Written By: Gargi Sarma
Food is lost either during or right after harvest, costing an estimated $600 billion. Can producers and retailers take any action? 33 to 40 percent of the food produced worldwide is lost or squandered annually, which is a terrible statistic. Even if this fact was catastrophic in less dire times, it is even more urgent given the impending global food catastrophe brought on by the Ukraine War, COVID-19, and climate change. More than 800 million people worldwide—or one in nine individuals—cannot eat enough to stay healthy. Food loss and waste will have harsher effects over time.
The food and beverage business is facing a rising problem with food waste. Many organisations are seeking ways to reduce their waste as sustainability has elevated in importance for CPG companies and the customers who buy their products. The new coalition would encourage businesses to be open and honest about how much they are really wasting before collaborating to develop novel ways to cut it.
The freshness clock starts ticking whenever the food moves from the farm to the back of the store. Grocery stores put a lot of effort into finding high-quality produce goods for their consumers, but the process of getting those things to the shelf can have an impact on both quality and shelf life. Suppliers concentrate on moving their products quickly and carefully through the rigorous supply chain to the shop. The baton is then handed off to the retailer, who must carefully unload the merchandise and display it to clients to sell every lot well before its expiration or sell-by date. This is done to guarantee that the amount of time spent in the client's home is sufficient to guarantee a wonderful dining experience. Farm-to-fork food waste is a problem with opportunities at every link in the supply chain, but for this article, we'll concentrate on the area that the grocery business is in charge of.
It appears challenging to reduce waste given the complexity of the weather, geopolitical difficulties, distribution, sales unpredictability, pricing, promotions, and inventory management. Fortunately, cloud-based data analytics and machine learning are effective tools in the war against food waste.
Food Waste in Different Countries:
Food waste on a worldwide scale is on its way to becoming a billion-tonne disaster. The globe produces 931 million tonnes of food waste annually, of which 569 tonnes originate from households, according to the UNEP's 2021 food waste index. The food service (244 million tonnes) and retail (118 million tonnes) industries are responsible for the remaining portion. The typical home globally produces 74 kg of food waste per capita each year, and this number is largely comparable across countries and income classes, suggesting that significant progress is required to address the issue.
According to the index, if food loss and waste were a nation, it would produce the third-highest amount of greenhouse gas emissions worldwide. So how wasteful are different nations in terms of food? It should come as no surprise that the two countries with populations greater than a billion people had the highest absolute food waste rates. India throws out 68.8 million tonnes of food annually, whereas China reportedly wastes 91.6 million tonnes. With 19.4 million tonnes of food waste yearly, the US is slightly further down the list than Europe's leading producers, France and Germany, which each produce between 5 and 6 million tonnes.
When it comes to the amount of waste created per person, things seem to be rather different. For instance, the average Indian household throws out 50 kg of food annually, compared to 59 kg in the United States. Despite having 2.6 million tonnes of total food waste annually, Australia has a high amount of per capita waste, with 102 kg of trash produced by each family annually, according to the index. Russian household garbage is only 33 kg per person, with an estimated 4.9 million tonnes of rubbish produced there annually.
5 Countries Leading the Fight Against Food Waste:
There are regional solutions to the global issue of food waste. It follows that distinct geographical regions will always have various cultures, infrastructures, difficulties, and opportunities. As a result, each area's approach to combating food waste needs to be customised to what will work best for them. We can solve this issue if every nation, state, city, and household does their share to decrease trash.
We can learn a lot from the very efficient strategies that many nations are using to reduce food waste and, hopefully, adapt them to our own needs.
Food waste in supermarket stores was virtually outlawed in France in 2016. France passed a regulation requiring grocery retailers to donate edible food instead of throwing it out in response to an increase in demand at food banks and other charities (spurred by an increase in unemployment and homelessness).
In order to prevent 'dumpster diving', food that is approaching or past its best-before date but is still acceptable to eat was previously dumped in the trash and frequently purposefully ruined with bleach or other chemicals.
Food waste has significantly decreased as a result of the heavy fines and even jail time that grocery store managers who break the law now face.
Additionally, the nation is spending a lot of money and time encouraging reforestation and sustainable agriculture throughout the world.
A deal to reduce food waste by half by 2030 has been inked by the Norwegian government and the food sector in the nation.
Together, they are altering how consumers interpret "use by" and "best before" dates as well as how supermarkets handle food that is getting close to these dates. Foods like these are now more frequently donated and discounted at grocery stores (instead of being thrown out), and because of marketing initiatives and consumer education, customers are now more likely to take advantage of these deals.
