As a doctoral student at UC Santa Barbara, Rogers, then in his mid-20s, was studying the molecular basis of solar paint—a thin, photovoltaic film that’s still largely experimental—and he regularly needed to shuttle between university labs for his research. Those five-hour drives gave him a lot of time to kill, so he listened to podcasts, including one about the dramatic consequences of food waste. He was horrified to learn that as much as half of America’s harvested produce ends up in landfill. The idea struck him particularly hard since he was driving through the leafy farmland of the Salinas Valley in central California.
“My thought was, if people are going hungry because of perishability—and perishability is caused by water evaporating, and steel is perishable without its oxide barrier—could we solve the food perishability problem by creating a thin barrier for produce?” Rogers says.
James Rogers, the founder of Apeel Sciences, got his undergrad degree at Carnegie Mellon, where he also captained the football team (he played linebacker).
James Rogers, the founder of Apeel Sciences, got his undergrad degree at Carnegie Mellon, where he also captained the football team (he played linebacker).COURTESY APEEL
His life as a bored scientist ended there. Within a year, in 2012, the former college linebacker (he was a captain on Carnegie Mellon’s squad) had won his university’s New Venture Competition with his idea for an odorless, colorless and tasteless edible coating for produce that would extend shelf life. After that, he captured a $100,000 grant from the Gates Foundation—one of its primary causes being the eradication of world hunger—and hired Apeel Sciences’ first two employees (Jenny Du and Louis Perez, who were given cofounder titles). They experimented initially on commercially relevant crops in the U.S.—in the earlier 2010s, Rogers imagined debuting to consumers with longer-lasting blueberries—and did field trials in Nigeria using the product on cassava root. Over the course of their six-year, $40 million research and development ramp-up, Rogers and his team found that their coating can double, triple and, in some cases, quadruple how long a fruit or a vegetable can last in a store.
Apeel produce is, for the first time, becoming available in stores. For now, that’s only Apeel avocados. (Which makes sense. The fickleness of a ripe avocado has inspired internet memes, but Americans still bought north of $2 billion of them last year.) Harps, a grocery chain in the Midwest, started selling Apeel avocados in May, and Costco signed on in June. In the three months since, Apeel says Harps has discarded dramatically fewer avocados—as much as 60% fewer. That improvement translated to a 10% sales lift in avocados, and a 65-percentage-point increase in its margin on the fruit.
Kroger, the nation’s largest grocery chain, wants in too. The company announced Thursday that it will carry Apeel avocados in 109 stores in the Cincinnati area. It’s technically a six-month test, but if it goes well, Kroger could quickly expand to carrying the long-lasting veggies throughout the Eastern half of the U.S. “From a dream perspective, we’d like to not throw any of the avocados out,” says Frank Romero, Kroger’s corporate vice president of produce. Really, Kroger doesn’t want to throw anything out, and if it could get Apeel-treated products throughout its produce aisle, it could mean as much as a $1 billion lift in revenue—just from reducing waste.
A display of Apeel-treated avocados at a Kroger supermarket.
A display of Apeel-treated avocados at a Kroger supermarket.KROGER
“We always had the hypothesis that if we could make fruit stay higher quality for longer, it would be good business and result in improved economics for suppliers and retailers, but it hasn’t been until the last three months now that we have products in market,” Rogers says. “We’re getting the numbers back from our retail partners, and we’re demonstrating that, yes indeed, reducing losses is good business.”
Broadly, produce accounts for 12% of a supermarket’s sales, or a total of roughly $63 billion in the United States. Sales of fresh food are growing at twice the rate of items from other parts of the supermarket—giving Apeel a huge opportunity. Investors such as Andreessen Horowitz and Viking Global Investors have put $110 million into Apeel, valuing the company at more than $350 million. But Apeel isn’t profitable yet, and it won’t discuss revenue, a sign that it probably hasn’t completely figured out how to monetize its science.
“Numbers-wise, this is a trillion-dollar industry, plus or minus. It’s a meaningful part of the economy, and fresh food is on the ascendant,” says Walter Robb, former Whole Foods co-CEO and current Apeel investor and board member. “This is a technology that’s coming in, and it’s directionally correct. But they’ve got to do the work. It’s early; it’s only the first inning. Hyping it doesn’t do any good.” But, he adds, it says something when “Kroger, the largest grocery store the U.S., says, Hey, there’s something here.”
Here’s how Apeel’s science works: The company takes the seeds, skin and pulp of grapes and other common fruits and vegetables and presses out a fatty oil. (“It’s not like some weird botanical extract from some avocado seed or something,” Rogers says.) The fat lipids in the oil act as a natural protector for the fruits and vegetables, keeping moisture in and oxygen out. It’s the same principle as a cell membrane, which is also, essentially, a lipid-based protective wrapper. Apeel takes the oil and turns it into a powder, which is combined with water and sprayed onto fresh produce.
The application of this solution happens not at a farm but at the sorting factories of wholesale produce suppliers. In Kroger’s case, that’s the Horton Fruit Company in Louisville. The avocados are harvested and sent to Horton, where, in addition to the normal washing and ripening process, the fruit receives the Apeel treatment through a conveyor-belt-like machine that Apeel has installed in Horton’s facilities. The Apeel-sealed fruit then gets sent back to Kroger, which pays Horton extra for the treatment.
Each fruit and vegetable requires a slightly different coating formulation, so Rogers spent six years developing treatments for more than three dozen fruits and vegetables, starting with milligrams of fruit and working his way up to kilograms.
A distributor like Horton, which can reach millions of consumers in the Eastern U.S., gives Apeel the chance to expand quickly. But Rogers is cautious about oversaturating shoppers with too much Apeel science too quickly. After all, consumers in 2018 are warier than ever about additives in their food, even ones that purport to be all natural.
Apeel is compliant with what the FDA calls “GRAS,” or “generally recognized as safe” to eat. There are no allergy concerns, Rogers says, because allergens come in a fruit or vegetable’s proteins, not its lipids. Even so, one bad batch of avocados—even if it’s the fault of one of Apeel’s suppliers—could mean trouble for the company. Food safety concerns have hobbled companies far bigger than Apeel. Rogers takes that risk seriously. Apeel performs a quality analysis of a supplier’s produce as part of the due diligence process on potential suppliers, and he’s a self-described paranoid CEO: “I’m never like, ‘Oh yeah, we’ve got this,’ I’m always like, ‘What could go wrong?’”
Rogers has his eye on the rest of the produce aisle—and beyond. Apeel-treated lemons, limes and asparagus will be the next products to market, likely later this year, and Rogers hints that additional Apeel adoption by U.S. retailers could also come later this year. And after that? Like his investors, Rogers sees Apeel as a force for good for the entire world. In Africa, for instance, farmers who raise produce later treated with Apeel could ship their crops father and longer.
“It’s great for more people to have more access to better quality fresh foods that they’re less likely to throw away,” he says. “But at the end of the day, the way we’re going to move the needle on the climate impacts we’re seeing on the planet is by reconfiguring the way we’re doing the food supply chain. And the biggest way that can happen is moving away from refrigerated storage and transportation and towards this more natural way of preserving fresh produce.”