Danone has declared an “Alimentation Revolution”. The France-based food and beverage giant has urged the industry to join a “movement” that aims to “nurture the adoption of healthier and more sustainable eating and drinking habits”. Emmanuel Faber, Danone’s CEO, made the call at last month’s Consumer Goods Forum in Berlin. Dean Best caught up with Faber after his speech to find out more about what he says is Danone’s “manifesto”, how it is defining the company’s actions and why the industry should join them.
The international food system can, in many ways, be deemed a success, playing an important role in, for example, reducing malnutrition and increasing life expectancy across swathes of the world’s population. Equally, however, industrialised food production has had significant negative impacts on health and on the planet’s resources, and those impacts are escalating.
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It is becoming clear a growing number of food industry CEOs believe the way of doing business has to change.
Among them is Emmanuel Faber, CEO of France-based dairy, baby food and soft drinks Danone, who two weeks ago delivered a speech to his peers at The Consumer Goods Forum (CGF) summit in Berlin that, to put it mildly, grabbed the attention.
The growth of industrialised, globalised food production had brought nutrition to many but it has come with “unprecedented, probably unexpected consequences – the explosion of non-communicable diseases and the depletion of the resources of the planet”, Faber told delegates at the CGF summit.
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Faber’s speech was more than a rallying cry for greater emphasis on sustainability. It appeared aimed to deliver some home truths – awkward truths perhaps – making plain not just that industry needs to intensify efforts on health and sustainability but also questioning the fundamentals of the international food system as it stands.
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By GlobalData“Food is precious – and we called it a commodity. We called it a consumable. We made it a consumer good. We let market forces drive demand and drive supply. And we are hard-wired for salt, for fat, for sugar. Unlike what Wall Street is trying to tell us, there is no invisible hand – in particular there is no invisible hand when it comes to doing the right or wrong thing. The system has reached its limits and we are pushing through these limits, so why don’t we stop? We don’t because the consumer doesn’t realise. The consumer does not realise because the food system has disconnected people from their food.”
Speaking to just-food after his speech, Faber emphasises industry needs to work harder on health and sustainability but, just as much, needs to take stock of where the food system is and be transparent with consumers in explaining why the industrialised food system is the way it is.
“It’s a matter of not only working harder but recognising where we are on the journey because we see lots of consumers walking away from the food system – whether this is brands or shops – and this is not because there are fewer people or they eat less. It’s simply because they go somewhere else and the reason they do is that they’re not sure about the intent of that system,” Faber argues.
“We would all gain if we were prepared to be more transparent about where we are. There is no shame in explaining why some of the solutions the food industry has found to deliver what it’s delivered are what they are. Unfortunately, we don’t know yet how to be better but I think pretending this is not the case is what consumers feel they are not ready to live with anymore. There’s a concern about the overwhelming impact of what’s happening in the food system on the health of consumers and so, for me, the first thing is not about accelerating or doing more, it’s simply explaining why we are where we are and explaining clearly where we are. It’s a question of mindset, transparency, and the way our brands engage consumers, even more than driving a sustainability agenda, which of course, in and by itself is important.”
Faber used his speech at the CGF summit to present Danone’s new company “signature” of ‘One Planet. One Health’, which will be rolled out from tomorrow (7 July). At the event, he called on the industry to join Danone’s “Alimentation Revolution”, to sign up to what the company describes as a “movement” that aims to “nurture the adoption of healthier and more sustainable eating and drinking habits”.
In a LinkedIn post to accompany the announcement of the new signature and his speech at the CGF, Faber admits “there are many things” at Danone “that we are not doing right yet, that we don’t know yet how to do better”. Sceptics could point, for example, to growing fears over the amount of plastic being used and discarded by consumers and Danone’s position as one of the world’s largest sellers of yogurt and bottled water. “I am fully aware that we are not perfect, and we will never be but,” Faber writes, “our intention, my commitment is nevertheless unequivocal.”
As to whether the pressure of doing business in uncertain macroeconomic conditions worldwide might be holding back some in the industry from investing more in health and sustainability, Faber is reticent to talk about other companies but acknowledges cost is a factor. “It’s hard for me to comment on others. What I know is a combination of the factors that you mentioned is putting Danone where we are and not yet in a better situation. It has a cost,” he tells just-food.
However, Faber points to two initiatives upon which Danone has embarked because it believes it could eventually be in a stronger position in the eyes of consumers.
“When we decided to go for non-GMO milk supply in the US, it took us 18 months to transition from GMO to conventional, non-GMO feed. To start with, the yields were lower. The cow’s milk yield was lower as well because the nutrition was different. There is a transition and it is today impacting our P&L. The bet for us is that we end up improving the value proposition to our consumers because they are saying that naturalness is an important factor for them,” Faber explains.
“And when Danone is unilaterally pledging to completely support breastfeeding, that includes changing the marketing practices of some of our key brands. Some of our competitors wouldn’t take the pain of this. We are definitely trading some loss, in a way, in terms of opportunities. But we believe, long term, we’re building a relationship of trust.”
Nevertheless, Faber is keen to bring the discussion back to whether food companies are willing to open themselves – and the industry – up to scrutiny. The Danone CEO argues that to enact real change business has to recognise where it is and be transparent about it. He believes a change in “mindset” is needed at some companies.
“I’d like to go back to my earlier point, which is about attitude. We [Danone] found ourselves – and we continue to find – it’s very difficult as a brand, as a company to recognise where we are – that we don’t yet have all the solutions but be transparent with consumers about it. To describe the roadmap in a way that is obviously going to expose us to people looking at that and saying ‘You could do faster’ or ‘You should be faster’ etc. This change of mindset is quite hard to obtain unless you really have the vision to do it.”
A business can have employees interested in corporate responsibility, in how the companies they work for tackle issues such as health and environmental sustainability. However, creating that vision has to come from the top. The food industry does have high-profile CEOs and senior executives who are passionate about such issues, about instilling a longer-term mindset into their operations. Unilever CEO Paul Polman is an obvious example; his rebuttal of Kraft Heinz’s takeover interest this year had – fairly or unfairly depending on your view of the US food group – questions of longer-term business sustainability at its core.
To suggest the industry is uninterested in health and sustainability would be unfair. It has created multi-stakeholder organisations, set out pledges to make products healthier and mitigate environmental impacts. Companies have put in place in-house strategies aimed at making their manufacturing more sustainable and products healthier. Good work has been done and progress made.
What Faber and other CEO-advocates like Polman are saying is the sector not only needs to do more but must not shy away from awkward truths, and must embrace radical and disruptive ideas to work towards a sustainable future.
The faltering recovery from a devastating global recession and volatility in key emerging markets may represent a new normal, and can no longer be an excuse for not facing the long-term investment imperatives that health and sustainability concerns now represent.
What is more certain is there is a new normal with regard to consumer behaviour. More consumers are voting with their wallets or their clicks, when it comes to health and sustainability, and this is perhaps helping to focus the minds of many business leaders, and the investment community. That may help Faber, Polman and their peers win more hearts and minds.
As Faber told the CGF: “When we talk about sustainability, we talk about our licence to operate. When people think about their food sovereignty, they are looking at their licence to operate and how they will accommodate us. This is a huge change and this will disrupt our business models. This will be our responsibility to adjust how our companies work.”
For the second part of just-food’s interview with Faber, in which he outlines how Danone’s “vision” is shaping its corporate activity, click here.