Even a grocery store in the nation sells only food that is about to expire or has already done so.
Additionally, a number of apps and technologies are emerging to assist grocery retailers, consumers, and nonprofit organizations in ensuring food is used effectively rather than going to waste.
In just 5 years, Denmark decreased food waste nationwide by 25%!
Stop Spild Af Mad, a nonprofit organization that means "stop food waste" in English, has been raising awareness, developing powerful campaigns, and promoting radical change at every link in the food waste chain.
Denmark currently has the most food waste initiatives of any European nation, and the data shows how effective they are.
Japan has a significant issue with food waste, just like many wealthy nations. Additionally, the number of people in need is growing. They lack a lot of space for farming and landfills, too. That results in a very unsustainable food culture, which may be the reason the nation takes food waste so seriously.
There have been numerous initiatives to address the issue since the early 2000s. As an illustration, the nation currently has a national food bank organization called Second Harvest that is committed to removing edible food from supermarkets and other shops and swiftly redistributing it to people in need. Additionally, there are programmes that give extra store points for buying food that is close to its best-before date, and a new law called the Food Recycling Act tries to reroute food waste to facilities that turn it into compost, animal feed, and electricity.
The government is putting a lot of emphasis on education, from primary school through university, in an effort to alter the way the country views the issue and prepare the next generation to do even better at decreasing food waste.
The capital of South Korea saw a 10% reduction in food waste, or 300 tonnes per day, in just 4 years! Why did they succeed? As a first step, they demanded payment.
Seoul adopted a law in 2016 requiring residents to pay a recycling charge based on the amount of food trash they generate. This law has been so effective that it has inspired similar legislation in numerous other towns and provinces across the nation.
The way it operates is that food waste is measured and recorded in special bins placed across the city. The waste is just dumped in, and then the bill is issued. The trash is subsequently transformed into energy or animal feed. Residents can either take food waste to one of the many compost bins, which also demand a modest price, or dispose of it in the trash if they buy specific garbage bags.
It should come as no surprise that when waste is paid for, people are far more driven to reduce their waste!
We are all impacted by the problem of food waste. Even if boundaries and distance may separate us, we are all inhabitants of the same planet. a nonreplaceable world for which we have not been caring. Let's make a commitment to helping one another improve and learn from one another. We can change this if we all do our part.
Food Waste in Retail Stores
It is believed that 5-7% of perishables are lost due to inadequate management, with the perishable category accounting for between 50 and 60 percent of sales in a supermarket. Accordingly, food waste and shrinkage can cost businesses up to 4% of their total sales. Retailers provide products at a discount and sell them to customers before they expire and need to be thrown away in order to reduce food waste. The discounting of food, however, only makes up 0.75% of the 4% income loss.
Retail food waste is a bigger issue in developed markets than it is in emerging ones. In mature markets, growing food waste is a result of consumers' demands for complete variety and consistent availability in retail stores. The moral and social debate between consumers who demand choice and businesses who provide it is complex, yet the impact on the environment and economy is much easier to measure.
Minimizing loss during manufacturing and processing, minimizing loss during transit, selling more of what is produced, and fundamentally preventing loss are all levers that merchants and food manufacturers may pull to have a significant influence. Each lever has a range of possible actions. Some will demand a substantial financial commitment and innovative operating methods. Everything will pay off, leading to not just a decrease in food loss but also an improved value chain, increased EBITDA, and decreased CO2 emissions.
Technologies that are helping reduce food waste in different countries
Food waste and climate change mitigation have greatly benefited from the digital transition. Additionally, by focusing on their corporate social responsibility while increasing their revenue, these tactics support firms.
Here are several ways that technological advancements can result in a food system with zero waste.
With IoT and blockchain technology, the supply chain will be shorter:
Businesses can follow the path of their food from the harvesting stage to the warehouse thanks to technology. An estimated 14% of the food produced and consumed worldwide is lost during the harvest, food preparation, and retail processes.
Businesses may use IoT and blockchain technology to find supply chain vulnerabilities. The Internet of Things consists of a variety of online-connected gadgets.
Retailers can track every product and make timely judgements regarding the entire food supply chain by utilising IoT technology. IoT technology also assists them in locating resources and reducing downtime. Similarly to this, blockchain technology gives retailers safe, long-lasting, and date-and-time-stamped records of food production and transactions. With the use of blockchain technology, you can quickly assess the lifecycle of your product and decide how to improve it. Simply put, a digital blockchain system can reduce waste dramatically, improve food safety, change food production, and make it simpler to trace food from the farm to the table.
