Regen ag: Cost vs. ROI

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15 Jun 2023

Mari Rydings

Mari Rydings is a versatile content creator, editor and marketer with experience developing dynamic, results-driven materials for B2B and B2C audiences. As the editorial director for Avant Food Media, she leads the day-to-day editorial operations for the company’s print and digital magazines, newsletters and social media platforms. Outside of work, she loves reading, hiking, putting together jigsaw puzzles and spending time with her husband and their twin daughters.

KANSAS CITY, MO — Regenerative agriculture, a farming concept that has been around for hundreds of years, is gaining ground as a viable solution to restoring the earth’s biodiversity. However, it’s a solution that will take years to implement. In the short-term, cost vs. ROI must be taken into account, whether a bakery sources ingredients made from regenerative farming or local grain, like New Haven, CT-based Chabaso Bakery. Along with Atticus Bakery, its bakery-cafe sister business, Chabaso has been involved with New England’s local grain movement for quite some time.

“Before the pandemic, we shifted all of the flour and grains used at Atticus to only New England grown from small-scale growers and millers,” said Reed Immer, director of sales and marketing for Chabaso. “But at Chabaso, we’ve realized that we can’t make a product with 100 percent locally sourced, regenerative practice grains because it goes way past the price point we need to be competitive in a mainstream grocer. Part of the value we provide to our customers is knowing the economic constraints they are working with.”

Instead, the Chabaso team shares its learnings from baking with local grains at Atticus with its customers.

“It’s almost been like a bread lab for Chabaso in terms of being able to test items in a more intimate, smaller environment,” Immer said of the work at Atticus. “We tell our customers, ‘This is what’s working in the micro bakery, super-premium world, and we think there’s some trends that can flow over into your more mainstream grocers or foodservice operators.’”

John Friend, CEO of Farm to Market, echoed Immer’s comments about the necessity of weighing the costs and benefits of baking with regenerative or local ingredients.

“We kind of compete in two worlds,” Friend said. “There’s the [food service] side of our business that’s very price conscious. But on our retail side, there’s a little more price elasticity. I think those customers are going to be really happy to start learning about where their flour is coming from and that it’s going to have a more positive impact on the environment.”

For now, ROI for larger bakeries may need to come in the form of product innovation. Research indicates that consumers, especially younger ones whose buying power is becoming increasingly relevant, are intentionally seeking products made from sustainable sources, which can command a premium price. They’re doling out their dollars based on the environmental impact of the brands on the shelves. Consumers are also willing to try baked goods made from new-to-them grains.

Another potential downstream benefit of producing regeneratively sourced baked goods is market differentiation.

“If you’re able to align with some of these trends and differentiate yourself as a preferred supplier with some of the major wholesalers who are setting these corporate missions, like, ‘We’re going to cut out all non-recyclable packaging by 2025,’ you’re able to stand out at the higher executive level in terms of being a part of interesting initiatives,” Immer said.

When bakery manufacturers think circularly vs. linearly about the agriculture supply chain, they can tap into things like upcycled foods and ingredients.

Regenerative agriculture starts the circle and upcycling closes the loop.

“Regenerative agriculture and upcycled foods are two sides of the same coin,” said Dan Kurzrock, founder and CEO of Upcycled Foods Inc., the leading innovation platform for upcycled food. The company got its start by converting spent grain from the beer brewing process into grain for baked goods, a product called ReGrained SuperGrain+.

“It’s like an ecosystem approach,” Kurzrock explained. “You’re trying to figure out where outputs — for example, waste products — can become inputs. There’s a super clear financial bottom-line benefit to food manufacturers looking at their own waste streams and seeing what could be transformed into a usable ingredient with upcycled technology instead of sending it to animal feed, compost or a landfill.”

Another bottom-line benefit of using upcycled ingredients can be found in sourcing. Conventional ingredients are sourced externally, while upcycled ingredients are sourced internally. According to Kurzrock, it’s the same business.

“The difference with upcycled ingredients is you’re going to get products that are differentiated,” he said. “There are products that can feature new ingredients, that have health benefits and environmental claims that can help companies reach their ESG goals, potentially, lower their carbon footprint, and tell a story that consumers are looking for.”

According to “Taste Tomorrow,” proprietary research from Puratos, consumers are interested in that upcycled story.

“We found that one in three US consumers are interested in products made from upcycled ingredients,” said Michael Gleason, senior product manager – SBU Bakery for Puratos. “Globally, 43 percent of consumers are interested in these upcycled ingredients.”

Puratos’ R&D team has been working with the ReGrained product for two years. It partners with bakers, foodservice chains and in-store bakeries to show them how they can use upcycled ingredients alongside Puratos ingredients.

When it comes to regenerative agriculture — and sourcing local grains and upcycled ingredients as extensions — continued steps forward in the right direction is what’s needed.

“We don’t need all-in on regeneration from day one, but we do need transparency, monitoring and constant forward momentum from go,” Evan Harrison, CEO of Kiss the Ground. “We just need to get the word out that regeneration is a solution to the climate, wellness and water issues. The way that will happen is with like-minded companies that say, ‘We want to give our consumers an opportunity to make a decision to support regeneratively sourced products.’”

This story has been adapted from the April | Q2 2023 issue of Commercial Baking. Read the full story in the digital edition.

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