Chris Cochran - Afresh - Ep 43 — PostHarvest Technologies

In this episode of "Let's Talk Farm to Fork", we're joined by Chris Cochran from Good Food Advisors, who we'll talk to about Afresh and how their retail-level software is working towards reducing annual food waste within the fresh produce industry.

www.afresh.com/

www.goodfoodadvisors.co/

Transcript

[00:00:00] Mitchell Denton: Hello, and welcome to "Let's Talk Farm to Fork," the PostHarvest podcast that interviews people of interest across the food supply chain. Today on our show, I'm joined by Chris Cochran from Good Food Advisors, who I'll be talking to about Afresh and how their retail-level software is working towards reducing the amount of annual food waste within the fresh produce industry.

So with no further delays, let's get started.

Hi, Chris. How you doing?

[00:00:26] Chris Cochran: Hi, Mitch. I'm doing well, thanks.

[00:00:28] Mitchell Denton: Great. Great. Before we get into it though, I just wanted to ask you just a little bit about your background and how you came to work in foodtech and maybe a fun fact about yourself.
[00:00:40] Chris Cochran: I fell in love with food and agriculture just after college I was working with Smallholder Farmers in Central America. It was a DIY version of Peace Corps. And. From there wanted to work for the world's largest grocer, so went to work for Walmart, leading their global produce sustainability program, and there really developed a deep understanding of both the strengths and challenges of grocery retail and where there is opportunity for innovation, including in the area of food waste.
From there I, I led ReFed, which some of your audience may be familiar with as a think tank that focuses on the issue of food waste. And it really furthered my thinking on both innovation opportunities and who are the leading startups that are seizing those opportunities.
So I formed Good Food Advisors, my consultancy to promote food retail innovation, and I went out with an investor mindset to pick companies that I want to bet on to create the future of food.
And that's what led me to Afresh as a strategic advisor. I was introduced to them by James McCann, the former CEO of Ahold. And I've been working with them for the past three years. So through a period of incredible growth.
[00:01:51] Mitchell Denton: That's great. And uh, is there any chance you have a fun fact for us?
[00:01:56] Chris Cochran: I do. One of the fun facts is, uh, when I was in Honduras just after college, as I was leaving Honduras, I purchased a small cocoa and rambutan farm actually planted a lot of the trees myself and have operated that farm for the past 13 years with local partners.
[00:02:14] Mitchell Denton: Wow. Wow. What? What brought that on?
[00:02:18] Chris Cochran: I was interested in not only studying international development but continuing to engage in it. So it's been a passion project of mine and wanted to stay connected to this special place where I fell in love with food and agriculture.
[00:02:31] Mitchell Denton: Yeah. That's fantastic. They have, they have great coffee there, by the way.
[00:02:34] Chris Cochran: Yes, they do.
[00:02:35] Mitchell Denton: Before we get bogged down in, uh, Honduras though, can you please give us a little bit of a history lesson on Afresh and what solutions and technology they provide to the food industry?
[00:02:46] Chris Cochran: Sure. So Afresh was founded in 2017 by Matt Schwartz and Nathan Fenner. They were actually doing a graduate school project, so to learn more about the food supply chain and conducted over a hundred interviews with industry experts and leaders. And their epiphany was that even though fresh foods are critically important to grocery retailers, the majority of technology systems are designed for shelf stable foods and aren't well suited for fresh.
So they founded Afresh with this mission to build technology, specifically designed for managing fresh foods. Their first product is an ordering system for grocery retailers that uses artificial intelligence to forecast demand, to understand inventory, and to order the right amount of fresh food and grocery store employees will use Afresh's application on a tablet in stores to take inventory, create orders, and it really brings together the best of both human and artificial intelligence to create an accurate order that both ensures shelves stay full and product is available to customers, and also prevents over ordering and waste.
[00:04:01] Mitchell Denton: That's great. So then, what are some of the key factors that Afresh's technology considers when predicting demand for grocery items? How does machine learning play a role in this process?
[00:04:13] Chris Cochran: I had say, at a basic level a grocery retailer's goal is to ensure that fresh products are available for customers. While also minimising waste. And so Afresh's approach to this is to create not just a demand forecast, which is information but not a decision, but actually to create an accurate order.
