The quiet revolution of food retailers

October 28, 2010

While many debates continue in the political and “parapolitical” world about many aspects of food production systems and the impact of human activity on the environment, retailers lead a quiet revolution. Without making the headlines, they gradually change the way their suppliers will do business in the years to come.

Such an evolution is certainly welcome, especially in a time where important decisions need to be made. Political leaders seem unable to reach any agreement on environmental issues, as the world could see at the late Climate Summit of Copenhagen. In the food sector, there are many discussions going on about sustainability and genetic engineering, to name the two hottest items, but the political class does not seem to generate clear and concrete action plans.

Just like what happened in the 1990s about food safety in Europe, retailers are taking the initiative to create momentum on the current issues. The problems that plagued the food industry in Europe, such as salmonella in poultry, the mad cow disease, or the dioxin in Belgian fat for chicken feed showed a number of weaknesses that needed to be addressed. In the case of BSE, UK retailers did not wait for British or European legislation to demand meat and bone meal-free feed for farm animals. As I was working for a company supplying the UK market with chicken meat, I can testify that these were dramatic times. Tough decisions had to be made on a very short notice that had serious financial consequences. By then, a couple of reasons made the retailers took the lead. First, the inability of the government to prevent and tackle the issues was creating a bit of a vacuum on leadership. Consumer confidence in their institutions was fading, and retailers were the only ones, true or not, perceived to take the proper actions to protect the public. The second reason was the fact that many retailers had their own private labels. In this case, the problem was not the supplier’s problem anymore because the supermarket chain could have risked serious PR damage if a food safety issues would have been associated with their brand.

This time, retailers are again in the position where they can present themselves as the consumers’ champions. Legislation is slow to move and make significant decisions. The involvement of interest groups adds to the infighting and delays decision-making.

To prepare for the future, they already have come out with plans and communication on how and where they want the food they sell to be produced, and they try to offer a choice to consumers. By doing so, the most active among them are setting new standards, and forcing the whole production and supply chain to think about the things to come.

In previous blog posts, I have mentioned some of such initiatives, and in Future Harvests, I described the increasing leadership role of food retail in agricultural practices.

In particular, I mentioned the carbon footprint labelling on dairy products by Tesco, Wal-Mart’s Sustainability Index questionnaire to suppliers, and the seafood sustainability programs of many retailers. Marks & Spencer started their Plan A in 2007 with the objective of making their business more sustainable. To achieve this, they are involving their suppliers and the farmers producing for them to carry out the changes that M&S finds necessary for a better future.

More recently, new initiatives indicate that retailers are pursuing further on such initiatives. Wal-Mart came last week with their plan for sustainable agriculture. In the UK, Sainsbury let know last week that they were committing GBP40 million to invest in farming. Earlier this week, Carrefour unveiled their “Reared without GMO” program. In their stores in France, they will sell 300 food items labelled as being GMO-free, to offer consumer a choice based on transparent information. If Carrefour ventures into this, one can be sure that they do so because they already know that this will be good for their business. By gaining market share, it is very likely that their competitors will soon react by issuing similar programs. The EU Commission may be struggling to figure out how to deal with GMOs, but Carrefour says “Let the consumers tell us!” Vox populi, vox dei!

Of course, such initiatives do not please everyone. Today, I could read in a blog for a US magazine backed by the meat industry some interesting reactions about Carrefour’s new plan. Some readers were bringing up the typical arguments. Meat would be so expensive in Europe. Well, meat is quite affordable in France, even without GMOs, so think again! The other argument was about freedom of choice: people should be able to eat what they want. By labelling its food item, Carrefour does just that. French consumers are free to buy at Carrefour or somewhere else, and they have the right to choose what label they prefer. The freedom of choice is ironic coming from the US meat lobby, since American consumers do not have that freedom. Reared with GMOs is pretty much the only choice in the US. For now, that is. However, it is interesting to see on Carrefour’s press release that the pictures of fish, chicken and pork chops are exactly the same, regardless of whether they would be grown with or without GMOs.

