By Dave Lewis, Group Chief Executive of Tesco and Chair of Champions 12.3
These remarks were delivered at the Consumer Goods Forum Global Summit on June 15, 2016
Ladies and gentlemen, good afternoon. I’m delighted to be here.
Now I’m more than happy to say anything you like on Tesco, but if you will allow me, I’m here more for the next twenty minutes or so in my capacity of chairing Champions 12.3. As you know, it’s a commitment globally on food waste, and I’m delighted to tell you that the Consumer Goods Forum is signed up to that commitment.
It’s quite a broad church. It’s the first time I’ve been involved in something like this that comes out of the UN. A lot of the people that are involved in that space come to it from quite unique perspectives, and that’s what makes it really very rich.
So what I thought I’d do today is share with you a little bit of my perspective – how I became involved and what it is we are trying to do, in the hope that it stimulates and involves you in what I would say to you is a critical issue, and one on which I believe we can make a huge impact.
Some of you know I spent nearly three decades working for Unilever before I joined Tesco in the way that’s already been said, and I was extremely proud. It’s a business I have a very fond affection for. I was proud to be part of an international, multinational food business.
But then I came to Tesco. I’m new to retailing and I wanted to understand the food supply chain, and I spent an awful lot of time doing that. I realised that my time in Unilever, however valuable it had been, had shown me a fraction of the food chain and actually in Tesco I saw a food business that was much bigger, more complicated, but also a food business that required, dare I say it, some attention.
Because I have to tell you, as I got to know a little bit about it, as I started to get to understand it a little bit more, it did actually stir up – it does actually stir up – quite a few emotions, quite a lot of mixed emotions, and not all of them positive.
I have to tell you, as I found out more about food waste, the first feelings you have are actually ones of sadness. And then from sadness you get very quickly to angry and sometimes you get slightly appalled by some of the things that you see that happen around the world when we come to talk about food. It’s a bit embarrassing sometimes to explain why it is we do some of the things we do, and it’s not too far to say that sometimes you see some things that you feel quite ashamed of.
Now, they are very powerful words, they are very powerful emotions and, if they are left just where I’ve left them, they are potentially negative. Powerful, but negative, is not at all where I would want to be. I don’t think it’s where anybody would ultimately want to be and as an optimist who’s always believed that actually the power of capable committed people to change things can be a force for good, that’s really how I became involved and passionate about the thing I am going to talk to you about now.
Now I’ll leave you with one thought before I get into the meat of it, which is if you listen to what I’m going to talk about now and you look at it through the lens of just commercial sensibility – it’s just good business – that’s one thing. You might also look at it through the lens of actually doing something positive and making a great contribution to mankind and that’s another, and I really don’t mind through which of those lenses or which of those ears you listen to what I am going to say for the next twenty minutes, because honestly I think both of them are true.
Let me share with you a few facts….
…I’m going to talk to you about food waste, but the issue is bigger than just food waste. The issue is around hunger, around inequality, about excess in one place and paucity in another, and it plays into the very fabric of a lot of societies in which we live and work. The other thing is it’s a growing problem. By 2050 we will not have enough food to feed the planet and yet today we waste one third – one third – of all food that we produce.
Most of my career has been in countries where food poverty exists, where there is a genuine scarcity of food, and that means people go hungry. I also then turned up in Tesco in the way that Alex has described, and as part of my induction I found myself in a large store late one evening having spent a shift trying to understand how colleagues worked in the store. And despite all of the routines that happened during the course of that day, there was food left at the end. We tried to reduce it, but I was part of a team that at the end of the day took perfectly good food and threw it away. Yes some of it went to a digester, some of it went to an animal farm, but not all of it.
I watched, having had most of my career in parts of the world that had no food, I actually physically saw it for myself and it was that which stimulated me to get more and more involved. And then when I walked through the supply chains and I got to know a little bit more, I walked into farms where we ploughed back in perfectly good crop because the demand wasn’t there for it once the crop had been grown, and when you’ve worked or when you’ve lived in a region or a country where there is that level of food poverty that’s a terrible, terrible thing to see.
The issue is not simple. You will hear a lot of people talking about the distinction between developing and developed markets, if you want to use those phrases. It is fair to say that actually in the developing world there’s very little consumer waste. Most of the waste is actually generated in the supply chain from agriculture to store, and in the developed world it’s much more the other way around.
So it’s actually a little more complicated than we might like, but I’ll share with you one statistic that shows the difference between these. In North America and Europe, customers in their homes, per capita: 95-115kg of waste per person per year. Developing world of Asia and Africa it’s around 6kg of food per year. Massive differences, and that’s why we need to think about some changes that look across the whole of the food chain.