So to create an accurate order, you need to understand your demand forecast or how much you anticipate selling. And also your inventory or how much product you have on hand, which is actually a, one of the kind of key challenges in fresh is knowing how much fresh product you have in your store. And those two factors will lead you to creating an accurate order. So it really brings together those three components, um, towards this order decision.
And it uses, you know, billions of data points, you know, historical sales volumes, how often does a store receive shipment? What produce varieties are being sold? At what prices? Are there promotions happening? And how much inventory is currently on hand to inform this model? And I'd say one piece of this that's unique is that Afresh is built on a kind of a new and rapidly evolving discipline of machine learning that's specifically designed to produce decisions amidst uncertainty, and so their system really takes into account all of these messy and imperfect data points to optimise a decision.
[00:05:44] Mitchell Denton: Yeah. Okay. On that note, how does Afresh kind of strike that balance on the push and pull between maintaining optimal inventory levels and minimising waste?
[00:05:56] Chris Cochran: Well, I mean, there is a tension there, right? Because you, on the one hand, could simply over order and always have your shelves full or under order and not have any waste. And so the way that Afresh really approaches this is with this retail mindset of let's maximise profit as our key metric and that will drive striking this balance between having enough inventory where customers are very likely to have this product in stock if they go into their local store looking for it.
While also not having so much product in stock that the retailer is throwing excess product away. So conceptually it's really, it is exactly striking this balance by looking at profit maximisation as the key function that they're driving towards.
[00:06:44] Mitchell Denton: Mm. Yeah. Okay. So then beyond inventory levels, how can Afresh's data collection be leveraged by grocery stores to make informed decisions such as identifying trends, improving the customer experience, or supporting sustainability initiatives?
[00:07:02] Chris Cochran: I think of this, maybe I'll, I'll think of customers first. That's where my mind goes as a former retailer. For customers, they walk into a store and grocers that use Afresh are very likely to have their fresh products in stock and available for those customers to purchase. Not only that, but on the backend Afresh has made sure that those fresh products haven't spent too much time sitting in warehouses or sitting in back rooms of stores.
And wasting away the best days of their freshness, but that they move quickly through the system because there's not a lot of excess inventory throughout the system, Afresh has really streamlined that inventory to get it as fast as possible from farm to to store shelf for consumers. So that freshness is another key benefit in addition to availability for the customer.
I also think about store associates, um, you know, one, this is saving them time, but it's also lifting up the job because they're now, you know, superpowered humans with this artificial intelligence tool to help them do their job better and really leverage their human expertise, um, and intelligence.
And so I think that lifts up store associates as well. And then in terms of supporting sustainability, what I love about Afresh is their core business model drives sustainable outcomes, so it drives availability of fresh food for customers at an affordable price, and also minimises waste and all of the impacts that come with that in terms of reduced greenhouse gas emissions, water use, land use, et cetera.
[00:08:44] Mitchell Denton: Mm-hmm. You mentioned store associates. I'm just wondering if you can share any success stories or case studies where Afresh's technology has helped grocery stores significantly reduce waste or improve their overall operations.
[00:08:59] Chris Cochran: There are so many. I mean, if you look at afresh website and at their customers common commonalities are reducing food waste by 25% or more. Seeing an increase in top line sales by 2 to 4% because the product is available when customers go to buy it. It also saves labour and increases freshness.
So whether you are a, some of Afresh's, especially earlier customers, some of the regional supermarkets in the US or whether you're a large national, like an Albertson's company, you are seeing these benefits.
[00:09:33] Mitchell Denton: Mm, that's fantastic. Cause I find that fresh produce is inherently uncertain and ever-changing, with variables like perishability and, and seasonality. That usually doesn't apply to most boxed food items with barcodes. So I was just wondering how does Afresh's fresh produce capabilities compare to alternative grocery monitoring options?
