InfoBriefing#1

PreparedforPartnershipsforForestsMarch2018

www.efeca.com

Palm Oil in the Foodservice Sector

Efeca 1 PalmOilintheFoodserviceSector

1.IntroductionThisbriefingnoteexplorestheuseofpalmoilandcertifiedsustainablepalmoilinthefoodserviceindustry.Itdescribesthemarketstructureandsomeofthekeymarketdynamics,beforelookinginmoredetailattheCSPOpoliciesofmanyofthekeyplayers.ThisanalysisshedssomelightonthecurrentstateofawarenessandactionintheindustryonsourcingCSPO,andallowsustoassesswhereassistanceisneeded.Therearemultipledefinitionsofthefoodserviceindustryinuse;forthepurposesofthisinvestigation,weincludethedelivery,preparationandsaleofanyfoodanddrinkorfoodrelatedservicesthattakeplaceoutsideofthehome,apartfromfoodsoldbylargeconsumer-facingretailerslikeTescoorSainsbury’s.Thismeansthatweencompassover400,000UKretailandfoodservicebusinesses,fromindependentconveniencestorestofarmshops,hotels,schools,hospitalkitchens,petrolstations,restaurants,cafesandstaffcanteens.1Alsoincludedinthisindustrydefinitionistheprovisionoffacilitiesmanagementandcleaningtothepublicandprivatesectorestatebyfoodservicecompanies.Foodservicecompaniessourcebothcleaningandfoodproductsthatcontainpalmoilintheiringredients.

2.MarketStructureTraditionally,thesectorhasbeensplitintothe‘profit’and‘cost’segments,withvarioussegmentslistedbelow.Overall,thevalueofsalestoconsumersisestimatedatGBP87.2billion.TheProfitsectorcanbedividedintoseveralsub-sectors:retail,travel,leisure,hotels,pubs,andrestaurants.Historically,potentialbusinessgainswerethemainmotivatorofthissectorofthemarket.Themajorityofprofitoutletscanbeclassifiedasworkingwithinthehospitalityindustry.TheCostsectorrepresentsbusinessandindustry,andthepublicsector.Traditionally,catererswithinthecostsectordidnotderivesubstantialmargins.Mealprovisiontendedtobeoutofnecessity,ratherthanasaresultofaprofitopportunity,andprovisionwasgovernedbycontractwithcontrolledpricing:e.g.,schools,hospitals,prisons,andspecialistcarehomes.However,withtheincreasingmoveoflargecommercialcontractcaterersintothecostsector,thisdynamicischanging.

1http://www.fwd.co.uk/content/8/Size-and-scale/

Efeca 2 PalmOilintheFoodserviceSector

Table:TheSizeandComplexityoftheFoodserviceMarket,MCA2017.IntheUK,thePub,QuickServiceRestaurant(QSR)andContractCateringsectorsaremostlydominatedbylargegroupoperators,suchasWhitbread,SSPortheCompassGroup.WithintheQSRsector,businessesareoftenfranchised,butdeliverasetmenuorproductlistlinkedtothebrand’scontractdistributors(e.g.MacDonald’s).CateringoperatorsliketheCompassGroupareactiveacrossallsectors,fromhealthcaretoworkplaceandtravel.Operatorswithpubsandpubrestaurants,suchasWhitbread,holdthelargestpropertyestates.

2.1RoutestoMarketThemostcommonroutestomarketarelistedbelow.Largerfoodserviceoperatorstendtopurchasefromwholesalersorsourcedirectlyfrommanufacturersthroughcontracteddistributioninordertomeettheirbrandedmenurequirements.Smaller,independentoutlets,suchasindependentcafes,arelikelytobuyfromcashandcarry’sorretailstores,orpurchasestockthroughwholesalersorregionalproducers.

Table:RoutestoMarketforUKFoodservice,USDA2016.

