NIS 5.5 billion
Food Waste and Food Rescue During Retail and Distribution
(10)
Rate of Waste in the Retail and Distribution Sector
Waste during retail and distribution mainly involves food with a short shelf life that has passed its expiration date, or food with aesthetic defects or damage to its packaging. Food manufacturers, distributors, and retailers have an economic incentive to minimize food waste through effective supply chain management, maintaining proper storage conditions, and inventory planning.
However, this incentive is nullified by agreements that allow distributers and retailers to return a certain percentage of unsold food products to the manufacturers at no cost. Even with optimal planning for distribution and marketing, some food surpluses are inevitable because retailers are expected to provide a wide and varied food supply at all times. Consumers become quickly dissatisfied when the food products they want are unavailable. Therefore, the cost to retailers due to poor inventory is far greater than the cost of creating surplus, making surplus food an inherent part of the retail sales process. However, discarding food surplus rather than rescuing it is an economic failure of the market. One challenge facing government policymakers is to create a system of incentives for salvaging surplus and making it available to people in need. Naturally, the rate of waste is higher for fresh or perishable food products, such as fruit, vegetables, bread, and baked goods.
An international comparison found that the rate of food waste during the retail and distribution sector in Israel is similar to that in most developed countries, despite the potential for greater waste due to Israel’s hot weather conditions. This indicates that inventory management during retail and distribution in Israel is conducted according to relatively high standards. In developing countries, waste rates tend to be higher, mainly due to inadequate distribution, storage, and marketing.
In recent years, food marketers in Israel have made efforts to establish advanced logistics centers, inventory management systems, online demand planning, and maintenance of the cold chain in distribution. This has reduced food waste during retail and distribution.
In 2022 there was a trend among consumers towards purchasing online or through chain stores, both of which are characterized by a relatively low waste rate. Accordingly, the rate of food waste in this sector decreased slightly this year.
Online retail may also have an environmental benefit by reducing the number of consumers’ trips to stores, and by consolidating shipments to multiple addresses on one delivery route. A 2014 study conducted at the University of Washington found that optimizing shipment and distribution routes could reduce carbon emissions by up to 80%, as compared to when consumers drive to stores to make purchases (13).
Financial Loss During Retail and Distribution
International Comparison of Food Waste
Consumers’ Transition Towards Shopping Venues with Lower Waste Rates
There are three main factors behind food waste during retail and distribution
Retailers and distributors already make efforts to reduce waste and rescue food, due to economic considerations. This is done in several ways:
1. Sales and promotions of surpluses
Retailers offer discounts on perishables nearing their expiration date or products with damaged packaging.
2. Food donation
This may be coordinated centrally through contracts with food rescue associations or as local initiatives by various branches.
Food producers may donate surpluses or perishables to food rescue associations.
When it is noted at the factory that products have damaged packaging or aesthetic defects but are still safe and suitable for human consumption, they may be sold to various secondary markets.