Ten top business take-aways emerged from the 53rd World Food Business Summit.
Held in New York City, 17-19 June 2009, the event hosted more than 650 of the world’s most influential food and consumer business leaders from 40 countries.
The theme of the Summit was Ingredients for Success in Troubled Times.
Speakers included PepsiCo chairman and ceo, Indra Nooyi; Wal-Mart chairman of the executive committee and former ceo, Lee Scott; Safeway chairman, president and ceo, Steven Burd; and Kraft Foods’ chairman and ceo, Irene Rosenfeld
The 10 key insights are:
- Recovery is coming but the landscape has changed
- New rules: the crisis has changed consumer behaviour
- Healthy customers mean healthy business
- Consumers want solutions not prices
- Food safety needs a common set of rules
- Motivate your way out of recession
- Sustainability is the only way forward
- The need for innovation
- Collaboration is a force
- Recognising our power to make a difference
- Recovery is coming but the landscape has changed
Speakers at the Summit said the economic crisis had a positive side and recovery would come sooner than many thought. But if even if the worst is over, the effects of the crisis on economic policy could be longer-lasting.
Mark Price: Waitrose Boss Promotes Sustainable Seafood Sourcing
Dr Michael Mandelbaum of the Johns Hopkins School of Advanced International Studies said the worst didn’t happen, “meaning that the financial system did not collapse and that banks are now beginning to make loans again”. He added the food business had benefited from the fact food purchases cannot be postponed.
The downturn was also having a useful purging and reorganising effect in business, he said. However, the financial crisis had tended to mask long-term macroeconomic trends such as food price inflation, which would return to the agenda.
Dr Mandelbaum and Cargill chairman and ceo, Gregory Page, said there was still a risk of economic protectionism, government intervention and increased tension between nations.
The freefall is over, according to David Calhoun, chairman and ceo at the Nielsen Company. “Consumers had moved through denial, uncertainty and fear and were getting to acceptance,” he said. However, things were not the same as they were. New rules are in play.
“There has been a fundamental shift in consumer spending patterns, as restraint becomes the new mantra. The age of thrift is here,” said Indra Nooyi, PepsiCo chairman and ceo.
The long tail of many brands will suffer as retailers clear out the clutter on the shelves and focus on core offers, Nooyi said.
But there is no need for a battle between brands and private label. “When the offer is strong, both win.”
To engage the new consumer, players need to reach across three screens: TV, PC and mobile, she added. “Ads across multiple media win consistently against ads in a single medium.”
Both retailers and food manufacturers are keen to tackle concerns over diet, obesity and related health issues. The industry must also poise itself to meet the demands of consumers more concerned with healthy eating than ever before. However, there was debate over how best to get results.
Marion Nestle, a professor of nutrition at New York University and a prolific author, criticised industry self-endorsement and the addition of nutrients to otherwise sugary or fatty foods, but applauded the traffic light systems adopted by some retailers and manufacturers.
“Consumers very well understand that the products with the big red stop sign are the ones they really shouldn’t be eating,” she said.
But PepsiCo’s Nooyi and Sara Lee’s Brenda Barnes spoke out against labeling certain food choices as good or bad with a traffic light system, arguing a healthy diet was about balance.
“Consumers are smart. They need facts not judgments,” said Barnes. She was joined by Kraft ceo, Irene Rosenfeld, in calling for a universal fact-based standard.
Safeway chairman, president and ceo, Steven Burd, went much further in his views, arguing business and government should change consumer attitudes to diet and lifestyle by rewarding what he called compliant behaviour with lower health insurance premiums.
Supervalu executive chairman Jeff Noddle took the middle ground, agreeing the industry needed to reinvigorate personal responsibility but not police it.
The downturn has stretched budgets but straight price-reduction is not going far enough to help, according to the Summit’s speakers. Retailers and food brands can play a major role in providing meal solutions and helping consumers back into the kitchen with recipes and food education.
The food industry is poised to benefit as the downturn steers consumers back to home-cooking. But many have lost the knack of creating and preparing nutritious meals. Supervalu ceo Jeff Noddle talked about his company’s role as a partner in the kitchen, marketing and merchandising in such a way as to remove the barriers to home cooking.
Sainsbury’s ceo, Justin King, took a similar attitude, showing how Sainsbury’s offered complete meal solutions and educational promotions, such as The Indian Feast and Love your leftovers.
Dia’s Antonio Coto stressed the need to sell solutions not products. During Argentina’s own financial crisis eight years ago, Dia profited from smaller pack sizes and cheaper packaging, as well as offering a full meal for a fixed price.
The safety of the food supply was also discussed at the New York Summit. Leaders ranked the issue second (after the economy) in their list of priorities for the year. There was widespread support for the Global Food Safety Initiative (GFSI). The scheme drives harmonisation of food safety standards in order to free resources for continuous improvement.