Efeca 3 PalmOilintheFoodserviceSector

Currentlyoverhalfofallfoodsoldtofoodserviceoperatorsisdeliveredbywholesalersthatbuyproductinbulkandprovidedeliveryservicestooperators.

Chart:UKFoodservice,USDA,2016.Supplyingover330,000foodservicebusinesses,theyarethefirstportofcallforindependentretailersandcaterersonadvice,informationandsupportonmenus,ingredientsandnutrition.Unfortunately,recentresearchfromtheFederationofWholesaleDistributorsalsoindicatesthatsustainabilityorsustainablesourcingisnotoneofthemainconcernsofwholesalers.Legislation,deliveries,socialmedia,wastedisposal,transparentpricing,training,staffing,stocking,nutritionalinformation,dietaryneeds,andsubstitutionsarehigherpriorities.

3.PalmOilinFoodserviceThetotalamountofpalmoilusedbythefoodservicesectorisdifficulttoquantify,anduptodateinformationisnotavailable.Accordingtoa2011Defrareport,thefoodserviceindustryaccountedforaround150,000mtofpalmoiluse.Ofthis,itwasestimatedthat30-50%quantitiesofpalmoilcouldbeattributedtothepublicsector,equivalentto45,000-75,000mtofpalmoil.Thisrepresented7%-12%ofthetotalimportofpalmoilandpalmkerneloilintotheUKin2009.Asthecompanyprofilesinthesectionbelowillustrate,awarenesslevelsofpalmoilamongfoodservicecompaniesandwholesalersaremixed.SeveralofthelargemultinationalcompanieswithUKfranchiseshavepoliciesandareperformingwell,likelyduetotheirglobalpresence.ButtheUKfoodserviceindustrycurrentlylagsbehindretailintermsofCSPOusage,especiallywhenlookingatthelargenumberofSME’soperatinginthesector.AccordingtotheBusinessServicesAssociation,apolicyandresearchorganisationwhosemembersincludebusinessservicescompaniesinvolvedinthecontractcateringandhospitalitysectors,themainissuecontractcaterersfaceastheyendeavourtomovetowards100%sourcingofsustainablepalmoilisthecomplexityofsupplychainsand,therefore,thetraceabilityofingredients,particularlywhentheyaremadefromderivativesandareacomponentpartofproducts.

Efeca 4 PalmOilintheFoodserviceSector

Itisalsoimportanttonotethatunlikeretailers,somecontractcateringandhospitalitycompaniesdonotmanufactureanyproducts,haveanyownlabelproducts,orpurchasepalmoilproductsdirectly.Thismeansthatwhilsttheycanhelptoinfluencetheproductspecificationsthattheypurchasefromsuppliers,theydonothavedirectcontroloftheircomposition/ingredientssourcing.Someofthelargeoperatorshowever,likeWhitbread,dohavemenuitemsthataremanufacturedspecificallyfortheiroutlets,accordingtobuyingagreements.Becauseconsumersmaybeunawareofpalmcontentinfood,theremaybealackofconsumerdemandforchangeaswell.Foodlabellinghelpstodrivedemand,andinthefoodservicesector,mostfoodisservedorsoldwithoutingredientinformation.Intermsofthepublicsector,theGovernmentimplementedaGovernmentBuyingStandard(GBS)forfoodandcateringin2012,whichincludedarequirementaboutsourcingsustainablepalmoil,palmkerneloilandderivativestoRSPOorequivalentcertification.Allfoodandcateringproductsboughtbycentralgovernmentwererequiredtomeetsustainabilityrequirementsby2015,whichhascreatedsomechangeamongGovernmentcontracts,detailedbelow.UptakeoftheFoodandCateringGovernmentBuyingStandardvariesacrosscentralGovernmentintheUKhowever.Itisnotmandatoryfortwoofthebiggestfoodservicepublicsectors:healthandeducation.Itisalsonotmandatoryforoverseasdefenceoperations.

