Historically, food byproducts have been viewed as low-value material. They have mostly been discarded or fed to livestock, with little thought given to their inherent value. Fast forward to today, they are being seen as an opportunity. Advances in science and technology reveal that food byproducts are brimming with nutrients, antioxidants, and bioactive compounds waiting to be repurposed. These compounds offer immense economic and environmental value, helping food companies and investors unlock hidden profitability and sustainability.
How can you approach side-stream processing to increase value creation? Discover 3 key steps to embrace the opportunities, differences between centralized and decentralized approaches and real-world applications to inspire your strategy.
READING TIME: 6-8 MINUTES
Food byproducts are commonly redirected as animal feed, limiting their potential as valuable resources. Lower-value applications are common because they require less investment and are quicker to implement compared to developing more sustainable, higher-value uses for byproducts. For instance, in North America, only a small portion of crop side-streams goes toward human consumption or industrial products. The majority—around 75%—is diverted to low-value purposes such as animal feed, fertilizer, landfill, or incineration (GFI). With growing awareness of the environmental and economic costs of byproducts, a shift in perspective has taken place. Today, companies are beginning to see the value in byproducts, thanks to the compounds they contain—antioxidants, essential oils, proteins, and fibers.
The drivers to valorize food byproducts stems from a blend of environmental, economic, and consumer demands. Companies are adopting circular practices to reduce their carbon footprint as awareness of food waste’s environmental impact grows. Regulatory pressures, e.g., Corporate Sustainability Reporting Directive (CSRD), position byproduct valorization as both a compliance measure and a cost-saving opportunity. On the consumer side, demand for sustainable products offers companies a chance to differentiate and capture a premium by repurposing waste into new products. Furthermore, the higher the value of the side-stream, the stronger the business case for byproduct valorization, as companies can increase profitability while reducing waste.
To fully capitalize on byproduct valorization, companies need to examine their existing processes to identify overlooked resources with hidden potential. Many materials considered waste contain valuable compounds—nutrients, antioxidants, oils, proteins, and fibers—that can be harnessed to create new revenue streams and support sustainability initiatives.
Examples of high-value byproducts:
Once valuable byproducts are identified, physico-chemical properties need to are assessed and biotechnological process set up. The strategic decision companies face then is how to process these materials efficiently. There are two main options:
Centralized processing: Processing occurs at a single, high-capacity facility to maximize efficiency, consistency, and economies of scale
Decentralized processing: Smaller, regional facilities that prioritize flexibility, adapt to local demand, and minimize logistics and setup costs
To successfully valorize byproducts, companies must ensure they perform as well as or better than traditional ingredients to meet consumer expectations. Overcoming hesitancy about using byproducts in food involves increasing familiarity through sample distribution and giving consumers clear reasons to make the switch, such as sustainability benefits, lower prices, or superior quality. Educating consumers on these advantages can provide the incentive needed to embrace new ingredients.
There are growing examples of how companies are turning low-value byproducts into high-value ingredients. We have selected the following 7 case studies to inspire your business:
• PhenOlive: The start-up extracts valuable phenolic compounds from olive byproducts, creating olive flour
• Kern Tec: Processes stone fruit pits, like those from apricots and cherries, into oils and ingredients used in plant-based dairy products
• Dole: Convert pineapple waste into natural food colorants and flavorings; they also extract pectin from fruit peels for use as a food ingredient
• Anheuser-Busch InBev (AB InBev): Through its subsidiary EverGrain, AB InBev upcycles spent barley grains from brewing into high-quality protein ingredients for food and beverage products
• Nestlé: Using coffee berry cascara, a byproduct of coffee production, Nestlé created Nescafe Nativ Cascara, a carbonated soft drink
• Perrier: With Perrier Energize, launched in the US, Perrier repurposes organic caffeine from decaffeination into an energizing beverage
• Aldi: Launched two new beers made from wasted bread and ‘ugly’ fruit in partnership with Freedom Brewery
While the potential of high-value compound extraction is significant, several challenges must be navigated to fully realize its benefits. First, the high initial investment in advanced extraction technology can be a barrier, especially for companies new to this area. Sophisticated equipment, technical expertise, and ongoing maintenance demand substantial capital, making the entry cost steep. Selecting smaller pilot sites in a decentralized approach or using third party side-stream processing facilities is a way to ease initial cost burdens.
Regulatory complexity presents a formidable hurdle. Regulations vary by region and compound, requiring companies to navigate food safety, quality standards, and extensive documentation. Each extracted compound often faces unique scrutiny, especially when intended for consumer goods.
Further complicating the process are logistical constraints associated with sourcing, processing, and efficiently distributing byproducts, which often have limited shelf lives. Another key consideration is the question of centralization versus decentralization in processing side-streams. While centralization can offer economies of scale, it must be balanced against logistical costs and the need to maintain consistent quality. Decentralized processing closer to source points may reduce transportation costs and improve freshness but can be more challenging to scale efficiently.
Next, a challenge lies in mindset. Traditionally, agrifood byproducts have been seen as a waste management issue, but to unlock their full potential, companies must view them as strategic business opportunities. This shift—from “waste problem” to “resource opportunity”—is essential for developing successful valorization initiatives. Recognizing byproducts as valuable resources rather than a disposal cost requires a forward-looking approach and buy-in from all levels of the organization, from leadership to operations.
Despite these hurdles, the rewards for those who successfully implement high-value compound extraction are compelling, offering access to new revenue streams and a competitive edge in sustainable production.
High-value compound extraction offers food corporates and investors a compelling growth strategy, transforming low-value byproducts into marketable assets. By harnessing these materials, companies can open new revenue streams, enhance sustainability credentials, and secure a competitive edge in an innovation-driven industry. While initial costs and regulatory hurdles are challenges, they are surmountable with strategic planning and partnerships. For those committed to sustainability and profitability, high-value compound extraction represents a unique opportunity to align financial success with purposeful impact, paving the way for a responsible, profitable future in food production.
For food corporates and investors, high-value compound extraction offers an exciting avenue for sustainable growth and innovation—but navigating this transformation can be challenging. Bright Green Partners is here to advise you on how to make the most of these opportunities. With deep expertise in sustainable food innovation and resource valorization, we can help position your business at the forefront of the industry’s shift from waste to wealth. Schedule a consultation with our Managing Partner, Floor Buitelaar, to explore how we can support your move toward a profitable, responsible, and resilient food production system.
Sources
Agro-industrial potential of exotic fruit byproducts as a source of food additives - ScienceDirect
Trash Talking: Three Approaches to Food Waste Valorization in Asia | Cleantech Group
https://www.statista.com/statistics/519611/percentage-of-wasted-food-by-category-global
From beer to bars: How AB InBev’s EverGrain finds new uses for spent barley | Food Dive
Upcycled cascara drink: Nestlé tackles upstream food waste through product and technology innovation
Aldi boosts sustainability with beers made from food waste | FoodBev Media
