Published on: June 9, 2003
Next week, CIES will convene its annual World Food Business Summit in Barcelona, Spain, describing it as the "annual rendezvous of food business leaders who understand that anticipating the future is key to success." CIES has long one of the most interesting events of its kind - convening only the top leadership of the world's major food companies, considering issues and providing thought-leadership that is provocative and timely.
There may be no better time for food issues to be considered in a global environment, considering some of the tensions that continue to be felt between the United States and some of its brethren in the world community. And especially now, in an environment where companies like Ahold, Fleming, Kmart and others have given consumers reason to doubt their integrity, the ideas and strategies being expressed at CIES should have enormous resonance.
will once again be providing reports from CIES this year, with news and commentary about the people, the presentations, and the visions of the future of the food industry that can be found there…not to mention reactions to the sights, sounds and cuisines to be found in Barcelona.)
To get a preview of some of what we'll be seeing and hearing at CIES this year, we conducted an exclusive e-interview with Richard Fedigan, president and CEO of CIES.MNB: CIES will begin this year with a series of sessions that deal with "success in an age of skepticism." Clearly, the skepticism that the financial markets may be having about the food industry is greater now than a year ago, and there may be some evidence that this could be seeping into the consumer response as well. What are the essential financial and ethical challenges that food retailers must face up to in 2003 and beyond?Richard Fedigan:
I think it's appropriate to look at the recent financial and ethical questions about the food sector as an extension of a general climate of uncertainty and disillusionment about business and the development of global political, economic and moral society.
We decided on "Success in an Age of Scepticism" as the title for our Barcelona Summit before the Iraq war, the Ahold revelations, and SARS.
As you know, our Summit is not intended to be a conference in the sense that our members attend, spend a few days and fly back to life as usual.
We try to crystallize the main issues challenging our business from within and without, and this sometimes makes for a Summit experience that is not only provocative, but even a little uncomfortable for some global leaders of our business. We make no apology for this and in fact, it took some gentle persuasion from my more diplomatic colleagues to talk me out of calling Barcelona "Success in an Age of Cynicism"!
I think the key message we're trying to get across here is that on a number of fronts, from corporate social responsibility all the way through to marketing and electronic languages, the food sector needs to speak with a new vocabulary of reassurance and responsibility to assuage the sometimes irrational fears of the global community of consumers. This language must be spoken and the message delivered with confidence, but not with complacency or defensiveness. The only way we can really do this is to embrace it with honesty and do what it takes to deliver.
If a cynic is someone who already to knows the price of everything, the only thing we can do is deliver true value.MNB: Is it your sense that now, more than ever, just being big isn't enough to survive -- that, in the words of one of your planned sessions, "that number one has to think like number two in order to survive"?Richard Fedigan:
Actually, big may be necessary, but it certainly isn't enough.
You'll find us coming back to the "trust" issue again and again in Barcelona, for retailers and suppliers, big and small companies.
The Barcelona programme already features some retailer and supplier behemoths, from Carrefour to Wal-Mart, Starbucks to Coca Cola.
However in addition to the latest, and very concrete developments with the Global Food Safety Initiative, our "Image of the Food Business" Initiative launched in Atlanta last year, and the presence on the programme of the President of the International Olympic Committee and the Secretary General of Amnesty International, we have also added, in the last week or so, Sir Bob Geldof, founder of "Live Aid", and José Maria Garcia, Secretary of the agency responsible for supervising Spanish and European stock markets."
Global Scepticism will be tackled head on in Barcelona.
Coming back to the "big isn't enough" question, downward pressure on growth has been such that discount giants like Wal-Mart and Target have seen same-store sales slow sharply in March. Wal-Mart's decision to sell its McLane food service distribution unit in order to concentrate on its core retail business illustrates how tough this context is. However, the rewards are also considerable for companies that can match scale with expertise in local operations and clear communication with stakeholders. Wal-Mart, Tesco, Loblaw and Whole Foods are good examples. Elsewhere, Wegmans, H.E. Butt, SuperQuinn in Ireland, and NTUC Fairprice in Singapore still get the mix right for their customers in the face of stiff competition from the big "space invaders".
