One-third, or over $85 Billion, of fresh food is wasted each year in the US. Zest Labs is dedicated to helping reduce the massive post-harvest fresh food waste through prevention by proactively managing the fresh food supply chain. Retailers experience roughly 15 percent shrink in produce, primarily due to premature spoilage. Aside from the profound impact on the environment and sustainability, this is a huge hit to retail grocers’ product margins.
In 2011 we started developing Zest Fresh, the industry’s first proactive solution for managing the delivered freshness of produce and proteins in the supply chain, to address the food waste challenge. Zest Fresh is proven to significantly reduce field to shelf fresh food waste and can improve retail product margins by an average of six percent or more. In today’s highly competitive and dynamic retail grocery industry, this represents a significant value, a value that retailers and growers alike are increasingly recognizing.
Starting in 2015, Zest Labs engaged with Walmart to demonstrate the value of Zest Fresh to reduce waste and improve delivered shelf life consistency. During this time, Zest Labs’ proprietary information and trade secrets were shared with Walmart, including members of Walmart’s executive leadership team.
On March 1, 2018 when Walmart announced its Eden solution, we were surprised and concerned by how similar the description was to Zest Fresh. This concern led to the action we have taken today, which was to file a lawsuit with the federal district court in Arkansas claiming that Walmart has violated the Arkansas Trade Secrets Act and the federal Defend Trade Secrets Act. In addition, we are also filing claims for unfair competition, unjust enrichment, breach of the covenant of good faith and fair dealing, conversion and fraud. We believe strongly in the need to protect our intellectual property, recognizing the importance of preserving the value to our shareholders and customers. We are asking the court for over $2 billion in damages, based in part on Walmart’s claim in their March 1, 2018 announcement that Eden will provide that measure of benefit to Walmart over the next five years. This lawsuit is not expected to have a material impact to Zest Labs or Ecoark expenses.
Zest Labs remains committed to its mission to help our customers reduce waste while improving their business. We have proven that Zest Fresh can help growers, processors, distributors, retailers and restaurants increase their operational efficiencies, improve fresh food product margins, reduce waste and improve delivered freshness. We will continue with conviction to promote our proactive approach for fresh food management from the field to the shelf.
The case is Zest Labs, Inc., et. al. v Walmart, Inc., case number 4:18-cv-500-JM, in the United States District Court for the Eastern District of Arkansas, Western Division.
We will continue to share information with our customers and shareholders as it becomes available and is appropriate to do so.