What’s the issue?
Food waste is an obvious barrier to food security. The higher the level of waste, the harder it becomes to match supply with demand.
Relatively low prices for food have allowed many Western societies to develop wasteful habits and yet still comfortably afford to eat. Arguably, this “crowds out” lower income consumers, leaving less food to go around.
Certainly, if eating habits in developing countries were to mirror those in the West, with all the associated waste, then the challenge of feeding the world would become much more difficult.
Reducing waste is therefore a route towards greater food security and there are many remaining opportunities to achieve this.
What risks does this present to individual food companies?
Waste within the business is a direct hit to the bottom line and so there is always an incentive to reduce it. Waste beyond the point of sale (by customers) is a different matter. Waste reduction there, could result in lower sales.
However, companies increasingly are thinking beyond this narrow financial equation. Waste, incurred by customers, can be damaging for various reasons:
- Budget conscious consumers could steer away from purchase, for example if a product is not available in small packaging sizes
- Repeat purchasing is less likely, especially if competitors or substitutable products provide a lower waste solution
- Reputation can be harmed if a particular product or company is associated with waste
- Government intervention becomes more likely
What’s been the story so far?
At the time of writing (2013), total avoidable food waste by UK consumers is estimated by WRAP to cost them £12 billion a year. In addition, UK food and grocery companies waste £5 billion per year.
Landfill has become increasingly expensive as sites fill up and landfill taxes ratchet upwards to encourage recycling, re-use and waste reduction.
WRAP was set up by the UK government as a not-for-profit company in 2000 to promote and support waste reduction.
Since the onset of the Credit Crunch in 2007, food waste, both in the home and the supply chain, has attracted increasing attention.
WRAP has worked with many of the leading consumer goods companies on a voluntary basis. It brokered the Courtauld Agreement, a pledge by companies to reduce waste, currently in its third phase.
Phase 1 resulted in the prevention of 670,000 tonnes of food waste at household level and 520,000 tonnes of packaging waste.
The results from Phase 2 are scheduled to be announced by end 2013. Phase 3 is under negotiation.
IGD has worked in partnership with WRAP since its formation and leads a programme of waste reduction in the supply chain, through its ECR group of supply chain directors. This has so far resulted in a reduction of 110,000 tonnes of waste at source within the chain, contributing to the Courtauld figures.
Most food companies have now minimised or even eliminated the sending of food to landfill. However, disposal of liquid waste to sewer has proven harder to reduce and this is currently three times higher than disposal of solid food to landfill
Fresh and chilled categories account for an estimated 90%+ of the remaining food waste in grocery retail.
The industry continues to live with a degree of waste in order to offer consumers choice, availability and special deals. The challenge is to reduce waste without harming service.
Some unsold food products are now sent to Anaerobic Digestion (conversion to energy). However, according to the ‘waste hierarchy’ this is still an inferior choice to redistributing food for human or animal consumption which is around six times more CO2 efficient than the best energy recovery option.
A particular dilemma for companies, as a product’s shelf life ticks down, is therefore whether to donate it to a charity or to mark down the price in hope of still getting a sale.
What can companies do to reduce their own risks?
- Make waste reduction a company-wide priority, empowering all staff to contribute
- Use the ECR supply chain waste prevention guide, which is regularly updated with new material and includes over 50 company case studies ECR waste prevention guide
- Make full use of the wide range of help and expertise available from WRAP www.wrap.org.uk
- Measure waste in detail and track the cause of each incident back to its source. Look for a root cause solution that prevents similar incidents in future
- Engage with your trading partners and share relevant information. Often the root cause of waste in your business will be decisions made elsewhere in the chain. Partnerships can help you get to the bottom of this
- For ambient products, introduce a zero tolerance policy for waste, whether it be for damage, date expiries or obsolete lines
- For fresh products, apply a policy of reducing your waste tolerances (‘accepted’ allowances) year by year
- Establish ‘crop sharing’ arrangements, for instance so that vegetables that don’t make the grade for selling raw are automatically diverted to be used in processed products
- Adopt new packaging and production technologies that can extend product life
- Use data analytics to reveal shoppers’ propensity to switch brand or retailer when faced with particular out-of-stocks. This can help you better manage the trade-off between preventing waste and losing sales
What can companies do to act responsibly?
- Join the thirty-four manufacturers, wholesalers, retailers and food service companies supporting the IGD Waste Target set by the ECR UK Board
- Join the IGD/ECR working group on waste which is seeking to trigger step change reductions by challenging deeply embedded practices in the industry
- Avoid making decisions that just shift the burden of waste to others in the chain. Instead work collaboratively to root out the causes of waste
- Establish a policy, that wherever possible, surplus food stock will be redistributed in-date for human consumption or if slightly beyond date, for animal consumption. Work in partnership with food redistribution organisations to backhaul ambient and frozen products. Link with local good causes to redistribute fresh and chilled food. Develop and install practices so that taking food off sale and redistributing it before it expires is the default
- Offer products in a range of pack sizes, including those suited for single people
- Avoid multi-buy promotions for short life products (offering deals that don’t rely on mass purchasing instead)
- Don’t be overly-cautious when setting ‘best before’ dates (although these do play an important role in helping consumers enjoy products in peak condition)
- Provide information for consumers helping them to minimise waste, for example giving advice on using leftovers
- Engage with suppliers over product specifications, understanding the impact each clause has on waste and considering possible changes (whilst always protecting consumer interests)
- Support the adoption of a product Data Bar. This offers greater information capacity, enabling more thorough management of stock and product life
- Support the adoption of technologies such as ‘smart plastics’ which change in colour to indicate when foodstuffs had gone off, thus potentially extending product life
Who has taken action?
- Latest information on the ECR waste reduction programme can be found here
- Latest information on WRAP’s Courtauld Commitment is here
- United Nations food waste campaign: www.thinkeatsave.org/
Where can you go for more information?
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