Thinning margins, increased competition and heightened consumer awareness of global food losses trigger call to action from growers, retailers and restaurateurs.
Food waste is a huge problem. Consider that the United States spends more than $218 billion, or 1.3 percent of the nation’s gross domestic product, on growing, processing, transporting and disposing of food that is never eaten, according to the report, A Roadmap to Reduce U.S. Food Waste by 20 Percent, published in 2016 by ReFED, a non-profit collaboration of more than 30 businesses, non-profits, foundations and government leaders. Said another way, and in the same report, up to 40 percent of all food grown in the United States today is being wasted. What’s more, 80 percent of this waste comes from perishable foods, and more than half of this is from fresh fruits and vegetables.
“Food waste is the biggest revolution at retail since the big box store,” says Chris Cochran, executive director of the San Francisco-based ReFED and former senior manager for corporate sustainability at Wal-Mart. “It used to be that waste, or shrink, was considered a part of doing business. Now, it’s seen as a value creation opportunity throughout the supply chain.”
In today’s ultra-competitive retail and foodservice environments, food waste is at the forefront of executives’ and store-level managers’ concerns more than ever.
“Especially for produce, where margins are tighter, there’s more fiscal challenges, greater competition, and consumers’ expectations have never been higher with demands for a full variety of perfect fruits and vegetables year-round,” says Martin Gooch, Ph.D., chief executive of VCM (Value Chain Management) International, a company that has worked extensively in the international field of food waste reduction and traceability, in Oakville, Ontario, Canada. The good news is “retailers today have a considerably greater ability and opportunity to influence and benefit their chain’s operations through managing food waste than has been the case in the past.”
Here are some ways retailers can manage food waste better.
1. Predict, Spec and Order Accurately
Produce waste reduction begins in the field, says Cochran, who adds that ReFED will publish its ReFED Food Waste Retail Action Guide this fall. “It’s important for retailers to accurately predict and communicate to growers the supply needed so growers can plant the right amount. This is a good way to prevent waste before it starts.”
Then, successful retailers are very clear on what they are looking for in their specifications, says Jonathan Raduns, a Cherry Hill, NJ-based consultant for Merchandise Food, LLC and partner/advisor for FreshXperts, a full-service advisory firm that focuses on profitable, sustainable growth in fresh foods. “The level of quality and freshness required will impact the amount of shrink. For instance, if retailers are buying off-markets to offer last-minute ‘hot-buys,’ sometimes they will sacrifice freshness to offer customers a great deal. This needs to be watched closely to ensure the long-term brand promise is not compromised. Retailers with very specific requests to their vendors are more apt to have consistent fresh quality offerings. The higher the quality of an offering, the more likelihood of lower shrink as well.”
Ordering is another crucial factor in the road to waste, or no waste.
“We control for excess inventory with computer-assisted ordering and careful matching of product to demand,” says Eric Blom, external communications manager and spokesman for Hannaford Supermarkets, a 180-store chain based in Scarborough, ME, and a founding member of the Food Waste Reduction Alliance, a cross-industry initiative led by the Grocery Manufacturers Association, Food Marketing Institute and National Restaurant Association. “Managing shrink helps to keep costs down, and this benefits our business and customers by helping us keep prices low.”
“Managing shrink is a shared responsibility since factors throughout the supply chain, as well as a wide array of retailer policies and practices, impact the quality and freshness of produce displayed on the shelf.”
— Jan Delyser, California Avocado Commission
Regional and seasonal effects of inventory management are also important factors.
“Empowering local produce managers with good, current information about what performs well in their region is essential,” says Jessica Harris, senior manager of trade marketing and business development for Tanimura & Antle in Salinas, CA.
Similarly, “retailers should be conscious of weather conditions when ordering. Extreme heat and cold weather may affect product integrity. Inventory should also be adjusted during seasons in which some products may cannibalize sales of other fruits, such as whole watermelons in the summer,” says Dionysios Christou, vice president of marketing for Del Monte Fresh Produce N.A., Inc., in Coral Gables, FL.
2. Maintain the Cold Chain
Proper temperature maintenance from field, packinghouse and transport to the retail distribution center, back room and display shelf are key to reducing shrink.
