcycled offerings.”

How that materializes for UP, Inc. in its various partnerships is determined on a case-by-case basis. In terms of the protein crisps, it is a Kerry-produced product using ReGrained SuperGrain+ but the crisps are sold through Kerry’s portfolio. Same as Puratos SuperGrain+ Sourdough System, which can be sold as a foodservice product for bread baking.

Competition for upcycled CPG products is increasing as more consumers become familiar with the trend. The baking category that ReGrained operated in as a packaged goods brand has seen a slew of new upcycled flours and grain mixes over the last couple of years. Another Bay Area-based company, Renewal Mill, uses plant milk byproducts to make baking mixes and has been steadily increasing its retail footprint. San Antonio-based Grain4Grain has distribution with local supermarket chain H-E-B and recently partnered with Tyson Ventures as one of six sustainable companies chosen in the meat company’s Demo Day.

The market for upcycled foods is growing. UP, Inc. was part of establishing the Upcycled Food Association. The association received approval in February by the USDA Food Safety and Inspection Service to certify products as Upcycled Certified.

According to SPINS data provided to the Upcycled Food Association, sales of Upcycled Certified products grew between Q1 2021 and Q1 2022 by over 1,000% in the natural retail channel and about 400% in the conventional retail channel.

A Mattson research survey quoted on ReGrained’s blog stated that 57% of consumers actively search for products with upcycled ingredients and 54% of consumers indicated that seeing the Upcycled Food Association certification logo increased their likelihood of purchasing a product.

In both 2021 and 2022, Whole Foods Market’s Trends Council highlighted upcycled foods as a Top Ten Food Trend and is even launching in 2023 its own upcycled oatmeal chocolate chip cookie made from pulp used in oatmilk production.