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January 18, 2007

Consumer health and CSR dominate food industry agenda

What keeps food industry executives awake at night? As we go into 2007, health and nutrition has become the number one concern for those that run food manufacturers and retailers. However, the attention now given to social responsibility reflects a major shift in priorities. Being a good corporate citizen, and being recognised as such, has become a major preoccupation for the food industry worldwide, as Catherine Sleep reports.

What keeps food industry executives awake at night? As we go into 2007, health and nutrition has become the number one concern for those that run food manufacturers and retailers. However, the attention now given to social responsibility reflects a major shift in priorities. Being a good corporate citizen, and being recognised as such, has become a major preoccupation for the food industry worldwide, as Catherine Sleep reports.


For some years, food manufacturers and retailers have been devoting increasing attention and resources to consumer health and nutrition. Obesity may be the headline issue, but the health and wellness area comprises a wide range of concerns which have become an overriding priority for the food industry.


This preoccupation has been confirmed by a newly published industry survey, “CIES – The Food Business Forum: Top of Mind 2007”. Published annually since 1996, the survey asks over 300 senior-level retail and consumer goods executives from 48 countries to choose their top three issues for the year ahead, out of a list of broad topics. The survey has come to represent a valuable indicator of where food retail is heading, and the latest edition confirms that health and nutrition are the current top priority, rising from third place in 2006.


Obesity is still the focal point of the health and nutrition debate in Western countries, given the scale of this health problem and the pressure exerted by governments and the media. The situation is evolving rapidly: companies and industry bodies are pursuing various initiatives, such as eliminating trans fats or ending advertising to young children, while governments continue to look at fresh regulations. Although arguments over public policy remain fierce, for example whether to use traffic light colours on front-of-pack nutrition labelling, the debate has matured somewhat and food companies have notably earned praise from the European Commission. 2007 could be critical in terms of public policy, the survey’s compilers at CIES argued. Final EU regulations on food product health claims are due to come into effect and standards for nutrition labelling – whether voluntary or regulatory – should start to take shape.


Health has become such a key priority for food retailers and manufacturers not merely out of altruistic concern for consumer wellbeing, but because it offers huge business opportunities. Health-oriented companies like Danone and Whole Foods have enjoyed high growth in recent years, in contrast to much of the traditional grocery sector. The plethora of products targeting this area – from whole grains to antioxidants – suggests there must surely be a shakeout in the short term. But given powerful society factors such as obesity and an ageing population, combined with the food sector’s need to innovate and find new growth avenues, health and nutrition is set to stay at the top of the agenda for the years ahead.


Other high-ranking industry concerns confirmed by the survey showed little change from last year, with retailer/supplier relations, the retail/brand offer and technology & supply chain issues all in the top five. However, corporate responsibility climbed a striking six places to enter the top five for the first year, reflecting concern over the environment, sustainable development and social standards in society at large. While food and retail have been at the heart of social issues for many years, the surge of interest in health and the environment have brought corporate responsibility to the fore, and companies are now under constant pressure to demonstrate that they are doing the right thing.


Like other industries, food retail’s espousal of environmental issues makes good social and financial sense. High energy prices and growing evidence of environmental risks have inspired a host of initiatives, from Wal-Mart’s various sustainability targets to the selling of biofuel by numerous retailers. But while a certain amount can be done quickly, progress takes time since society issues, such as the environment, are complex and controversial. There is concern that major retailers may seize on CSR as yet another instrument with which to extract yet greater value from their suppliers. Yet as big, closely scrutinised actors in the daily lives of consumers, both food manufacturers and retailers have no choice but to engage in these issues.


Looking ahead, so-called ethical sourcing will figure prominently as a sector issue since it brings together a number of public concerns such as the environment, human rights and development in less developed countries. Following its bruising lobbying battle with opponents in the US, Wal-Mart has decided to take a lead on these questions on a global level. But given that top retailers and manufacturers are all sourcing globally, both in food and non-food, the sector as a whole will be expected to act responsibly.


Click here for the survey “CIES – The Food Business Forum: Top of Mind 2007”.

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