Food Engineering & Ingredients: Your startup company, LEROMA has set up a commodity search and a raw material surplus exchange for the food industry. We’ll come back to this, but first let’s look at some background about the company. What was the seed idea that led to you starting LEROMA?
Marina Billinger: After being a purchasing and trading consultant in the food industry for many years, I realized that there was a procurement issue as it took too long to search for suppliers and, on the other side, there was a waste of ingredients which were already purchased or produced. I wanted to make the procurement process easier and I wanted to reduce the waste of raw materials. I also wanted to increase transparency in the market. As part of the Google generation I wanted to integrate the experience which I had with B2C [business to consumer] platforms into a great B2B [busines to business] product where businesses could enjoy a digital solution with an easy user journey.
FEI: When and where did you establish the company?
MB: I established LEROMA in 2019, in Düsseldorf, Germany. We have a holding structure which is in my ownership. LEROMA is an independent B2B platform without strategic investors so far.
FEI: Can you outline some of the initial processes / research that led to the establishment of the company?
MB: First of all, after I had the initial idea of a B2B search engine and the first-ever database of all tradable ingredients, we collated all the ingredients and placed them in sub categories, industry groups and added the specific application criteria which are important for food technologists. This list was created with food designers, chemists and technologists working in food production and analysis. Thus, food raw materials can now be efficiently searched by those involved in the food industry.
Before entering the market in September 2020, we did various mockups, click dummies (2017-2018) and an MVP [minimum viable product] (2019) where we collected customers‘ feedback. We then built the LEROMA platform (2020) on a flexible CMS / PAAS solution where we integrated our datasets of all ingredients. The technology within the datasets is complex, but it is very easy to integrate with other frameworks as well as API integrations for further applications.
Some of the initial processes included the participation of accelerator programmes like Ignition and Up2B as well as from the EU-funded www.lowinfood.eu project, from which we received a grant of €147,000.
FEI: Seed funding is a key issue for start-up initiatives. Have you raised seed funding and what is the funding used for?
MB: We are currently looking for a seed investor for our first financing round. The money raised will be used for building further technological functions on the platform and to expand further internationally. Most of our customers are from Germany, the Netherlands and Belgium, but we need to reach other leading food industry markets such as France, Italy and Spain to assure a higher match making between suppliers and buyers of ingredients within Europe.
FEI: What were some of the main challenges you faced during the initial growth phase of the company and how did you resolve these?
MB: One of the challenges which each platform or marketplace is facing is the demand and supply balance where we generate matches for businesses. We overcame this issue by firstly providing suppliers a free subscription model where they upload their portfolio for free and try out our match-making service. For buyers – the searching part – we built a mini-Google for food ingredients where we crawl ingredients suppliers‘ websites and generate a search result for the buyer.
Secondly, we provide a great service which no trading agency can offer. When we receive inquiries for food ingredients that are difficult to source, we are able transfer them to the best possible suppliers. We are currently receiving about 800 inquiries each month for alternative ingredients suppliers, new applications or alternative products in the event that the normal ingredients or primary products are in short supply or have become too expensive due to political or environmental obstacles.
Searchable database of food raw materials
FEI: Can you explain how the searchable database of raw materials is categorised?
MB: LEROMA provides a database of raw materials, divided into 17 groups, including the different sections:
1. Baking, confectionery, flour processing industry;
2. Fish and seafood industry;
3. Meat, poultry processing industry;
4. Gastronomy, prepared foods, desserts, delicacy industry;
5. Drinks / beverage industry;
6. Spices, additives, marinades industry;
9. Ketchup, mayonnaise, sauces industry;
10. Milk, cheese, ice cream industry;
11. Dietary supplements, functional food, super food;
12. Fruit, vegetables processing industry;
13. Seedling industry, agriculture;
14. Snack food industry;
15. Confectionery industry, refineries, chewing gums;
16. Pet food, feedstuff industry;
17. Livestock trade / bee trade.
This data catalogue sets the first standard for collecting all tradable ingredients for the food processing industry with the ability to filter the results by specialist criteria such as thermostability, ph-value, size, colour, function and certification.
You can search for an ingredient in the search window or just click on the category you need. After you click on one industry group you get the subcategories, like flavours and flours and stabilizers. We introduced a new industry group to include ‘insects’ where we are still collecting all known ingredients, like whole insects such as jewel beetles, larvae, protein and flour. We expect insects to become a trending ingredient within the next few years and we will finalize our database with the development of all insect products in this time. We receive this data directly from our customers and the suppliers of insect products.
The buyer making a search receives their search result as an advertisement of an uploaded product by a registered ingredients supplier or commodity trader or a search engine result from our crawler which links directly to other websites (suppliers‘ own company websites with their catalogue, other platforms and further databases).
The benefit of this structured search is that the buyer doesn’t have to contact 50 suppliers to ask them by email if a product is thermostable, processed or naturally grown. The searcher can use a filter for a more accurate result and get in contact with just five suppliers which fit the search query and therefore save time and eliminate unnecessary communication.
On the other hand, with the LEROMA platform, the supplier has a digital sales and marketing tool and can save time by filtering inquiries from potential buyers. The sales person is not being replaced, but now has a great tool to support them so they can concentrate on new customers and markets.
Ingredient Surplus Exchange
FEI: LEROMA has also established a raw materials surplus exchange? Is this unique in the market place? Can you explain what this service is about?
