The writing is on the wall for food and beverage manufacturers in Ontario: when it comes to waste, it’s going to cost more to continue with business as usual. From loss of competitiveness to brand damage, polluter-pay fines to overinvestment in infrastructure, here are four ways waste is damaging food processing businesses, plus one solid way to take positive action to win accounts, enhance your brand and save money.
1. Wasteful companies are less competitive.
Consolidation—both of big food manufacturing brands and food retailers—is one of the biggest challenges for food processors, particularly small- to medium-sized manufacturers who must lower their prices while facing higher production costs than their larger competition.
If you’re a private label manufacturer, increasing efficiency and reducing costs is critical to earning and maintaining relationships with the brands that will put their name on your product. If you’re negotiating directly with retailers, efficiency and cost-cutting are just as important, as retailers play manufacturers off each other to push prices down as a way of increasing their margins with cost-sensitive consumers.
In this context, wasteful manufacturing—whether we’re talking energy, water or ingredients—is evidence of inefficient processes. Waste will add to your cost of business through higher utility bills and raw material costs, as well as increased waste transportation costs, tipping fees, and sewer surcharges.
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2. Wasteful companies are hurting their brand.
According to a Q2 2018 Nielsen poll, 73% of global consumers say they would definitely change their consumption habits to reduce their impact on the environment.
This is an opportunity for food manufacturers. In the words of Nielsen’s Crystal Barnes, SVP, Global Responsibility & Sustainability, “By identifying an opportunity to be more sustainable and implementing a reasonable plan of action to accomplish it, companies achieve an authenticity that paid advertising can’t buy.”
On the flip side, being branded a wasteful polluter makes you part of the problem in the eyes of the consumer, not a source of solutions. As a result, you’re less likely to be their first choice—particularly when it’s younger buyers making the decisions.
The brand impact extends further up the supply chain from the consumer, too. Retailers and larger food brands that purchase from private label manufacturers also want to associate their brands with environmental responsibility and may expect suppliers to be able to prove they have sustainable practices. In that way, being able to show that your operations minimize waste could make the difference between having your product on the shelf and not.
3. Wasteful companies will have increased costs.
The Ontario government’s environment plan states that producers should be responsible for managing the waste they create. This is a shift from the status quo, which expects taxpayers to swallow the cost. Moving responsibility for the costs of waste management from citizens to corporations will inevitably mean food and beverage manufacturers will pay more to deal with their waste.
At the same time, the province has an ambitious plan to ban all organic waste from landfill by 2022. This waste ban will mean food manufacturers who need to send their organic waste to landfill will pay high transportation fees to truck the waste to the U.S., plus the disposal fees and hassle of customs and permits.
4. Wasteful companies will have a harder time finding employees.
Good employees are hard to find in the food and beverage processing industry, a reality that’s been confirmed by a Canadian agri-food study discussed in Canadian Manufacturing. The study predicts 65,000 new workers will be needed across Canada by 2025 to meet national growth targets for the sector, but there is a shortage of employees to meet the demand, particularly in the meat, dairy and bakery sectors.
If your company isn’t paying attention to its wasteful practices, it may have an even more difficult time finding employees, particularly millennials. The Millennial Employee Engagement Study showed that 83 per cent of millennial employees would be more loyal to a company that helps them contribute to social and environmental issues and 64 per cent won’t accept employment from a company that lacks strong corporate social responsibility practices.
The "waste into value" solution
One simple way for food processors to increase their competitiveness, protect their brand, reduce their costs and become more attractive employers is to take action on their waste.
Waste reduction initiatives often start with an audit to pinpoint where, when and why waste is happening in your processes and at your facility. (We have a free audit checklist specifically for wastewater that can help.) Involve your employees in your waste reduction efforts to increase both engagement and ideas, then make sure to measure the difference you’re making and share the progress in formal ways. Communicating the numbers will boost morale, sustain momentum and demonstrate your commitment to both environmental responsibility and cost reduction to your current and potential customers.