Eurotrends: Sustainability in the Food Industry

By Joerg Gruenwald | September 1, 2009

More than half of consumers heavily consider sustainability when buying products.

The number of ethically minded consumers is increasing in Europe. These consumers recycle waste and bath water, they buy "green" cars and washing machines, and they read the labels on food products for information on ingredient origin. No longer just on the fringe, these consumers now exert increasing influence on the food and drinks industry. According to industry estimates, more than 50% of consumers in Europe now base their purchasing decisions on sustainability considerations.

Terms such as "food miles," "carbon footprint" and "greenwashing" are increasingly in use. Fairtrade certified products are soaring as a result of double-digit growth. Organic produce has a loyal consumer base. Sustainability initiatives are selling points. On the other hand, when ingredient companies are suspected of unethical behavior, word spreads among consumers who often boycott products in response.

Manufacturers are responding to all of these trends by publicizing their sustainability efforts. When looking at the websites of major food and drinks ingredients manufacturers, interested parties can easily find information on their sustainability initiatives. In fact, out of the top 20 global ingredient manufacturers, only two companies do not devote any webspace to their sustainability reporting. Further, there are figures available on a company's greenhouse gas emissions, energy expenditure and waste emissions-you can even find out the number of environmental complaints lodged against the company. In many cases, downloadable sustainability reports are available, giving yearly results and goals for the future.

Sustainability Reporting

Sustainability reporting for ingredient companies begins with cutting down harmful output and reducing energy and water expenditure. The term "carbon footprint" may describe the environmental trace left by a single product, or by the operations of the entire company. And even though there are no regulations making this figure mandatory (or even defined calculations that make up this figure), many consumers in Europe are now expecting it, both on the company website and on the product label.

Sustainability extends to the whole supply chain, starting at ingredient sourcing, with considerations such as protecting the biodiversity (which in most cases means rainforest areas) being most prominent in consumers' minds. If a manufacturer is suspected of endangering the local biodiversity in order to cultivate a given ingredient (such as palm oil), then consumers are increasingly likely to take notice and remember that when making their next purchase. In fact, the pressure consumers put on manufacturers is enough to trigger the formation of non-governmental organizations (NGOs), such as the Roundtable for Sustainable Palm Oil, a not-for-profit association that unites stakeholders from seven sectors of the palm oil industry with the objective of promoting the growth and use of sustainable palm oil products through credible global standards and engagement of stakeholders. Membership in one such NGO, of course, is good PR for ingredient companies.

The Fairtrade foundation and its seal, to name another example, have become familiar and recognizable to consumers over the course of the past few years. Products carrying the Fairtrade seal range from fruits such as bananas and oranges, to cocoa, coffee and tea, and the range is growing-so is the number of consumers looking for it on the shelves.

The sustainability trend not only affects big multinationals. Cause marketing and local sourcing are emerging as opportunities for medium-sized companies who get their supply from domestic sources. If sourced locally, both manufacture and consumption of the products occur within a region of 30 to 40 miles. The carbon emissions that are saved because of short transport are immense. In this way, consumers can get behind their local ingredient and feel they have purchased products with few food miles behind them at the same time. Local sourcing therefore not only supports local industries, but also protects the environment in a more global way.

In Europe, local brands are growing as ethical consumers readily accept the idea. Shorter routes between production and distribution sites not only mean less carbon emissions, but also fresher ingredients. Despite all its advantages, however, local sourcing only works with locally cultivated ingredients. As soon as exotic ingredients such as superfruits enter the equation, long transport ways become inevitable.

In a world where resources are increasingly scarce, consumers who otherwise feel helpless to affect global politics often see no other recourse but to vote with their purses. This trend is expected to increase. Packaging, carbon footprint information, fairtrade logos, and other sustainability information will continue to give food and drinks products a competitive edge over similar "regular" products. Moreover, sustainability-related claims are expected to grow, especially in conjunction with other mega-trend claims such as functional or natural. The synergy between natural and sustainably sourced ingredients, or between functional and sustainably sourced ingredients, is very appealing to informed consumers, who tend to be ethically-minded as well as aware of the link between food and health.

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