MB: In this area we are definitely pioneers. We have implemented the idea of sustainability to reduce the amount of wasted ingredients by enabling their transfer to other producers, some of whom are outside of the food processing industry. Food producers have their daily task of producing and selling food products and do not have time to deal with the overstock of half processed goods or ingredients. Additionally, producers often don’t want to give their ingredients to competitors in order to protect their intellectual property within the same production area. Therefore LEROMA is helping by matching them with other industries, so, for example, the leftover 500 kg of cranberries from a chocolate producer can be reused by a beverage producer, or a pizza producer can sell his flour overstock to a cookie producer. The possibilities for this exchange are unlimited when you look at the shortage of supply in other industries. We‘ve had successful examples of this, like conveying coffee that was roasted too dark and not suitable for one coffee brand to a cosmetics producer which used the coffee in cremes and exfoliators.
Currently, we offer different cleared, imported and duty paid products, mainly warehoused at our customers‘ production facilities in Germany. Examples of products in large quantities include asparagus flakes / 60,000 kg, soytexturate / 35,000 kg and citric acid / 20,000 kg.
We also offer smaller quantities, for example 375 kg of egg yolk powder; 155 kg of cubeb pepper or 460 kg of rice protein.
The surplus exchange has different subcategories, for instance spice extracts, flours, fruits, vitamins, sweetenings, cereals and many more.
FEI: Do you have figures indicating how much surplus raw material is out there?
MB: Yes, the total official food waste is around 1.6 billion tonnes per year worldwide. 1.1 billion tonnes could be reprocessed to new products or prepared for a longer shelf life and therefore saved! The real number is higher because we have a lot of unharvested products which are not calculated in the statistics.
When a farmer has an amount of 200,000 kg carrots which he doesn’t want to harvest because he has no buyer, we are losing not only the 200 tonnes of carrots, but also the energy and effort he spent on growing those carrots. If we match this farmer with a processor of vegetable products, for example, he can expand the shelf life by two years by producing carrot powder which can be used as a taste or colour ingredient.
FEI: Being surplus – are these raw materials offered at a discounted price?
MB: Mostly yes because it’s a lower quantity or the expiration date is shorter, but it’s dependent on the product as well. When a product is short in supply and has a longer expiration date, the seller can demand approximately the same price he paid for these goods or even higher.
FEI: What has the market reaction been like in response to this ‘Surplus Exchange’?
MB: Due to the need to be more sustainable and also with the aim of achieving the UN’s Sustainable Development Goals from a political point of view, each European country must reduce food and resource waste. Upcycling is gaining increasing recognition and is opening doors at several companies. We have big producers like Fuchs Gewürze, Almi, Rügenwalder Mühle, Hipp and Zentis trusting LEROMA with helping them minimize their resource loss and not only being sustainable, but also saving money on warehousing, disposal costs and of course returning some of the capital bundled in goods.
FEI: Do you have any data on how the Surplus Exchange is benefitting sustainability?
MB: After only 1.5 years we already saved 800 tons of surpluses that would otherwise have been thrown away or sent to a biogas plant.
We will have more data by the end of the year, but are expecting to save more than 1.5 million kg of ingredients. Therefore, it is important that producers and buyers participate in our ‘lowinfood’ project where we calculate the inefficiencies for companies in a period from now up to 2024.
FEI: What is the outlook for this initiative?
MB: We see from one side more awareness about resource conservation and attempts to reduce inefficiencies while trading, producing or processing within the food industry, but there are predictions by experts that we will have more food waste by 2024 than today, because the food market demands a variety of tastes, shapes and new technologies. Therefore, food producers will face more waste as they produce more diverse products and offer bigger portfolios in order not to lose market share. Therefore, it is necessary that more solutions and innovations are developed to reduce food waste along the whole supply chain. For LEROMA it means more possibilities and projects to connect suppliers and buyers of surpluses internationally. We also need to educate and motivate producers and product designers to reuse existing ingredients with a regional approach using more nutritional product ideas and upcycling technologies. Our goal is to support infrastructures with our networking platform as well as our new valorization forum to create more recycled products with agricultural waste products. Our dream case is when a plastic producer who is located close to the coast uses already existing technology (watch Marinatex from UK) to create biodegradable plastic out of waste fish bones and skin.
In five years we want all producers to use LEROMA’s surplus exchange – like we all use Ebay today – so they can be satisfied that they are sustainable.
FEI: What does the future hold for LEROMA?
MB: This year we published our third new business structure;
the valorization forum.
More precisely, this forum, also designed with sustainability in mind, actively promotes new business relationships between new partners and facilitates a better exchange of recycling options for food raw materials. For example, a manufacturer produces 6,000 tons of mango peels per month. He communicates the availability of this raw material, which is superfluous for him, via the valorization forum. A user can register in the forum and share their knowledge or suggest his own or another company as a recycling possibility. Mango peels can be used to make shoe soles, for example.
We want the forum to become more widely known as we continue to expand the database with all known ingredients and supplements.
FEI: How can parties who are interested to invest in your company go about doing this?
MB: Just send us a message to: email@example.com.
FEI: Lastly, what are some of the key things you have learnt in managing this start-up process that you can pass on to others who are about to begin this journey?
MB: The first important building block before the foundation is the fundamental structuring. Only through precise planning and the illustration of possible problems can obstacles be removed in advance. It is recommendable to build an MVP to test the reactions of potential customers. The feedback gathered in this way should be used to optimize the product before it goes to the market. Important attention should be paid to the choice of the company form as well as to the set-up of the company structure. Last but not least, it is important to keep an eye out for grants and scholarships. These represent a valuable opportunity to obtain financial support at an early stage. Networking is also very important to get fast, new, valuable information and contacts.