Affordable and healthy food for low income people

There are over 2 billion people in the world who suffer from food insecurity. It doesn’t have to be this way if we consider that we waste over a third of the food that we produce in the world, while the food is perfectly edible, for reasons such as aesthetic or packaging defects, or because the food is about to expire. 

At Nilus, we have developed technology to rescue food products that are at risk of being wasted from producers and retailers, and distribute them at 30% to 50% of their market price among soup kitchens in low income neighborhoods. We are currently operating in Argentina, Mexico and Puerto Rico, where we have delivered over 3 million plates of food to over 90,000 people.   

We are resolving two deeply intertwined problems: malnutrition and food waste. More than 820 million people in the world suffer from severe food insecurity, which means that they have likely run out of food and, at the most extreme, gone for days without eating. Additionally, there is another 17 percent of the world population, or 1.3 billion people, who have experienced food insecurity at moderate levels. This means that they do not have regular access to nutritious and sufficient food. Malnutrition is directly associated with chronic diseases, as well as intellectual and emotional underperformance. 

Additionally, by tapping into food that is about to be wasted (for aesthetic or packaging defects, or proximity to expiration) we are tackling one of the main hidden drivers behind climate change. Food waste is responsible for the emission of 1.3 gigatons of CO2 equivalents into the atmosphere, and the needless use of 20% of the world’s hydric resources and 30% of the world’s arable land.

These two problems are so grave that they are included in the UN SDGs: Goal 2, which addresses hunger, of course; and Goal 12, that addresses responsible consumption and production, and specifically targets food waste reduction in Goal 12.3. 

We have created a digital marketplace that connects food companies with products at risk of being wasted with soup kitchens and convenient stores in low income neighborhoods, and manages the last-mile distribution of the products by crowdsourcing the trips among professional drivers. 

Nilus' operations are technology-based. We have developed 3 digital solutions for our three users in the marketplace: 

(1) Stock Management System: this is a platform to: (i) create and manage stock online, (ii) create trips, (iii) register and manage users of the two mobile solutions, (iv) generate metrics and reports.

(2) Community Kitchens App: this is a mobile app that community kitchens use to placer orders and process payments. 

(3) Driver App: this is a mobile app for our professional drivers to manage trip requests; receive pick-up and delivery information; and confirm the delivery of the products.  

Our mission is to reduce food insecurity and malnutrition, by making it possible for low income people to access healthy food in a sustainable manner. Malnutrition is a problem that affects low income people disproportionately, because of inefficiencies in the food supply chain. 

In Latin America, for example, transportation and intermediation costs account for a 270% markup on the price of the food from farm to fork.

Therefore, by reducing inefficiencies in the food supply chain - using food that would otherwise be wasted and crowdsourcing the last-mile logistics - we are able to offer healthy food at 30-50% of the market price, and make it affordable for the most vulnerable to food insecurity. 

In addition, by tapping into food that would otherwise be wasted - because it is close to its expiration date, or because it has aesthetic or packaging defects - we are also making a meaningful contribution towards climate change (and human health). Consider that if food waste was a country, it would be the third emitter in the world after the US and China. 

We are aligned in three main ways:

• We are actively preventing food loss and waste, by creating a distribution channel for food producers and retailers with food at risk of being wasted. 
• By creating a distribution channel in low income neighborhoods - unexplored for most of our suppliers - we are creating new business models for producer-market connections. 
• By delivering food waste and crowdsourcing last-mile logistics, we are reducing the carbon footprint of the industry. In fact, the UN FAO estimates that for every ton of food waste rescued, we save 1:45 gigatons of CO2 equivalent emissions.  

The traditional model of food rescue and distribution among low income people is that of food banks. Food banks receive donations in a centralized warehouse, and manage a network of soup kitchens that pick up the food in turns. The food banking model was created in the USA, and today there are food banks all over the world. 

When we started in 2017, our goal was to digitize the food banking network of Latin America, where most food banks operate with rudimentary analog-based logistics. In 2018 we were even showcased at the Global Foodbanking Alliance.     

But we learned that this model doesn't scale sustainably in developing countries, because food donations are based on tax incentives. And in countries with informal economies, companies don't have enough incentives to donate food. That is why in Latin America and Africa, less than 1% of the total food waste is donated to the needy. 

Our innovation, therefore, is twofold: we operate a digital solution that connects food companies with soup kitchens in real time, thereby optimizing logistics costs; and we do it sustainably by buying and selling the food at discounted prices (instead of expecting it in donation). 

Our growth has been explosive because we can access a larger supply of food and offer it at extremely low costs. 

Finally, as our technology brings end-to-end traceability of food and its nutritional value, Nilus is the first solution to enable continuous tracking and improvement of nutritional levels based on real-time data of our serving customers.

