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Happy Tuesday Market Shakers. Are you ready to be inspired? To bid sayonara to Japan’s unseen world of food waste and loss? Today’s post is an exclusive interview with the Co-Founder and CEO of ARANEA, the company developing scalable upcycling tech that Japan’s manufacturers can use to turn high waste volumes into value-added products.

ARANEA was founded to fill the gap in upcycling in Japan

Alexander Fellner is the CEO of ARANEA, a company he founded with his business partner in 2021. ARANEA has developed a technology that ferments food waste and transforms it into a protein- and fibre-rich superfood that can be used for a range of applications.

The inspiration for this potential rich venture is, in many ways, a result of Alexander upcycling his own career experiences, which at their core are marked by entrepreneurship and a fondness for people and helping others.

Alexander Fellner, ARANEA LTD CEO | COURTESY OF ARANEA LTD

While studying in Law school, Alexander discovered a passion for social entrepreneurship, engaging in humanitarian events and eventually interning at Grameen Bank in Bangladesh. Passionate about helping others, he began freelance tour guiding, leveraging his half-Austrian, half-Japanese heritage by welcoming Japanese people to Europe.

Alexander eventually dropped out of Law School to focus all his energy on tour guiding. This led him to opportunities to host events all over Europe, and eventually Japan. Here he registered to work at the 2020 Olympics in Tokyo…but 2020 has other things in mind.

COVID-19 derailed everything. The Olympics was postponed, my tourism and event management career on hold, and travel restrictions made it hard to leave Japan. As an upcycler, I naturally decided to see the opportunity in my wasted opportunities.
I took the chance to reconnect with my entrepreneurial spirit. I got talking to a friend of mine who experimenting with using fermentation technology on spent coffee grains. He had an idea for using them as an ingredient to make cake. At this stage it was just an idea, but a great one.
To me, this seemed really interesting, and after researching this kind of technology, I discovered the concept of upcycling. I also discovered it didn’t really exist in Japan. I was simultaneously fascinated by the promise of upcycling food and shocked that an advanced nation like Japan wasn’t seeing the potential here. So, I said to my friend: I think there’s a real opportunity in this technology to transform things in Japan, what do you think? That’s when ARANEA was born.

With everything coming full circle, Alexander has been focused on building ARANEA’s business by doing what he does best. Getting in front of Japan’s biggest food wasters and introducing them to a new world, that of fermentation-based upcycling.

The potential for upcycling is huge in Japan’s F&B industry

ARANEA’s technology uses a unique technological approach to upcycling byproducts of the F&B industry.

The output of our fermentation is a product that is visually similar, yet very nutritionally enhanced. Our technology unlocks byproducts’ nutrition because it breaks down protein into easier to absorb amino acids and breaks down dietary fibre, too.
This means our product has potential for a lot of different uses. For example, fermented spent grain can be dried and eaten as enriched granola, or it can be ground down into a high protein, high fibre powder.

Alexander is excited by the flexible applications of fermentation technology to help different food industries in Japan reduce their idle assets (products that would go to waste).

Japan has some huge producers of food, and the amount of waste they generate is akin to their size. Take the beer industry, the amount of byproduct that they produce is colossal. The same goes for Japan’s ready-to-drink coffees.
A lot of this byproduct is being thrown away as it stands. A little is used for fertilizer and animal feed, but as Japanese society ages and we see more shift toward plant-based diets, meat consumption and demand for fertilizer will decline. So what do we do with all the byproducts then? This is where our technology comes in. Spent grain and wasted coffee grounds, can be fermented and turned into a totally new product.

Turning waste into value is an attractive prospect, especially now when ESG management and SDGs are currently THE hot topics in Japan’s business world. What’s more, Alexander sees ways that ARANEA can offer unique value to larger Japanese companies with diverse product ranges.

Japanese manufacturers often produce a broad range of f&b products. Take the largest beer manufacturers in Japan, they also make protein bars and snacks. Ingredients to make these products, such as protein, are often purchased from other companies. ARANEA’s technology offers companies the opportunity to take their main byproduct and use it to supplement their other product lines. Our technology could enable brewers to create protein powder from their spent grain to use in protein bars, for example.

Taste is the key ingredient to the success of upcycled products in Japan

In principle, upcycled products offer many benefits, but in practice, if they don’t taste great, they won’t make it in Japan.

For an upcycled product to succeed in Japan it must first and foremost taste good. It should taste as good, or better than similar products that aren’t made from upcycled ingredients, or consumers won’t buy it, no matter how sustainable it is. In this sense, sustainability is more of a “plus” for Japanese consumers, than a reason to buy.

This is a key difference between Japan and the European market, according to Alexander. European consumers will purchase alt foods because they want to make a sustainable decision. In Japan, there isn’t that level of drive yet towards sustainability.

Food manufacturers need to communicate the benefits of an upcycled product clearly to customers. They should explain why the ingredients are important and also where they came from. Consumers in Japan need to be reassured that upcycled ingredients aren’t just fished out of the trash, they are part of the production cycle and always treated as ingredients. If this is done, then Japanese consumers will be very interested in trying the products.

Challenges facing upcycling in Japan: consumer awareness and regulations

While the benefits of upcycled products are increasingly clear to large manufacturers in Japan, it’s not so for consumers, according to Alexander.