3.1CompanyProfiles-FoodserviceImportantplayersinthefoodserviceindustryarelistedbelow,withtheircurrenteffortsonpalmoil.Theyspanthepubsandbars,QSR,accommodation,contractcatering,travel,leisureandrestaurantsectors.Theyhavebeenselectedtoshowarangeofcompanies,withthelargestineachsub-sectorincluded.SeveralofthelargerestaurantandpuboperatorsintheUKdonothavepalmoilpolicies,whilemanyofthelargecontractcaterershaveimplementedbuyingpoliciesalready.TheQSRcompanieslinkedtomulti-nationalbrandsarealsoperformingwell.Company Sectors Description CSPOPolicy RSPOMember/

RSPOACOPWWFScorecard

Whitbread

Accommodation,Restaurants,QSR

UK'slargestoperatorofhotels,restaurantsandcoffeeshops,owningCostaCoffee,PremierInn,BeefeaterGrill,BrewersFayre,TableTableandTaybarns

Targetof100%CSPOby2020.SaytheywillbuyBook&Claim(B&Cwherenecessary.

NotRSPOmember

DidnotrespondtoWWFpalmoilscorecardquestionnaire

MitchellsandButlers

Restaurants,pubsandbars

OneofthelargestoperatorsintheUKof1700restaurants,pubsandbarsintheUK.BrandsincludeSizzlingPubs,VintageInns,Harvester,EmberInns,TobyCarvery,CrownCarveries,Castle,Nicholson's,O'Neill's,Alex,All

Nopolicy NotRSPOmember

Notaskedtoreport

Efeca 5 PalmOilintheFoodserviceSector

BarOne,Miller&Carter,Browns,Innkeeper'sLodge,OakTree,OrchidPubs,PremiumCountryPubs.

GreeneKing Pubs,restaurantsandaccommodation

Leadingpubretailerandbrewer,withover3000pubs,restaurantsandhotelsandbrewingbeerssuchasGreeneKingIPAandOldSpeckledHen.BrandsincludeBelhavenPubs,EatingInn,FarmhouseInns,FlameGrill,GreeneKingLocalPubs,HungryHorse,LochFyne,Meet&Eat,Metropolitan,SpiritPubCompany,OldEnglishInns

Nopolicy NotRSPOmember

Notaskedtoreport

J.D.Wetherspoon

Pubs,bars,restaurantsandaccommodation

Ownsjustunder1,000outlets,includingthechainofLloydsNo.1barsandthechainofWetherspoonhotels

UsessomeRSPOsegregatedpalmoilintheircookingoil.Workingwithfoodsupplierstoensurethatanypalmoilusedasaningredientisalsosegregated.

NotRSPOmember

Notaskedtoreport

TheRestaurantGroup(TRG)

Restaurants,QSR

Operatesover500restaurantsandpubs,whichincludeFrankieandBenny’s,Chiquito,CoasttoCoast,Garfunkel’s,Firejacks,Brunning&PriceandJoe’sKitchen.Alsooperatesaconcessionbusiness,whichtradesover60outletsacrossmorethan30brands,primarilyinUKairports.

“SupportersofRSPOandensureallTRGproductscontainonlyRSPOcertifiedsustainablepalmoil.”Nofurtherdetail

NotRSPOmember

Notaskedtoreport

Greggs QSR LargestbakerychainintheUK

100%ofboxedpalmoilisCSPO.Requiresallsuppliersofbakeryfatsthatusepalmoiltobe

NotRSPOmember

Notaskedtoreport

Efeca 6 PalmOilintheFoodserviceSector

RSPOmembers.McDonalds QSR 1,264outletsinthe

UKLaunchedGlobalSustainablePalmOilPolicyin2016.Goal:by2020,100%ofthepalmoilusedinrestaurantsworldwideandasingredientsinproductswillsupportsustainableproduction.In2016,99.82%ofthetotalvolumewascertifiedassupportingsustainableproduction.87.3%B&C,11.7%MassBalance(MB),lessthan1%segregated.AimtoincreasephysicalsupplyofRSPO-certifiedpalmoil.