A small business called Ripe.io, situated in San Francisco, uses the blockchain to connect its growers, processors, distributors, merchants, and digital customers. This helps businesses acquire information about the beginning to end of the food supply chain.
IoT devices are also being utilised to track the entire process, from food manufacturing and transport through harvest. The supply chain is transparent and trackable because the entire procedure is carried out in real-time. With the aid of real-time insights, monitoring sensors on refrigerators and bins assist experts in identifying performance variations.
Overstocks are prevented via automated replenishment based on precise forecasts:
Major retail companies have successfully reduced overstock over the past few years by automating replenishment based on software that can anticipate sales at the item level. Although this technology is quite effective for ambient ranges, it is challenging to implement in product categories with a limited shelf life, such as fresh vegetables. However, merchants are always researching this issue and attempting to enhance their fresh item forecasting strategies.
In April 2011, the Swiss grocery chain Coop started automating the ordering process for its selection of fresh vegetables. Coop began employing forecasting tools to manage the ordering process for its ambient range as early as 2005. With this, the Swiss retailer was able to enhance on-shelf availability while also reducing inventory in its locations by 8%. Due to this achievement, Coop made the decision to implement automated forecasting for its fresh produce division as well. In April 2010, the retailer began to roll out the solution to the rest of the dairy category, as well as meat, convenience goods, fruit and vegetables, fresh baked goods, and plants. This was followed by a test with 30 dairy products. A retailer must have reliable inventory data in order to automate restocking. Coop eliminated the multiplication key at its checkouts as a result. The purpose of this is to prevent situations like booking many chocolate tastes under the same GTIN (Global Trade Identification Number, formerly known as an EAN code). Currently, Coop's scanning precision is 99.85%.
Real-time stock levels that are accurate:
With the use of technologies that can anticipate sales by item, retailers have improved their order volumes significantly during the past ten years. The precision of stock levels in the systems is one requirement for the accomplishment of replenishment automation. Now, some retailers are taking things a step further by keeping track of the stock levels of individual items in their assortment throughout the day, ideally in real-time.
The in-store manufacturing of pastries, grilled chicken, or any other delicacies sold at a service counter is one sector that could undoubtedly benefit from real-time inventory management. There is no need to make extra muffins or breads in the backroom if a merchant is aware that particular varieties aren't selling as well as anticipated.
Dynamic pricing enables price adjustments based on available inventory and sales projections:
Retailers can only go so far with automated replenishment in terms of decreasing food waste and losses from unsold perishables. Even if they can manage their inventory with the help of this technology to better meet their sales projections, there will always be some excess supply in the fresh produce section. For instance, strawberries are especially challenging for retailers to handle because it is difficult to predict how they will sell. They won't sell well if they are too green when they get to the store. If they are overly ripe, the same would apply. From a forecasting viewpoint, apples can also be challenging. Although they have a long shelf life, it might be challenging to predict when they should be marked down.
This is where dynamic pricing and real-time inventory management come into play and assist retailers in further lowering write-offs in the fresh food section. Retailers can at least lock in a percentage of their initially anticipated sales if the products are already on the shelf and in danger of going bad by lowering prices. In the Netherlands, Albert Heijn has put this to the test.
Smartphones and ESL transmit price changes:
According to the concept research from SAP and SAF, a number of in-store technologies allow the retailer to keep track of fresh produce sales throughout the day and mark down prices appropriately if sales are lower than expected. In Regensdorf, close to Zürich, SAP's Future Retail Centre is actively testing the technology.
It compares actual sales throughout the course of the day at the product level with a continuously updated prediction using an automated forecasting and ordering system, and it identifies material variances. When a product is overstocked or out of stock at the end of the day, the system notifies the store. Then, employees on the shop floor can implement the necessary steps, like applying price reductions or automatic price reductions at the register.
Customers' mobile devices present potential for upselling:
The system presented in Regensdorf, Switzerland, already sends price notifications and exclusive discounts to customers' smartphones. Retailers can take it a step further and run cross-selling campaigns on customers' mobile devices. With the latter, businesses can boost full-priced product sales to make up for decreasing sales from marked-down goods.
To achieve this level of contact, shops must also provide customers with the option of self-scanning using their cell phones or other mobile devices. If this is the case, merchants may ask customers who choose to purchase reduced tomatoes and self-scan them, "Would you like to buy some spaghetti as well?"
For instance, if a consumer has specified in their profile that they are vegetarian or vegan or that they prefer certain goods, they will be notified right away if their preferred veggie burger or vegetable is on sale.
