“Story Food” versus “Feeding
the Family Food”: Different
Strokes for Different Folks?
Dr. David Hughes
Emeritus Professor of Food Marketing
Nuffield Contemporary Scholars
Conference
Te Papa Tongarewa, Wellington, NZ
Monday, March 7th, 2011
Top Global Grocery Profit Performers in 2009
Profit Margin %
ROCE %
Philip Morris Int.
40
47
Altria Group
36
38
BAT
32
24
AB InBev
31
14
GlaxoSmithKline
30
31
Coca-Cola
29
24
Diageo
28
21
Johnson & Johnson
26
25
SABMiller
25
14
Colgate -Palmolive
24
46
Reckitt Benckiser
24
19
Procter & Gamble
24
56
Pernod Ricard
23
9
Reynolds American
21
16
PepsiCo
19
33
Profit Margin = EBIT after earnings from associates and other exceptional items
ROCE = Return on Capital Employed
Source: OC&C UK, 2010
Top Global Food Profit Performers, 2009
Profit Margin %
ROCE %
Group Danone
16
General Mills
16
12
19
Kellogg’s
16
Campbell Soup
16
Nestlé
15
HJ Heinz
15
Kraft Foods
14
Unilever
14
Cadbury
13
24
12
24
15
ConAgra
12
18
Profit Margin = EBIT after earnings from associates and other exceptional items
ROCE = Return on Capital Employed
Source: OC&C UK, 2010
28
35
20
Proprietary Technology and Demand Chain
Squeeze
Life Science Companies
Ownership of Genetic Rights
market
power
polarised
nursery people
growers/farmers
distributors
manufacturers etc.
get squeezed!
Major Global Food Retailers and Food Service Firms
Ownership of Information on Shopping Behaviour
In the Dock: The Modern Global Food and Drink Industry
The Charge? Threatening Health & Well-Being of:
- The Planet - issues relating to sustainability, climate
change, resource conservation, biodiversity, etc.
- Consumers – food safety, obesity
- Food System Participants – abusing farm animals,
threatening smaller-scale farmers
For the Prosecution
Hugh Fearnley-Whittingstall
% Obesity Levels in Selected Countries
%
Source: The Financial Times, September 9th, 2010
2010 Dietary Guidelines for Americans
• eat less, exercise more
• eat more:
– plants i.e. fruit, vegetables
– pulses, whole grains, nuts & cereals
– seafood, low/no fat milk products
• eat moderately (government code for eat less)
– lean meats, poultry and eggs
• eat significantly less
– sugar, salt, solid fats, refined grains
Financial Times Report, October 2/3rd , 2010
Nestlé To Invest $500 million in Health Science
• “The Swiss giant’s announcement marks an
implicit step towards the recognition by Big
Food that it bears responsibility for the
unremitting worldwide rise in obesity –
though food manufacturers are not yet ready
to admit that their products are harmful, as
the tobacco industry does ...”
“Food Has Never
Been Safer”
US: Obama nominates food safety undersecretary
27 January 2010 | Source: just-food.com
President Barack Obama has announced that he plans to nominate USDA
veteran Elisabeth Hagen as his first undersecretary for food safety.
US salmonella scare: farm inspections
reveal manure, mice and maggots
Calls for main egg producers to be better regulated after two
firms at centre of scare revealed to have breached basic
hygiene guardian.co.uk Tuesday 31 August 2010
“Consumers are blissfully ignorant of the
existence of farm assurance and what it
stands for” UK Food Standards Agency Survey, 2002
• so, traceability schemes and requirements are a
waste of time and money, with most costs
carried by the primary producer?
• consumers simply expect that the food industry
has food safety “sorted”. They believe as a
matter of course that we know exactly where all
our ingredients come from. If they find out that
we don’t, then, they are outraged.
Wal*Mart Announces Global Sustainable
Agriculture Goals, October, 2010
 Support Farmers & Their Communities
 selling $1 billion in food from smaller-scale farmers
 training 1 million farmers/workers in sustainable farming practices
 increasing income of above by 10-15%
 in USA, doubling sale of locally-sourced produce
 Produce More Food with Fewer Resources + Less Waste
 over next 5 years invest $1 billion in its global fresh supply chain
 reduce food waste in stores worldwide by 10-15%
 introduce Sustainable Produce Assessment for suppliers
 Sustainably Source Key Agriculture Products
 all Wal*Mart brand palm oil sustainably sourced by 2015
 expand existing beef sourcing practice in Brazil with zero
tolerance on deforestation
Nestlé S.A. to Receive
2011 World
Environment Centre
Gold Medal for
International Corporate
Achievement in
Sustainable
Development
WEC's independent jury selects Nestlé
S.A. as the 2011 recipient of the Gold
Medal Award
Reasons for paying more for food and drink
Thinking about food and drink that you are willing to pay more for, what are the most important reasons for doing so?