In the 1990s, British and European consumers, and retailers, were challenging food industry practices because they were worried about their health and about the lack of transparency about food. Nowadays, in the USA, consumers are increasingly suspicious of their agribusiness, because they are worried about their health and the lack of transparency of the industry. Beef recalls because of E. coli, egg recalls because  of salmonella, spinach contaminated with manure are in the news on a (too) regular basis. They are also increasingly aware, and suspicious, of the relations between interest groups and their government agencies, and how this influences decisions on what they eat.

Retailers are now saying that they are not waiting for politicians to make decisions. They have defined their vision, they know what they want, and they are passing the message on to the suppliers. What would happen in agribusiness USA if Wal-Mart took a similar approach as Carrefour?

Copyright 2010 – The Happy Future Group Consulting Ltd.


Consumers shape food production systems

October 21, 2010

Although it is tempting to think that food production systems are created by agribusiness, they depend greatly on the choices and the attitude of consumers and society. For humans, food is not just about nutrition, but it is loaded with a high emotional content.

Consumer choices are highly irrational. To demonstrate this, here are some examples.

When the mad cow disease, or BSE, hit the UK in 1996, beef consumption dropped, but the behavior of consumers was odd. A leading retailer put British beef on sale at 50% off the normal price. They had their best weekend sales ever by then. When asked why they had bought beef, while there were concerns about health risks, some consumers gave answers such as “At that price it is worth taking the risk” or, even better, “ I will freeze it and eat it once the mad cow crisis is over”! At the same time, customers’ visits to the leading fast food chain drop sharply and beef burgers were not in demand, although their beef was from the Netherlands, a country free of BSE by then.

In Europe, mostly in France, consumers used to demand veal to be white. Not slightly pink, just plain white. To achieve this, calves were fed a milk powder diet, which kept them anemic. Yet, at some point, consumers denounced this technique as being against proper treatment of animals. The demand of white meat with a normal diet could not be reconciled. It took years before consumers finally understood that veal was supposed to be pink.

For most customers, white eggs are perceived as being from intensive cage production, while brown eggs are perceived as being more “natural”. Everyone with knowledge of the industry knows that the color of the shell has nothing to do with the nutritional quality of the egg. The belief that the egg color indicates a difference persists, though.

Some blind tests carried out between “industrial” and free-range chicken meat carried out in the Netherlands in the 1980s showed interesting results. When consumers were not told which was which, they could not clearly taste a difference, while when they knew which meat was from which production system, they overwhelmingly gave the preference to the free-range chicken.

Here, in Vancouver, there is a strong trend towards organic foods produced locally. Farmers markets flourish and the environmentally conscious consumers choose to buy their “natural” food on these markets. Ironically, many of them drive in their gas-guzzling SUVs to go there. So much for caring for the environment.

Who, with a rational mind, would choose to eat junk? Yet, junk food is quite a popular item in North America, and it has been a growing trend in many European and emerging countries as well.

In the case of tobacco, not a food, but an agricultural product nonetheless, the warning on the package is quite clear. Yet, some people decide to smoke.

The list could continue and I am sure that everyone has more examples of irrational behavior. Consumer demand (both the rational kind as the irrational one) determines what farmers and food companies produce and sell. In this regard, consumers also share a responsibility in what is produced, how it is produced, where it is produced and how it is distributed to them. Blaming retail or the agribusiness alone for the kind food systems that are in place is unfair.

Of course, it would be interesting to imagine what people would eat if they were rational, and what impact on our food production this would have. A rational diet would follow proper nutritional recommendation, and to this extent would follow the same principles as those used in animal nutrition. However, this would not have to be as boring a diet as what animals are fed. A rational diet does not need to be a ration. After, the human genius that is cooking would help prepare delicious rational meals. It would be like having the best of both worlds. The emotional, social and hedonistic functions of food would remain. The key would be about balance and moderation. If people were eating rationally, there would not be any diet-related illnesses. There would not be obesity. There also would be a lot less food waste. This would improve the level of sustainability of agriculture.

