Some 800 c-level delegates were on hand as the Global Summit celebrated its 60th birthday in Cape Town this June. With it focus on seizing opportunities in the face of disruption, a number of sessions referenced consumer health and the impact changing consumer demands are having on our industry. However, there were three sessions in particular that focused on the importance of the health and wellness of people around the world.
The below summaries are taken from the Delegates’ Early-Bird Executive Summary of the 60th Global Summit, held in Cape Town from 15th-17th June 2016:
Jonathan Farnell said that the EAT Foundation brought together over 500 of the key players in the food chain to break down barriers between different stakeholders in the food chain and improve nutrition worldwide. He reminded the Summit of the unprecedented magnitude of the situation the world faced. We were in the wake of an obesity epidemic and yet also faced significant areas of malnourishment (and the two sometimes overlapped). Our food production systems were just about adequate to feed the world’s growing population, but only if we stopped throwing 30% of our production away. And what we chose to put on the plates of the population would have a tremendous impact on the planet, especially as increasing wealth saw diets pivoting towards meat and ultra-processed food.
Farnell then joined Walter Robb and Denise Morrison for a panel discussion moderated by Alex Thomson. Morrison said that although health and wellbeing were in the DNA of the Campbell Soup Company, it had had to be activated in a more contemporary way. She had really gone to work on the company’s purpose and assembled a cross-functional team of leaders to work out how to articulate it in a way that really resonated. It had been the most galvanising thing she had ever observed in an organisational setting.
Robb also emphasised the importance of purpose. That of Whole Foods Market was all about fresh food, love and respect, and the belief that full health was not so much the absence of something, but the presence of something. They had built steadily on the basis of offering food with no additives and no preservatives, increasingly using third party verification to set and maintain standards. They had a passion for transparency and accountability, in turn driven by consumer hunger to know where their food came from. He applauded the steps the Campbell Soup Company had made to do the same and said that as consumer goods companies, they could use their power with producers to raise the bar.
Morrison related how her company had decided to improve the health and wellbeing of its headquarters home town in Camden, New Jersey. In a public-private partnership they had committed to reducing the 40% obesity rate to 20% within the next ten years. She noted how public budget pressures made the challenge harder because nutrition education was often the first item to be cut, and physical education the second.
Robb said it was also important to revisit the prevailing relationship between quality and price. Not all food was created equal. There was a cost to good food and it was important to resist a race to the bottom. He noted that in the US, people spent just 9% of GDP on food versus 15-16% in Europe.
Paul Bulcke said he was not going to speak about environmental sustainability in isolation but rather how business could stay involved for the long term. The mission for The Consumer Goods Forum is better business for better lives, and being good for society is what business had always been, creating shared value.
Africa showed what creating shared value sustainably was about. It was definitely a continent of opportunity and growth, but how did you go beyond that? You needed the right mindset. Nestlé was 150 years old this year, a 90 billion Swiss Franc company with operations virtually all over the world selling 1.3 to 1.4 billion products a day. In Africa Nestlé was 100 years old in South Africa this year. The company had 26 factories in Africa, and a research and development centre in Abidjan.
Creating shared value was a fundamental concept at Nestlé which combined both a what and a how. It was a conviction that to be successful over time, you had to create both shareholder value and create value for society as well. The company looked at this in terms of three intersecting areas: nutrition, rural development and water. In nutrition, the company had been developing products which were fortified with micronutrients. Products like stock cubes were a potential vehicle for iron, tackling anaemia in pre-school children. In total, some 200 billion products globally were fortified by Nestlé. But nutrition was as much about education as formulation of products. The Healthy Kids programme was operating across the world, touching over half a million children in sub-Saharan Africa alone. The company also provided cooking lessons to mothers at wet markets.
Rural development was intimately linked with local raw material sourcing. Two thirds of Nestlé products used such ingredients, up from just a half a few years ago. One example was the company sharing plantlets for coffee with local farmers, training some 13,000 farmers to get better, stable yields. Similar programmes existed to promote grain quality locally, increasing the volume of locally sourced grains by 28%.
Water was the most precious resource of all, and at the heart of Nestlé’s business. Water programmes, like those for food and nutrition, were long term commitments. Providing treatment plants and local access to water were accompanied by long term reductions in water usage in manufacturing. All of this work had still to be consumer-centric, respecting different tastes and common concerns globally.
In all of this activity, business and societal engagement were combined for the long term, and based on respect for society, the environment and diversity. But Bulcke said all economic activity created value for society and at some point civil society had lost sight of this fundamental link between financial and societal value. By communicating clearly and transparently, companies could show how the United Nations’ Sustainable Development Goals could be served by business that was conducted responsibly.
Dick Boer said that with the Summit in Cape Town, he first wanted to celebrate the fact that 10 years ago, Ahold had established the Albert Heijn Foundation to put 5% of purchase cost in Africa to growers across Africa. That helped build capabilities locally. As an example, fresh cut fruit from Ghana was prepared by 3,000 people in factories there, and in store in the Netherlands within 24 hours.
He commented briefly on the Ahold-Delhaize merger, having shown a video which demonstrated the remarkable similarities in their joint history over almost 150 years. He said both were characterised by operating great local brands within common beliefs.
The macro trends facing the food business were profound: a fragile economy prone to shock, major demographic change and the disruption of new technology. But on the other hand, Boer said he still believed in the potential of existing food retail companies to identify and deal with the specific trends facing the consumer goods industry. He characterised those as a drive for more value, the sense that time is a luxury, the desire for living better and going digital. If he had to concentrate on two, they would be the third and fourth of these. And he also believed that change was in their DNA, because they already had a history of driving transformation from within.
Their omnichannel transformation had started almost 30 years ago and included the acquisition of Peapod.com and bol.com. Bol.com had taught them a great deal, because they sold 11 million items online, and a significant proportion came through third party vendors. They were thinking about opening up their network to other food vendors as well. They believed they could achieve a sustainable 6-7% of their sales online by 2017 because they owned the supply chain in fresh and regarded it as a real lever for growth. That meant sometimes they could catch up. Having missed the meal box market initially, they had become the number 1 in the Dutch market within six months of launch. And there were huge opportunities for innovation, improving accessibility and convenience, in fresh. Their ability to marshal food knowledge also allowed them to be effective specialist media owners, both in printed and online channels.
Digital change was reflected in the roles within the organisation. More than 1,000 people now worked on digital around the world, focusing both on mobile interfaces and on the distribution backbone to support the business. Track and trace functionality allowed customers to see where the delivery van (or delivery electric bike in Amsterdam) was on its journey to their home. But it also allowed Ahold businesses to be much more personalised in their shopper interfaces. For instance, in the Peapod app, they were tailoring proposed shopping lists to historic purchasing habits and health needs. Other applications could include helping customers with exercise and integrating their diet and lifestyle, because as a food retailer, they were at the centre of the “health and wellness” ecosystem. Being able to connect with consumers at the point of need allowed both the retailer and its suppliers to provide relevant solutions at the right time.
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