Food for a Better Future

A new direction for the global business of food

Sharon Natoli

• Publisher: Food & Nutrition Australia
• Year: 2018
• ISBN:
  9780975838921
• Edition: 1
• Topic: Business
• Subtopic: Food Industry
• Index: Business

Emerging consumer values are mobilising a shift in the drivers of consumers food purchasing
decisions. This evolution, galvanized by growing global consciousness around the way
we are living our lives, provides significant opportunity for those in the business of food
looking for growth in the decades ahead.
The ability to embrace change, and to move from a ‘me too’ position to one that is
more meaningful, will amplify business performance, strengthen the ability to meet key
performance indicators, re-ignite trust and create long term consumer engagement.
This book argues the case for a new direction in food marketing and innovation and
outlines the three essential ingredients for food businesses seeking relevance in the
years ahead.

PART 1:

A VISION FOR THE FUTURE

‘Our job is not to decide the future; our job is to leave the future as many options as possible’.

Alex Steffen

CHAPTER 1

GLOBAL PATTERNS OF CHANGE

From retail, to travel, accommodation to pet care, our commercial world is being transformed at an accelerating rate.³ And the business of food has by no means been left out. Large food businesses, once the main supplier for the consumer’s kitchen pantry, are today experiencing slower growth rates and declining profits. Changing consumer expectations about what their food will deliver are putting increasing pressure on companies to innovate, engage with customers and act responsibly, while technology threatens traditional retail outlets as it offers greater choice around the way we buy, grow and access food. Small food providers, by contrast, being more agile and responsive to changing consumer sentiment around food, are growing on average at five times the rate of their larger counterparts.⁴

Climate change, meanwhile, is threatening our food production, with some of the world’s most important staple crops facing declining supply. Global production of major crops such as maize and wheat have already been below expectations, and maize production in Africa is predicted to decline by as much as 22 per cent by 2050.⁵ In Australia, a University of Melbourne study found that a warmer climate will have wide-reaching consequences and will severely threaten crops such as chickpeas, walnuts and peaches and lead to a reduction in dairy milk quality and cheese production.⁶

Limited foresight has led to critical loss of crop biodiversity, threatening our ability to feed the world’s population, which is expected to climb to 9.8 billion over the next 30 years.⁷ At the same time, more and more people globally suffer from overweight and obesity, and food companies are blamed for their role by promoting overconsumption of unhealthy foods and drinks.

Global forces influencing the nature of the food supply are converging with changing expectations about the way businesses should operate. Concern about the role of business in communities and society is putting unconscious capitalism under scrutiny and businesses looking to maximise profits at all costs are struggling to engage. The banking industry is a good example. Tolerance is running out for a culture that focuses on the achievement of record profits while many customers face financial pressure and strain. As a result, the head of business banking for one of Australia’s major four banks has recently left his position in the company to start a new bank with a ‘back to the future’ approach that focuses on a return to relationship banking and a priority to serve small to medium-sized businesses. Responding to the sales-driven culture of the big banks, the new start-up states it doesn’t believe in the profit push culture and will not have sales targets. It is set to disrupt an industry that has been seen to be far too heavily focused on profit at all costs.

Similarly, around food, tolerance has run thin for misleading or deceptive marketing practises and for the promotion of unhealthy foods in environments such as schools, health facilities and sporting venues. Concern about unethical treatment of animals and the impact of food production on the environment, and a desire to take greater control of personal health through lifestyle changes rather than medical management, are all putting pressure on food businesses to evolve their practises. Like a sports team preparing for the grand final, many have put in place steps to prepare for the future, but the uncertainty of the opposition and the conditions of match day remain out of their control.

These changes are driven by many factors, not least mainstream acceptance of the impact of human activity on the health of the planet and the increasing burden of chronic disease.

The food system is a key contributor to, and victim of, climate change, and our diet is a key influencer of the prevalence of chronic disease. Given that these macro changes in population and planetary health are overlaying changing consumer and business consciousness, the future survival and prosperity for those in the business of food will rely on operating in a way that demonstrates a greater level of consciousness in the market.

It will no longer be acceptable to purposefully set out to encourage people to over purchase or overeat, or to mislead consumers with clever marketing tactics or bypass codes of practice that protect children from the influence of brand advertising, or to produce food in a way that harms the planet. Consumers won’t accept such practices, and for many, a business-as-usual approach will not produce the success that food businesses are seeking in the long term. Future survival, both commercial and societal, requires new thinking and a new leadership approach. For food businesses, this will increasingly mean taking greater responsibility for playing an active role in implementing initiatives that lead people and the planet toward a better future — one that is based on moving from the old world approach to the new world approach as outlined in Table 1.

Table 1: Old vs new world thinking

	Old World	New World
Business	Profit	Purpose
Food	Ignorant	Intentional
Environment	Acceptance	Action
Culture	Depletion	Retention
Social	Disruption	Connection
Health	Physical	Spiritual

The remainder of this chapter outlines the evolution in thinking that is occurring, how values are changing across each of these areas, and the relevance of this to the business of food.

Business — from profit to purpose

‘Have you heard about the great crusade?

We ran into million’s, but nobody got paid.’

Holy Grail, Hunters and Collectors

The value that has been put on wealth and success, as defined by the accumulation of money and possessions, is increasingly recognised as an obstacle in the path to a better future. That such accumulation has not led us to a happier place is witnessed across all sectors of society. In his book Global Mega-trends: Seven Patterns of Change Shaping Our Future, Stefan Hajkowicz proposes that one of the key mega-trends for the future will be the choice of experiences over accumulation of possessions.⁸ Rising interest in the minimalism philosophy, tiny houses, recycling and repurposing are signs of a shift away from the prestige once associated with material possessions. Today more of us understand that spending more time with people, participating in experiences, enjoying nature and consciously caring for our planet are more rewarding and meaningful ways of living our lives. This evolving change in our consciousness is having an influence across the business community too.