Consumers in Japan are still largely unaware of upcycling food and beverage products. What is a good sign, however, is that there are products in the Japanese market that have already been successful. Sake kasu, sake lees upcycled from sake brewing, is an established part of Japanese food culture. It shows Japan is receptive to upcycled foods. Now it’s just a question of education for “new” upcycled products.

For Alexander, educating not only consumers but government too is important.

ARANEA are using by-products that haven’t been used before to make food. For example, coffee grounds and spent grains. But Japanese food law views these ingredients as trash technically. So we have to explain to the authorities that these products are ingredients, just like sake kasu. Slowly we’re getting through to them.
We also take great care to comply with food sanitation laws in Japan relating to fermentation related ingredients. Our product is treated just like food because that’s what it is.

ARANEA want to fundamentally change our food system…

ARANEA are working really hard to integrate its technology into food manufacturing in Japan.

We’re currently partnering with companies to develop products as proof of concept for our technology. Eventually, we aim to sell our fermentation technology to other companies so that they can upcycle their sidestreams. Our technology is the missing piece of the puzzle that can make manufacturers' processes sustainable and circular.

Alexander wants to empower companies to achieve circular production systems with ARANEA’s technology, simultaneously changing the way we think about the food system.

With ARANEA’s technology, what is waste now will come to be thought of as a new source of nutrients and therefore health. We want it to be normal for the next generation to eat products that include upcycled materials.

…Starting with beer, coffee and chocolate

ARANEA is focussing on industries that have high volumes of byproducts: beers, coffee, and chocolate.

These industries have a lot of sidestreams. When we ferment these sidestreams with our technology, the applications can be quite different. Cacao husk for example could be used as a topping for ice cream, but the fermented coffee grains would work better for another round of espresso, for example. The potential of each ingredient is different, and that’s exciting.

The beer industry is the top priority, however.

Right now, we’re working with a big player in the beer industry. The reason is that the scale of their waste is so huge, so we have the most potential to make a positive impact on these industries.

For ARANEA, the scale of the food waste problem demands a scalable solution

Alexander has established three pillars to grow ARANEA. Scalability of their technology, the nutritional value of the fermented byproduct, and profitability of their solution for their customers.

Depending on the industry the focus is different. Some industries have big volumes of byproducts, so they need our technology to be scalable. We need to ensure that we invest in this at an early stage. At the same time, we need to show that the products we ferment are nutritionally sound. The health benefits of products are important to Japanese consumers so we have to ensure we do our research to promote the benefits of our technology to manufacturers for them to incorporate it into their processes. Last but not least, we also want our technology to be a profitable solution for our customers.

ARANEA ‘s vision is to expand the application of its technology to food waste in general. In Japan, this means starting with bento.

We’ve already tested our fermentation on wasted bento boxes in Japan. We can use waste bento to feed our fermentation medium, so a protein-rich, edible membrane grows on the surface, and we can harvets it. More R&D is needed but if we can develop our technology to use on general unseparated food waste then we can make a huge impact.

Providing a solution to food waste in Japan will open up doors for ARANEA to use their technology to support the global food and beverage industry.

The food waste problems that Japanese manufacturers have are only partially unique to Japan. If our solution can work in Japan, it can work overseas too. By partnering with global players in Japan, we also have access to their global network of challenges. We can access international markets this way by first understanding the issues through Japan and then developing solutions that solve the same issues overseas.

For upcycling to take off in Japan, a change in mindset is required

We asked Alexander what he thinks needs to happen for using sidestreams as ingredients to go mainstream in Japan. His answer was clear: we need to engage all stakeholders - startups, VCs, big companies, government and the consumer, etc. Here, he sees movement in the right direction.

I’m seeing interest from the government side. METI has started organizing events in the upcycling space where startups and big companies can meet and build connections. It shows the government is ready to invest and support upcycling. Of course, it’s crucial that they continue to show support.
Other startups in our industry, especially B2Cs like CRUST or Ethical Spirits, are breaking down barriers too. B2C companies are a direct window to consumers and they are key to raising awareness and creating demand for upcycled products. They can show consumers that upcycled products are high quality, tasty and sustainable. Manufacturers take note of these shifts too, they start to get curious about upcycling, which then makes it easier for us to approach them as a B2B business.

What’s next for ARANEA?

More and more stakeholders in Japan are seeing ARANEA’s technology as the key to unlocking the hidden potential of idle assets; turning their trash into nutritious treasure. So where is ARANEA headed next?

We’re working towards building upcycling facilities across Japan and a dedicated R&D centre. The goal here is to develop scalable and sustainable solutions to regional byproduct challenges. ARANEA is going to empower all of Japan to hit the 2030 SDG waste reduction targets!

That’s all folks

We hope you enjoyed learning about ARANEA and their exciting innovations as much as we did. It’s uplifting to see technology with the potential to transform the way food is made in Japan gaining traction. We’d like to extend a huge thanks to Alexander and the team at ARANEA for supporting this interview.

Next week we’ll be hearing a different perspective on upcycling from the Future Food Fund, a foo tech venture capital firm with an appetite for upcycling. See you next Tuesday!

Uplifting Upcycling Chapters

#0 - Japan's Food Waste Problem

#1 - Fighting Global Food Waste

#2 - Japan’s Food Waste Fix

#3 - Consumers’ Sound Bites

#4 - Shelf Sweep

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