food and beverage sustainable sourcing - planning for a changing planet
TRANSCRIPT
2
Highlights
Planning for a Changing Planet:
Creating Ethical, Sustainable and Eco-
Friendly Sourcing Strategies
• Changing planet – global trends
• Sourcing strategies
• Case studies across the supply chain
• Where to go from here?
4
The Challenges
EnergySecurityEnergySecurity
ClimateChangeClimateChange
PopulationGrowthPopulationGrowth
FoodSecurityFoodSecurity
5
Food Security – Population Growth
Demand
Population
9 Billion2050 (UN)
Global Population Growth Forecast to 2050
Asia
Latin Am
Europe
Africa
N America
Oceania
-0.5%
2.0%
-200 1,800
Absolute Change (millions), 2000 to 2050
CAG
R (
2000-2
050)
Source: Frost & Sullivan / UNESA
Africa's population to more than double between 2000 and 2050
Percentage of the world's population living in cities: 3% (in 1800); 47% (in 2000); 67% (in 2025 – UN forecast)
Source: Frost & Sullivan.Source: Frost & Sullivan.
6
Global Food & Beverage Demand, 2002 through 2014
Food & Beverage Market: Retail Industry Revenues, in $ Billions (World), 2002-2014
Small dip in global revenues due to lower feedstock prices and
economic slowdown
Small dip in global revenues due to lower feedstock prices and
economic slowdown
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000Re
tail
Food
& B
ever
age
Indu
stry
Sal
es ($
bill
ions
)
Latin America (LA) 869 963 1,066 1,305 1,375 1,549 1,710 1,661 1,787 1,872 1,977 2,094 2,217
Europe (EU) 1,475 1,783 2,030 2,164 2,288 2,631 2,896 2,579 2,673 2,744 2,830 2,925 3,025
Asia Pacific (APAC) 1,945 2,192 2,425 2,731 2,866 3,265 3,660 3,618 3,846 4,093 4,380 4,701 5,073
Mid. East & Africa (MEAF) 1,409 1,651 1,803 2,122 2,086 2,283 2,516 2,480 2,638 2,785 2,941 3,108 3,283
North America (NA) 911 966 1,034 1,108 1,182 1,252 1,287 1,247 1,295 1,349 1,406 1,465 1,521
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan
9
Annual CEO Survey: Perceptions of Green Issues
Perceptions of Green Issues
30%
30%
18%
12%
9%
1%
29%
23%
15%
12%
19%
2%
30%
34%
20%
12%
3%
1%
0% 10% 20% 30% 40%
Moral, ethical obligation
Critical to growth ofcompany
Important to customers
Good public relations
Irrelevant
Don't know/care
Total Sample (N=593) CEOs (N=248) Other Organization Leaders (N=345)
How do you primarily view the current high profile of environmental/green issues?Source: Frost & Sullivan.Source: Frost & Sullivan.
10
Annual CEO Survey: Motivations for Green Investment
There are many drivers which contribute to a company making environmental investments, what are the main reasons driving your decision to “go green”?
Motivations for Going Green(N=400)
33%
38%
46%
50%
54%
59%
62%
69%
67%
61%
0% 20% 40% 60% 80%
Potential competitive advantage
Growth opportunity for company
Corporate social responsibility
Meeting customer expectations/requirements
New technology opportunities
Ability to enter new markets
Greener Image
Product development
Potential cost savings
Leverage existing markets
61%
Note: Only top ten responses shown.
Source: Frost & Sullivan.Source: Frost & Sullivan.
12
Sourcing Strategy – Common Practices
Quality / Cost Sourcing Sourcing StrategiesStrategies
Operational Efficiency
TypicalTypical
Source: Frost & Sullivan.Source: Frost & Sullivan.
13
Sourcing Strategy – Best Practices
Quality / Cost Sourcing Sourcing StrategiesStrategies
Global Delivery
Ethical Sustainable Eco-Friendly
Operational Efficiency
Source: Frost & Sullivan.Source: Frost & Sullivan.
14
Sourcing Strategy – Best Practices
Quality / Cost Sourcing Sourcing StrategiesStrategies
Global Delivery
Ethical Sustainable Eco-Friendly
Operational Efficiency
ReinventReinvent
Source: Frost & Sullivan.Source: Frost & Sullivan.
15
Consolidation of the Global Supply Chain
Pro
s
Pro
s
Lower Cost
Opportunity
Quality Management
Flexibility
Potentially Sustainable
Source: Frost & Sullivan.Source: Frost & Sullivan.
16
Consolidation of the Global Supply Chain
Pro
s
Pro
s
Co
ns
Co
ns
Management Rhetoric
Lower Cost
Opportunity Quality Management
Flexibility Potentially Sustainable
Narrow Minded
Complacency
Limit Innovation?
Monopoly
Source: Frost & Sullivan.Source: Frost & Sullivan.
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Debating Global vs Local
• Development of communication
• Trade efficiently & effectively
• One step removed
• Reliant on the price of commodities; fuel
• Greater profit
• Control
• Understand principles
• Supports community
• Bespoke innovation
• High labour costs
• Niche markets
• Greater profit
Global Local
Source: Frost & Sullivan.Source: Frost & Sullivan.
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• GMO – modern plant breeding
• Increased yield / quality / disease & pest
control in a sustainable way
• US & Argentina global leaders in GM
soybean cultivation and production
• Phenomenal growth of GM soybean
cultivation within 10 yrs
• Total Acreage 4% in 1997 to 92% in 2008
• Assists growth of the bio-lubricants market
• Not the case in EU
GMO – Blessing or Curse?
