A Sustainable Sourcing Concept For The 40+ Billion Dollar US Pet Food Market

There is a start-up company based in Atlanta called Grubbly Farms which is focused on the market opportunity for environmentally friendly pet foods. Pets play an important role in American society. A recent survey by the American Pet Products Association (APPA) found that 70% of US households own a pet and that this is a multi-generational phenomenon. They also found that there has been a 14% increase in pet ownership during the pandemic. The overall pet care market in the US is estimated to have surpassed $100 billion in 2020 with food and treats accounting for $42 billion of that total. In the APPA survey 51% of owners said they were willing to pay more for “ethically sourced” and “eco-friendly” pet products. Since protein is a key component of these foods, the way that is sourced has ramifications for those owner aspirations. Concerns have been raised about the large amount of meat used to feed US pets. Some have even estimated that if US pets were a separate country it would be the 5^th largest meat consumer in the world. In response some pet food marketers have been promoting plant-based options.

Of course virtually all food is plant-based since only plants (along with algae and some bacteria) can perform photosynthesis to turn solar energy into the carbohydrates on which all living things depend. The difference is whether there is an animal stage in between the plants and the ultimate consumer – in this case the pets. For Grubbly Farms that “in between” stage is an insect called the Black Soldier Fly – technically an animal, but not something most people relate to as a food option. These insects are able to thrive on many different waste-streams or low value side-streams that are generated within the human food system. The insect-based protein that is produced not only “up-cycles” those byproducts, it represents an alternative to the environmental issues that would occur if those byproducts were to end up in a landfill.

The founders of Grubbly Farms were students at Georgia Tech when they heard about the potential to use food waste to feed the larval stage of the Black Soldier Fly and then feed them to animals. They started raising some of the insects themselves using food waste from the dormitories on campus and used those to feed birds. In mid 2015 they joined a VC supported innovation accelerator and by 2016 they were featured in a New York Times
NYT
listing of “Tech Stars.”

Originally the company planned to continue raising the insects themselves, but their business model evolved so that they now source protein meal from the already emerging industry of insect rearing companies who are utilizing desirable side product sources (some of which produce feed for pets but most of which produce feed for animal agriculture). They find sources of the other ingredients they need and then outsource the blending and formulation to companies with existing manufacturing facilities for the animal feed industry. This gives Grubbly considerable flexibility for new product development with a pet focus and avoids the hurdle of capital investment in facilities.

The Black Soldier Fly is the key species here because it is incredibly flexible in terms of what it can eat and convert to its high protein biomass. It is known in some circles as the “piranha” of the insect world because it will eat anything. The larvae themselves are also hypoallergenic and that is a particularly important consideration for dogs. The adults of this insect are non-biting flies so they are not a potential nuisance.

Initially Grubbly has been working with insects raised on waste streams from the fresh-cut fruit and vegetable industry or from potato processors making frozen French fries. Those sorts of trimmings can be fed as is to various animals, but the insects convert them into a much higher value product. Theoretically this sort of system could be used to address post-consumer food waste, but that source lacks the traceability, consistency and predictable quality of the food processing sources they are currently using.

There is already an insect-based pet food market in the UK, Germany, France and Italy and there is support for that option from the veterinary community. The US may now be able to follow that trend as larvae and their processed form has recently been approved by the FDA as an adult dog food ingredient through the agency’s AAFCO process. This opens the door for significant expansion. Grubbly has been in this business for a while and have reached the milestone of using 13 million pounds of original food waste, but they see that as only the beginning. Their first generation products have been for pet chickens (Grubblies – Snacks made of oven-dried grubs, Fresh Pecks layer feed and Little Pecks starter chick feed). Chickens comprise a surprisingly large pet segment.

In mid March 2022 Grubbly launched a snack/treat product for dogs called “Vroomies.” That name was chosen because it promotes healthy joints to keep dogs mobile. Additional products are under development that will also be part of Grubbly Farm’s mission to create “sustainable superfoods,” “without harming our planet.”

The folks at Grubbly like to say that insects today are like corn long ago – something for which more and more uses can be developed over time. Here are just a few of the other possibilities:

A potential feed for these insects is the residue that comes from an anaerobic digester even after it has generated clean energy from a waste-stream. Such residue from livestock manure processing is already used as a crop fertilizer, but an environmentally positive scenario for post-consumer food waste would be to “double up-cycle” it for energy and a high protein feed.

Peanut processing waste could be another opportunity. The peanut products produced in the US for human consumption are very safe because of the inspection, cleaning, shelling and sorting process that is employed to keep the dangerous fungal metabolite aflatoxin out of peanut products. That process generates a waste stream that can contain the mycotoxin. Black Soldier Fly larvae have even been shown to convert even that kind of mycotoxin contaminated waste-stream into a safe animal feed.

Because these waste converters are insects, their larvae contain the biopolymer chitin, and that could be pulled out for the $65 billion market for its uses in paper, textiles, skin products, biomedicines and even dissolving bandages.

So insects could play a role in many interesting and potentially profitable waste-prevention and up-cycling opportunities. Pet Food is a great early example to watch.