In today’s global context, challenges persist in preventing agri-food waste due to factors like limited consumer awareness and improper food-handling practices throughout the entire farm-to-fork continuum. Introducing a forward-thinking solution, the upcycling of renewable feedstock materials (i.e., agri-food waste and by-products) into value-added ingredients presents an opportunity for a more sustainable and circular food value chain. While multi-product cascade biorefining schemes show promise due to their greater techno-economic viability, several biotechnological hurdles remain to be overcome at many levels. This mini-review provides a succinct overview of the biotechnological and societal challenges requiring attention while highlighting valuable food-grade compounds derived from biotransformation processes. These bio-based ingredients include organic acids, phenolic compounds, bioactive peptides, and sugars and offer diverse applications as antioxidants, preservatives, flavorings, sweeteners, or prebiotics in foodstuffs and other consumer goods. Therefore, these upcycled products emerge as a sustainable alternative to certain potentially harmful artificial food additives that are still in use or have already been banned from the industry.