Executive Summary
This report lists recommendations as to how Nature Foods Ltd. might shift its business model to take advantage of consumers’ growing concern not only with the state of the environment and their ecological footprint but also consumers’ desire to buy locally produced products. In recent years consumers have shown greater interest in purchasing food with low food miles, which affects Nature Foods Ltd.’s current system of transport from the Devon base. The food industry witnessed increased sales in recent years for companies that reduced packaging also, as well as companies whose food products switched to more natural ingredients as opposed to artificial.
Introduction
The following report compiles information gleaned from the newspaper as well as trade journal sources. Its focus rests on the burgeoning model of sustainable business practices and how these might be implemented by Nature Foods Ltd. to boost sales of its breakfast cereals, snack bars, and dried fruits and nuts.
Findings
Background
Sustainable business and its impact on the food industry remains a controversial topic. Food miles – a term that denotes the distance food travels from its location of production to the location where it is purchased and consumed – has become a means of calculating and “evaluating the sustainability of the global food system in terms of energy use” (Hill, 2008, p. 2). Over the last 10 years, food miles have received an increasing share of the focus in the ongoing environment debate, as “climate change patterns have become ever more apparent” (Hill, 2008, p. 2). As a result, consumers have expressed – through their purchasing actions and decisions – and greater insistence that food manufacturers comply with “ethical and environmental standards, however, such as organic and fair trade” (Hill, 2008, p. 6).
Consumers for the most part still list convenience, access, and price as the core factors affecting food purchase decisions. Consumers’ ethical and environmental choices, however, can exert a “great deal of influence on the direction our food system is headed” (Hill, 2008, p. 6). An overall reduction in “food mile footprint” appears to be of interest to a significantly larger proportion of consumers who wish to consume fresher food, offer their financial support to farmers in their community, and to develop an awareness of the origin of their food (Hill, 2008)
Challenges
Local / Organic
Organic food – such that is produced without fertilizers and pesticides – tends to reduce the carbon footprint of producers since synthetic chemicals typically derive from fossil fuels, through an energy laborious process, therefore eradicating synthetic fertilizer and pesticides significantly decreases production energy output. The problem is, the boost in demand for organics means that retailers now “source organically grown food from around the globe, creating increased emissions in the transportation process” and effectively nullifying any environmental gains. In some cases, locally grown foods produced non-organically end up being “less energy-intensive than organic foods traveling long distances” (Hill, 2008, p. 6). According to The Economist, “half the food miles associated with British food are traveled by cars driving to and from the shops” (Anon 2010)
Consumer Interest
Nature Foods Ltd.’s marketing strategy must gauge consumer interest in the issue of the environment. According to Andrew Eyles, chief executive and founder of brand design and packaging company Blue Marlin, “Green is still not a significant influencer on purchase. There is a core of consumers for whom a brand’s environmental credentials are a priority, and there can be no doubt that there is a growing green consciousness in the UK, but the majority of consumers are still motivated by price, and shop on autopilot, looking to their trusted brands” (Cowlett, 2008, p. 32).
Similarly, Guy Douglass, brand identity managing director of a packaging design consultancy ranks sustainable packaging as “very low” in terms of how most consumers choose the foods that they buy (Cowlett, 2008, p. 32). For certain, says Douglass, “customers are still not ready to pay a premium price for sustainably packaged goods” (Cowlett, 2008, p. 32). Another controversy lies in the area of responsibility. Cowlett (2008) speaks to the sense among many consumers that corporations need to lead the charge toward environmental responsibility and set the example for consumers to follow (p. 32). Nature Foods Ltd. must decide if it wants to join the host of businesses currently spearheading environmental change from within the boardroom (Cowlett, 2008)
Gains
However, market gains “may be limited by the fact that some formulators include minor amounts of these materials in their products to be able to list organics on the label to derive marketing benefits” (Jeffries, 2005, p. 50). Natural ingredients, on the whole, tend to cost more than synthetic substitutes that fulfill the same use. Also, the “poor image held by some animal-derived extracts will inhibit advances” (Jeffries, 2005, p. 50)
Conclusions
“Big Organic” refers to the production of organic food growing apace with consumer demand, which advocacy groups counter has now become as detrimental to the planet as the large scale food production industries it was meant to replace (Anon 2006). This backlash has become concerned that the organic movement’s original goals have been subsumed by “large companies that produce and sell organic food on an industrial scale” (Anon 2006, n.p.). Nature Foods Ltd. can take advantage of this trend, as sales from local producers and farmers’ markets continue to grow. Essentially local food has proved itself “immune to being industrialized or corporatized,” therefore Nature Foods Ltd. will reap the harvest from local food advocate looking for companies that share their values (Anon 2006)
Recommendations
Consumer environmental interest dictates that companies shift their production efforts to meet sustainability demands. For instance, ingredients that come from readily identifiable plant sources such as flowers and vegetables tend to restore consumer confidence and build brand loyalty (Jeffries, 2005). Food products gaining in sales in food markets include those that employ soy proteins and recognizable herbal extracts such as ginseng and tea tree oil (Jeffries, 2005).
Other recommendations include changing raw materials largely to plant origin and specifically plants derived from “organic, biodynamic or ethically wild-harvested sources” (Jeffries, 2005, p. 56). Nature Foods Ltd will also benefit from improved brand image if it switches to raw materials that are consciously derived from using socially responsible and ecologically aware methods.
Avoidance of any animal ingredients, including “collagen, elastin, ceramides, mink, musk or spermaceti oils” will similarly improve Nature Foods Ltd.’s brand image and make its products more attractive to this burgeoning market. Nature Foods Ltd. will be best served to avoid synthetic ingredients in its production process and to open its production methods up to transparency, especially in eradicating genetically modified raw materials from its foods.
As far as packaging is concerned, Nature Foods Ltd. will benefit from continued innovation. Breakfast cereals, snack bars, and dried fruit and nuts products need to be consciously renewable and recyclable. Nature Foods Ltd.’s brand philosophy grows and gains sales and consumer confidence when it fully commits to a socially sound and environmentally transparent sustainable business model.
References
Anon (2010) The not-so-great outdoors: how to green your grill. The Economist.
Anon (2006) Voting with your trolley: can you really change the world just by buying certain foods? The Economist.
Cowlett, M. (2011) Do we really care about sustainability? Marketing.
Hill, H. (2008) Food miles: background and marketing. National Sustainable Agriculture Information Service. Web.
Jeffries, N. (2005) Marketers’ new edge is all natural: as manufacturers seek to create impact with performance, natural ingredients have become a key element of marketing strategies in cosmetics and toiletries, and naturals sales are projected to increase 7.5% annually to US$1 billion in 2008 in the U.S. Global Cosmetic Industry. 173 (5), p. 50-56. Web.