I’m now going to come to an experience in the UK. I’m going to take that global picture and I’m going to come to the UK because, quite frankly, it’s a market I know well. It’s a market that’s got a lot of data around it, and it’s obviously a market in which Tesco is very active. But in the UK, and this is the whole of the supply chain, in manufacturing there’s about 1.7 million tonnes of waste and there’s about 7 million tonnes of waste downstream. The bit in the middle, our retail operation, is tiny by comparison with only 0.2 million tonnes – we think, that’s the best measure we have. It’s quite a challenging measurement but that’s where we start from and I’m going to use this to structure the rest of the presentation.
So like all good things, you start at home. I want to be really clear about what it is we as Tesco are doing in our own operation to eradicate this element of waste. And yes it’s the smallest part. It is the smallest part, but we must make sure that we have our own house in order.
Now before I came – and some of the people who are responsible for this are actually in the room – Tesco three years ago measured its waste. It measured it end to end, in terms of what its food waste footprint was, and it published that information.
We are now in our third year of publishing all of that detailed information, and what I’m showing you on here is the report of a month or so ago that shows that the waste in our total Tesco operation is 1%. Now it’s really hard for me to benchmark that because not many, if any, other retailers are publishing that data and I’ll come back to that at the end. However, I look at it and I say 1%, it could be a very small number, but I also look at it and say it’s nearly 60,000 tonnes of food due to the size of the business that I am responsible for. That is somewhere in the region of 70 million meals.
Now, it’s not easy, and my team love me for it given the commitment, but there were a couple of categories which were not included because they were a little bit difficult in the definition. We changed that this year – we included it, bakery would be a key indicator, and as we did that our waste number went up. Now I don’t mind that. I’d much rather know. It might be inconvenient but it is the truth and therefore we use that as the base and against it we will target ourselves to reduce it.
In March of this year we made a straightforward commitment: by the end of next year, by the end of 2017, no food that is safe for human consumption will be wasted inside the Tesco operation. None at all.
In five hundred of our largest stores, for the last few months, we have been piloting an innovation. We put together three different parties to work with us, some young entrepreneurs from Dublin, from the Imperial College, who have designed some software that we’ve supported, and we’ve put it together with a charity in the UK called FareShare so that we’re able to donate any food that we are not able to sell through our stores directly to charity. Those charities were confirmed, authorised, they’ve got food safety clearance. This is an illustration of the app. It works on a smartphone and that’s the thing that will enable us never to waste anything that is safe for human consumption. The other thing that is important about this is we’ve put the money in, we will develop it and we’re going to try and prove it given all of our different stores. But by the time that we’ve proven it, it’s been built as an open system and the intention is to make this available to anybody who will want to use it in a retail operation. We will prove it first and then we will make it available.
So that’s within the retail operation – there’s loads we can do, but if we go back to the agricultural side we’ve spent a lot of time trying to understand. Lots on insights, lots of time talking to agricultural partners, talking to our customers – we actually went as far as taking some of the activists in this area and making them advisors. We asked them to come in and look at our business, shared with them the information and asked them to challenge us on what we did. The interesting thing is that, for very good reasons over years, at Tesco we have worked with our suppliers to improve the quality and the consistency of what we have given to customers and that was translated into specifications that were getting tighter and tighter in terms of driving that quality improvement. The unintended consequence of that, however, was that things that fell outside of those guidelines potentially would then drive waste in the agricultural supply chain – that ploughing back in that I talked about before.
So, we’ve been doing some work, and in this area some of the examples I’m going to give you now are Tesco and some are from the UN examples – but you will have heard some people talk about wonky food, and wonky fruit and veg: in Tesco we call that ‘perfectly imperfect’. This is about taking that element of the specification and making it available to customers, normally at a lower price, but making sure that it’s not wasted even though the quality is very good.
But also it’s about the forecasting and ordering. I was in Norfolk, England, a little while ago seeing a model which now links our sales from store directly with our farms to decide which fields to pick when. Allowing ourselves to think about how we might open up our retail operation when there is a crop flush, so that that flush is not wasted. The example that’s on here is that by changing the way the that we work with our banana ripeners in the UK, we’ve reduced the waste by six percent in that operation just by getting the forecasting and the end to end working differently.
We import a lot of our fresh produce from Europe, Spain in particular. Be it soft fruit, be it citrus, be it a number of salad things in the winter. By going end to end we’ve taken out restocking points and as a result we’ve been able to increase the life of fresh produce on shelf in the UK by two days. Colossal in terms of its impact on what it means therefore for waste.
There’s also been some work – and I know there’s other work in the room, I’m giving you Tesco examples but there are other examples I’m sure other retail members could share – on linking parts of our business. So that element of the crop which is not perfect, dare I say it, in terms of potatoes – linking that to the processor of ready meals in order to supply mashed potato is something we are very keen to do. We talk about how we can use the whole crop across a number of different uses.
