One of Cape Town's startup companies is pioneering a new way to process bio waste, at the same time harvesting a usable supplement for pets, fisheries and poultry. What started as a bathroom experiment in Johannesburg in 2016 has become one of South Africa's most exciting circular waste management businesses, providing full-time employment to 65 members of staff.
Founder and CEO Dean Smorenburg has since moved the HQ to Epping, Cape Town - now also the home of black soldier flies (BSFs). Leftovers from livestock, brewery grains and even ground-up rusks form the diet of the BSFs who reach maturity after 12 days. Engineering News reports that the initial 1, 600m2 facility has expanded to 5,500m2.
In this interview, Maltento outline the 2024 status of the business, providing an indication of what's to come in international markets.
What challenges did the company experience from 2018 to the Seed raise in 2023?
Initial key challenges were to fully understand how to best optimize engineering, feed substrates, and our biology breeding setup. Knowing these operations would ensure that the venture was feasible and that Maltento could grow larvae consistently over time ensuring that we meet customer quality criteria like (1) supply security (2) product consistency (3) pricing targets to meet margin requirements.
On the farming side, we initially battled extensively with our bioconversions (yields). In 2020 we were sitting at around 11% bioconversion and now we average 21%. This was largely driven by the improved management of the young neonates (baby larvae) and our ability to manipulate the climatic factors in which the larvae grow.
In the early days, we also suffered from customer concentration risk which meant that we were exposed should something happen to our only customer. The reason for this is that customers order 20ft or 40ft containers. You can't diversify risk by selling half containers to two different customers. This creates a lag effect where you will at any given time have more supply than demand, until you grow into demand.
In the early days, we spent most of our time overcoming the market perception that our product was not consistent. Companies before us had adopted a variable waste input model, but this resulted in variable nutritional specs on the end-products. We spent two years building trust with many of our now current customers that we can supply on-spec product every batch. From a product perspective, we have evolved from a pure protein business into a functional ingredients business, and it has taken the better part of five years to refine our product portfolio to a point that we can compete with other categories outside of insects. It has taken four years to optimize our insect smoothie that is adopted in the Pet Food and Aquaculture segments as a palatability enhancer. This functional “taste” ingredient competes with Liver and Viscera-based products.
What do the BSFs feed on? How does Maltento about sourcing that from waste collectors, and what volumes are you collecting?
Our diets comprise mainly of spent brewery grains, breads, and rusks with a little fruit and veg pulps. Currently, we source approximately 450MT of feed inputs per month from the local breweries and bakeries and some retail stores. We also make use of some maize sweepings that land up on the floor at feed mills. We have a rigorous process to pre-qualify waste streams to ensure that they are free of contaminants and are human grade.
Maltento have four products (Pets, Aqua, Chickens and Soils). What are the share of sales and growth expectations for each product line?
- Chickens 70% expected growth year on year is ~15%
- Pets 20% expected growth year on year is ~500%
- Aquaculture's 3% expected growth year on year is ~300%
- Soil 7% expected growth year on year is 10%
How has Maltento worked with food and agriculture to identify and create new products?
In the early days, we worked closely with nutritionists, ingredient suppliers and customers to co-develop our product range. The insect material is new-to-world and it has taken some time to educate the stakeholders around its potential applications. Without industry experts and key government stakeholders (State Vets and Elsenberg), we would not be where we are today. We have found that the industry as a whole stands for our success and we have felt that across the majority of our stakeholder engagements. The nutritionists have assisted us in understanding the nutritional aspects of our products and how they would be included in formulations as well as the benefits that they possess vs more traditional protein ingredients.
How is Maltento being adopted by international markets?
80% of Sales are in the USA and Europe. We have been developing a product with an international customer for close to three years now and are on the brink of launching. Maltento focuses on the use of clean, traceable waste streams to feed our insects. This approach has enabled us to overcome some significant regulatory issues that some of our competitors face. We received our ZA EU export clearance two years ago which has enabled us to move our products into the international markets with confidence.
What can we expect in 2024-25 from Maltento?
2024 is a critical year for Maltento. We will invest heavily in our team at Maltento, building focus and alignment is key for us to be successful and ensuring that we live out our purpose every day. We need to focus on growing our larvae more efficiently and scale to 1500MT per year, we are currently producing ~900MT per year. From a product perspective, we want to accelerate the NPD and launch 2 news palatant products in the US and Europe by Q3 2024. We currently have started initial discussions around the building/sourcing of our 2nd facility.
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