2%
I Want To Impress My Friends
Religious Beliefs Eg Halal, Kosher
Endorsed By A Brand Or An Organisation I Like And Trust
•
3%
Key Findings
•
4%
6%
Special Dietary Needs E.G Gluten Free
•
7%
I Will Spend More On Food For My Children
9%
They Are Better For The Environment
10%
More Ethically Produced
As many as 1 in 7 (14%)
shoppers are willing to pay
more for organic food
1 in 10 are willing to pay
more for ethically produced
goods and a similar number
(9%) for goods that are better
for the environment .
14%
Organic/ Natural Ingredients
21%
I Know I Will Like Them
22%
They Are For Special Occasions
25%
I Can Afford Them
27%
They Are A Treat
36%
Healthier
41%
They Are Better Quality
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
World Population: Who's Going Up and Who’s
Going Down?
2010
World
Africa
Asia
Europe
LAC*
North America
Oceania
6.9
1.0
4.1
0.7
0.6
0.3
0.04
*Latin America & Caribbean
Source: UN (population scenario planning)
2030
- billion8.2
1.5
4.8
0.7
0.7
0.4
0.04
2050
9.0
2.0
5.1
0.7
0.8
0.5
0.05
The Future of Food and Farming:
Drivers of Change
•
•
•
•
•
•
Global population increase from 7 billion in 2010, to 8 billion in 2030 and 9
billion by 2050.
Dietary changes (increased global consumption of meat and dairy) will require
substantially more resources than in the past.
Future governance of global food system will have a big impact on supply and
demand balance:
– National food security policies
– Production subsidies, trade restrictions
– Growth of new food superpowers (e.g. BRIC)
– Control of increasing areas of land for food production
– Adequacy of current global international institutions
Climate change
Competition for key resources
– Land (urban versus rural versus industrial)
– Energy (e.g. green, price/availability of fossil fuel)
– water
Values and ethical stances of consumers – e.g. acceptance of new technology
London, UK, 2011
The Future of Food and Farming:
High Level Conclusions
1. More food from less. Contain demand for meat and
dairy (code for reducing consumption in Developed
countries. Minimise waste. Improve political and
economic governance.
2. Climate change initiatives and achieving sustainability
in global food system inextricably linked.
3. Revitalise moves to end hunger – reduce unfair
subsidies, focus on rural development
4. All policy options open – code for embracing new
technology.
5. Food self-sufficiency at national level rejected but
maximise benefits of globalisation to ensure food
supply.
London, UK, 2011
Consumer Trends: Migration to the Poles
“Feed the Family Food”
Global
High Tech
Drudge/Chore Shop
Consumer Shopper
New and Improved
Ready-to-Eat
Fast Food
Fuel Food
Just Me
Low Price
Good For You
All Year
Intensive
“Experience & Story Food”
Local
High Touch
Leisure/Experience Shop
Citizen Shopper
Traditional
Natural/Unprocessed
Slow Food
Story Food
Friends/Family
Premium Price
Naughty but Nice
Seasonal
Extensive
“Feed the Family” or “Story” Food?
Depends on Range of Factors Including:
• Income
• Urban or rural composition of population
• Family composition (e.g. children or not, help in
the home ... grandparents in China)
• Meal occasion
• Strength of national/regional food culture and
food heritage
Impact of Campaign
• 500,000 more households bought Yeo Valley products in the 12
weeks to December 25th, 2010, than in preceding period
• Outperformed total yoghurt market by 250%
• Viewed 2 million times on YouTube (YeoTube!)
• Sales boosted by £10 million – equivalent to 15% year-on-year
– for a campaign investment of £3 million
• Advertisement aired 7 times during the X Factor (ITV1) and 25
ITV2 slots
We Want a Better World!
Products which are:
• better for me
– more convenient
– better tasting
– better price
• better for my well-being and body
– feel good
– look good
– safer for my children
• better for the world and my locale
– environment
– Third World
– my countryside
• better for Bambi/Flipper/Little Nemo/Babe/Bo Peep
CONTACT POINTS:
e-mail
profdavidhughes@aol.com
telephone numbers
office
+44(0)1600 715957
fax
+44(0)1600 712544
mobile
+44(0)7798 558276
Check my latest podcast at www.profdavidhughes.com