Market Analysis – 11141701 – Food waste or scrap

Market Analysis Brief: Food Waste & Scrap

UNSPSC: 11141701

Executive Summary

The global food waste management market, valued at est. $63.7 billion in 2023, is projected for significant expansion, driven by regulatory pressure and corporate sustainability mandates. The market is expected to grow at a ~6.8% CAGR over the next five years, transforming a traditional cost center into a potential value stream. The primary opportunity lies in shifting from landfill disposal to circular economy solutions like anaerobic digestion and upcycling, which can mitigate rising disposal costs and meet increasing ESG scrutiny. The most significant threat is logistical and infrastructural gaps that hinder cost-effective diversion from landfills.

Market Size & Growth

The global market for managing food waste is substantial and expanding. The Total Addressable Market (TAM) is driven by the cost of collection, transport, and processing of the est. 1.3 billion tonnes of food wasted annually. Growth is fueled by a global push to divert organic waste from landfills. The Asia-Pacific region represents the largest market due to high population density and increasing urbanization, followed by North America and Europe, where stringent regulations are key drivers.

[Source - Allied Market Research, Aug 2023]

Key Drivers & Constraints

1. Regulatory Pressure (Driver): Government mandates, such as the EU's Landfill Directive and state-level organic waste bans in the U.S. (e.g., California, Vermont), are forcing diversion from landfills and creating demand for alternative processing.
2. Rising Disposal Costs (Driver): Increasing landfill tipping fees, driven by shrinking landfill capacity and environmental taxes, make alternative solutions like composting and anaerobic digestion more economically viable.
3. Corporate ESG Goals (Driver): Public commitments to "Zero Waste-to-Landfill" and carbon footprint reduction are a primary driver for large corporations to seek sustainable waste management partners and invest in source-reduction technologies.
4. Circular Economy Value Creation (Driver): Technology is enabling the conversion of food waste into higher-value products, including renewable natural gas (RNG), animal feed, bioplastics, and soil amendments, creating new revenue-stream opportunities.
5. Infrastructural Deficiencies (Constraint): A significant lack of collection and processing capacity for organic waste remains a major barrier, particularly in developing regions and parts of North America. Contamination of food waste streams further complicates processing.
6. High Capital Investment (Constraint): The construction of advanced processing facilities, such as anaerobic digesters, requires substantial upfront capital, slowing the pace of infrastructure development to meet growing demand.

Competitive Landscape

The market is dominated by large, integrated waste management firms but is seeing disruption from specialized technology players. Barriers to entry are high due to the capital intensity of infrastructure, the logistical complexity of collection (route density), and navigating complex environmental permitting.

⮕ Tier 1 Leaders * Waste Management (WM): Differentiator: Unmatched collection network and landfill ownership in North America, with significant investment in renewable natural gas (RNG) facilities. * Republic Services: Differentiator: Focus on "Polymer Centers" and "Circularity Centers," integrating recycling and organics processing to create circular feedstocks. * Veolia: Differentiator: Global leader with deep expertise in complex water, waste, and energy solutions, particularly strong in European markets with advanced anaerobic digestion technology. * Suez: Differentiator: Strong global presence and expertise in sustainable resource management, now largely integrated with Veolia, creating an environmental services powerhouse.

⮕ Emerging/Niche Players * Anaergia: Specializes in building and operating advanced anaerobic digestion facilities that maximize resource recovery (RNG, fertilizer, clean water). * Divert, Inc.: A data-driven provider using proprietary technology to help food retailers reduce waste at the source and manage unavoidable waste. * Compost-Now: A subscription-based collection service focused on converting food scraps into high-quality compost for local communities (regional model). * Full Cycle Bioplastics: Develops technology to convert organic waste into Polyhydroxyalkanoate (PHA), a compostable bioplastic.

Pricing Mechanics

Pricing for food waste services is primarily structured around cost-of-disposal, which procurement aims to minimize or convert into revenue. The primary model is a service fee for collection and processing, typically priced per-ton or per-haul. This "tipping fee" at a composting or digestion facility is benchmarked against the local landfill tipping fee; a discount to the landfill fee is the core value proposition. In rare cases where a generator can provide a large, consistent, and pure stream of feedstock (e.g., brewery mash), a processor may pay a nominal amount for the material.

The price build-up is dominated by collection and processing costs. Collection is driven by fuel, labor, and vehicle maintenance. Processing costs depend on the technology (e.g., sorting, grinding, digestion, curing). The three most volatile cost elements are: 1. Landfill Tipping Fees: Can fluctuate based on local taxes and capacity. Recent national average increases have been ~5-7% annually. 2. Diesel Fuel: Directly impacts all hauling-related fees. Has seen volatility of +/- 30% over the last 24 months. 3. Renewable Energy Credits (RINs): The value of credits generated from producing RNG from food waste is highly volatile, impacting the profitability of anaerobic digestion and the price they can offer for feedstock.

Recent Trends & Innovation

• Data-Driven Waste Reduction (2022-Present): Increased adoption of AI and IoT sensor technology (e.g., Divert, Phood) in commercial kitchens and retail to provide real-time tracking of food waste, enabling source reduction and operational efficiency improvements.
• Regulatory Acceleration in the U.S. (Jan 2022): California's SB 1383 enforcement began, mandating statewide diversion of organic waste. This has catalyzed significant investment in collection and processing infrastructure throughout the state, serving as a model for other regions.
• Investment in Renewable Natural Gas (RNG) (2022-2023): Major waste handlers like WM and Republic Services have announced multi-billion dollar investments to build or expand networks of RNG facilities that convert landfill and food waste gas into pipeline-quality natural gas.
• Food-Grade Upcycling (2023): Growing interest and venture funding in technologies that upcycle food byproducts into human-grade food ingredients (e.g., converting fruit peels into functional fibers), moving beyond traditional animal feed or compost applications. [Source - ReFED, Apr 2023]

Supplier Landscape

Regional Focus: North Carolina (USA)

North Carolina's food waste landscape is characterized by a growing generation volume from its robust food processing, agriculture, and retail sectors, contrasted with a nascent disposal infrastructure. The state currently lacks a statewide organic waste landfill ban, resulting in a heavy reliance on landfills. Average tipping fees in NC (est. $40-50/ton) are lower than in the Northeast, which has historically weakened the economic case for diversion. However, a limited but growing number of private and municipal composting and anaerobic digestion facilities are emerging. The outlook suggests a near-term opportunity to partner with these local processors, locking in favorable rates before regulations tighten and landfill costs inevitably rise.

Risk Outlook

Actionable Sourcing Recommendations

1. Quantify and Reduce at Source. Pilot a data-analytics solution (e.g., Divert, Inc.) at 5-10 highest-volume sites to establish a precise baseline of food waste streams. Target a 15% reduction in preventable waste within 12 months by addressing operational inefficiencies. This strategy directly reduces disposal costs and provides auditable data for ESG reporting, shifting focus from cost-of-disposal to profit-at-source.

2. De-risk Future Costs via Diversion. Issue a formal RFI for organic waste diversion services in key regions with rising landfill fees (e.g., Southeast, Northeast). Target diverting >50% of food waste from landfill to anaerobic digestion or composting partners within 18 months. This mitigates exposure to future price shocks from landfill taxes and capacity constraints while improving the corporate sustainability profile.