RSPOmembersince2011,havesubmittedregularACOPreports.

9outof9onWWFscorecardLeadingthewayonessentialactions,startedjourneyonsourcingphysicalCSPO

RestaurantBrandsInternational

QSR Canadianmultinational,third-largestoperatoroffastfoodrestaurantsintheworld.OwnerofBurgerKingintheUK.

100%of17,544tonnesusedisCSPO,mixtureofB&C,MBandsegregated.Goal:by2020,allpalmoilsourcedaswellaspalmoilandpalmkerneloilusedasaningredientinbrandedproductswillbeCSPO.

RSPOMember,OneACOPreport.

9outof9onWWFScorecard.Leadingthewayonessentialactions,startedjourneyonsourcingphysicalCSPO

SSPGroup QSR,Travel,Restaurants

Aleadingoperatoroffoodandbeverageconcessionsfromquickservicetofinedining.SSP’sclientsaretypicallytheownersandoperatorsofairportsandrailwaystations.BrandsincludeUpperCrust,CamdenFoodCo,ThePastyShop,Millie'sCookies,CaffeRitazza,Mi

Nopolicy.UsesGreenPalmCertifiedpalmoilincookiedoughatMillie’sCookies.

NotRSPOmember

Notaskedtoreport

Efeca 7 PalmOilintheFoodserviceSector

CasaBurritos,DelicedeFrance,Whistlestop,TheBeerHouse,Pumpkin,Breadbox,SloeBar,SOHOCoffeeCo,HarryRamsdens,CityBar&Grill,nam-po!,Starbucks

Yum!Brands

QSR Multi-nationalbasedinCanada,ownsPizzaHut,KFC,TacoBell.

Goaltosource100%ofpalmoilusedforcookingfromsustainablesourcesbytheendof2017.Unclearifmet.Doesnotaddresspalmoilinfoodingredients.

RSPOmembersince2017,noACOP

DidnotrespondtoWWFscorecardquestionnaire

Domino’s QSR UK’sleadingpizzabrand,multi-nationalbasedintheUS.Over1,000stores,sellsover90millionpizzasperyear.

USbusinessused2,181tonnesin2016,100%CSPO,majorityMB.

Membersince2016,submittedACOPforUSbusiness.

Notaskedtoreport

EIGroup Pubs,Restaurants

LargestportfoliomanagerofpubsintheUK,withover4,500properties,predominantlyrunasleasedandtenantedpubs

Nopalmoilpolicy NotanRSPOmember

Notaskedtoreport

TravelMoto Travel,QSR,Restaurants

UK’sleaderinmotorwayserviceareaswith45locations

Nopalmoilpolicy NotanRSPOmember

Notaskedtoreport

ChesterZoo Leisure,VisitorAttractions

UK'smostvisitedzoo

Use100%CSPO.CreatedthePalmOilChallengetoraiseawarenessamongvisitors.InitiatingChesterCitySustainabilitychallengeaswell,withfocusonalldeforestationcommodities.

NotanRSPOmember

InterContinentalHotelsGroup

Hotels,restaurants

LargeglobalhotelgroupwithmultipleUKlocations.BrandsincludeHolidayInn,CrownePlaza.

Nopalmoilpolicy NotanRSPOmember

Notaskedtoreport

CompassGroup

ContractFSMandFoodservice

Contractfoodservice,cleaning,propertymanagementand

AccordingtoWWFScorecard/ACOP,theyonlyuse700

RSPOmembersince2010,havesubmittedregularACOP

4outof9onWWFscorecard.Startedjourneyonessential

Efeca 8 PalmOilintheFoodserviceSector

supportservicescompany,15,000locationsacrossUKandIreland.BrandsincludeChartwells,ESS,Eurest,14forty,Instore,TheJockyClubCatering,KeithProwse,LevyRestaurants,LimeVenuePortfolio,Medirest,Payne&Gunter,Radish,RestaurantAssociates,RouxFineDining,WhiteOaks

tonnes.WorkingwithsupplierstoensurethatallpalmoilinproductstheysellacrossEuropeis‘sustainable’byendof2017.Unknownifreached.Havegoaltosource100%physicalby2022

reports.