“Managing shrink is a shared responsibility since factors throughout the supply chain, as well as a wide array of retailer policies and practices, impact the quality and freshness of produce displayed on the shelf,” says Jan DeLyser, vice president of marketing for the California Avocado Commission, Irvine, CA. “Operational logistics vary from retailer to retailer and from commodity to commodity. However, a thorough review of receiving and handling practices by conducting a cold chain analysis to measure and monitor each step of the chain can help to determine if the chain is broken, in need of repair or where improvements could be achieved.”
3.Engage and Empower Staff
Employees play a crucial role in shrink prevention at store level.
“Whether at the warehouse or store loading dock, retailers must properly receive products and have staff in-tune to any items that might create a problem. Staff must be hands-on and check freshness and sell-by dates,” says FreshXpert’s Raduns.
“Once in store, proper culling and handling is essential,” says Rick Stein, vice president of fresh foods at the Food Marketing Institute in Washington, D.C., and former vice president of retail merchandising and marketing execution at Safeway. “Employees may think they are increasing shrink when culling, but not removing over ripe fruit or decayed vegetables can actually create more waste since shoppers won’t want to buy from an unappetizing display.“
Beyond this, produce staff at New Seasons Market, a 20-store chain headquartered in Portland, OR, tracks waste by category.
“For example, categories might be value-added, wet rack, salad, berries, stone fruit; it changes based on the season,” says Jeff Fairchild, produce buyer. “This way, we can go after waste prevention in a targeted manner and get the big bombshells.”
One step more advanced, PCC Natural Markets, a 10-location community-owned food market based in Seattle, served as the pilot location for Redmond, WA-based WISErg’s Harvester, a machine that liquefies large volumes of landfill-bound food scraps into ingredients for the company’s fertilizer. “This is essentially a smart-dumpster that requires employees to enter information about the foods they’re throwing away. The foods are then turned into a fertilizer. The system is able to provide recommendations for waste reduction and improved inventory management. This requires a little more labor than simply tossing everything into a dumpster, but cuts food waste and can yield savings, along with a new revenue stream. PCC sold fertilizer produced by the Harvester in its stores.”
Retail executives should ensure adequate training for all produce team members, says Del Monte’s Christou. “They could also provide incentives to produce managers who hit low shrink targets. Ultimately, it is the responsibility of the produce and store managers.”
4.Merchandise with Waste-Prevention in Mind
Stack it high and watch it fly is becoming outdated, says Tanimura & Antle’s Harris. “Greater variety that caters to regional consumer preferences, supported by recipes and ideas, is what stimulates purchases.”
Merchandising in attractive compelling ways generates sales, which in turn allows for faster movement of products on the sales floor or in refrigerated cases, says FreshXperts’ Raduns. “The goal is to maximize displays to the largest size possible without creating your own ‘shrink machine.’ Over merchandising generates excessive shrink while under-merchandising creates missed opportunities.”
VCM’s Gooch says the industry needs to break away from a belief that volume is king. “We worked with a retailer on a project and in the end, they made more money but sold less product, so deemed the project not fully successful.”
A good example is found in the 2014-published report, Food Waste in Canada — $27 Billion Revisited, authored by Gooch and colleague, Abdel Felfel, Ph.D. At the grower level, says the report, if a farmer grew less but higher-quality product, and thereby generated less waste, the financial outcome would be greater than if the farmer were to produce more with greater waste. Gooch and Felfel take this scenario further. If a retailer, for example, purchased 10 products that cost $1 each and only sold seven, with a markup of 30 percent, the business would lose 90 cents. However, if the same retailer bought eight of the same product at $1 each and lost just one, with the same markup, it would make a profit of $1.10. This equates to a $2 difference before costs associated with handling and disposal of wasted items are calculated.
Signage can play an important role in boosting sales of produce on the verge of becoming shrink, says Kathy Means, vice president of industry relations for the Newark, DE-headquartered Produce Marketing Association. “For example, post ‘perfect for salsa’ on a ripe tomato display or ‘great soup starter’ on vegetables. It’s all about marketing.”
Sampling is one strategy for saving mushrooms on the way out, recommends Mike O’Brien, vice president of sales and marketing at Monterey Mushrooms Inc., in Watsonville, CA, and former vice president of produce and floral for Schnuck Markets. “By doing this, you can sample out 25 percent of the product, sell half of it or more, and not lose any money.”
