Dive Brief:

• Two "ugly produce" companies are expanding to make unattractive fruits and vegetables more widely available. Misfits Market, a subscription box service for less-than-perfect produce, has raised $16.5 million in Series A funding, according to TechCrunch. 
• The company currently serves states in the northeast including Pennsylvania, Ohio, New York and New Jersey, and plans to expand further south from Virginia and Maryland down to Georgia and Florida.
• Ugly produce company Imperfect Produce has announced a new warehouse location in New Jersey as part of an ongoing East Coast expansion. The San Francisco-based company already delivers to the West Coast, Midwest, Texas and some eastern states, and will continue to expand into Boston, Hartford, New York and Pittsburgh.

Dive Insight:

According to the United Nations Food and Agriculture Organization, more than one-third of all available food around the globe is wasted. Fruits and vegetables have the highest waste rates of any food and much is thrown away simply because it’s unattractive – or "ugly." Companies like Misfits Market and Imperfect Produce sell the discarded produce for cheaper, cashing in on consumer sentiment for food waste reduction.

Misfits Market’s boxes are stocked with produce direct from farms and sell for 30% to 50% less than they would in a grocery store. Their boxes come in weekly or bi-weekly subscriptions and range in price from $19 to $34 plus shipping. The all-organic produce ends up being about $1 a pound. Imperfect sells a variety of boxes. Some are all fruit, some all vegetable, some mixed, some organic and some not. They range from $11 to $43.

These are not the only two companies looking for ways to impact the excess produce market. Hungry Harvest delivers boxes in eight states and Washington, D.C. Produce startup Full Harvest raised $8.5 million in Series A funding last summer, though the startup connects farms with businesses rather than selling to consumers.

Major retailers are behind the idea, too. Kroger has launched its own ugly produce program, Peculiar Picks, this year as part of its Zero Hunger Zero Waste initiative. Whole Foods and Walmart have both piloted ugly produce programs but haven’t moved forward with official plans.

While the cause is noble, some retailers have run into problems with these programs. Last fall, Hannaford and Price Chopper discontinued selling ugly produce due to lack of sales and product inconsistency. Raley's also launched an ugly produce program in 2015, partnering with Imperfect, but ended it shortly after due to sourcing problems.

The subscription services aren’t without their share of criticism. Many say the boxes are taking imperfect produce away from soup kitchens and food banks. Others say they don’t have an impact on food waste as a big percentage of total food waste is happening at home, after the items have already left the store.

Misfit Market's CEO wants to take its boxes beyond the typical farm box subscriber. In a recent interview with Vox, Abhi Ramish said the majority of his customers are cost-conscious families who are looking to save money on groceries. He also hopes to be part of the solution for food deserts and to provide people who don’t have access to grocery stores with the fresh produce they need for nutrition. Misfit has a pilot program in the works that will allow the company to accept SNAP payments.