In China a few weeks ago, I saw at first hand (without a mask!), how the locals are perfecting not research and development, but "copy and development" adapting best international practices to local market requirements, and doing this very successfully, thus raising the stakes for the big boys in the biggest market on earth."
In other words, food retailers are on a steep learning curve as they continue to expand and diversify.
To handle this extra strategic and operational complexity, retailers and their suppliers need more than ever to work together to promote a responsible image for the sector on the one hand, and increased effectiveness on the other.
One very good and increasingly urgent aspect of this last point is vastly increased cooperation between associations and industry bodies around the world.
Beginning with the co-organisation by AIM, CIES, FMI and GMA of a series of global CEO Forums a couple of years ago, and now involving GCI (the Global Commerce Initiative), and a newly-invigorated EAN International (including UCC), we are now on the verge of having and using a common global eCommerce language and standards, as well as being well- positioned for the introduction of the Electronic Product Code and RFID standards.
A lot done, and still some way to go, but we are convinced that we are entering a new era of global co-operation that will make life more coherent for sector companies large and small.
One size does not fit all, and we have been very careful in our food safety, sector image and ECommerce standards initiatives to ensure that there is a place at the table for companies from all around the world, large and small.
Efficiency and effectiveness are laudable objectives, but ensuring that consumers can still choose what type of outlet they shop in is critical also, and we must let the market make this choice rather than favouring the big players."MNB: It sounds like one of the things you are going to try and do is drive home the importance of food to the food retailing experience -- a connection not always made by retailers that sometimes believe they are selling boxes and cartons and bottles. Why, in your mind, is this an important connection to make?Richard Fedigan:
Let me answer this in a few words, and they're not new either. This business is not about selling ingredients at the lowest price.
It's about providing value solutions to complex consumers who don't have to give their money to us if we don't give them good reasons.
They can fill their stomachs or get their value somewhere else, or in some other way.
It's up to us to figure them out, not the other way round.MNB: The differences between US policymakers and EU policymakers on the issue of genetically modified food never seems to have been greater, what with the recent complaint filed by the US in the WTO. What bridges need to be built in order to find common ground between the US and EU on this issue?Richard Fedigan:
This issue is a political and cultural mess, and I'd rather stay out of it!
However, here's a few points, and you'll note I'm using some terminology not for the first time:
In Europe, consumers are, at best, sceptical about GMOs. They don't believe the case has been made for the advantages of using them. Retailers have no choice but to respond to this scepticism until the debate is resolved.
The US seems to be objecting to the EU position that US exports to Africa, for example, be GMO free!
Better qualified people than me are working on resolving this.
My own personal view is " Stop all agricultural subsidies, Now!"MNB: What are the top two or three strategic imperatives facing global food retailers in 2003 and beyond?Richard Fedigan:
We need to get the cake growing again, not just pick up someone else's crumbs.
Create! Invent! Imagine!"
Specific issues like food safety, nutrition and obesity, the right and privilege of communicating with the consumer, GMOs, globalization, unemployment, security and cultural identity will grow in importance.
However, the single critical challenge for our sector is how to step forward collectively and address a pervading mood of scepticism before it turns into entrenched cynicism.
This will require a positive new vocabulary that projects confidence, competence, reassurance and responsibility, without complacency and defensiveness.
This represents a step-change for the sector, and to succeed, we have to co-ordinate our efforts much more closely. Nothing less than the credibility of the sector is at stake.
As CIES celebrates its 50th anniversary in a few weeks, we have already begun the process of becoming much more issues-based, and our role going forward will be more and more about global sector and top-level network orchestration, concertation and communication, above and beyond the organisation of top-class international conferences. (Faithful Summit fans should not be alarmed. The CIES World Food Business Summit will remain the global "gold standard"...world-wide).