5. Try ‘Ugly’ Opportunities
Of the 45 percent of fresh fruits and vegetables wasted in North America, about two-thirds of this happens either at the field or in the home. At the field level, food is wasted when it does not meet the retailer or consumer specification, according to the report, Global Food Losses and Food Waste: Extent, Causes and Prevention, published in 2011 by the Food and Agriculture Organization of the United Nations. This fact has prompted several retail programs to sell so-called “ugly” fruits and vegetables. These are produce items that are perfectly delicious, but may be of a non-standard size, configuration or have a blemish.
One of the first retailers to implement such a produce program was Raley’s Family of Fine Stores, a 123-store chain headquartered in West Sacramento, CA, with banners including Raley’s, Bel Air Markets and Nob Hill Foods. The retailer rolled out its Real Good program in 10 Raley’s stores for a 90-day pilot in the summer of 2015. Aesthetically challenged produce, such as peppers, plums and pears, sold at prices 25 to 30 percent less.
“We learned a lot about food waste and customer response to the program,” says Chelsea Minor, director of public relations and public affairs. “We did not extend the program beyond the pilot because we experienced some challenges sourcing the product. However, our efforts were important to increasing the dialogue about food waste.”
Robinson Fresh, based in Eden Prairie, MN, partnered with several retailers starting in 2015 for its Misfits program.
“The movement started in Europe, but I’m not convinced there is a strong growth opportunity in ugly produce here in the United States. Consumers like to see produce that is cosmetically pleasing.”
— Ed McLaughlin, Ph. D, Dyson School at Cornell University
“Hy-Vee is a great example,” says Gina Garven, Robinson Fresh’s director of category management. “Hy-Vee started offering our Misfits program to all of its stores in January, and by April, the company had saved more than 1 million pounds of produce. In connecting food waste with education, marketing and a reduced price, this combination helped the Misfits offering at Hy-Vee become a success.”
Other restailers involved in the Misfits program include Coburn’s, King Soopers, Price Chopper, Meijer and Hannaford.
“One thing we’ve learned from trialing this program is that it truly needs to be holistic. It’s paramount to the success of the program to have collaboration at all levels of the organization,” says Craig Arneson, general manager, Robinson Fresh. “Before launching the Misfits program with any retailer, we make sure they are supportive of the price, the sustainability component, the branding, and the cadence of receiving the produce.
“The Misfits program can be a logistical challenge, but like any program in the produce industry, it takes the coordinated efforts of product and logistics throughout the supply chain to be successful,” adds Arneson.
In July, Appalachian Sustainable Development, which operates a food hub in Abingdon, VA, launched its Practically Perfect program in concert with national non-profit, Wholesome Wave. The goals are threefold: provide additional income to farmers, reduce food waste and offer more affordable fresh produce.
“Number 2-grade produce from 10 select farmers, who are GAP certified and already delivered their #1 produce to our hub, was delivered in our small, refrigerated delivery truck to four supermarkets,” says Sylvia Crum, director of communications and development. “The pilot tracked three very different pricing structures, using very similar marketing materials that included point-of-sale with the wording, ‘Funny looking, serious savings.’ For example, at the two IGA stores, product was either sold in shrink-wrapped tray packs or loose by the pound at 99 cents per pound with PLU stickers. At the two Food City stores, produce was sold in bags with a ‘Buy 3 bags and get 1 bag free’ offer. Customer response has been strong right out of the gate and our pilot stores are asking for more. Store owners, staff and corporate managers of the Food City (KVAT) chain stores are also pleased.”
‘Ugly’ produce isn’t a U.S. phenomenon, says Ed McLaughlin, Ph.D., director of the food industry management program, Robert G Tobin professor of marketing and former dean of the Dyson School at Cornell University, in Ithaca, NY. “The movement started in Europe, but I’m not convinced there is a strong growth opportunity in ugly produce here in the United States. Consumers like to see produce that is cosmetically pleasing; they’re conditioned to buy with their eyes. What a program like this may do is bring in a shopper, the lower income shopper. The retail opportunity is to segment and market to specific shoppers.”
6. Offer Variety
A shopper recently took a produce professional to task for not being able to buy just one stalk of celery. After all, reasoned the consumer, her recipe only called for this quantity and that’s all she wanted.
“It’s important for retailers to offer a wide variety of options. For example, whole or fresh-cut on a salad bar and incorporated into foods already prepared by the deli, bakery or other departments. This is an excellent way to reduce waste both in-store and at-home for the consumer,” says PMA’s Means.