Will consumers become more rational in the future? I do not think so, but I believe that they will become better informed and more critical over time. Especially with the rise of social media, information circulates much faster and trends can gather momentum faster than in the past. More programs for healthier eating are currently running and action is taking place at many levels. In particular, schools are a place where much can be achieved. One can wonder how long the “lunch money and self-service system” will last. Having schools placing vending machines selling items that are highly unbalanced foods and leaving the decision over to kids to decide what they want to eat was of course a disaster waiting to happen. I cannot believe that anyone would expect kids to consciously making the choice of spending their lunch money on broccoli and mineral water. Kids will choose what they like best, not what is best for their health. They need adults for guidance.

Attitude towards food is changing all over the world. Currently, I can see two major trends growing. One is taking place in North America and the other is happening in emerging countries.

In North America, consumers are waking up and starting to question the way their food is produced. This is a major change compared with their attitude until a few years ago. When I moved to this part of the world in 1999, I was amazed by how easy consumers, and retailers, were for the food industry. Consumers simply seemed to consume without trying to know about production methods. Hormones, antibiotics or GMOs (genetically modified organisms) seemed to be accepted. This was a sharp contrast with what I had known in Europe, where all of the above was meeting strong resistance from consumers and retailers. What I currently see happening currently in North America reminds me strongly of what I had seen happen in Europe 20 to 30 years ago. The similarities are almost disturbing. Consumers are losing trust in government agencies, and retailers seem to be the ones to champion food quality, traceability and production methods. This will have much more profound consequences in the way food is produced in the USA and in Canada than the agribusiness seem to realize, or is willing to admit. The population is aging, the generations are changing and the values about food are shifting. The current opposition is not a short-term fad. Consumers will make different choices. Some food producers see that and are already adapting, but many producers still seem to think that opposition will pass. I believe that they are in for a surprise. The expressed plan of Wal-Mart to buy more from small and mid-size farms, to reduce waste, and to develop sustainable sources of agricultural products is a very clear signal that business is changing!

In emerging countries, consumers are changing their eating habits, too, but for a different reason. They now have better wages and more disposable income. The previous “”subsistence” diet made of mostly grain, such as rice, wheat or corn, are now including more animal protein, as well as fruit and vegetables. In these countries, consumers are not overly critical of their food production and distribution systems, but issues that arose in developed countries affect the way food is produced, especially in the area of food safety. These consumers probably would like to experience the same level of food security and affordability of food as in the West over the past 5 decades, but the growing population, and the financial markets will temper this trend. Food prices will be firm at best and they are more likely to increase in the future on an ongoing basis.

There is no doubt in my mind that consumers and retailers are increasingly going to put the emphasis on sustainability, health, food safety and transparency. This may sometimes lead to conflicting objectives with the need to produce more food globally. This does not need to be a problem, but this is why the world needs strong leaders to show the way towards meeting both the objectives of better food and of more food.

Copyright 2010 – The Happy Future Group Consulting Ltd.


Future Harvests – The book is coming soon!

April 9, 2010

 

The editing of my book “Future Harvests – The next agricultural revolution” is about completed. All that is left to do is developing the cover and start the publishing.

I have already received orders, even before the book is out. That is quite a good sign. And a great surprise for me.

If you wish to be updated automatically when the book is published, just subscribe in the sidebar window on the right.

To describe the topics addressed, I have posted three short promotional videos on YouTube. In previous articles (The fun of writing this book and The next agricultural revolution), I had already given an idea about the content of the book.

