Sustainability Drives Competitive Advantage in Food Industry Supply Chain

Parents – mainly mothers – determine most household food purchases. Questions race through their minds as they navigate the labyrinth of products, packaging and prices.

• Is this healthy for my family?
• Will my family like this?
• How much time will it take to prepare?
• Can I afford it?
• How will it impact the future of my children, my family, my planet?

The food industry supply chain wrestles with a similarly lengthy list of concerns when gauging the value shoppers place on the answers to those questions.

Understanding the complexity of consumer relationships with brands is never more interesting or instructive than within the food and beverage category.

Equally complex is the relationship between consumer purchasing preferences and their understanding and commitment to the value of sustainability.

And, some would argue, even more complex is determining whether sustainability in all its iterations can be a competitive advantage for those in the food industry supply chain.

Initially, many in the food industry took a wait-and-see attitude toward infusing sustainability into the marketing mix. Skepticism and suspicion of another “green-washing” campaign, as it relates to the eclectic and confusing world of sustainability, permeated the perceptions of many food industry gatekeepers.

What We Know

Sustainable food marketing does not cost the industry more. In fact, significant savings are attainable while taking care of people, planet and prosperity.

For example, the lightweight and compact construction of cartons allows brand owners to actually transport more product and less package at the same weight. Manufacturers save on inbound packaging shipments and ship more product at the same price, generating more revenue. And, consumers take less packaging home, generating less post-consumption waste.

To further illustrate this point, examine the wine industry. Cartons are quickly gaining on traditional glass bottles as the package de jour. Consumers, brands and retailers are discovering the benefits of a package that provides both convenience (portion flexibility, transportability, taste profile) and sustainability (weight reduction, energy savings, reduced carbon footprint and more).

Beyond these factors, many other influences are shaping the degree to which the food industry adopts sustainability as a competitive advantage.

Key stakeholders are increasing pressure significantly within the marketplace to encourage companies to adopt emerging environmental and recycling-oriented values into their commercial, consumer and policy choices.

Media, non-governmental entities (NGOs), and government are actively communicating, influencing and organizing policy, regulations and public opinion around environmentally-oriented food and beverage packaging.

Consumer preferences add momentum to this evolution through demand for environmentally high-performance packaging.

Building on consumer momentum are retailers like Wal-Mart that drive environmental performance goals into the supply chain. Brands naturally respond to this pressure by establishing packaging goals that strive for stronger environmental performance.

What It Means

Significant amounts of data exist around the sustainability movement and the food and beverage industry.

Market data now show, for example, significant gains in consumer awareness and commitment to living more sustainable lives. The data also show people are consistently prepared to consider the environmental impact of their food purchases relative to how it impacts the future for their families and humanity.

But does consumer awareness of sustainability translate to competitive advantage? Does consumer intent translate to transactions?

Whether sustainability matters or to what extent it matters in determining consumer behaviors seems to reside somewhere between “it depends” and “it’s evolving.”

Studies and experience show the sweet spot for consumers probably doesn’t relate to the question of price, but to the questions of taste and convenience. While many consumers (35 percent in the U.S.) are willing to pay more for ecologically responsible products, they are increasingly unwilling to compromise when it comes to the taste and convenience of food products and packaging.

Around the world, demographic shifts, such as a growing middle class and growing urban population, are driving an ever-increasing demand for convenience. The World Bank expects the global middle class to soar from 430 million in 2000 to 1.15 billion by 2030. These new middle-class consumers are particularly interested in products that meet the needs of their busy, urban, on-the-go lifestyles. And, they will demand greater convenience without compromise on quality, safety, or sustainability.

In fact, a 2011 Thompson Reuters study reports that consumers are torn when choosing between environmental conscience and convenience when making food and beverage packaging decisions. And a recent study by Pira International confirms that consumer demand for convenience is considered one of the three largest barriers to the growth of sustainable packaging.

When it comes to competitive advantage for the food industry, though, definite opportunities exist for manufacturers and retailers to develop new sources of value at the intersection of consumer demand for environmentalism and convenience.

In short, the more immediate and concrete convenience and taste profile functionality of carton packaging creates incentives (for consumers, food manufacturers and retailers) beyond the less immediate, less concrete desire to help the planet. This alignment of immediate benefits (convenience, taste) and long-term benefit (environmental responsibility) creates a unique and powerful “path to permission” that helps unlock the business value of sustainability as a competitive brand advantage.

Jeff Fielkow is Vice President of Sustainability and Recycling Programs at Tetra Pak Inc. Jeff is responsible for designing and executing the company’s sustainability and recycling strategies throughout the U.S. and Canada.