LONDON The hefty savings that can be made by reducing food waste are one of the factors behind Tesco's 3.7 billion pound takeover offer for wholesaler Booker, the British supermarket chain's chief executive says.
CEO Dave Lewis has been working to improve the image of a company that was rocked by a 2014 accounting scandal relating to its relationship with suppliers and is now preparing for intense scrutiny of the Booker deal from competition authorities.
The deal announced in January will add to Tesco's more than 28 percent share of the overall UK grocery market and more specifically its influence in the convenience, confectionery and tobacco markets.
It will also increase Tesco's exposure to the fast growing "out of home" food and catering markets, with the company saying it expects incremental profit and cost savings of at least 200 million pounds within three years.
"By coming together with Booker, it’s going to allow us as Tesco to be able to buy a greater percentage of agricultural crop from individual players so that they then don’t waste it," Lewis told reporters, speaking in his capacity as chairman of campaign group Champions 12.3.
Lewis noted that in Britain more than 20 percent of all vegetables produced are wasted, reflecting the segmentation of produce into grades for retail, wholesale and catering.
"Because of the Booker opportunity we’ll now be able to buy across 100 percent of that crop rather than just the 70 percent that we could at Tesco, and that means we’ll be able to reduce the food waste," he said.
Champions 12.3, a grouping of leaders from government, business and research, was formed to drive the United Nations' sustainable development target of halving per capita global food waste at retail and consumer level and reduce food losses along production and supply chains by 2030.
It estimates that global food loss and waste causes about $940 billion a year in economic losses, with a third of the world's food wasted while one in nine people remain malnourished.
On Monday Champions 12.3 published a report setting out the investment case for businesses to reduce food waste.
Its analysis of 700 companies across a range of sectors in 17 countries found that, on average, for every one dollar invested in reducing food waste there was a $14 return.
"In other words, reducing waste is a real business opportunity," Lewis said.
Last year Tesco made a commitment that no food that is safe for human consumption will go to waste from its UK operations by the end of 2017.
(Reporting by James Davey; Editing by David Goodman)