There are some really big issues in terms of sustainability and how we tackle this problem of efficiency and food waste. Tell us a bit about how Tesco is managing waste in the supply chain.
Darren Clough: Retailing has got lots of challenges, and within that produce plays a vital role. It’s a key part of the shopping basket, and a key component of how people judge our brands, health of the store, quality and availability. It’s also really important that we do things in the right way, so looking at food waste has been really important. Tesco has wanted to take a leadership position on this. Back in 2013 we were the first retailer to publish its waste figures, which were independently verified, and while other retailers have followed suit – which is really pleasing – Tesco has a very strong ambition to take a leadership role within this.
Within our own operations, we have made massive commitments to step change how we approach waste. We’ve made bold statements about how we are going to remove the levels of waste. Also [chief executive] Dave Lewis is chair of the United Nations Sustainable Development committee, Champions 12.3, and that’s a really great example of bringing together the government, industry bodies, research organisations etc to really tackle the end-to-end supply chain challenge. And they’ve got a really ambitious goal to reduce per capita waste by 2030. It’s not just for the leaders and the governments, but also for our supply partners, and I’m really pleased to say that 25 of the biggest suppliers in Tesco in the UK have already signed up to 12.3, which is fantastic.
Why is it that you decided as a business you needed to crack down on food waste?
DC: When you think about the food chain, about a third of it is wasted. Of that third, about half of it is on the farm, and roughly half of it is in the home, and a little bit within store operations, so it’s really important that Tesco as a retailer don’t just think it’s a retail problem – it’s absolutely an end-to-end problem, a shared responsibility, and a shared goal we have to have.
Looking at the challenge that we have end-to-end is key. It’s also about the role of not just consumers, but our producers and our farmers, and actually 30 per cent of Tesco’s waste problem is in produce. Bakery is up there as well, along with other areas, so from a business perspective as well as a moral, social and environmental perspective, produce is really top of the agenda. And the good thing is there’s loads more we can do to reduce the amount of food waste that’s in our operations.
You mentioned it’s an end-to-end issue, and part of that therefore is working more closely with suppliers and offering longer contracts. You’ve been doing that, as well as streamlining your supply chain. Tell us more about what you’ve been doing there.
DC: It’s fair to say we already had lots of longstanding, loyal and really highly valued partners. We’ve got some that have been dealing with us for 50 years, so we’ve already got a good foundation of long-term relationships. I think the key thing is if we want to go on a journey of helping do better things and make changes, we have to do it with partners who have clarity about their business.
The deliverables are that we have to be leaner, we have to be more collaborative, we have to understand each other’s business a lot more. We are going to have to work with fewer and better partners, and reward the people who do make the investments and the commitments.
So we’ve done lots and lots of work and I’m pleased to say that over half of our partners now have a three- to five-year business plan, which gives them that clarity about where their business is going, and gives them confidence to invest and make some of these changes to address things like food waste.
Suppliers have long been calling for more relaxed specifications at certain times, and the Perfectly Imperfect range meets some of those needs. What’s the thinking behind that?
DC: Retailers will always follow the customer and make sure they go in the right direction to serve them best. But equally it’s important that we follow the growers, follow the industry and listen to those guys to see what they’re producing and what the season or the weather is producing.
So actually we’ve made a strategic and conscious decision to be much more nimble, more agile. Some of the words we’ve used today about being responsive, matching the supply to demand. And to do that we have had to think about our ranging and our specifications. A couple of things that we’ve done: we’ve introduced a kind of wonky, Perfectly Imperfect range, and that’s been really successful. We’ve introduced a farm range, a kind of entry farm range to compete with some of our discount competitors. And again, that’s been really good at addressing not only an entry point to the market, but taking up to five per cent more crop. For example on areas like berries and topfruit, that means we’ve gone from less than 90 per cent crop utilisation to over 95 per cent. And that makes a significant difference in terms of yields, sustainability for the growers etc.
Equally, we are doing a lot of work now to redefine our core and Finest tiers, and it’s really important that those people investing in varieties and top quality also have a really solid market. So it’s a better-balanced mix. With Perfectly Imperfect we do about 10 lines, sell it when it’s available, really flexible, we put it into the stores based on how much we’ve got, and it’s really successful with consumers. On strawberries alone we do about half a million packs a week on that. That used to go into the bin, or into markets where you get no return. So that’s proven really successful. Also the farm brand has allowed us to take more of the crop into a broader specification.
The other initiative is ingredients, such as what we’ve done with Branston, where we’ve taken some of the excess potatoes and redirected that into some of our broader prepared ranges.
You talked previously about the need to source faster. What does that mean in practice?
DC: When I talk about faster, we talk about being able to bring the product quicker and with less time on the farms, and there are a number of things that we’ve done. First and foremost we’ve made sure we have more open dialogue with our producers. We’ve taken on board and worked towards one forecast, so everybody is working to one number. We’ve actually taken on board and integrated some of our supply partners, their capability and expertise. We’ve now got six people from our suppliers that sit in our office and help construct the order. We’ve upweighted the trade plan, so again we can do more crop flushes when it’s available.
I think the key message for me would be, the biggest thing that we’ve done is we’ve thought about not only the width of product – selling more products like putting potatoes into mash, wonky fruit, farm brand etc – but actually thought about the depth. So when the product does become available, it doesn’t go into the field or to the market for no return, or to our competitors, but it comes to Tesco. But time and time again we’ve done that – benefit producers, and better for the customers. We’ve done crop flushes on iceberg, Jersey Royals, British cauliflowers, and that’s a really good message for our producers, and our consumers, and I think it’s a win-win situation.
Do you feel there’s more that can be done to reduce packaging in the fresh produce sector, or is there more of a PR battle to be had in terms of persuading the public about the benefits of fruit and vegetable packaging?
DC: There are a number of things. It’s a big topic, but we have to address it. For me, there’s got to be a balance. Some packaging actually works, enhances the product, helps shelf-life extension etc. Equally, there is way too much packaging on fresh produce, and if you look at some of our commitments, we are going to make sure all of our packaging is recyclable or compostable by 2025. We are going to make sure the cardboard we use is sustainable, and to halve the weight. For me there’s loads more we can do around it. It’s got to be more economic, it’s got to be more affordable for producers because some of the technology is quite expensive.
So it’s got to be commercially viable, but absolutely there are a number of things we are going to be doing. We are going to be setting our specifications to align our producers to the right types of materials – getting rid of PVC, black plastic etc. We are also going to try to minimise the amounts being used, and there are some great examples of where we are going to take some iconic lines in the next six to 12 months and significantly reduce the amount of packaging or remove it completely. It’s a big opportunity. But also we have to help educate consumers as to how better to use their products, where packaging is not needed etc, and things like deposit return schemes. It’s a responsibility for all of us.
