Costco Wholesale, one of the largest retailers in the world, has partnered with California-based agtech company Zest Labs to enhance and improve their fresh food supply chain. The retailer will be utilizing Zest Labs’ Zest Fresh technology to manage and forecast the freshness of their produce products, which in turn could help them to reduce food waste and save money.
Costco will be working with Zest Labs to manage their produce supplies from California to warehouses on the West and East Coasts. Zest Labs is currently working to provide Costco with deeper insights into their supply chain so that they can develop a customized freshness plan.
“I think it’s well known that Costco is among the top national retailers in customer satisfaction, specifically in the grocery section and that’s not lost on us. It’s a great validation for us that even one of the top companies in this area looks to improve and sees the benefit in using Zest Fresh,” said Peter Mehring, CEO of Zest Labs during an interview with Xtalks.
According to Zest labs, their technology works by tracking the journey of produce from farm to shelf. It provides retailers and wholesalers the ability to manage the quantity and quality of produce products as well as estimate their expiry. This will allow Costco to sell their produce products strategically and before their expected expiry dates, which will reduce the number of food products that go to waste.
“Costco embraces the continuous improvement of their fresh food and their products, always looking for better ways and now we have a way to measure it for them. Before, they did not have an actual way to measure the performance of that because once the consumer picked up the product they really didn’t get any feedback. But how we measure products allows us to tell them, before the consumer picks it up, how long the product will actually last for and that gives them confidence that they’re doing the best thing for their members,” said Mehring.
According to Zest Labs, their Zest Fresh technology utilizes Zest Intelligent Pallet Routing Codes (ZIPR Codes), that are given to each produce pallet prior to shipping them out to distributors and retailers. These dynamic date codes allow companies to monitor the freshness of each produce pallet rather than estimating their freshness by using a harvest date label. Zest Fresh uses autonomous product condition data capture, artificial intelligence, machine learning and predictive analytics to calculate and update the ZIPR codes of each pallet. Zest also inserts wireless IoT temperature sensors into pallets at harvest to monitor the condition and processing of products. All these technologies work in unison to update the current freshness of each pallet so that food companies can strategically plan out the distribution of their products and reduce their food waste by 50 percent or more.
“Zest Fresh is the first solution that proactively reduces waste in the supply chain before it arrives at the retailer and we’ve gotten a lot of interest across the whole retail base because that approach is new and because retailers in the past have focused on fixing things in the store level. They were frustrated that collectively they still had some waste and it was impacting product margins. Coming up with a new solution, getting good press and having a good marketing outreach program informed people that they could do better than they were today with a new approach and it’s a proactive approach in the marketplace. So I think that caught their [Costco] interest more than any specific problem. They saw an opportunity to improve already great operations,” Mehring told Xtalks.
Although Zest Labs’ is catching a lot of attention for their Zest Fresh system, the company’s name has been hitting headlines lately for their connection with retail giant Walmart. At the beginning of the month, Zest Labs filed a lawsuit against Walmart for $2 billion for allegedly stealing their Zest Fresh technology. In March, Walmart announced that they saved $86 million in food waste while using their “Eden” technology which works like Zest Fresh. According to Zest Labs, Walmart’s Eden system “looks, sounds and functions” just like their Zest Fresh technology.
“We’ve taken this action because we were surprised at their announcement last March on their Eden software and it sounded very similar to what we worked with them on for a number of years prior to that. So we believe strongly in defending our intellectual property for our customers – customers like Costco who pay for the right to use this product need us to protect it against people who don’t pay for it. And for our investors as well – our shareholders certainly expect us to do what’s right to protect the value of the company,” said Mehring.
Regardless of the outcome of the lawsuit, Zest Lab’s freshness solution provides retailers with a tool that can help to reduce the billions of dollars worth of food waste that is accumulated in the industry annually. This, in turn, will benefit the environment, attract socially conscious consumers and ultimately save a lot of money for food companies.