And finally in terms of redistribution there was a report by Wrap, another association in the UK, recently which talked about how, in the agricultural part of the supply chain in the UK, 2.4 million tonnes of food is wasted. They then went on to show that only about 1.8% of that, so about 40,000 tonnes, was redistributed in any way. Now what we’ve done in our particular case is we’ve taken our twenty biggest partners and we’ve put them directly into the FareShare association that we have and therefore they donate directly in the same way that we do to redistribute that food and not waste it.
When I come upstream to the customer, or downstream if you’re putting the customer at that end of your particular chain, it was as simple as getting ourselves clear and consistent on date coding. In the UK there used to be two – you display it until this time you, eat it until that time. We’ve simplified it in order that we can communicate better.
Controversially, in April last year we stopped ‘buy one get one free’ promotions in all of our fresh categories because that was driving customers to buy more volume than they actually needed, and driving up the waste at home. We continue to try and do that, but I have to say there’s still an awful lot of volume driving promotions that you can link to waste in the home, and I think something for all of us to reflect on – whether a manufacturer or indeed a retailer – is about whether that’s the right way to be promoting our food business going forward. Innovations in packaging that make the food fresher for longer are obvious, and there’s an awful lot of marketing activity in order to give tips on reuse, recipes, all the ways of avoiding food waste in the home.
One close to my heart is education and you see here some very amazed young boys and girls from a primary school in the UK. We have a programme in the UK called ‘Eat Happy’ and within that is an element of what we call ‘Farm to Fork’. Basically we take young children – and it was mentioned in the conference about how little our children know about food and health and actually where their food comes from – and we literally walk these children from farm to fork explaining where their food comes from, what’s good for them, health, everything. And in the last year 1.2 million children have done that educational journey through our stores and with our partners. We believe that this education ultimately will pay off on things like food waste and, dare I say it, some other important issues as well.
So my pitch to you is a really very simple one. We need to get ourselves to a place where we understand this chain, where we measure enough of what’s happening end to end. Champions 12.3 starts from a very simple premise, which is could we just pleasure measure where we are now, and wherever it is we are now, commit ourselves to halve that on the timing that we’ve said.
Trust me there’s enough best practice out there already to make a massive difference, so what we need to do is share it, and that’s what I’m going to try and do in terms of how I lead the 12.3 initiative, because this is not a source of competitive advantage – this is just a very good thing for us to do and this is the opportunity for us to innovate. Why wouldn’t we want to have a look at this? We can look at it through commercial sensibility, because waste ultimately has to be paid for, so if we eradicate it we can lower our costs. We might even be able to improve the margins if that’s the thing that really drives us. But there’s also a bigger goal which is how we might make a contribution to that massive inequality that exists already in terms of those who have food and those that don’t. Both of them, I think, are enough for us as an industry to motivate ourselves, engage ourselves, and innovate against this need.
Now it wouldn’t be a presentation if I didn’t take the opportunity to ask for your help, so the shameless bit of the pitch is very specifically for those responsible for a retail business in the room – please sign up for the transparency… we have agreed as the Consumer Goods Forum that that is what we are going to do, so now’s the time for us to do it.
We will measure the progress and I suppose my little barb in there is that for years and years we’ve argued about methodology and we’ve found reasons not to measure or not to publish. I suggest to you that the time for that is now passed. And it doesn’t really matter where we start from, we just need a base line. And from that it’s all about measuring the improvement.
For manufacturers in the room, partner. There’s a huge amount of expertise. Everything I’ve talked about in my Tesco example has come about because of partnering – so really keen to engage. You know I will say this and some of you can say ‘oh that’s rich given that you were a supplier once’… I think we should review some of our promotional strategies through the lens of what it is doing to that total end to end, and what it means in terms of waste, particularly in the consumer cycle. Most importantly I think the expertise to educate, through communication, marketing and other things is very strong and very alive and is a core capability of the manufacturers in the CGF and I’d love to see that come to fruition in helping educate and change behaviour here.
So, unashamedly, three action points for each and, if we can’t avoid it, please find a way of redistributing that food to people in need.
So the title of this talk was ‘no time to waste’. The point being that we’ve made a commitment globally. We’ve now made a commitment as the Consumer Goods Forum. I’m hugely excited by the opportunity. I’ve taken all the negative emotions I’ve felt about it, as I’ve understood it, and I choose now to channel that into the opportunity that we, individually and collectively, have against what is a massive global issue. And if we get on it, and we do it, then I believe we can aspire that no food goes to waste.
Thank you very much.