Optimising resources in food grocery value chains WRAP Conference Creating the Future: Rising to the Resource Challenge Judith Batchelar Director Sainsburys Brand 5th November 2015

Agenda

Our context

Underpinning our work

Product Designing in Sustainability

Understanding & helping our customers

Within our own operations

What does the future hold

Our context

The global challenge

A complex set of evolving challenges

Agricultural land use change:

11% of global GHG emissions

Severe flooding:

will double in Europe by 2050

Land availability:

50% of available land mass used

to grow food

Global Fish Stocks:

>85% over or fully exploited, or in decline

Resource availability

Extreme drought events per 100 years

will double (IPCC)

Agriecosystems:

60% degraded

Stable & predictable

climate

Global Food

Reserves 50 year low

Global GHG emissions: 24% from agriculture

Decreasing

A complex set of evolving challenges

Food waste: 1.3 billion

tonnes a year Demand for

resources and food

Middle class

consumption 3-4 billion by 2050

Global population: 2-2.5 billion

by 2050

Food: 50% by 2030

UN FAO

Food Prices (104%) & Price

Volatility (>3-fold)

UK Population: 10M more people in 20 years

UK: Products & services =

75% of personal CFP

Food Poverty: 4.7 million

people in UK

Competition for Water:

30% by 2030 IFPRI

50 billion cost of poor diets to

NHS by 2050

Energy Demand: 50% by 2030 (IEA)

Ill Heath: circa 1bn stuffed or starved

Increasing

A UK Retailer but a global business

10Billion of Sainsburys Brand products from 72 countries

Over 1,300 Stores Over 160,000 Colleagues Over 2,000 supplier sites

10,000s farmers CANADA

USA

USA

MEXICO

PANAMA

DOMINICAN REPUBLIC

ST LUCIA

COLUMBIA

BRAZIL PERU

BOLIVIA

CHILE

EUROPE

UK EIR

E

SPAIN

SENEGAL

NORWAY

SWEDEN

FINLAND

TURKEY

EGYPT

PORTUGAL

GHANA

MOROCCO

KENYA

SOUTH AFRICA

MADAGASCAR

MAURITUS NAMIBIA

MALDIVES

INDIA

CHINA

AUSTRALIA NEW ZEALAND

MALAYSIA

SOUTH KOREA

VIETNAM

THAILAND

PAKISTAN

Underpinning our work

An End to End Approach Because we dont work in isolation, we need to understand this for the entire value chain

Soil Landfill

Progress going forward will rely on our ability to join up the end to end value chain to create truly sustainable business models

Food and Drink Manufacturing

and Processing

Agriculture and Land Use

Retail Operations

Supply Chain and Logistics Consumers

Best Suppliers

Best People

Best Data

Fit For the Future Best people with the best information make the best decisions working with the Best Suppliers to create shared value

Databenchmarking & best practice

Sustainability standards

Key raw materials

Hotspot issues, (triple bottom line)

Building on from and using existing standards

Standard assessment & simultaneous data capture

Supports benchmarking & continuous improvement.

Improves transparency & traceability within our supply chains.

Produces real time value chain data for all stakeholders more than just certification