We are using the following technologies: 

1. Digital marketplace: we run a digital marketplace that consists of an inventory management application (that we developed ourselves given the peculiarities of food waste products) and has APIs to connect with our suppliers' ERP systems. In addition, our buyers mobile app allows clients to see the catalog of available products, and complete orders and payments online. In the near future, we expect to release a reinforcement learning module that continually learns from customer-specific buying patterns, and optimize offers and prices to increase chances of maximizing their nutritional value while staying on their budget.

2. Logistics crowdsourcing: we use traditional last-mile crowdsourcing technology, a-la-Uber, only that we apply it to source professional drivers with licenses to transport food, and we filter by the type of transportation needed for different products, such as a refrigeration. 

3. Logistics optimization: we recently began experimenting with machine learning to cluster our pick-up and delivery points, and optimize the routing that the app suggests to our drivers. This is the feature we're focusing most of our development efforts now and will have a direct upside in the final cost of food we can offer to our customers.

All our technology is proprietary. It is based on existing models, but it is the first time - that we know of, at least - that is being applied to resolve malnutrition by operating a food waste marketplace that tracks food and its nutritional value throughout the supply chain.

The evidence that the technology works is that it's been working for over two years now, and has facilitated our delivery of over 3 million plates of food to over 70,000 people. We're always improving it, of course, but it works in Argentina and Puerto Rico, and we're in the process of launching it in Mexico. 

Our solution addresses malnutrition through the rescue of food waste. 

By rescuing food in edible condition that was going to be discarded mostly for aesthetic standards or proximity to expiration, we facilitate food access to low income families at a very low cost (30-50% of the market price). By facilitating food access, we contribute to reduce food insecurity among these low income populations. Reducing food insecurity positively impacts nutrition. By improving nutrition, we help guarantee that low income people have the capacity to feed their children property and prevent malnutrition.   

On the environmental side, by rescuing food we help decrease the carbon, water and land-use footprint of food production. As explained before, food production that then goes to waste has a massive environmental impact.  

We are currently supplying food for 12,500 - 13,000 people on a regular, weekly basis; we also create economic value for a network of 8 suppliers, that include small farmers as well as large industrial food producers; and we create part-time jobs for a network of 30 drivers. 

In one year, we expect to be delivering food to at least 40,000 people on a regular basis; create economic value for a network of 15 suppliers; and create jobs for a fleet of over 100 drivers. The main driver of our growth for the next year will be the deployment in Mexico, which is already under way. 

In five years, we will be deploying our technology all across Latin America and many countries in Africa - we're thinking Kenya, Ghana, Nigeria and Rwanda - so we expect our growth to be exponential. We are targeting serving two million people on a weekly basis, a network of at least 2500 suppliers and a fleet of over 15,000 drivers.         

Our goal for the next year is to scale in Mexico and Guatemala and grow our impact fourfold, defined as the number of people we feed on a weekly basis. 

In order to scale in Mexico, we are using a new approach, different from the direct intervention we followed in Puerto Rico. In Mexico we are empowering a local team of community leaders with a franchise, and helping them drive Nilus forward in the country. The reason why we're taking this approach is that distributing food to the poor is such a sensitive social matter that there are many strong incumbent actors - such as national and municipal Governments, charities and community leaders - that already possess deep local knowledge and entrenched interests that are complex, and beyond our capacity to comprehend quickly enough from our desks in Argentina. 

This strategy of empowering local partners with a franchise has worked well so far in Mexico, where thanks to our local partner we were able to strike a deal with the Mexican City Government to land our first project in Central de Abasto, the largest fruits and vegetables market in the world. 

That's how we hope to scale in Africa as well, and have a presence in at least 8 countries in the Americas - Argentina, Brazil, Colombia, Guatemala, Honduras, El Salvador, Mexico and the USA - and 5 countries in Africa - Ethiopia, Kenya, Ghana, Nigeria and Rwanda - in the next five years. 

Some potential barriers that could affect our growth next year and in the next five years are:

1. Technology adoption: our strategy is mostly focused on soup kitchens and convenient stores in low income communities ordering food online. And many times these users show low levels of digital penetration and skills. 
   

2. Nutritional culture: many times we have a hard time pushing healthy food in our clients meal plans, simply because they are not used to consume the product we're offering. 

3. Food rescue logistics: as we grow bigger, it is proving increasingly hard for us to manage the whole driver selection process ourselves. This is because the supply of professional drivers who are licensed to transport food is limited, and many times they work with large transportation companies on an exclusive basis.  

