How it all started
2017 was a bad year for some industry organizations. Mars, the producer of M&Ms, denounced a study on sugar intake guidance, funded by ILSI North America. ILSI is an industry organization that counts many global food manufacturers among its members, including Hershey, Mondelez, Danone, and, until 2016, Mars. One of the issues with the manuscript was that at least one of the authors did not disclose that she held a grant from a major soda pop producer. And according to Mars, the manuscript undermines the work of public health officials and draws all industry-funded research into question. Matthias Berninger, spokesperson for Mars, stated the study creates more doubt for consumers rather than helping them make better choices. The transparency of ILSI North America was called in question. Mars consequently withdrew its support for ILSI.
In the very same year, the Grocery Manufacturers Association (GMA) lost ten major food producers as members. The exodus of, again, Mars, Unilever, Nestlé, Tyson Foods and others came after GMA took a different position on some of the major issues, including added sugar labelling, sodium reduction and GMO labelling. In addition, GMA was ordered by Washington State to pay $1.1M, the largest campaign finance penalty, in what was seen by some as a money laundering case to avert a GMO labelling bill.
The bigger picture
Clearly, it was not just what made major food manufacturers leave their previously revered associations. The food industry had come under scrutiny by governments and consumer organizations, criticizing that the manufacturers of pre-packaged products produced unhealthy foods, often with an enormous carbon footprint. With cost of healthcare rising due to factors like obesity, Britain announced a sugar tax in 2016. In addition, there appears to be an inherent mistrust in the food industry that has developed over the recent years among the millennials. If you google “distrust food”, among the first hits you see are articles about major manufacturers. A significant percentage of this important clientele of the food industry simply lost trust. Some of this distrust is likely to also have been caused by the scandals the food industry has seen recently, melamine, horse meat, and fake products to name just a few. And losing trust means losing business. According to Rabobank, the top 10 branded food-processing companies in the United States have lost 4% of their market share in the past five years.
A New Strategy – The Answer to All Questions?
In Douglas Adams novel, Hitchhiker’s Guide to the Galaxy, the answer to the ultimate question of life, the universe, and everything was answered by the supercomputer Deep Thought to be “42”. For the four major players in the food manufacturing segment, the answer seems to be SFPA. SFPA stands for Sustainable Food Policy Alliance, and was formed in mid-July this year by Mars, Danone, Unilever and Nestlé, which have a combined annual revenue of $200 billion. And it is a smart strategic move. It’s a fresh start from which trust can be build without a checkered history and no negative associations (pun intended) or press.
What does SFPA Work On?
According to the Alliance’s website, the focus is on the policy development in five areas:
- Environment
- Nutrition
- Consumer Transparency
- People and Communities
- Food Safety
Policies in the Environmental segment will have a focus on sustainability, renewability and reduction of carbon footprint, as well as other factors that can adversely affect the climate. The keywords in the Nutrition segment are sodium reduction, and healthier products. Consumer Transparency includes clearer, easy to understand labels, e.g. on GMO or added sugar. People and Communities means more support for suppliers and their families at farm level and their own factory workers in different geographies. Food Safety, the last item on their list in this sequence, will focus on FDA’s Food Safety and Modernization Act (FSMA) and sharing food safety knowledge.
Will SFPA be the Answer to All Questions?
The short answer is ‘no, but…’. While the effort and good intentions of the new strategic alliance are laudable, it needs to be seen if this is sufficiently convincing for consumers, especially millennials. The 4% market share loss that the top ten companies suffered, according to Rabobank, has been lost to small, innovative companies with new, healthier products. It is therefore likely that besides the work within the alliance, we will see some acquisitions of new, innovative food companies to complement the strategy and achieve set goals faster, as many large, multinational corporations have become slow moving and inflexible.
Certainly, Nestlé has embraced the goals of the new alliance and frequently advertises on TV its support of families of coffee farmers (including education of their children) and sustainability achievements of the Nespresso brand.
Time will ultimately tell if the newly formed powerful alliance will have a significant positive impact on how millennials perceive global food manufacturers. Right now, the signs are good. SFPA’s power will be put to the test when GMA and SFPA lobby at FDA for opposite goals.