Video #1: The Fundamentals (duration 2:37) – Introduction to the background and fundamental principles mentioned in the book “Future Harvests – The next agricultural revolution” to achieve food security for 9 billion people in 2050. Topics such as demographics, the shift in economic power, the control of food  and food security strategies are reviewed. Sustainability, innovation, efficient market driven food production and strong leadership are required.

or click here if video does not appear

Video #2: The Actions (duration 2:12) – A short review of some of the actions mentioned in the book to achieve the objectives. Solving the water challenge, finding new land for production, urban farming, hydroponics, farming the desert, rebuilding fisheries and developing aquaculture further are all possibilities.

or click here if video does not appear

Video #3: The Questions (duration 3:08) – A sample of some of the questions raised in the book. They cover technology, land deals in Africa, improving yields, restoring soil fertility, change in consumer needs, organic farming, risks of conflicts, biofuels or meat are some of the topics presented.

or click here if video does not appear

If you know someone who could be interested by the topics on this page, please pass it on!


Sustainability: A land of confusion?

September 17, 2009

The more I read and hear about sustainability, the more confused I get about what the people making statements about it really mean, if they mean anything at all.

Very clearly, everyone now goes sustainable or green or whichever other term they choose. It is almost as if sustainability is a completely new revolutionary concept. No, it is not. That was the way people lived for ages, before we started thinking that we did not have to live by Nature’s laws. Yes, in the old times people would repair their socks instead of throwing them away. What were they thinking?

Two things really worry me about the current sustainability approach. The first one is companies appointing one person in charge of sustainability. Can sustainability be a separate entity in an organization or has what should be our most basic thinking been so forgotten that someone needs to reinvent it? I do not think so. Sustainability is everyone’s concern and if there is a CSO (S for you know what), it should be the person at the very top, imposing sustainability thinking to every employee in the company. This topic is too important to delegate. The second one is how quickly businesses that have shown some serious deficiencies in the sustainability area now come out very quickly with all sorts of announcement and even certification proving how well they are doing. Of course, on the other hand, there are the market watchers claiming that some of these claims are not true.

For instance, I am getting more and more confused by how quickly, and almost on a weekly basis, restaurants and supermarkets are able to source sustainable seafood. As such, this is great news. Yet, it makes me even wonder if there indeed was an overfishing problem. Something just does not quite add up.

There are those who seem to reduce sustainability in food production to organic or to small farms, almost as if the Amish way, with all due respect for the Amish, is the only way forward. I disagree with this rather reductionist thinking. I believe that with all the technology that we currently have, we can be sustainable and modern.

Therefore, for those who, like me, are confused about what they hear and read, here are a few statements about how I think about the subject, and I hope that they are not confusing to you.

  1. Per definition, what is not sustainable has no future. Therefore, just do it, instead of talking how you would do it.
  2. Everything that continuously depletes a source of our basic essential needs is not sustainable. Think about it before depletion reaches the point of no return!
  3. Everything that continuously increases the level of harmful components in what we breathe, drink or eat is not sustainable. Think about it before increasing water, air, soil and food pollution!

It is just this practical.

Copyright 2009 The Happy Future Group Consulting Ltd.


Wal-Mart’s Yiannas promotes food safety culture

September 11, 2009

This article reports of Mr. Yiannas (VP Food Safety at Wal-Mart) speaking at the Grocery Manufacturers Association’s Executive Conference in Colorado Springs, Colo., and his views on this topic.

It just shows that there is a new trend coming in the US, as I happened to describe in my article of yesterday (Health and environment as the drivers of food production). There are growing concerns from consumers and the retail will probably be the catalyst for change. Wal-Mart as the leading retailer is going to pave the way forward, just like it does on sustainability. This certainly is going to mean some deep changes in the way the suppliers will have to run their businesses.


Health and environment as growing drivers of food production

September 10, 2009

Health concerns will gain more importance in the future in the decision process of consumers when they buy their food.
More and more, we can hear and read about concerns and even rejection of the current production systems. Although this bad publicity is not always based on the most objective facts, it has been able to find a growing audience.