For each of of the barriers, we're taking to following approach: 

1. Technology adoption: we're integrating our technology with platforms widely used by users, such as WhatsApp, to notify them of current offers, or the delivery of their order. 
2. Nutritional culture: we are testing with gamification - such as product combos or special tied-offers (e.g. for every veggie product you buy, you can have a discount on flour). We are also working with celebrity chefs to provide some of our food products pre-cooked, making sure they taste delicious and have the endorsement of people our clients know. 
3. Logistics: we imagine our future logistics solution consisting of a system of interconnections with transportation companies, from which we will assign trips to vehicles with idle space that are navigating in routes that are compatible with our assigned trips. We are not thinking of continuing building our own fleet, but of building partnerships with transportation companies that already use technology to optimize idle capacity and negative bandwidth, such as Uber Freight. In Argentina, we are already testing this with success with a firm named Avancargo.

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• 10 full-time staff
• 3 part-time staff
• 15 contractos (drivers and logistics consultants)
• 5 advisors

Ady, our CEO, has over 10 years designing and leading technology projects for the base of the pyramid, including ConnectAmericas.com. Ezequiel, our CTO, developed the logistics solution for Quilmes, Argentina's largest beverages company. Tomas, our Head of Product, comes from Wasteless, another food waste startup from Silicon Valley. Vanina, our UX Designer, is specialized in design for the bottom of the pyramid. Nico, our CFO, comes from McKinsey and Harvard Business School, and is an expert in sustainability design. Karina, our Head of International Growth, is an environmental engineer specialized in food waste, that worked for the World Bank on the matter. And Peter, our Country Manager in Argentina, used to run a supermarket that sold food waste.

All of us except for Tomas have been working together for over 2 years now, and have gone through many learnings, including those that informed our pivot from a donations-based platform to a distribution e-commerce solution.    

• Walmart, Marriott International, Hilton, McCain, Danone, Econo, Coca-Cola, Fresh Point and Adeco Agro, among others, are using our solution to channel discounted sales of products at risk of being wasted in Argentina and Puerto Rico. 
• Siemens, SAP, Mercado Libre and the Clinton Foundation are impact investors who are helping us grow our operation and impact.    

We buy the food at risk of being wasted at heavily discounted prices, proportional to the product's useful life. For example, if the product has reached 90% of its useful life and will expire in 2/3 days, we pay 10% of the market price. We monetize by selling these products charging a 30% markup. 

We also have another line of sales, which is Healthy Combos. Because many times our clients have difficulties managing their finances, we help them procure all their nutritional needs for a certain period of time (2 weeks in general). And given that food at risk of being wasted does not cover 100% of our clients needs, we offer them the possibility to combine products at risk of being wasted with other food items that we buy directly from producers (both farmers and industrial producers) and include them in the same delivery. On those products purchased directly from the producers we charge a 15% to 20% markup.

The combination of heavy discounts on the food at risk of being wasted with the savings in intermediation and logistics costs arising from the food that we acquire directly from producers, makes our Healthy Combo 30% to 50% cheaper than the market price, on average (depending on the delivery zone). 

We are applying to Solve because of its unparalleled network and know-how. We know we need to refine our technology and our distribution strategy if we want to scale globally - particularly in Africa, where most of us ever worked. The experience of a truly global organization providing a 9-month acceleration support from world class advisors, would be a privilege and a game changer for us. 

In addition, we are hoping that being Solvers can help us with fundraising. It’s been very hard for us to raise funds given that we are social enterprise that prioritizes impact above financial returns. With the MIT name and prestige backing us, we expect this part of the work to be easier.

On the technology, we understand that food waste and food consumption have different patterns in different countries, and we believe we need to develop a predictive tool that can allow us to combine food waste and non-waste in optimally nutritional ways that account for local tastes and preferences, and make that combo our signature product. 

On distribution, we are experimenting with direct expansion (Argentina and Puerto Rico) and franchising (Mexico and Guatemala). It would be great to have support from experts in international growth to help find the best model to scale internationally. 

On marketing and media, we need help positioning our solution when we first enter a market, because what we do is counter-intuitive. In many countries, particularly in Latin America, the idea that building a for-profit company is the best way to fight against malnutrition is not always obvious to everybody, particularly among traditional segments of society. 

We would definitely appreciate the opportunity to work with the Abdul Latif Jameel Water and Food Systems Lab at the MIT. More specifically, if Nilus could be the subject of a research project at the Lab, it could add immense value in the buildup of our global predictive tool that we mentioned before.

We are using machine learning to optimize our logistics. But the focus of the award would be to build to predictive tool mentioned above, that can combine food waste and non-waste in combined boxes, and combine them based on their nutritional quality, affordability and local/cultural habits. 

Nilus is attempting to resolve two problems: one that affects two billion people - malnutrition- and another one - food waste - that affects a third of the world's arable land, 20% of the world's hydric resources, and is the third emitter of CO2 equivalents in the world, after US and China. If Nilus tackles this problem successfully, it will meet two sustainable development goals explicitly mentioned: Goals 2 and 12.3. With the funds, we will accelerate the market expansion to Central American countries where children malnutrition is most affected, assuming that other scalability variables are in place (nulle.g. digital penetration, proximity between farms and urban areas, community kitchens funding systems)