actionsin2016

Sodexo ContractFSMandFoodservice

Rangeofservicesfromconstructionmanagement,receptionandfoodservicesthroughtoassetmaintenance,securityandgroundsmaintenanceforclientsinoffices,schools,prisons,hospitals,militarybases,remotesitesandhospitalityevents.2,000clientlocationsacrossallmarketsectorsinUKandIreland.Morethan4,300suppliers.

AccordingtoWWFScorecard/ACOP,theyonlyuse1,805tonnes,allCSPO,andover75%ofthisisB&C.HavebeenpurchasingGreenPalmcertificatessince2012.

RSPOmembersince2011

9outof9onWWFscorecardLeadingthewayonessentialactions,startedjourneyonsourcingphysicalCSPO

Elior ContractFoodservice

Contractcateringandrelatedservices.Morethan10,000EliorpeopleintheUKon650clientsites.

Asof2016,governmentcontractspurchaseviaarestrictedbuyinglistofproductscompatiblewithsustainablepalmoil.Forotherbusinesssectorsthegoalistosource100%palmoilfromsustainablesourcesbytheendof2016.EliorUKisworkingwithnominatedsupplierstomapusageofpalmoilandprovide

NotRSPOmember

Notaskedtoreport

Efeca 9 PalmOilintheFoodserviceSector

informationonallproductlinesthatcontainpalmoil.Unclearifgoalhasbeenmet.

Aramark ContractFSMandFoodservice

Providesfoodservice,facilitiesanduniformservicestohospitals,universities,schooldistricts,stadiumsandotherbusinesses

Havearesponsiblesourcingpolicybutnomentionofpalmoil.

NotRSPOmember

Notaskedtoreport

3.2CompanyProfiles–WholesalersIntermsofthebusiness-to-businesswholesaling,thebelowcompaniesrepresentsignificantportionsofthemarket,sellingtoCateringandHospitality(C&H)businessesandIndependentandConvenienceRetailers(IC&R).Theircurrenteffortsonpalmoilaredetailed.TheIC&Rcategoryincludesbothunaffiliatedretailersaswellassymbolretailers,coveringgroupssuchasSPAR,Premier,Londis,Budgens,CostcutterandNisa.Symbolretailersactaswholesalers,manufacturingown-brandproductsthatarethensuppliedtofranchisedstoreoperators.Wholesalerperformanceismixed;nonelistedareRSPOmembers,though2dohaveCSPOsourcingpolicies,andonesourcesCSPOforselectedownbrandproducts.NisaandSPAR,twoofthelargestsymbolretailgroups,donothavepoliciesandarenotRSPOmembers.Company Sectors Description CSPOPolicy RSPO

Member/RSPOACOP

Brake’s SelltoFC&H

PartoftheUSgiantSysco,theglobalBrakesGrouphasmorethan50,000customersincludingsomeofthelargestleisure,pub,restaurant,hotelandcontractcateringgroupsintheworld.In2015,approximately100,000oftheGroup'scustomersiteswereintheUKandIreland.BrakesGrouphasteamsofdedicatedbuyerswhosourceproducts,includingtheGroup’sown-brandproducts,fromover2,000suppliersaroundtheworld.In2014,theyspent£1.8billionintheUKalone.

Goal:AllpalmoilusedinBrakes'ownbrandproductsmustbecertifiedsegregatedby2018.Inaddition,ifandwhencertifiedsustainablesourcesofpalmoilderivativesbecomecommerciallyavailabletheywillbeusedinBrakesownbrandproducts.

NotanRSPOmember.