BlackRock, the world’s largest investment firm, is responsible for US$1 trillion of investment funds. In January 2018, BlackRock’s founder and chief executive called on business leaders and their companies to do more than simply strive for profits. The mood of society is changing around social responsibility, he argued, and now demands that businesses, both public and private, serve a social purpose.⁹

Here was the world’s largest investment company challenging the very companies it invests in to engage with the community and embrace a greater sense of purpose. It was a clear signal that a shift toward greater corporate consciousness is pervasive and rising.

Several converging factors are driving this change. Firstly, certain demographic sectors are set on doing meaningful work and therefore seek employment with businesses that demonstrate a purpose they can relate to. In his book Drive: The Surprising Truth about What Motivates Us, Daniel Pink talks of how two key generations, baby boomers and millennials, are shifting the centre of gravity in organisations by not rating money as the most important form of compensation.¹⁰ Today they are more likely to choose to work for companies that can offer them a place in ‘a great team’ or the opportunity ‘to give back to society’ through their work. Businesses that operate ‘not only for profit’ are becoming increasingly valued as places to work.

Secondly, changes in human intelligence may be increasing demand for greater business consciousness. The Flynn effect, a term used to refer to the finding that IQ is rising by 3–4 points per decade¹¹, may be contributing to people’s dissatisfaction with mundane, repetitive work and their desire for work that is fulfilling and meaningful. It is surely driving people to seek out businesses with meaningful missions.

This is not unique to one industry but rather is a cross-industry evolution. Fast fashion stores are recognising their contribution to land fill and installing recycling bins in stores to facilitate re-purposing of fabric. The banking industry recently started an advertising campaign that emphasises ‘putting people before profits’ and contributing to local communities. A major gas provider in Australia is promoting its switch to renewable energy. A men’s clothing brand is incorporating diversity in its models and advertising and including messages on its shopping bags about reusing the bag before recycling it. Ikea has committed to producing as much renewable energy as the business consumes by 2020; it is also working with cotton farmers to adopt more sustainable practices while still maintaining a profit. KeepCup, a reusable coffee cup launched in 2009, experienced a 400% lift in sales after the TV program ‘War on Waste’ was aired and highlighted that standard takeaway paper coffee cups are not recyclable.

Businesses advancing in this direction are starting to reap the rewards, not only in relation to social return on investment, but also in financial returns. The 2017 Responsible Investment Benchmark Report found an increase in the number of asset managers using responsible investing as a core theme from 69 in 2016 to 74 in 2017, with the number of investment products offered by these managers increasing from 128 to 224 over the same period. The Responsible Investment Association reported that more Australians want their investments to align with their values, in particular those based on making a positive social or environmental impact. The report also found that funds based on responsible investment strategies generally performed better than equivalent Australian or international share funds.¹²

In the food space, Whole Foods Market in the US has operated with purposeful food-related values since its inception and has reaped the rewards both socially and financially. The company commenced operations in 1980 and 37 years later was sold to Amazon for US$14 billion. Among its food related values are quality standards that include a commitment to feature foods that are free of artificial preservatives, colours, flavours, sweeteners, and hydrogenated fats. The company is also committed to upholding animal welfare standards, reducing the use of pesticides in fresh foods and flowers, sourcing first from farmers who grow food using sustainable practises and providing fresh, wholesome and safe food that supports health and wellbeing.

Wholefoods takes an active role in influencing the broader environment in which it operates by supporting food related projects and initiatives across its supply chain and through its Whole Kids Foundation, Whole Planet Foundation; and the Whole Cities Foundation. Examples include increasing access to nutritious foods in the communities in which the company operates and the provision of microloans to entrepreneurs for projects that help to lift people out of poverty in the 69 countries where the company sources its products.

A study that included a comparison of financial performance of brands under the Unilever umbrella also confirms the value of conscious marketing and business practice within the fast moving consumer goods market.¹³ Brands that had integrated sustainability into their purpose and products, were responsible for 70 per cent of the company’s growth in 2017.¹⁴

While it would be easy to imagine that purchasing products based on their sustainability or social purpose credentials is a phenomenon peculiar to developed countries, this is not the case. An earlier study by Unilever also found that 88 per cent of respondents in India and 85 per cent of those questioned in Brazil said they felt better when buying products that are produced sustainably, while in the US the figure was 78 per cent and in the UK 53 per cent.¹⁵

Speaking about the research, Unilever’s Chief Marketing and Communications Officer said: ‘This research confirms that sustainability isn’t a nice-to-have for businesses. In fact, it has become an imperative. To succeed globally, and especially in emerging economies across Asia, Africa and Latin America, brands should go beyond traditional focus areas like product performance and affordability. Instead, they must act quickly to prove their social and environmental credentials and show consumers they can be trusted with the future of the planet and communities, as well as their own bottom lines.’

In July 2018, four of the world’s largest food companies initiated further action in this area. Nestle USA, Unilever USA, Mars Inc and Danone North America together formed the Sustainable Food Policy Alliance. The group aims to undertake advocacy and action to influence public policies around what people eat and how it impacts their health, communities and the planet.

Evidence is mounting for the benefits of adopting and demonstrating a higher level of consciousness as a long term strategy for business prosperity.

Food — from ignorance to intentional

‘Obesity and related illnesses are a greater threat to our quality of life than war, infectious disease and terrorism.’

Yuval Noah Harari

Obesity levels worldwide have tripled since 1975, and most of t...