By Jorge Mercado Thursday, May 18th, 2023

Santa Paula-based Limoneira, a grower of lemons and avocados, has signed an exclusive licensing relationship with Apeel Sciences, the Goleta-based company that has developed a system for increasing the shelf life of fresh produce, the company announced May 11.

But for Limoneira CEO Harold Edwards, the most exciting part of the deal is the new capability it gives his company.

“If you take a step back, this created a research and development component to our company and after 130 years, we have been doing it the same way for many years, this is a huge innovative step for us,” he told the Business Times.

“We couldn’t be more excited about bringing state-of-the-art technology to products that will differentiate us in the market.”

Apeel was founded in 2012 by James Rogers who is still acting as the company’s CEO. Edwards said Limoneira has been “a big fan of Apeel since they started commercializing their business.”

Apeel’s goal is to eliminate the vast amount of food waste across the globe. It does this with a coating that can double or even triple the shelf life of fresh produce. 

The coatings are made of plant waste materials like seeds and stems, and protect produce from water loss and oxidation. This non-GMO, edible, plant-based coating maintains moisture for longer and reduces oxidation preventing spoilage throughout the supply chain.

For Limoneira, this would mean their lemons would remain juicier for longer and retain their color for longer as well.

“There’s a bunch of benefits from this relationship because it will improve supply chain and loss to spoilage in our internal storage and provide them to retail and food service which ultimately provides those consumers with a better experience,” he said.

Limoneira will be Apeel’s first fully integrated lemon supplier in the U.S. and it will significantly expand the availability of Apeel-protected lemons domestically and internationally through Limoneira-affiliated packing facilities and through licensing management.

Edwards explained that the agreement the two sides came to was that Limoneira would coat five million cartons worth of lemons with Apeel’s technology through the end of the year and then pack, market and do everything it normally would do with the fruit.

The two sides will then reconvene at the end of the year to discuss going forward.

“This is cost neutral for us because instead of the wax we use, we will coat with Apeel,” Edwards said.

The interesting part of the deal, however, is the licensing component. Limoneira does not grow every lemon sold in the world, but Edwards’s goal is to “coat every lemon in the world with Apeel.”

Edwards explained that if a large retailer, such as Walmart, specifically wanted lemons coated with Apeel, Limoneria would supply as much as it can, but it can’t serve the entirety of the market. 

At that point, it would partner with growers all over the world who they see as a “good fit” and license the technology to them so they could coat all of their products as well.

“Apeel doesn’t want to learn how to be good in the lemon industry. They don’t want to learn all the ins and outs and get all the partners. They want us to be their lemon connection and go to market,” Edwards said.

Though no exact numbers could be mentioned, the licensing opportunity could be a huge deal for Limoneira over the coming decades.

Edwards explained the company has changed its focus over the last few years to partner more with other growers and grow Limoneria that way.

In product trials leveraging Apeel’s technology, Apeel-protected lemons showed a significant difference and exhibited reduced water loss, shrivel, and color change or “bronzing”, including when tested in ambient conditions.

“Apeel’s technology brings with it a new set of opportunities for the category and Limoneira’s customers,” Rogers, who could not be reached for comment, said in a press release. “Growers working with Limoneira can expect access to new channels of distribution, Retailers can expect energy and cost savings during warehousing and distribution, and Consumers can expect an experience they need to see to believe.”

Edwards said it was about a year ago when the two sides got serious about bringing the product to lemons.

“I credit James for understanding that the technology is not a one size fits all. Everyone could use Apeel and he’s rebuilt the company around the understanding that there should be a lemon focus, an orange focus, an avocado focus, etc. because it’s different across every different item,” he said.

Edwards said there are some growers in the industry that likely have concerns about extending the shelf life of their product, stating that some believe it would work against the opportunity to sell more lemons.

“But I believe the opposite. This will grow the category because if consumers have a better experience, it will increase consumption and it will just create a more positive experience for everybody,” Edwards said.

“My goal is to have every lemon in the world coated with Apeel and all the benefits from supply chain to quality to the consumer, all of that is captured and we reap what we sow.”

Limoneira shares have remained flat since the announcement before the markets opened, with shares closing at $16.23 on May 17.

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