Booker SelltoFC&H

Bookerhasaspecialistdeliveryserviceandacorecashandcarrybusiness.Extensivecustomerbaseamongstindependentoperators.TheGroupnowcomprisesBookerWholesale,Makro,BookerDirect,ClassicDrinks,RitterCourivaud,ChefDirect,Premier,FamilyShopper,Budgens,LondisandBookerIndia.BookerWholesaleandMakroaretheUK'slargestcashandcarry

AllChef’sLarder,HappyShopperandEuroShopperbiscuitsandsnacks‘supporttheproductionofCSPObyusingpalmoilsourcedthroughRSPO-approvedsupplychainmodels.’

NotanRSPOmember.

Efeca 10 PalmOilintheFoodserviceSector

operators,offeringbrandedandprivate-labelgoodswhicharesoldtocustomersincludingindependentconveniencestores,grocers,leisureoutlets,pubsandrestaurants.

Bidfood SelltoFC&H

TheBidvestFoodservicedivisionofthecompanyoperatesasafoodservicewholesalersupplyingfresh,frozen,ambientandnon-foodproductstocustomersinawiderangeofsectorswithinthefoodserviceandcateringindustry;includinglocalauthorities,NHStrusts,defencecontractors,hotelandrestaurantchainsaswellasmanyindependentoperatorsinthehospitalityindustry.BidvestLogisticsprovidesdistributionandsupplychainservicestolargeroperatorsinthefoodserviceindustry,includingmanywell-knownrestaurantandfast-foodbrands.

Bidfoodsupportstheuseofsustainablysourcedingredientsincludingtheuseofsustainablysourcedpalmoilandpalmderivatives.InBidfood’sownbrandproducts,theywilluseonlysustainablysourcedpalmoilorpalmderivativeswherecommerciallyandtechnicallyviable.

NotanRSPOmember.

Bestway SelltoIC&R

UK’slargestindependentfoodanddrinkwholesaler.Itisasupplypartnertoover70,000independentretailersand40,000cateringandfoodserviceoperators.

Nopalmoilpolicy

NotanRSPOmember.

SPAR SelltoIC&R

World’slargestfoodretailchain.IntheUKover2,400stores.Primarilyfranchisees.Sellown-labelproducts.

Nopalmoilpolicy

NotanRSPOmember.

Nisa SelltoIC&R

1300(approx.)members,operatingalmost3,500retailstores.Haveadeliverynetwork,largeproductrangeandown-labelbrand.

Nopalmoilpolicy

NotanRSPOmember.

4.NextStepsInsummary,thefoodservicesectorlagsbehindretailintheUKintermsofCSPOuptake.Thismaybeduetothelackofvisibilityamongconsumersofpalmfoodingredientsthatareusedinpreparationorcontainedinmanyitemsoffoodserviceoutlets.AstheUKnearstheAmsterdamCommitment2020deadlinefor100%sustainablesourcingofdeforestationcommodities,itisimportanttodrivechangeinsectorsthathavenotfullyembracedpalmoilsustainability.Efecawillhostaworkshopforfoodservicecompaniesthisspring,withtheaimofgatheringinformationonkeyobstaclesandbrainstormingsolutions.Thiswillbefollowedbyafreewebinarinthesummer,toshareknowledgeandengagethesector.Wewillworkwiththefoodsectortoimplementthesesolutions.Inaddition,Chesterhasrecentlybidtobecometheworld’sfirstsustainablepalmoilcity.TheChesterSustainablePalmOilCitycampaign,ledbyChesterZoo,isencouragingfoodservice

Efeca 11 PalmOilintheFoodserviceSector

businessessuchasrestaurants,cafes,hotels,fastfoodoutlets,workplaceandschoolcanteens,councilandhospitalfoodoutlets,andvisitorattractioncafes,aswellasothersectorsacrossmanufacturingandretail,tojointheinitiativebysourcing100%CSPO.Efecawillprovideon-goingtechnicalassistanceandsupport,includingforalauncheventthissummeratWestminster.Astheinitiativegrows,knowledgeandinformationonsourcingCSPOwillbedisseminatedthroughouttheUK.