The cut fruit and vegetable program at Morton Williams, a 13-store chain based in the Bronx, NY, is one of the chain’s most popular and profitable. Fresh whole produce on display is routinely harvested to make fresh-cut packs of peppers and onions for a stir-fry, broccoli and cauliflower florets for a side, or shaved Brussels sprouts for a salad.
“If customers want something, and they don’t see it, we’re happy to cut and trim it for them. After all, in the city many people either don’t want or don’t have the room for a large whole fruit or vegetable; they’d rather just buy a portioned container. For us it works well. What might sell for 99 cents per pound whole could be $4 per pound fresh-cut. It takes shrink and turns it into margin.”
This summer, Monterey Mushrooms launched its new pre-chopped packages of mushroom, which is first destined for foodservice and perfect for ‘blending.’ “Pre-chopped packaged produce helps to avoid food waste because you only use what you need at a given time. In addition, this produce is made with finely chopped white and brown mushrooms, all parts — cap, stem and gills. The product is ready to be blended with ground meat to create sustainable burgers, meatballs, tacos or similar items.
”It can also be used as an ingredient in several applications, such as scrambles, omelets, sauces, soups and more,” says O’Brien.
7. Donate to Food Banks
Produce is a hard product to donate, since it is highly perishable plus not standardized and often not packaged like a consumer products good. Yet, says ReFED’s Cochran, “we’ve seen a rapid increase in produce donation to food banks over the years by both retailers and foodservice operators.”
Tax incentives, whether deductions or credits, are an encouragement for retailers and foodservice operators to donate. These benefits roughly equal the incremental costs of donation, leading to a net breakeven financial impact, according to ReFED data.
Another reason for retailers to donate to food banks is part of strong corporate sustainability initiatives. One example is Publix Super Market’s food recovery program. The 1,000-plus store retailer, headquartered in Lakeland, FL, partners with Feeding America to donate to food banks in the Southeast. For produce, this starts with culling fresh fruits and vegetables daily to remove what is still edible, but unsellable. This produce is picked up and delivered to the food bank in a refrigerated vehicle to assure a safe donation. Trucks can make up to 60 pick-ups a week. Last year, Publix Charities donated $5 million to the Feeding America network.
8. Teach Customers to Waste Less at Home
One of the top reasons consumers waste food at home is really an aspiration to eat more healthy fruits and vegetables, but a lack of confidence in preparing them in delicious ways, says Samantha Cabaluna, vice president of brand marketing and communications for Tanimura & Antle.
“We’re far beyond needing to remind people that produce is healthy or wagging our finger at them, telling them they should eat more. What we need to do is enable people to prepare vegetables in several ways that are simple and tasty.”
Supermarket retail dietitians are awesome educators in supermarkets across the country, according to Amy Myrdal Miller, MS, RDN, FAND, founder and president of Farmer’s Daughter Consulting, in Carmichael, CA.
Education is a big piece of food waste, says Meredith McGrath RD, LDN, corporate dietitian for Redner’s Markets, a Reading, PA-based chain, with 44 markets and 13 quick shoppes in Pennsylvania, Maryland and Delaware. “It’s not just about proper handling and storage; I also teach my customers how to manage their food supply at home. For example, I tell them when you start to notice some produce items are on the decline, it is a good idea to have a usage plan. Recipes such as casseroles, omelets, smoothies, stir fries, and soups are great ways to use up a variety of produce that is waiting to be used. “
Social media is a great way of educating shoppers on different ways to use produce and proper preparation, says Esther Ellis, MS, RD. LDN, at Rouses Markets, a 54-store chain headquartered in Thibodaux, LA. “I also have the opportunity to contribute copy to the circular ads and will occasionally mention alternative ways to prepare produce, such as using watermelon rind in stir fry.”
Some retailers may fear if consumers use produce more efficiently at home, they won’t be back to buy more. However, according to VCM’s Gooch, 2015-published research by the UK-based WRAP (Waste and Resources Action Programme), this fear is unfounded. ”Businesses can benefit by consumers trading up to higher-value products by using the savings they gain from wasting less food.”
Chefs Work to Reduce Produce Waste
Produce waste is a farm-to-table problem in the foodservice industry. In fact, four to 10 percent of food purchased by this sector is thrown away before it even reaches the customer, according to statistics shared by LeanPath, a Beaverton, OR-based company that specializes in preventing food waste. Said another way, a 2013 study by the Washington, D.C.-headquartered Food Waste Reduction Alliance puts food loss in restaurants at between 15 to 16 percent of the annual food bill.
