Food Waste in AmericaOpportunities to Fight Hunger

Food Waste in AmericaOpportunities to Fight Hunger

July 2011

Summary

• Feeding America and A. T. Kearney collaborated to evaluate food waste and donation opportunities along the US food supply chain

• This study evaluated all food channels with a focus on foodservice channels

• Approximately 80 billion pounds of food is wasted annually, 50 billion pounds in foodservice channels

• The common enemy of companies and Feeding America is landfill waste

• Supply chain partnerships can ensure this waste is minimized and redirected to donation

Feeding the Nation’s Hungry

Feeding America’s mission is to feed America’s hungry through a nationwide network of 200+ member food banks and engage

our country in the fight to end hunger

4

National Retailer donations are offsetting a decline from National Manufacturers

Feeding America Annual Food Sourced (million lbs)

Source: Feeding America

2007 2008 2009 20100

500

1000

1500

2000

2500

3000

3500

2,100 2,200

2,6002,950

Federal

Purchase

LocalDonation

NationalDonation

Total Product Donations Increasing

5

Worst Employment Recession Since WWII

Months after Peak Employment

% Job Losses

Relative to Peak

Employment

Nearly 7 Million Unemployed for Over 26 Weeks

Month/Year

Unemployed over 26 Weeks

1969 Current

0 47

Current Recessio

n

50.2M Americans are Food Insecure

Source: calculatedriskblog.com; USDA

Demand Outpacing Supply

UsageAlternative Channels (519)

Estimated US Food Supply Chain(1) (billions of lbs)

6

Production

International Trade

Farming(1,270)

Agri-Processing(405)

Manufacturing(710)

Wholesaling(673)

Primary Distribution (861)

Drug Stores(10)

Retail(372)

Caterers(2)

Hospitality(17)

Institutional(38)Convenience

(14)

Foodservice (465)Grocery (396)Restaurants

(407)

Secondary Distribution (~19)CloseoutStores (1)

DollarStores (14)

Exports(94)

Imports(82)

Note: (1) Industrial waste is not included; numbers may not balanceSource: USDA: 2007 U.S. Census of Agriculture; 2007 U.S. Economic Census; National Restaurant Association; others

Animal Feed(311)

Donation(3-5)

Biofuels(208)

Consumed(664)

Food Waste(78)

Packaging Waste(138)

Raw Inputs

US Food Production = 900B lbs

7

Hun

ger

Waste

Obesity

TheFood

Paradox

7Source: USDA; CDC; A. T. Kearney analysis

A coordinated effort is needed across the industry to tackle these issues

In 2009, the number of food insecure individuals rose to 50 million

Obesity easily exceeds 30% in most age groups, including children

Americans throw away tens of billions of pounds of food each year

We are living in a Food Paradox

8

Additional Donation Opportunity in Existing Programs (B pounds)

Source: Feeding America

ProduceDonation Program

ManufacturingDonation Program

Retail DonationProgram

0.0

0.5

1.0

1.5

0.5 0.40.2

1.0

0.4

0.3

Current Donations Opportunity

Grocery Supply Chain Support

9

12.0

4.933.9

Annual US Food Waste Generation(1) (estimated, B lbs)

(1) Post-recycling(2) Consumers, grocery channels, etc.Source: EPA; www.zerowasteamerica.org; BioCycle; Industry interviews; ATK analysis

Procurement

Plate

Preparation

Waste of food that has already been served to

consumers

Waste that occurs at the site during

preparation

Uncooked food waste that occurs along the

supply chain

50.8

27.0

Foodservice

All Other Sources(2)

US Food Waste = 78B lbs

10

Food Waste

Procurement Preparation Plate

Example Reasons for

Waste

Uncooked food waste that occurs along the supply chain

Waste that occurs at the site during preparation (includes trimmings)

Waste of food that has already been served to consumers

• Excess• Damage• Test

• Process design• Lack of training• Quality requirements

• Incentive to “push” food• Portion sizes• Lack of tracking

The Three P’s of Food Waste

Description

Source: A. T. Kearney analysis

Evaluation Framework

ProcurementWholesaling

(3.4 B)

Plate

PreparationProcurement

Institutional(4.2 B)