[00:09:58] Chris Cochran: I think the, the first goes back to your question about the technology and really being designed for fresh foods, and the imperfection of data that is inherent in the fresh food industry. Um, and there are a variety of reasons this can happen in dozens, but a couple of examples. Let's say an organic apple is mis-scanned out as a conventional apple.
You now have a problem with your data, both for conventional and organic apples, so you're going to produce a wrong order if you simply rely on the computer assisted ordering systems that are designed for centre store and Afresh really embraces that imperfection for fresh specifically. I think the other aspect of this is thinking about inventory levels, so, traditionally, retailers have relied on, we can get kind of wonky here, but retailers have relied on a system called perpetual inventory, which in layman's terms is simply counting how many you purchased, how many items you purchased, how many your system says you sold, and assuming that that's your on hand availability.
And of course there'll be inventory reconciliation maybe once a month, that's a very time consuming process. But for the other 29 days of the month, you're relying on imperfect data. And Afresh really takes a fundamentally different approach, especially to this aspect of inventory.
And instead of using perpetual inventory or counting, it uses a probabilistic system of inventory that takes into account all of these imperfections and uncertainties and embraces that to optimise its decision making. So it's a really different, you know, it's really different approach to inventory.
[00:11:47] Mitchell Denton: Yeah, absolutely. So, I mean, I'm stating the obvious here, but sustainability is obviously a core focus of Afresh. Could you share any specific initiatives or partnerships that Afresh has involved in to promote sustainability in the broader food industry?
[00:12:03] Chris Cochran: Sure, and I would just begin with Afresh is by nature, a social enterprise that's driving sustainable outcomes through its core business. You know, its mission in fact is to eliminate food waste and make fresh food accessible to all. So from that lens, any partnership that they have with retailers is helping drive sustainable outcomes.
Since Afresh was founded, it's helped avoid more than 40 million pounds of food waste and associated benefits of that, including 27 million kilograms fewer CO2 emissions, almost a billion gallons of water saved. And so it's really powerful to me for a company to be driving these sustainable outcomes as part of their core business instead of separately as a side project.
[00:12:54] Mitchell Denton: So then taking a step away from the solutions that Afresh is providing, what in your opinion represents one of the main challenges or pain points in the fight against food waste?
[00:13:05] Chris Cochran: Mitch, I've done a lot of thinking about this, especially in my role as, at ReFED. I think a couple that I would point out, I think one is food waste is both everyone's responsibility and yet no one's responsibility. And what I mean by that is we're all contributing to this on an individual level, but then if you look at the supply chain, or even within food companies where some of this waste is generated or where consumers purchase their food, there's always.
Partial responsibility of each, each party involved for food waste. So for example, if I throw away berries in my fridge, was that my fault? Or did the retailer leave them out too long on the shelf? Or did the berry company not get them to the retailer fast enough? And so I think there's a bit of a tragedy of the commons that happens with food waste, where it's everyone's responsibility and no one's responsibility at the same time.
I think relatedly, it's a, a misalignment of incentives. I think there's sort of short term thinking that, you know, if I am a, maybe it's a produce supplier or a fresh retailer that if I help my customer downstream for me reduce waste, they may purchase less from me. And I think, I think that shortsighted, I think in the long run by providing fresher product to your customers, I think that positions you to win as a company in the long run.
But I think there's sometimes, uh, short term thinking that can cloud decision making around food waste.
[00:14:39] Mitchell Denton: Yeah, absolutely. I mean, I find for the PostHarvest team, we're constantly looking at that mentality that you're kind of talking about of, people kind of kicking the can down the road and the, and the responsibility of the quality of the food from suppliers through to the warehouse and facilities, to distributors, to retail, to the end consumer.
And then, like you're saying, the, the end consumer throws out some fruit from their fridge and they're like, "Was this my problem or did the problem happen further up the line? And I'm just kind of getting the results of that". So, yeah, that's very interesting. So then how do you see the foodtech industry evolving in the next 5 to 10 years, and how will Afresh adapt to these changes?
