Food waste

Against food waste: voluntarism and innovation

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According to the Food and Agriculture Organization of the United Nations (FAO), one-third of the world's food production is lost or wasted between the time it is produced and the time it is consumed. This is all the more alarming since agriculture and food are major sectors in terms of energy consumption, environmental impacts (CO2s, pesticide use, etc.) or health issues. The problem is also a social one: while more than 4 million French people are food insecure and have recourse to food aid, more than 2 billion euros of food are thrown away each year by those involved in distribution.

Ss economic plan, according to a study carried out for theAdeme16 billion, the theoretical value of losses related to food wastage in France would rise to around one-third of the budget dedicated to paying the interest on the debt!

An incentive-based regulatory framework

The wastefulness induced by our industrial food system is a major challenge that challenges national and supra-national public decision-makers.

At the international level, the fight against food waste is one of the main levers for achieving the sustainability goals of the United Nations. The European Union has thus committed itself to halving food waste. by 2030 and to actively support the transition to a circular economy via the H2020 program.

In France, the great energy transition law of 2015 was an important first step towards raising awareness of the issues of waste and a more circular economy. In 2016, through its "National Pact to Combat Food Waste", France has undertaken to halve the scale of this phenomenon by 2025. The first national law against food wastage, known as the "National Act against Food Waste", was passed in 2006. Garot ActThe Commission, in its report on the implementation of the Directive, sets out a set of measures to reduce and manage this problem, particularly at the distribution stage.

This law establishes a hierarchy of priorities. The first is to prevent food wastage at source (by selling, for example, products that are usually refused); the second is to enhance the value of unsold products through donation or processing (by authorizing the gleaning or transformation of products into compost). Then comes the valorization for animal feed. Finally, composting and energy recovery, in particular by methanisation.

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This law introduces a new regulatory constraint: it is now forbidden for distributors to throw away non-expired food. This rule comes in addition to the tax incentive linked to the Coluche scheme dating from 1981, which grants a tax exemption of 60 % to distributors and industrialists who practice food donation as a substitute for waste production. This measure highlights the central role of regulation in innovation processes; it thus illustrates the hypothesis of Porter and Van der LindeThis is in line with the EU's policy that good environmental regulation not only reduces environmental externalities, but also generates benefits for innovative companies.

However, the fight against food wastage should not be seen solely from the point of view of political voluntarism. It must be complemented by the logic of innovation driven by entrepreneurs and private actors.

The emergence of "mission platforms

In recent years, many start-ups or citizen initiatives have been created to limit food waste.

The company PhenixOne such initiative is the "Helping Businesses Reduce Waste by Unlocking the Potential of Their Waste" initiative. This start-up created in 2015 organizes and optimizes the redistribution of unsold food. It is experiencing rapid growth and highlights the new innovation logics at work in this field.

Phenix was initially developed around a digital platform, which connects distributors (those who generate unsold food) with the different recipient structures of these volumes (food donation associations or animal sectors). The approach is part of a corporate logic, with a profit and growth objective, while pursuing an environmental and social mission. It is thus an example of what are known as "mission platforms"; these are built around a hybrid model combining different logics of action.

When Phenix was created, its co-founders Jean Moreau and Baptiste Corval first set out to build the both sides of their digital platform. They targeted the biggest players in food distribution, whose daily unsold items represent between 500 and 2000 euros per point of sale. In barely four years, 900 stores have used the solutions developed by Phenix to optimize the process of recovering unsold goods and waste.

At the same time, the two entrepreneurs managed to federate numerous associations Charities distributing food aid such as the Food Bank, Secours Populaire or Restos du Coeur by taking charge of the organisation of food collection free of charge.

Particularly in rural areas, few associations have sufficient physical resources to collect donations from large and medium-sized stores. The Phenix platform thus imposes itself as an intermediary capable of linking in real time supply (unsold goods) and demand (food to be redistributed), by structuring the modalities of exchange between two organizational worlds that are at odds with each other.

From an economic point of view, the platform's suppliers have access to several advantages: they reduce waste treatment costs, traditionally paid to companies and collection organizations (Veolia, Suez, Paprec, etc.), and benefit from a tax deduction on donation operations. For example, if a store offers 1,000 euros of milk bottles via the platform and an association accepts these products, the store can deduct 600 euros from its tax base - on which Phenix receives a commission.

The architect of an ecosystem

However, the role of this company cannot be reduced to that of a simple dematerialised intermediary. Phenix builds and structures its "business ecosystem" - that is to say all the relations between companies and the different stakeholders in food donation - by several mechanisms.

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In many cases, Phenix organizes, pilots and executes the physical and logistic flows of food aid itself. While the co-founders had a light structure in mind when the initiative was launched, they gradually understood the importance of developing logistical and operational expertise, requiring the creation of jobs to animate the local collection and distribution networks.

In 2017, among the 75 employees of Phenix, 50 are dedicated to accompanying customers in the field in the reduction of their waste. The strong "thickness of intermediation" (not only digital, but also logistical and human) deployed by Phenix constitutes a major source of its success.

Phenix also plays a structuring role in the development of partnerships and innovation projects around food waste. The company is extending its model and is developing a capacity for animation with all the actors of the ecosystem in order to reduce waste at the source. For example, Phenix has been active since 2017 with the free service Zero-Waste for the better enhance products nearing the end of their life in the retailer's shelves.

The company has also created a Phenix Lab, an initiative that incubates and accompanies the next start-ups in the circular economy. Through its studies and adviceThe company is also developing relationships with public players, producers and manufacturers wishing to reduce food waste further upstream in the value chain.

Challenges ahead

Since its creation, Phenix has doubled its turnover every year, to reach 4.5 million euros in 2017 - developed via a portfolio of 900 clients and 550 associations. To finance its growth, the start-up has already raised 2.5 million euros and is preparing to launch a new campaign this year.

Sectoral diversification is a first area of growth. It is first of all a question of opening the model to non-food waste, strengthening research and consulting activities and also innovating in the field of distribution. Indeed, the capacity of charities to integrate the flows collected seems destined to reach its limits, and the company must find new outlets.

In terms of geographical diversification, the company is now present in France, Spain and Portugal and plans to expand into new countries. Nevertheless, this strategy raises the question of the replicability of the model in other legislative and competitive contexts. In the United Kingdom, where the public authorities are relying more on competition and voluntary approaches from ecosystem companies, Tesco stores, for example, are pioneering and preparing to launch their own platform by 2018, FoodCloudThis is supposed to help the distributor's supply meet the demand of local associations. It remains to be seen whether Foodcloud will go as far as Phenix in its role as architect of relationships and flows, or whether England will see the birth of a more fragmented set of approaches.

One last challenge, and not the least, concerns the capacity of Phenix to remain a 'mission platform' while developing its model. For it is indeed a question of coexist at the heart of the company is a hybrid mission, combining social and environmental benefits with strong ambitions for growth and profitability.

 

Aurélien AcquierProfessor - Strategy, Organizations and Society, ESCP Europe
Louis ChappetManagement Researcher, ESCP Europe
Valentina CarbonProfessor of Supply Chain Management and Sustainable Business Models, ESCP Europe

The original text of this article was published on The Conversation.

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