Hospitality(2.2 B)

Plate

Preparation Procurement

Restaurant(40.7 B)

Plate

Preparation

Procurement

Estimated Foodservice Wasteby Industry (billions of lbs)

80% of food service waste from Restaurants

1212

Hotels: Companies donate part of food purchase

• There is excess food at banquets & conventions, which typically is discarded

• Companies can prevent plate waste by reduce their food purchase (e.g. decrease menu options, smaller tray sizes, etc)

Institutional: Go “trayless” in cafeterias

• Students at Northwestern University weighed their plate waste to quantify their waste stream

• Trays were then eliminated trays at select cafeterias, limiting customers from taking excess food

• Anecdotal evidence suggests that “going trayless” reduced plate waste by 30%

Caterers: Passengers donate value of their meal

• On average, 1-2 first class meals are thrown away at the end of each flight

• Airlines could provide first-class passengers the opportunity to refuse their complimentary meal in lieu of a donation to Feeding America

• Monetary savings can be donated to FA to purchase food for the hungry

Source: Industry interviews; A. T. Kearney analysis

Solutions ‘out of the box’

13

Identify and Quantify the

Waste

Explore Ways to Reduce the Waste

Recover and Donate the Remainder

“Quantify”

• Where is food waste occurring?

• Why is there waste?• How much waste is there?• Who owns the waste?

• How can we reduce the amount of waste?

• How much waste will remain?

• What kind of waste is it?

• Is the waste edible? Can it be donated “as is”?

• If not, are there steps that can be taken recover the waste?

• What is the cost of these steps?

Strategies for waste reduction and donation can live in harmony, as the common enemy is dumping and landfill waste

Source: A. T. Kearney analysis

“Reduce” “Donate”

Partnership Strategies

14Source: A. T. Kearney analysis

Increasing Time

Desired Change in Waste Flow

Dumped

Donated

Identify Waste

Decrease Product Losses

Capture Edible

“Waste”

Maximize Saleable Product

Maximize Donation

Minimize Dumping

Reduction Strategy(Quantify, Reduce, Donate)

Reduce Inedible Waste

Goal: 0 Landfill

Secondary market is increasingly important revenue stream for manufacturers but impacts donations

15

20042005

20062007

20082009

20102011F

0

100

200

300

400

Non-Produce National Pounds over time

Our lean enterprise initiative is really taking hold

The business environment forced us to embrace secondary markets

We’re selling to secondary market 2x what we donate

Recession has driven us to tighter production plans and reduce new product introductions

…and macro trend validated at donor levels through interviews

Po

un

ds

(M

M)

Fiscal Year

YTD FY11 June 1, 2011

Need vs. Opportunity

Waste solution opportunities

Dry, frozen, refrigerated Short-codedPast code with approved extensionsDiscontinuedMislabeled Unlabeled / britesTest productPromotional ItemsPrivate label/ licensed Packaging changes

Line start up wasteReformulationsSeasonal ItemsOverrunsCustomer returnsFood service sizes Bulk ProductLow weights/short fillsIngredientsBoxes, Containers, Shelving & Equipment

Through out the Supply Chain

Benefits of Donating

• Waste reduction• An inventory management solution• Potential tax benefits• Centralized donation process; local community support• Security and integrity of brands• Savings in storage and transportation• Savings in dumping fees: $4,000 per truckload!• Cost-free way to handle unsaleable product• Sophisticated tracking, reporting and recall procedures• Supports ‘green’ initiatives and corporate commitments to

sustainability

Join in the FIGHT

Institute Corporate Donate do not Dump policy• Clear process for all employees• Early identification of unsaleables• Immediate action to donate• Extended code dates on consumables

Engage locally with your community food bank• volunteer• event sponsorship

18

Thank you

Steve, a former shipping and receiving associate, and his wife both worked two jobs to support their daughters. But that was five years ago. The couple now relies on unemployment benefits to feed 15-year-old Katie and 10-year-old Olivia.  Until things turn around, they turn to their local food shelf for assistance. This agency of the Second Harvest Heartland food bank in St. Paul, Minn., provides them with the food the parents need to keep their family fed. There’s a Steve in your own community. www.feedingamerica.org to see how you can help.