McKinsey Quarterly 2023 Number 1

Is food loss the same as food waste? Food loss and food waste are related but distinct. Food waste, according to the Food and Agri culture Organization (FAO) of the - United Nations, is “the discard of edible foods at the retail and consumer levels.” In other words, food waste happens downstream, during either the distribution stage (for example, as food makes its way from a retailer’s ware house to a store shelf) or the con sumption stage (such as people - - throwing out leftovers). Food loss, on the other hand, happens upstream: the FAO defines it as “the decrease in edible food mass at the production, post-harvest, and processing stages of the food chain.” Regulatory bodies and industry groups alike have taken steps to address both food waste and food loss. In fact, the United Nations’ Sustainable Development Goal 12.3 is to “halve per capita global food waste at the retail and con sumer levels and reduce food - losses along production and supply chains, including post harvest losses” by 2030.

retailers more visibility into their production plans. Some companies are starting to engage in long-term planning with their suppliers, working together to align on the volume and mix of crops—not just for the upcoming planting season but also for the next one and the one after that—thereby reducing uncertainty for the parties involved. • Overhaul procurement practices. How you buy must change dramatically. Shift away from a commoditized view of food and a focus on man aging short-term costs; instead, consider - launching structured supplier collaboration efforts or entering into innovation-focused partnerships. Don’t choose suppliers based on price alone. Take food-loss-reduction efforts into account when drawing up contracts, creating incentive structures, and estab lishing performance metrics. In addition, regularly - review specifications and look for opportu nities to make them less stringent, without com promising food safety or sell-through. (For - - example, through consumer surveys, grocers might find that consumers have a higher tolerance for color variations than in the past or that shoppers don’t pay much attention to the size of a particular fruit variety.) For manu facturers, reviewing specifications to optimize - for loss reduction both at the farm and at the factory could lead to lower volume requirements. • Find creative ways to turn food loss into value. There is enormous potential to sell more of the food that farmers produce. Food that would otherwise be lost can be turned into new prod ucts and thriving businesses. Consider dedi cating R&D resources to developing new - - revenue streams from nonmarketable food. AB InBev, for instance, invested $200 million in processing plants to turn its barley byprod ucts into a protein and fiber ingredient. It - developed two new businesses as a result: a dairy-free protein drink sold under the Canvas brand and a protein ingredient that AB InBev now sells to other food manufacturers.

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