Sara Lee’s Brenda Barnes underlined the complexity inherent in food safety management and called for adequate funding of food safety authorities and a common set of standards and regulations.
Kraft’s Irene Rosenfeld urged delegates to support GFSI, calling for a common approach to supplier auditing and a commitment to GS1 standards on traceability.
Cargill’s Gregory Page said global food safety systems should be science-based and internationally-recognised: “Working in a fragmented way has a negative impact on the food system and allows food safety to be used as a barrier to trade,” he said.
Dia’s Antonio Coto said his company’s experience during Argentina’s crisis had shown the key to winning was all about attitude.
“Don’t make (your staff) more nervous than they already are. Be convinced about your victory. Dia raised salaries during the downturn to convince staff that they were on a winning team,” he said.
Delhaize’s Pierre-Olivier Beckers reminded leaders to relax. “Every survival kit should contain a sense of humour. Humour is irreverent and attacks our sacred cows. This is the very basis of innovation. If you can keep your humour and your optimism and summon original and fearless thought, then you have already won half the battle. The rest will come down to your attitude,” he said.
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Indra Nooyi:
the age of thrift is here |
PepsiCo’s Indra Nooyi said she was fortunate to lead an extraordinary company where personal engagement was high: “Each employee thinks of it as ‘my company’,” she said.
Industry leaders have already actioned wide-ranging sustainability plans, aimed at reducing environmental footprint and social inclusion. The Summit saw two of the world’s most powerful business leaders reflect on the shift in priority among businesses:
PepsiCo’s Indra Nooyi saw better, more connected times ahead. “Capitalism has changed because it’s had to. We will revert to the old ways. Companies used to understand that business and society need to work together. We are given a licence by society and we have a duty of care.”
“Our response to Hurricane Katrina helped us to see more clearly than ever before the opportunity and responsibility that we have as a company,” Wal-Mart’s chairman of the executive committee and former ceo, Lee Scott, told delegates. “What’s come out of that is a revitalised commitment to our customers, to diversity, to sustainability, to healthcare, to economic opportunity everywhere we operate around the world.” Scott went on to praise the work done by the Global Social Compliance Programme (GSCP), of which Wal-Mart is a founder member, on human rights and environmental conditions in the supply chain.
The crisis will punish those who refuse to adapt, said Delhaize Group president and ceo, Pierre-Olivier Beckers. However, those who could innovate would prevail. “Looking forward, long-term food supply challenges demand advances in technology.”
Jean-Jacques Lebel, president of L’Oreal’s consumer products division, stressed a downturn was no time to cut back on new product development. He showed examples of new lines developed by L’Oreal to meet consumer needs in the recession, under the project tagline Destination Beauty in Turbulent Times.
Supervalu executive chairman, Jeff Noddle; Kraft chairman and ceo, Irene Rosenfeld, and Sara Lee chairman and ceo, Brenda Barnes, agreed the silver lining in the financial crisis was an opportunity to rethink business models, making them leaner and simpler. “It’s a chance to cut out everything that doesn’t matter,” said Barnes. “It will make us stronger when we come out of the downturn,” Rosenfeld added.
Professor Robert Watson, chief scientific advisor for Defra, said food demand would double within the next 25-50 years. Success in meeting this demand depended on the development of new and emerging biotechnology, such as genetically modified crops, he argued.
The joining of forces between CIES, GCI and the Global CEO Forum in the creation of the Consumer Goods Forum and the parity of representation between retailers and manufacturers paves the way for true industry collaboration on non-competitive issues that benefit consumers.
Pick n Pay’s Gareth Ackerman, chairman of the Summit committee, said any industry collaboration should focus on consumer rights and result in lower cost, along with a safer, more sustainable food chain.
Via the Consumer Goods Forum, the industry called for collaboration on:
- Food safety: standards and traceability
- Nutrition: labeling and education
- Sustainability: sourcing and environmental stewardship
Pick n Pay Holdings chairman Gareth Ackerman pointed out the combined revenues of companies represented by the Summit delegation accounted for 3.5% of global GDP and the Summit had enormous power to make a difference.
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Lee Scott: make the most
of the time you have |
Trust, safety, sustainability and consumer rights are priorities. “Our role is to look after the consumer,” said Ackerman. “I urge you to grasp this opportunity to make a real difference to the people in your world.”
Waitrose managing director Mark Price, who is also chairman of the Prince of Wales Rural Action Programme, highlighted the parlous state of the world’s fish stocks, due to industrial over-fishing. He outlined a model for sustainable seafood sourcing and urged delegates to follow it for the benefit of future generations.
Wal-Mart’s Lee Scott had a final word of advice: “You won’t always be 100% perfect in what you do. But you can step out and commit to making progress. Make the most of the time you have in your positions.”