Published on: January 14, 2008
SCOTTSALE, Arizona -- Over the next few days, MNB Content Guy Kevin Coupe will be filing regular reports from the Food Marketing Institute (FMI) Midwinter Executive Conference, being held this year at The Phoenician in Scottsdale, Arizona. Check back regularly for updates on presentations made by the likes of Safeway CEO Steve Burd and PepsiCo CEO Indra Nooyi, plus reports on sessions focusing on such disparate subjects as cloning and health and wellness marketing.Posted: Monday, January 14, 2007, 2:35 pm ESTBurd, Nooyi Urge Creation Of Coalition Focusing On Health Care, Obesity
In separate presentations today to the FMI Midwinter Executive Conference, the CEOs of Safeway and PepsiCo each threw down a challenge to the industry to create a coalition that can fight obesity in the US and develop a more holistic approach to the health care issue.
The challenge from Safeway’s Steve Burd certainly had more meat on it, since it came a year after he’d rocked the same conference with a speech about corporate and national health care policy that stressed the importance of personal responsibility, and pledged to create a corporate approach at Safeway that would have enormous impact on both the health of its employees and the health of the company’s bottom line.
This year, Burd’s update on last year’s speech came after a 12-month period in which his company had negotiated numerous union contracts, each of which had health care-related elements. And if there was one question that hung out there a year ago, it was whether Burd would be able to make his argument stick during negotiations, and convince union leaders that it simply made sense that people who demonstrate unhealthy behaviors should pay higher insurance premiums than people with more healthy lifestyles.
Remarkably enough, he did. Burd said that in virtually every negotiation, union leaders were willing to adopt a personal responsibility-driven health care model because they understand that if health care costs continue to go up, there will be no money left for pay increases. (And the fact that Safeway is willing to write a rebate check at the end of the year to people who change their behavior and adopt a healthier lifestyle certainly means hat Burd is putting his money where his mouth is.)
Burd reiterated some of the basic numbers he presented in January 2007 – that 70 percent of all healthcare costs and behavior-driven, that 74 percent of all health care costs are related to four chronic conditions, the vast majority of which can be reduced through a change in personal behavior and that the private sector – through smart and disciplined programs – can reduce costs without shifting costs or turning to the government for assistance. In the case of Safeway, Burd said, health care costs were taken down 13 percent in 2006, remained flat in 2007, and he was convinced that they would stay flat or fall further in 20098.
Burd noted that the Safeway approach has been two-pronged – it both encourages greater amounts of exercise (through a corporate fitness center and subsidizing gym membership costs in other locations) and better eating (the company cafeterias subsidize healthy meals and charges full market value for less healthy options).
But there were other, remarkable elements to the Safeway approach that Burd described, including a soon-to-launch concierge service that will assist employees and their family members diagnosed with either cancer or cardiovascular disease. It will, he said, give them some they can call and rely on for support after getting the diagnosis, helping them make the proper and most effective treatment decisions.
And, he said, Safeway currently is forming a healthcare services company that will endeavor “to help other companies and governments replicate our experience.”
Burd urged attendees – retailers and manufacturers alike – to join the Coalition to Advocate Healthcare Reform (CAHR), which currently consists of 53 members and is focused on influencing national public policy in the health care arena. The essential concept is to create a mechanism so strong that it will be able to influence, even dictate, national policy in this area because it has been so effective and efficient, creating a market-based healthcare system that focuses on universal coverage and individual responsibility, imbedding real change within both public institutions and private enterprise.
In the morning’s opening presentation, PepsiCo CEO Indra Nooyi chose to address the obesity crisis in America, urging the food industry – and society at large – to “stop the blame game. You cannot blame one person, industry or government.”
Nooyi suggested that the industry band together to create a national awareness program on the scale of the “Keep America Beautiful” and “Buckle Up” campaigns. Such a campaign, she said, would develop science-based programs that could be distributed to schools, helping students understand portion control, healthy eating and the importance of moderation; it could also lobby for states to mandate K-12 physical education programs.
Virtually everyone in the industry can agree on both the goals and the process, Nooyi said. “The hardest part is the will,” he said. And she called for an obesity-focused industry conference that would take place within three months, aimed at pulling together a cohesive and coherent strategy.
Burd agreed with the suggestion, but emphasized that any obesity strategy has to be a subset of the larger health care debate.Note: Michael Sansolo will offer additional analysis in his “Sansolo Speaks” column Tuesday morning.
In other news...
• Barry Scher, the longtime vice president of public affairs at Giant Food and Ahold USA, received the FMI 2008 Glen P. Woodard Jr. Public Affairs Award, in recognition of his leadership in helping the industry address governmental issues.
