Food Waste Under Category Captainship

Category captainship, the practice of delegating category-level decisions to a leading manufacturer, is widely adopted in retail practice, yet its strategic consequences for an increasingly salient operational outcome, food waste, remain unexplored. We develop a model in which a retailer facing uncertain demand chooses between managing a perishable category itself and delegating assortment decision to a category captain. The category captain possesses superior private information about the demand state but internalizes waste costs only partially. We identify two countervailing forces set in motion by delegation. An adjustment effect improves demand–supply matching, as the captain tailors the assortment to the true, privately observed demand state rather than the retailer’s unconditional prior. An opposing exclusion effect distorts the assortment by inducing the captain to purge high-velocity fringe products and introduce its own low-demand products. We show that the exclusion effect dominates, and category captainship strictly increases expected food waste relative to retail category management for short-shelf-life and highly substitutable categories such as fresh produce and dairy. We further show that this distortion is not intrinsic to delegation but to misaligned incentives. Delegation is not unambiguously harmful to non-captain suppliers. In particular, we show that the category captainship can lead to a win-win-win scenario where not only retailer and category captain benefits from the category captainship implementation but also the non-captain suppliers can earn strictly higher expected profits. Overall, our results offer a structural explanation for why waste concerns concentrate in perishable categories and provide actionable guidance on contract design for retailers seeking to capture the informational benefits of category captainship without incurring its operational and environmental costs.