Too Good To Go: how to build at the intersection of business profitability and conscious consumerism
Saving the planet with magic bags
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I predict that by the time we reach 2026, a significant portion of the developed countries’ global population would know their individual CO2 emissions.
The underlying assumption is that public and private bodies would significantly incentivise individuals for slashing and offsetting(described below) their emissions.
What is carbon offsetting?
- A mechanism to fund reduction of greenhouse gasses to compensate for a business’s/individual’s residual emissions.
- Generally, the reduction activity takes place elsewhere. Eg. reforestation, funding renewable energy projects etc.
- Carbon offsetting is an attempt to restore the damage that has already been done rather than a prevention measure.
One metric ton of emissions reduced = one carbon offset
We already see some slashing incentivisation programs in the form of transportation: subsidised prices of electric cars, extra charges for diesel & petrol cars for using certain roads (Londoners are quite awry about it), energy: tax redemption for use of solar energy, ability to sell back excess energy produced etc.
I imagine such incentivisation also deepening into other climate change causes such as food waste!
How could a Mango lying in the fridge way past catching up a fungus contribute to greenhouse gas emissions?
Let’s look at something called the “food value chain”. (earlier we used to call it “supply chain” but apparently, value is the new business buzzword)
A kg of mango wasted leads to 3.5kgs of CO2 emissions. It is equivalent to CO2 emissions of a car run on fossil fuels for 19 kms OR CO2 emissions from a smartphone charged every day for 10 months.
Food waste is the 3rd largest contributor to CO2 emissions if considered as a country after the US and China. Food waste represents 10% of greenhouse gas emissions and colossally impacts our planet’s health.
Let’s widen the scope a little beyond CO2 emissions:
Hunger and inflation: 40% food is wasted globally
1 in 9 people go to bed hungry whereas 40% of food is wasted globally (upstream + downstream), meanwhile, food prices are soaring.
Fresh water depletion: 2500 liters of fresh water is used for bringing food to our table
Every individual needs 3000 liters of freshwater every day for survival ( 50 or so is for survival, 100 for washing clothes, 150 for industrial uses for an individual). The remaining 2500 liters are used for bringing food to our plates. Thus, wastage of food, also represents waste of fresh water, which is the bloodstream of our planet.
If a household where demand is fairly constant could have food wastage issues, imagine the scale of surplus when demand is asymmetrical in restaurants, food banks, food manufacturers, agriculture products etc.
Enter “Too Good To Go”!
Too Good To Go was founded in 2016, with the vision of “a planet with no food waste”. The initial focus of the business was downstream. Save food being wasted from restaurants, cafes, bakeries and even florists.
The model is simple: a marketplace to connect consumers with sources of potential food waste at bargain prices which otherwise would go to waste.
I wrote a comprehensive piece on marketplace businesses, tap the below button to read it.
The “Too Good To Go” business model, though simple, is not easily found. The concept is a rare space where conscious consumerism and business profitability align.
The business started in 2016 in Denmark, has scaled to 15 countries and 4.7 million users served as of 2022 (impact report).
How does it work?
Users can order food in 3 steps with the app:
Sign up for the app.
Explore places around you offering ‘Magic Bags’, place an order and pay.
Pick up the bag at the allotted time and save food from getting wasted.
Retailers could list their establishments just as simply:
Retailers like bakeries, restaurants, supermarkets can sign up on “Too Good To Go”. Upon verification, they would get onboarded and trained.
Retailers could then activate their listing on days when they have surplus food about to expire. The surplus food is given away in the form of ‘Magic Bags’ in order to reduce friction and avoid listing the specificities.
The retailers receive payment from TooGoodToGo quarterly.
➡️ Takeaway thought: climate consciousness could be economically viable, given you solve a real problem for a business. Does it mean supply side opportunities provide more upside than demand side in the climate consciousness fight?
Does it work?
Climate consciousness
The first climate consciousness bell rang in 1896 by scientist Svante Arrhenius’s scientific paper. 127 years since then in 2023, climate scientists have claimed that global warming has ended!
It is the beginning of “global boiling” (not a scientific term).
The consciousness of the world has been shifting dramatically towards climate change and people are willing to adapt. In my understanding, the users’ climate consciousness is an additional bonus. The main lever for “TooGoodToGo” remains the budget friendly price.
It is stereotypically understood that younger generations are more aware and willing when it comes to climate consciousness. We also love a good bargain! The magic bags serve as the best of both worlds!
➡️ Takeaway thought: When it comes to sustainable products, the preconceived notion for consumers is higher prices and it is true to a large extent due to R&D. Could creating upside on supply and demand bring down the price?
Targeting a global issue: food wastage
Food businesses except franchises and big establishments do not work on huge budgets and prioritise cost effective quality production over data centric tools to understand production trends for their storefront.
Food waste of perishables thus becomes an inevitable and global issue downstream.
Too Good To Go as a solution applies equally to all such downstream solutions with no exceptions.
This is highly beneficial for big and small retailers alike:
Turning potential waste food into revenue for the business.
CSR efforts for retailers and big chains. Eg. Starbucks.
Discovery: allowing consumers to sample their food which they may not at the original prices. (I am definitely a part of this category)
Scalability across the value chain
“Too Good To Go” scaled across 15 countries with little regional competition in different countries.
A win-win relationship with retailers and users' willingness to buy has led to a snowballing network effect. The app targets and provides value to a wide range of audience which allows to create constant demand.
The marketplace is uniquely positioned to use the same model in upstream activities such as agriculture farms, production units, factories etc. In fact, the latest update from “too good to go” allows users to order magic bags from production units and get them delivered to their doorstep.
I am personally not a big fan of how they are tackling the upstream value chain because additional delivery costs could lead to expenses which could delay the path to profitability. That being said, their partnership with Unilever in 2022, helped save 30k meals in Denmark & Netherlands.
Enabling retailers to act on anti-waste: Stock management
The supply and demand for perishables is asymmetrical leading to huge waste.“Too Good to go” acquired “CodaBene”(now FoodMemo) to address that problem at the retailer level!
It allows retailers to track expiry dates, to print discount stickers for soon to be expired items and decision making for items nearing expiry. It allowed them to save 3 million products every month through 1000 stores in France.
➡️ Takeaway thought: Understanding supply chain and users’ interaction at every step of it could unlock numerous opportunities to work on.
Politics & Policy
A question I wonder about often is: where would impactful sustainable change originate from: would it be government initiatives, climate impact focussed businesses or the demand from the audience for sustainable solutions?
The answer is a balance of the three. A policy-product-market fit!
Rarely do we ever question the “use by date” on the packaging, even the 5 second rule food on the floor followers 😛.
Too Good To Go worked with food manufacturers to implement “look smell taste” labels. It encourages consumers to judge the food on these three variables instead of solely relying on the printed date.
The business works with government officials at all levels around policies to combat food waste. The impact report shares the highlights of achievements the business has achieved by collaborating with different countries.
“We’re using our membership of the EU Platform on Food Loss & Waste to call for legally-binding targets to reduce food waste in the EU by a massive 50%.”
➡️ Takeaway thought: questioning principles taken for granted in an industry is difficult, yet impactful for unlocking solutions.
Conclusion
Businesses like TooGoodToGo help us understand how we could build sustainable businesses on foundational principles (circular economy) which could help fight climate change.
In a world filled with buzzwords, how could we think by applying foundation principles to problems which need addressing?
The next essay is titled: the carrot helping users make better food choices!
Until next time,
S R