Cultivation Area in Million Hectares in US, 1997-2008
Source: GMO CompassTotal soybean cultivation area
GMO soybean cultivation area
Year Total Soybean
GM Soybean
GM Ratio
1997 25.66 3.6 4%
2008 30.10 27.7 92%
GM Soybean Ratio in US, 1997-2008
2008 Soybean Production in United States
Reduced Biodiveristy?
Source: Frost & Sullivan.Source: Frost & Sullivan.
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Energy Consumption
Climate Change
Growing Demand
Competing Land Use
Bio-fuels
Renewable EnergiesCareful use
of Raw Materials
Carbon Offsetting
Efficiency Savings
Limited Oil Sources
Rising CO2
Emissions
xxxxx
Source: Frost & Sullivan.Source: Frost & Sullivan.
20
Waste Reduction
Biodegradable Packaging
Recycling
‘Just in time delivery’
Portion Control
Reducing Food Wastage
Alternative Raw Materials
Source: Frost & Sullivan.Source: Frost & Sullivan.
21
Raw Material Supplier
Eco-labelling - Consumer Awareness
Source: Frost & Sullivan
Distributors and Retailers
Final ConsumersFinished Good Manufacturer
We Are Still
GreenAre We Green?
Is this Green?
Distributors and Retailers Final ConsumersFinished Good
ManufacturerRaw Material Supplier
We Are Still
Green
We Are Still
Green
We Are Still
Green
We Are Still
Green
3rd Party Verified
Without a clear industry icon…
With a clear industry icon…
We Are Still
Green
Product FlowProduct Flow
€ and Feedback Flow€ and Feedback Flow
23
Sustainability and Financial Performance
Index 1999=100 Source: Dow Jones Indexes and SAM
DJSI World vs MSCI World (1999-2010)
24
Marks & Spencer – Plan A
Climate Change
Waste
Natural Resources
Fair Partnership
Health & Wellbeing
25
PepsiCo – Performance with Purpose
EnvironmentalEnvironmental
SustainabilitySustainability
TalentTalent
SustainabilitySustainability
PerformancePerformance HumanHuman
SustainabilitySustainabilityGood forSocietyGood forSociety
Good forBusinessGood forBusiness
==
26
Danisco – Ingredients for Sustainability
Global ChallengesGlobal ChallengesGlobal ChallengesGlobal Challenges
FoodFood
HealthHealth
EnergyEnergy
ChemicalsChemicalsPeople, Planet
& ProfitPeople, Planet
& ProfitBecoming
First ChoiceBecoming
First Choice
ComprehensiveApproach
ComprehensiveApproach
Danisco’sApproachDanisco’sApproach
27
Green Sourcing - Differences Across the Supply Chain
Driver
Sustainable Sourcing
Sustainable Sourcing
Cost /Pricing
Restraint
B-2-B Producer FMCG / Retail End User
Cost
Quality
ContinuousSupply
Efficent
Global Delivery
EthicalEco-Friendly
Cost
Quality
ContinuousSupply
Efficent
Global Delivery
EthicalEco-Friendly
Source: Frost & Sullivan.Source: Frost & Sullivan.
Customer ExpectationNew Market
Product Innovation
Feel GoodConscientious
Social ResponsibilityCompetitive Edge
Growth Opportunity
Confusing MessageInadequate
LabellingLimited Budget
Willingness to PayExtra – 5 to 25%
More?
Marketing MessageIncreased Cost
Pass onto Consumer?
Marketing MessageIncreased CostSmaller Profit
Margin
Implementation CostCompeting PrioritiesLack of KnowledgeVendors not Green
Implementation CostNo Industry
StandardVendors not Green
28
The Current Benchmarks to Increase Sustainability
Source: Frost & Sullivan.Source: Frost & Sullivan.
Water Recycling & Conservation
Energy Conservation
Waste Management
Reduce CO2
Emissions
Consolidating Transportation &
Distribution
Reduction & Recycling of Packaging
Increased SustainabilityIncreased Sustainability
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The Future Direction
Open Mindedness to Scientific Advances
Rigorous Monitoring &
Constant Evaluation of
Existing Strategies
Global Legislative Enforcement
Unification Across Companies & Even Countries Towards The Common Goal
Increase Investment in
R&D
Continue to Build Consumer Awareness
Source: Frost & Sullivan.Source: Frost & Sullivan.
31
The Food & Beverage Industry Today and Tomorrow
2010 20202015
Population Growth &
Food Security
Increasing consolidation in food supply chain
Increased utilisation of by-products as feedstocks
Demands from bio-energy and growing population mean rising food prices
Demands from bio-energy and growing population mean rising food prices
Increasing urbanisation impacts demand for healthy & high quality F&B products beyond BRIC
Increasing urbanisation impacts demand for healthy & high quality F&B products beyond BRIC
Continuous re-assessment of “safe” chemicals, technologies & materials
for F&B & agricultural production
Continuous re-assessment of “safe” chemicals, technologies & materials
for F&B & agricultural productionFood safety driven by customer access to F&B processing information
Food safety driven by customer access to F&B processing information
Mega Trend
Climate Change &
Energy Security
Sustainability driven by increasing raw material costs
Successful company sustainability strategies become economic not moral decision
Successful company sustainability strategies become economic not moral decision
Peak oil extraction limit reached
Peak oil extraction limit reached
Consumer demand for sustainability sourced products & increased legislation
Consumer demand for sustainability sourced products & increased legislation
Full industrialisationof developing countries
Full industrialisationof developing countriesDevelopments in energy efficiency & renewable energiesDevelopments in energy efficiency & renewable energies
Oil extraction volumes in terminal decline – Global vs Local
Oil extraction volumes in terminal decline – Global vs Local
Sustainability is here to stay Sustainability is here to stay Embrace it and create opportunities from it Embrace it and create opportunities from itSustainability is here to stay Sustainability is here to stay Embrace it and create opportunities from it Embrace it and create opportunities from it