It must be true, it was in the newspaper

It must be true, it was in the newspaper

Since most consumers have little or no knowledge of agriculture and food, their only source of information is in the popular media. On the other side of the discussion, the agri-food industry is not getting through, because its message tends to be too defensive and too technical. Unfortunately for the industry, errors from the past (for example, the use of DDT) or cases from other industries (for example, tobacco) contribute to cast a shadow on its credibility. As I wrote my previous article “Less controversy thanks to transparency”, the agribusiness will achieve much more by opening up and having consumers visit their premises so that they can tell what they saw. They must organize more Open House days.

Therefore, for now, consumers have a certain perception of how food is produced, and it is not so relevant to argue whether this perception is correct or not. Perception simply is reality, and consumers act according to what they believe is true.
A little bit of this...There is a growing concern about environmental and health aspects of food production. About the environment, you can list very diverse things such as the depletion of wild fish stocks in the oceans, the interaction between aquaculture and wild fish stocks, manure and smell of intensive animal husbandry and impact of manure on soils and drinking water, deforestation of rainforest for ranching of beef or about growing GMOs (Genetically Modified Organisms). On the health side, consumers worry about food poisoning due to bacteria, such as E. Coli, listeria, campylobacter and salmonella, but also about residues of pesticides or antibiotics, as well as they worry about the use of hormones in animal productions. As the discussions get more animated in the US about the reform of health care and the cost of obesity, more and more people are wondering about whether the fast food diet is a proper one. Next to this, animal welfare is a growing concern by more and more consumers.
The answer to many of these worries has started to appear in the last few years with the growth of the organic market segment. When we see the growth and the performance of a retailer such as Whole Foods, there is no doubt that organic foods have a growing audience.

The concerns about the environment are forcing retailers, food service and businesses involved in the production chain of food to make changes. Some of the actions they have taken can be seen as marketing or PR, but they also have become mainstream. Just a look at how many restaurant and supermarket chains have already implemented sustainable seafood programs indicates how serious this change in consumer attitude is. Fast food chains are also actively working on reducing their environmental impact and set standards on where they source their meat, based on environmental concerns, such as no beef from ranches deforesting the Brazilian rainforest.
In the past, we have seen some examples of production methods that had to be abandoned, simply because no solution to cope with environmental problems could be found. This has been the case in The Netherlands where the level of intensification caused such manure surpluses and risks of animal disease to such a point that after many years of looking for viable technical solutions in vain, the government decided that the size of the national herds had to be reduced.
Similarly to what happened in Europe over the last decade, we can expect that much stricter rules in the use of antibiotics will be applied, and I expect a similar trend to a progressive elimination of the use of hormones in animal husbandry. About animal welfare, there should not be any surprise the day that only husbandry systems that allow enough “recreation” area for animals will be allowed. All of the above is going to have an impact on how and where food is produced. Systems will become less intensive, and progressively we will see more techniques to improve efficiency to compensate.

Past Food?

Past Food?

As I also had mentioned in another article (Future price of fish and meat: up), it is simple logic that with more people to feed, food is going to become more expensive. However, the relative prices of various food products also need to go along their relative health benefits. Today, it looks like only wealthy people can afford a healthy diet, as the price of “good” food is substantially higher than the price of what makes a nutritionally unbalanced meal. This clearly does not work in the direction of a healthier population at large.

The way consumers think will define the way we eat and produce our food. Many changes in consumption patterns, in production systems and in product offering are under way. I will get back later with more details on what my views are on this.

Copyright 2009 The Happy Future Group Consulting Ltd.


Just like I said: Retailers take the lead in sustainability

September 2, 2009

Wal-Mart paid Kroger’s HQ a visit to talk about sustainability. I think that their Sustainability Index is going to be the basis for sustainability standards in the future. (Read my previous article)
Suppliers, you have been warned.

Read the article from Supermarket News here.