Measuring Food Waste Performance: Lessons From Best-in-Class Performers for Asian Retailers
Over the last few years, several of the world’s largest food retailers and suppliers have committed to the United Nations’ Sustainable Development Goal Target 12.3, which aims to halve per capita global food waste at the retail and consumer levels and to reduce food losses along production and supply chains (including post-harvest losses) by 2030. Among them are industry leaders such as Tesco, Carrefour, and Walmart. They have committed to reducing food loss and waste in their operations and in those of their priority suppliers. In addition, they have joined a new initiative called 10x20x30, which brings together 10 of the world’s largest food retailers and providers to engage with 20 of their priority suppliers and aim to halve rates of food loss and waste by 2030.
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Reducing food waste should become a business priority. Our in-depth analysis of leading grocery retailers reveals that the hidden costs of food waste are enormous, even at the best-performing chains. For example, we estimate that Tesco's food waste equals GBP 232m in lost sales value, close to 9% of 2021/22 adjusted operating profit.
The upside is that reducing food waste is highly achievable. Our analysis indicates that retailers that have set performance targets improved their food waste performance, reducing food waste by 13% to 45% from their target base year. For example, Tesco lowered food waste volume by 45% between FY2016/17 and FY2021/22. The reduction in food waste added approximately GBP 138m to its margins, ~5.2% of operating profit in FY2021/22. Tesco's example highlights a significant opportunity to reduce food waste, save financial costs, and reduce carbon footprint.
Our research offers important learnings and a roadmap for retailers in Asia to narrow the gap with the best-in-class performers and make food waste reduction a strategic priority.