When supermarkets choose the right strategy for surplus food, they can both reduce food waste and improve their bottom line. An analysis from the University of Copenhagen shows that it is often more profitable to donate surplus food than to throw it away. In many cases, doing so leads to a direct financial gain.
Food waste has been a focus for years, yet the problem in Denmark remains significant. Each year, the retail sector discards more than 100,000 tonnes of food, even though a substantial share is still fit for consumption. But food waste is not only unsustainable - it is also costly for retailers. In addition to the lost revenue from unsold goods, disposing of food typically involves waste handling costs.
For the first time, a University of Copenhagen analysis has produced detailed figures on retailers' financial incentives to sell, donate or discard surplus food. Today, at least half of all surplus food in retail is thrown away.
Although a central part of the analysis is based on data from a limited number of retail chain stores, the results point in a clear direction: in most cases, it is more expensive to discard food than to give it away - and retailers can often even make money by acting earlier.
According to the Danish Environmental Protection Agency, total annual food waste in Denmark is estimated at 881,062 tonnes. Of this, just under 103,906 tonnes come from the retail and wholesale sector (2023 figures).
"There is a widespread perception that donating surplus food is mainly about charity. But our figures show that, in many cases, it is also the most financially sensible option for retailers once they have given up hope of selling the products," says Jørgen Dejgård Jensen, Professor at the Department of Food and Resource Economics, University of Copenhagen and author of the study
Early price reductions deliver the greatest returns
The analysis shows that early price reductions in-store are, on average, the most profitable strategy:
"As long as the products still have some shelf life left, it makes most sense to sell them at a discount. If retailers act in time and reduce prices a few days before the expiry date, they can often turn a potential loss into a real financial gain. In fact, a price reduction of around 15% is typically enough to ensure the products are sold," explains Jørgen Dejgård Jensen.
According to the study data, most product groups generate a net financial gain of around €0.3-0.8 per kilo when prices are reduced, because more items are sold instead of ending up as waste.
For fresh meat, fish and processed meat products, the benefit can be even higher - in some cases exceeding €1.3 per kilo.
Only liquid dairy products and dry goods rarely generate a surplus through price reductions.
THE STUDY ALSO FINDS
- According to the analysis bread, fruit and vegetables account for 65% of total surplus food in retail.
- At least half of all surplus food is discarded. Most of the remainder is sold at a reduced price, while only 0.1-0.2% is donated.
- Sales via food waste platforms such as Too Good To Go can in some cases be even more profitable than donation. This model is most established for fruit, vegetables and bread, where it can generate net revenue of up to €0.5-0.7 per kilo. The analysis suggests there may also be economic potential for such platforms in higher-value products such as meat.
- The study also shows that food donation creates significant value for recipient organisations such as shelters, drop-in centres and crisis centres. For most product groups, donated food creates a social value of around €1-5 per kilo when it reaches vulnerable recipients.
Donation costs less than disposal
When products are too close to their expiry date to be sold, the analysis shows that it is more cost-effective in most cases to donate them to organisations that redistribute food to socially and financially vulnerable people rather than discarding them.
While it typically costs retailers around €0.27-0.36 per kilo in waste and handling costs to dispose of food, donation costs on average about €0.14-0.23 per kilo. This represents a saving of approximately €0.10-0.20 per kilo for most product groups.
- The analysis is based on an economic model describing supermarkets' incentives for managing surplus food. It combines industry data from 2019 with interviews with retailers and food organisations, as well as publicly available accounting and price data.
- The scientific article has been published in the Journal of Food Products Marketing.
- The study was supported by the VELUX Foundation.
"From the store's perspective, it is often about choosing the least costly solution. And in most cases, donation is cheaper than disposal. In practice, there is little difference between putting food into a container for collection, for example for biogas production, and placing it on a pallet for a food redistribution organisation to collect," says Jørgen Dejgård Jensen.
According to the researcher, the study overall shows that retailers' choices have major implications - both financially and for society:
"Reducing food waste and improving profitability are not conflicting goals. On the contrary, our study shows that the two can go hand in hand," the professor concludes.
"I hope this will encourage retailers to look at whether they could manage surplus food more smartly. Some products may be thrown away simply because staff are not aware that a better option exists. Of course, this requires training so employees know what should go where."