GS1 Databar makes automated markdowns at the register possible:
Following up on its abandoned effort with price displays, Albert Heijn has been experimenting with a different strategy to address the issue of food waste since October 2010. With the use of the GS1 Databar, the merchant automatically lowers the cost of game and poultry goods in one store in Zaandam. The store's checkouts automatically deduct 35% from these items' regular prices on the day they expire. This works because the GS1 Databar can contain data like serial numbers, lot numbers, and expiration dates in addition to the Global Trade Item Number (GTIN), which it carries on its barcode. The standard pricing of game and poultry products is advertised in-store, and markdown prices are also advertised on the day of expiration.
The issue of how to announce price changes in-store will remain, even if all shops are able to read the GS1 Databar. Before proceeding to checkout, customers will want to know which items are on sale.
Overall, the GS1 Databar method of marking down perishables is undoubtedly a more economical option. However, it only reduces rates on the day of expiration and does not provide the same options as more all-encompassing strategies, such as the one delivered to customers' smartphones.
Extended shelf life to maintain the freshness of the food:
According to the UN, over half of the fruits and vegetables grown worldwide are lost or discarded each year. Businesses are now utilizing technology to make informed decisions in order to deal with this enormous food waste.
Lineage Logistics, a well-known U.S. logistics company, uses AI, blockchain, machine learning, and IoT technology to keep food fresh during the entire journey. Additionally, this improves public health. IoT temperature and vibration sensors are used by Lineage Logistics to notify the company of any rise or fall in warehouse temperatures. This prolongs the food's shelf life and maintains the food at the ideal temperature.
AI can be used by retail businesses to collect client data and pass it on to their manufacturers. The producers then create the appropriate quantity of food while avoiding surplus production. To estimate the remaining shelf life of their products, many businesses employ biosensors. Scientists in Singapore have recently been working on developing an "electronic nose" that can predict when meat will start to decompose. The apparatus is still undergoing testing, though.
Sensors in packaging that determine freshness:
The IoT sensors used in the packaging process provide information about the product's freshness and shelf life. Distributors can use this information to better plan their distribution strategy and cut waste on foods with lower shelf lives.
Time-temperature sensors are used by Russian retailer X5 Retail Group to indicate when a product is going to expire by changing color. By doing so, the business may effectively manage food waste while simultaneously looking out for the general public's health.
Additionally, technology promotes the distribution of food to prevent food waste. One well-known instance is Copia, which analyzes and informs businesses about their waste and the causes behind it using software for managing food waste.
About 5 million pounds of fresh food have been salvaged by Copia from landfills and given to those in need.
The surplus food is gathered from farmers and distributed by the Dutch company Instock. In this manner, food waste is prevented. Instead, it will help those who are hungry.
Establishing a network for food donations:
Together, Walmart and the Walmart Foundation are creating a sustainable food system. All people should find it more accessible, secure, and healthy.
They have given more than 5 billion pounds of food to non-profit food donation organizations in North America during the last 15 years. Additionally, they contributed more than $145 million in grants to advance the goals of Feeding America and its regional food banks.
These retail contribution programs store goods at food banks as opposed to throwing them away. To ensure that no food is wasted, retailers and grocery stores can collaborate with their local food banks.
Retailers can help those in need by collaborating with a charitable food distribution programme. These products are typically collected from the stores by food bank trucks, who then distribute them to the poor.
You can give out-of-production items, consumable perishables, and product samples to food banks as a retailer. But you might need to properly train your staff in order to carry out the storage and transportation of these things.
Food waste isn't good for the environment, particularly with rising global hunger. When food is fresh, it can be conveniently donated to people in need. We need resilient food systems across a variety of businesses to make sure of that.
In order to improve food security, blockchain, IoT, and machine learning technologies have discovered successful food waste solutions. We may aspire for a better future as long as companies keep using them to decrease food waste.
Going forward, technology solutions that assist shops in preventing food waste will become more and more crucial. Simply put, every chance to cut waste would assist merchants financially at a time when their already precarious margins are under increasing pressure.
It is believed that 5-7% of perishables are lost due to inadequate management, with the perishable category accounting for between 50 and 60 percent of sales in a supermarket. Only a small amount of this waste, which could account for up to 4% of total sales, will be recovered through markdowns. Grocery merchants should give the problem of waste top consideration as consolidation and rivalry within the industry heat up and profits come under persistent downward pressure.
RapidPricer helps automate pricing, promotions and assortment for retailers. The company has capabilities in retail pricing, artificial intelligence and deep learning to compute merchandising actions for real-time execution in a retail environment.