• Liz Minyard, former co-chair and co-CEO of Minyard’s Food Stores, received the FMI 2008 Sidney R. Rabb Award for community service, especially “her efforts to feed the hungry and help the homeless, students and other people who suffer from chronic diseases.”
• Tom Infusino, chairman emeritus of Wakefern Food Corp., received the FMI 2008 Herbert Hoover Award for “personal and professional excellence in serving the food retail and wholesale industry.”
• A.G. Lafley, chairman/CEO of Procter & Gamble, received the FMI 2008 William H. Albers Industry Relations Award.Posted: Monday, January 14, 2009, 2:30 a.m. ESTDrawing A Health Care Map For Food Retailers
There will be at least two sessions here at FMI Midwinter that will be dedicated to health care. In one, Safeway CEO Steve Burd will present an update to the report he delivered at last year’s conference in Florida, where he outlined his priorities for how companies – and the nation – should deal with the health care crisis. Should be interesting.
In the other, there will be a panel discussion centering on how supermarket retailers can draw the connection between food and health, a connection that is at the center of a new report prepared by the Coca-Cola Research Council of North America. (Full disclosure: MNB
’s Michael Sansolo is a member of the council.)
The Council has been working with the Institute for the Future’s Health Horizons Program, which resulted in a study entitled “Health and Wellness in Food Retailing: A Map of the Decade.” To get a preview of this “map,” MNB
conducted a brief e-interview with Rod Falcon, Co-Director of the Health Horizons Program:MNB
: Health and wellness is clearly such an important issue for the food industry heading into the future. How does the institute see the issue changing the industry and how does the institute see the industry changing its approach to the issue?Rod Falcon
: Wellness is going mainstream and is no longer a niche market. Food is fundamental to definitions of wellness, and as more and more people take an active role in managing their health, food choices become closely linked to health. What we eat gets tied to notions of prevention, disease management, energy, appearance, and so on. As a result, health has become an important value proposition, joining taste, price, and convenience as critical factors consumers weigh in making purchasing decisions.
For food companies and retailers, making the connection for the consumer between food and health is key. As retailers move beyond value pricing to position themselves as stakeholders in the health economy, more consumers will begin to view the grocery store as an important resource in their personal health networks.MNB: The Institute frequently produces what you call "artifacts from the future" to describe your insights. What kinds of artifacts are you finding on this topic and what do they tell us?Rod Falcon
: Part of the craft of forecasting involves helping your audience to experience the future. The Institute’s “artifacts from the future” are internally consistent scenarios that we use to immerse people in the future. Artifacts take the form of everyday objects or experiences we may encounter in five to ten years. One of this project’s artifacts from the future explores the use of mobile devices with robust computing capacity and how the power of online collective intelligence will influence in store shopping experiences.MNB: What kinds of steps is the industry - retailers and suppliers – taking today that prepares it well for the future you see? Rod Falcon
: Food retailers are ideally situated to provide tools to help consumers navigate the connections between food and health. Many stores already provide access to nutrition counseling in person, online, or by phone. We are also seeing diverse re-branding toward wellness. Brand platforms such as Unilever’s Vitality and Safeway’s "Ingredients for Life” are examples of how companies are repositioning themselves and their product portfolios toward the health and wellness marketplace.
These platforms go beyond re-branding efforts in the traditional marketing sense—they offer brand narratives that are aspirational not only to customers but also to employees. Whatever companies do, they will need to recognize that “health” and “wellness” convey different meanings to different people. Recognizing and responding to this spectrum of shoppers in the health and wellness marketplace will be key.MNB: How does the institute develop its insights? And has your approach been the same working the Coca-Cola Retail Research Council?Rod Falcon
: The Institute for the Future’s research generates the foresight needed to create insights that lead to action. Our forecasting toolkit includes a variety of research methodologies. For this project, we held a series of expert workshops and conversations, conducted ethnography in people’s homes and observed them on shopping trips, and surveyed more than 1000 U.S. households.
Much of our insight into the future also comes from synthesizing information across other ongoing research efforts at IFTF, including those exploring the future of food and food markets, new media and online health affinities, and so called green values and sustainability.MNB: What insights do you think will resonate most with the crowd at FMI Midwinter?Rod Falcon
: We will share insights that come from several key forecasts, which include, for example, “wellness goes mainstream,” “anytime, anyplace health,” “nutrition information get customized,” and “health-driven transparency.” Our forecasts are the big stories on the horizon that we see shaping the future of food, health, and sustainability, and giving rise to a range of opportunities and threats that will demand strategic responses. The insights generated from these forecasts will help food retailers plan adequately for the future.