Technology opportunities form remote sensing to big data generating foresight

Product

Designing in Sustainability

Understanding & helping our customers

Structural change in the UK grocery sector

Grocery Market Channel Share, 2013-2022: % Take Home Market

2013 2022 Forecast

Online

Convenience

Supermarket

Discount

Chart1

69.89040447184.884677231321.17018630044.0547319965

57.575737282611.038539371123.53878543977.8469379066

Sheet1

6,989%5,758%

488%1,104%

2,117%2,354%

405%785%

There is real structural change in channels fragmenting the customer shop

Market Value by Channel: bn

Supermarkets Discount

Convenience Online

2015 2013 2014 2016 2021 2018 2017 2020 2019 2022

+10%

2015 2013 2014 2016 2021 2018 2017 2020 2019 2022

+4%

2015 2013 2014 2016 2021 2018 2017 2020 2019 2022

+12%

2015 2013 2014 2016 2021 2018 2017 2020 2019 2022

0%

Chart1

6.7920139016

7.6192215267

8.5388528347

9.5088224303

10.5256700084

11.6270651831

12.7904779123

14.0247714499

15.2206371618

16.4675233634

Sheet1

78910111213141516

Chart1

35.4618257821

36.7684812117

38.1885563753

39.6167067673

41.0329055029

42.5961642805

44.2125975797

45.8837468586

47.6111877078

49.3983135569

Sheet1

35373840414344464849

Chart1

8.1822413143

9.7845634458

11.4851322868

13.1829130134

14.7642891344

16.3889660543

17.9757018477

19.5914225901

21.3303713717

23.1653935782

Sheet1

8101113151618202123

Chart1

117.0722501941

116.8591885178

116.5947207657

116.244936253

115.86532565

116.0727441265

117.2470461019

118.4322380369

119.6457900298

120.8279981497

Sheet1

117117117116116116117118120121

Im currently drinking Taste The Difference Prosecco

I am 13 and I hate supermarkets unless Im taking pictures of myself there

The kids are sharing with Grandma in Australia that they love Sainsburys new lasagne

I am a google employee who likes electronic shelf edge labels

I want a job running product tests at Sainsburys

Watch me as I review my shopping

I like Sainsburys

In Godalming store we are talking about British Strawberries

Here is a vintage picture of me eating strawberries

4,000 customers are on a permanent forum with chat rooms and a weekly feedback survey

Here is a collection of pictures and recipes

Closer to customers

Helping customers reduce their household waste and start saving money along the way

Planning e.g. shopping planning not meal planning

Shopping e.g. navigating multi-buys & till shock

Cooking e.g. portion size

Storing e.g. confusion over what to put, where

Not using e.g. unopened products as well as leftovers

Throwing out e.g. battling the bins & recycling

PLANNING SHOPPING

COOKING STORAGE

NOT USING FOOD

THROWING OUT FOOD

Waste Less, Save More: Search for a town

Within our own operations

Everything you would expect and a lot more

Our Waste and Recycling Creating Renewable Energy :

First store ever to be powered off grid by food

waste

AD Plant

Sainsburys Cannock

What does the future hold?

Sainsburys Brand - Research Portfolio

Duration: 6m 4years

Format: Farmer-Grower Supplier-Academic-Sainsburys

3.5m per year

64 projects

30 research institutions

40 suppliers

Fresher better quality products with better availability - Container Tracking

Real time location data

Temperature and MAP monitoring

Proof of concept funded by the Catapult

Technology enabled

Managing interdependencies Trade offs

Data translated into information and

insight Real time

Foresight, modelling replaces

hindsight

Complex agendas require an interdisciplinary approach

Partnership and collaborations

Evolving our relationship with WRAP

Working together for over 10 years Valued independent source of knowledge, data, benchmarking and insight Facilitating value chain and pre-competitive stakeholder activity Moving from a packaging focus, to food waste & packaging to resource efficiency

& resilience

Slide Number 1AgendaOur contextThe global challengeA complex set of evolving challengesA complex set of evolving challengesA UK Retailer but a global business Underpinning our workAn End to End ApproachBecause we dont work in isolation, we need to understand this for the entire value chainFit For the FutureBest people with the best information make the best decisions working with the Best Suppliers to create shared valueDatabenchmarking & best practiceProductDesigning in SustainabilityUnderstanding & helping our customersStructural change in the UK grocery sectorThere is real structural change in channels fragmenting the customer shopSlide Number 17Closer to customersHelping customers reduce their household waste and start saving money along the wayWaste Less, Save More: Search for a townWithin our own operationsEverything you would expect and a lot moreOur Waste and Recycling Creating Renewable Energy :What does the future hold?Sainsburys Brand - Research PortfolioFresher better quality products with better availability - Container TrackingComplex agendas require an interdisciplinary approachPartnership and collaborationsEvolving our relationship with WRAP