“Good statistics on fruits and vegetable waste specifically at the restaurant level are lacking,” according to Katherine Miller, senior director of food policy advocacy at the James Beard Foundation, a national non-profit culinary organization headquartered in New York. “What we do know is restaurants have small profit margins, as do local farms, so we want to reduce waste in both before it hits the plate.”
To target this problem at the farm level, FreshPoint initiated its Unusual But Usable, or UBU, program in 2016. The Maitland, FL-based fresh produce distributor and subsidiary of Sysco, partners with local and national farmers to take lower grade products that don’t meet typical USDA grade requirements because of cosmetic factors such as shape, scarring or blemishes, and distributes and markets these fruits and vegetables. UBU-quality product is not decayed or rotten; it’s fully usable product for dicing, blending, juicing or processing. This reduces waste, helps the farmer recover growing costs and provides foodservice customers product at an attractive price point.
“One of the more unique items that we carry for UBU are organic juicing fruits and vegetables,” says FreshPoint’s president and chief executive, Robert Gordon.
Scraps of produce, like carrot peels, are something foodservice distributors are looking to use rather than waste. FreshPoint has launched a program this year that does just that called Customer Calendar. Bronx, NY-based Baldor Specialty Foods introduced a similar program two years ago, called SparCs, or scraps spelled backward. Both programs are finding creative ways to use the underutilized parts of fruits and vegetables to target food waste.
“We process more than 1 million pounds of fresh produce, more than 40 different fruits and vegetables, each week. Carrots into carrot sticks, celery into sticks, pineapple into chunks, for example,” says Thomas McQuillan, Baldor’s director of foodservice sales and sustainability. “About 150,000 pounds of this is leftover and what we refer to as scraps: carrot peels, the tops and bottoms of celery stalks, pineapple peels and cores. Our SparCs program finds a home for these edible products with chefs. For example, carrot peelings can be a labor-saving ingredient for carrot cake, or celery soup, or pineapple peels for infused water. SparCs sell for 30 cents per pound, a significant savings. It’s a new way of looking at food and adds to the bottom line.”
What chefs can do with scraps is truly amazing. For example, the Colorado Restaurant Association hosted its “Taste the Waste Food Challenge” last year to encourage chefs to use more of the menu ingredients that would otherwise have been discarded. The winner was Chef Kevin Grossi of The Regional, in Denver, for his Apple Cobbler with avocado-pit streusel, salted apple core caramel, with potato and apple skin pastry.
Similarly, chefs attending the James Beard Foundation’s “Chefs Boot Camp for Policy and Change” in Atlanta last spring prepared dishes from ‘ugly’ produce. The product was sourced by Baltimore-based delivery service for rescued produce, Hungry Harvest, as part of the chef’s hands-on exploration of the problem of food waste. One result was an Apple and Root Vegetable Slaw with Blue Cheese and Buttermilk Dressing.
“In the restaurant, we try to utilize the whole plant,” says Jamilka Borges, executive chef at Spoon, Pittsburgh, and a 2015 James Beard Foundation Rising Star Chef semifinalist, who also works closely with community organization, 412 Food Rescue. “Right now, we have a carrot pierogi, which utilizes all the pulp that’s usually thrown away from juicing (cocktails) and also the leftover juice for the dough. It’s a great talking point that servers can use to tell customers about waste.”
Teaching chefs and foodservice operators how to reduce produce waste in their own kitchens is the job of Robb White, executive chef and food waste prevention catalyst for LeanPath, a Beaverton, OR-headquartered company that helps commercial kitchens prevent food waste with smart meters that measure refuse.
“There’s greater potential for produce waste because produce is perishable and because some chefs are including more produce on the plate as an alternative to large servings of expensive proteins,” says White, whose clients include companies with multiple restaurants and catering operations such as Boeing, Google and Microsoft. “A fundamental that I teach is to always have a Plan A, B and C for each ingredient. Take fresh basil, for example. Plan A is to use it in at least two different dishes on the menu. Plan B may be to include it in a third dish or use it to make pesto. Plan C, if it can’t be repurposed and sold, is to use it in stocks or dehydrate or freeze. You really want to use every ingredient to its fullest extent.”