[00:15:24] Chris Cochran: I guess most generally, I see the foodtech industry maturing in the next five to 10 years. I love to refer to the Gartner Hype Cycle as a mental model of paths of innovation and with food and ag tech, it's really, you know, emerged over the past 10 years. And I think depending on the type of food technology we're talking about, we may be kind of during a rising and inflated expectations of that technology.
We've actually, in the past year, seen the emergence of the trough of disillusionment stage for some, some categories, for example, plant-based proteins or vertical farming. And I hope where we're moving throughout any of these types of food tech innovations is really like the slope of enlightenment, kind of where does this start to scale and take a more permanent hold in the industry.
So I, I really hope and expect the foodtech industry to mature over the next 10 years in the same way that it's, it has emerged over the last 10.
[00:16:31] Mitchell Denton: No, I agree. So then is there a particular group or innovation within the industry that you are excitedly keeping a watchful eye on?
[00:16:41] Chris Cochran: Yes, on my whiteboard at home, I have a a diagram end-to-end of the food supply chain and I track a number of categories of food and agriculture innovation, and maybe three, I would mention that I have my eye on. I think one is still indoor agriculture despite vertical farming, specifically being in the trough of disillusionment.
I still think there's this broader world of indoor agriculture, inclusive of vertical farming, but also things like greenhouses, uh, et cetera, that will play an important role in a changing climate and also in response to consumer demand for really fresh products year round where they want to have that local production.
The second area that I'm paying attention to, is really around how we protect food once it is grown. So the first is where do we grow it, and including locally and indoors. The second is, once we've grown it, how do we protect it? And I think we have combined these organic systems of food with inorganic systems of plastic packaging, and somehow expect those two systems to separate at the end of life and actually each be captured in a circular economy.
I think fundamentally that model is flawed, and so I'm very excited to see new, uh, innovation in the realm of packaging and, and protection of products. So, and then a third area that I'm very interested in paying attention to is really around data throughout the food supply chain, and I think particularly an understanding of freshness.
You know, we have fresh foods that today we rely on, essentially rely on date codes and harvest dates to understand how fresh those products are. But I think in the future we're really going to have a much better understanding of the freshness of, of products, not only generally, but individual units that are flowing through the supply chain and into consumers' homes, we're going to have a much better understanding of the quality and freshness of those products.
And I'm excited to see, you know, I know your company is working on ethylene sensing. So, you know, sensing technology, there's visual technology, you know, a variety of new technologies emerging for us to better understand the freshness of foods much better than our current system of date codes.
[00:19:12] Mitchell Denton: Mm. Yeah. No, I definitely feel like transparency and, and traceability across the supply chain is definitely where a lot of focus and attention's kind of going to in the future. So, That will be interesting to see. So Chris, we are coming to a close, but before we do, I just wanted to ask you, what is the major point you really want the listeners to take away from this episode?
[00:19:35] Chris Cochran: I think the major point is that, my hope for the foodtech industry is to take a note from the Afresh playbook of really focusing on partnering with large food companies. You know, in their case food retailers. To improve their business and improve the fundamental viability of their business from a financial perspective.
And that will help drive many of the sustainability outcomes that we're seeking. But I think this like business case first, sustainability mindset is really what I hope listeners take away from this podcast and Afresh as example.
[00:20:14] Mitchell Denton: Yeah, yeah definitely. Well, that's all for today's episode of Let's Talk Farm to Fork. Thanks for listening and thank you, Chris for joining me today.
[00:20:22] Chris Cochran: Thanks, Mitch.
[00:20:24] Mitchell Denton: For any listeners who would like to know more about Good Food Advisors or Afresh, check out the links in the description of this episode. Make sure to subscribe to the podcast so that you never miss an episode. And don't forget to leave a review and share with your friends.
Until next time, you've been listening to "Let's Talk Farm to Fork," a PostHarvest podcast.