Big Food Loses When It Keeps Consumers in the Dark
By Warren Thayer, RetailWire BrainTrust / Editor, Frozen & Refrigerated Buyer
Seems like everyone from Bernie Sanders to Donald Trump is tapping into the anger of America. And what are we so mad about?
Well, for starters, Congress is bought and sold. All the "rules" favor the rich. Major corporations lie and keep things opaque so consumers are kept in the dark as much as possible.
Yeah, people — especially those coveted Millennials — are mad as hell. They want change, honesty, and things done for the public good, not just for the fat cats. And these awakened, angry people vote, most notably in this context with their wallets.
Our politicians are at least talking the talk that they know people want to hear. Will they walk the walk? I doubt it. But just talking the talk may be a step in the right direction.
And so begins my rant at many of you who lead trade associations and "Big Food" and their ongoing anti-GMO labeling battles and other efforts to obstruct transparency requirements around the food supply chain. Do you really think you can continue winning by making vigorous attempts at keeping consumers in the dark about what they're eating? That you can continue to bribe Congress to help line your pockets at the expense of consumers?
Sure, some of you in Big Food who are perceptive enough to be worried are attempting genuine inroads here. Congratulations, although you may have already burned your bridges. Fact is, I've never seen so many enthusiastic start-ups where the calling is about producing good, healthy food more than it is about cutting corners to max out profit. And they're gaining share against Big Food, as was noted in a Fortune magazine cover story last summer. Most of Big Food remains focused narrowly on quarterly earnings and stock prices. When some of these Big Food companies and their suspender-snapping CEOs crash and burn, I won't miss them.
Will smaller companies focused on health and consumer transparency continue to gain share against Big Food? Should Big Food be more motivated to increase transparency around the food supply chain?
Comments from the RetailWire BrainTrust:
Amen, brother. I suspect not everyone on this panel agrees with you, but you can count me in!
The fact is that social media has created the transparency that "Big Food" tries to suppress. And that we are among the last developing nations to NOT have that transparency doesn't help Big Food either. I can remember country of origin being on fresh fruits and vegetables in Australia all the way back in the '90s.
We're just getting there here now. The bigger issue is that it becomes a class-oriented concern. Because it costs more to buy organic/local, etc., it ends up being something the wealthier do, while the poorer just keep being squeezed into chemicals. And the fact that empty calories are so bloody cheap here keeps them buying fast food (which we know is essentially addictive).
Until the poor are offered healthy options, Big Food will continue doing what it does: obfuscating, paying their local Congressman and carrying on business as usual.
Paula Rosenblum, Managing Partner, RSR Research
This article is well written, and stores need to offer options for consumer choice. Herein lies the problem if I may be so blunt. Organics are wonderful, and our U.S. standards are very high. However, I cannot sell any organic produce or meats in my store, as our population cannot and will not pay for them. This is true of the majority of stores in rural areas, not the exception, and we have to provide value to our customers every day. The GMO issue is changing, as more and more companies are offering the non-GMO foods at fair prices and they can produce them on a large scale.
This is just not the case when it comes to organic perishables, and I wish it were different, but a quality broccoli or a tomato at a good price is what our customers need, and across the rural towns in America this is how most consumers buy their perishables, as they simply cannot afford to go all organic to feed their families.
These are my honest thoughts on the subject, and until the organic perishable pricing gets closer to the products we sell in price then I don't see much change, at least here. Being transparent is critical, and I agree with Warren on Big Food changing the way they promote their products, but never let us forget that the folks out there still need fresh foods at prices they can afford to feed their families every day. Thanks.
Tony Orlando, Owner, Tony O's Supermarket & Catering
The GMO labeling issue is the poster child for Big Food's problems. More and more people want disclosure about GMOs (although they are still a minority) and producers spend more and more to fight it. Ultimately, as the voice for labeling grows stronger and big corporations continue to try and hoodwink consumers, the door opens for start-ups that produce what the tide of consumers want.
Any strategic large food producer that wants to grow and be profitable in the future needs to wake up and smell the coffee. Rather than spending many millions fighting consumer actions like labeling laws, only to lose customers no matter what the outcome, they would be wise to think like a start-up and move towards filling market demand. The Big Food companies that can leverage their scale and distribution to deliver healthy (or seemingly healthy) foods with ingredients that consumers want, will win every time.
Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive
The companies that focus on health and consumer transparency will be rewarded if they maintain their diligence and commitment to those principles. Consumers will pay a premium if your product and brand help the world — its people, its environment, its well-being. Recent news cited a number of cheese manufacturers using cellulose filler, products labelled as "extra virgin olive oil" being cut with cheaper canola oil and a number of other false advertising claims. Big Food may be making healthy profits until exposed but they have zero brand equity.
Those smaller companies that can supply local markets with healthy, cost-competitive (not cheap) alternatives that support a meaningful cause will be commercially rewarded by Millennial and forthcoming Generation Z shoppers.
Adrian Weidmann, Principal, StoreStream Metrics, LLC
It seems to me there is no question that "David" producers and suppliers will continue to battle — with increasing success, by the way — against "Goliath" food companies. And, there is no question that transparency is — in general — a sound go-to-market principle.
But the issue here really is one of affluence.
Put bluntly, this is (relative to global averages) a rich person's problem. There are millions of people on this planet that would be happy to have access to the kinds of foods Millennials and others disdain.
Why? Because the alternative is starvation. Oh, and speaking of those critics ... how deeply do they look at what it is they are really eating?
Warren raises a great point. People ought to have access to clearer labeling, but they also need the education to understand what those labels do and — perhaps more importantly — don't mean.
How many Millennials would ask for a little extra shaved Parmesan on their truffle oiled shrimp risotto if they knew federal standards allow up to four percent of their "cheese" to be cellulose or that their shrimp were harvested by slave labor?
How would those "organic" field greens taste if the person munching down on them knew that they had been sprayed by "approved" pesticides? Or what would purists say if they knew enough about botany and birds' elimination habits to understand how easy it is for GMO seed to gain ground in organic fields? And exactly what has the upscale demand for quinoa and other foods done for indigenous populations in emerging markets?
And I could go on and on and on. And then there is that nagging question of demand.
One can't have total transparency and "politically correct" food and the broad assortment of crops available that Millennials and others demand on a 24/7/365-day-a-year basis. That just isn't how the world works.
So, I agree with Warren. The industry needs to do a better job of labeling and educating but, on the demand side, activist consumers need to do their homework as well. There ought not to be any such thing as a fact-free lunch.
The entire economics of food production has had an explicit bias toward increasing yield since Neolithic farmers started cultivating lentils and other products. The notion of micro-agriculture is attractive, but it is bound to have profound consequences.
Ryan Mathews, Founder, ceo, Black Monk Consulting
Hooray to Warren for being so frank about the ugly truths in much of the Big Food industry. I agree, but will add that working in Big Food kept my family going financially for a long time. But over time, we switched our preferences to more locally-produced and organic foods, and now we use very few "packaged" items.
I fully support the plethora of new brands that are working hard to give us healthier options and providing full disclosure on how they are made, even if the prices are higher. The trend toward transparency and accountability, fueled by access to truthful information, is not going to reverse. So if Big Food continues to ignore the shopper and not deliver, the shopper will vote with his/her wallet and the outcome will not be pretty for the classic CPG brands.
And let me be clear: tiny changes that really don't address the issues will not save the biggest brands. The companies that fully address what the shopper wants and understand that this culture shift is the new normal will prevail.
Anne Howe, Principal, Anne Howe Associates