Retailers face significant challenges with food waste, which impacts both financial performance and environmental sustainability. However, this issue also presents a missed opportunity for suppliers to extract value from waste streams.
The Scale of the Problem
According to the United Nations, food waste generates 8-10% of annual global greenhouse gas emissions. In 2022, a staggering 1.05 billion tonnes of food were wasted globally, while 783 million people faced hunger. This waste takes up almost a third of the world’s agricultural land and costs the global economy roughly $1 trillion annually (UNEP, 2024).
Retailers As The Key Players in the Solution
Due to their crucial role in the food supply chain, retailers are uniquely positioned to lead waste valorisation efforts. Their extensive networks, spanning stores and suppliers, position them to lead the shift towards sustainable and circular waste management practices.
Case Study: A Retail Giant’s Journey to a Circular Economy
One of VCG.AI’s Southern European retail partners, operating 300+ stores, employing more than 37,000 people, and collaborating with over 2,000 suppliers, struggles with two types of waste, commercial and industrial. An estimated 500,000+ tons of biowaste are produced by 184 mapped suppliers in a selected area, missing the opportunity to be valorised.
Despite their efforts and substantial investments of millions of euros, successfully achieving an +80% recycling rate for plastic packaging, and promoting community sustainability in 2023, much of the biowaste remains underutilised and ends up in landfills. Logistical challenges in managing and valorising their produced waste prevent progress toward efficient circular economy implementation.
Retail Stores’ Waste vs. Suppliers’ Waste
Commercial operations in our retail partner’s stores generate an estimated 23,000 tons of waste annually. However, this pales in comparison to the 588,000 tons of industrial waste produced by its suppliers.
A significant portion of this industrial waste—about 156,000 tons annually—comes from fruits and vegetables. This is an untapped opportunity for our retail partner’s supply chain, as it could be valorised from its 184 mapped suppliers. Following VCG.AI’s mapping and analysis, this was identified as one of the priority waste streams in collaboration with the partner to develop optimal valorisation solutions.
VCG.AI’s solutions focused on identifying critical value chains for suppliers, as industrial waste from our retail partner’s suppliers accounts for 97% of the total waste volume.
VCG.AI’s Circular Solution for the Retailer’s Suppliers
Leveraging advanced AI and collaborating with a partner providing a network with thousands of supply chain partners and tech providers, VCG.AI determined the optimal solution for several prioritised waste streams with the potential for the highest impact. One of them was:
- The waste of fruits and vegetables, identifying:
- 17 high-priority localised waste sources
- 1 suitable existing value-adding processor nearby: identified as the valorisation of fruits and vegetables to Pectin
- 104 end-market applications across multiple sectors
Pectin turned out to be one of the solutions with the highest value and market demand for mixed fruits and vegetables processing, as it can be used in 104 end-market applications in the following industries:
- Manufacture of Dyes and Pigments
- Production of Pharmaceutical Products and Preparations
- Beauty and Personal Care Products Production Process
- Manufacture of Cocoa, Chocolate, and Sugar Confectionery
- Manufacture of other non-distilled fermented beverages
In Europe, pectin commands a price of approximately €10,192 per metric ton, making it highly lucrative for suppliers. Valorising pectin not only reduces landfill waste but also generates substantial revenue opportunities. Retailers could lead their suppliers towards this opportunity, creating a more sustainable and circular supply chain.
In a generated waste distribution map, VCG.AI further highlighted areas of high waste concentration and identified strategic locations for efficient transport networks, allowing our retail partner to explore circular opportunities in regions with abundant waste resources.
With these findings, VCG.AI encourages retailers to explore the immense potential of value chains to transform food waste into high-value products.
If you’re a retailer facing similar waste management challenges, VCG.AI can help you identify opportunities to transform your residual streams into valuable resources. Consider scheduling a demo to explore how circular strategies can benefit your business and environmental sustainability — https://vcg.ai/demo/.
