As we welcomed in the new millennium last month, retrospectives on last year, on the century, and on the past 1,000 years were almost as common as talk of the Y2K bug. Instead of a looking back, I thought it would be more fitting at this time to provide a view of what lies ahead for our industry in 2000.

At this juncture, nothing is more important to our industry than the need to drive growth and spur innovation. Through initiatives like Efficient Consumer Response, the industry has been able to streamline inefficiencies throughout the supply chain, keeping the cost of food stable for consumers. So how can the industry now create a culture for growth? Innovation will be the key. As companies spin off non-core brands and continue searching for ways to add value to their brands, they will be launching new and more sophisticated products to better meet consumer demands. Grab-and-go convenience foods are here to stay – look for them to permeate every category of the supermarket and every channel, as consumers search for ways to make their lives easier. Information about CPG products will become as important as the products themselves, as the Internet creates more savvy and skeptical consumers.

The line between food and medicine will continue to blur, with functional foods delivering substantial health benefits. Several companies took the plunge into the functional food market in 1999, with mixed results in the marketplace. But the groundwork is being laid for a major revolution in the way we eat, with the potential for a new wave of growth and fresh product development on the horizon. Foods that help lower cholesterol, ward off colds, increase bone density, and decrease the risk of heart disease, as well as taste good, will be continue to be introduced into the marketplace in 2000 and beyond – look for ingredients like soy protein to be added to more everyday foods.

Technology advances such as data mining and sales via the Internet may open the door to a new understanding of how consumers want to shop – not simply how we think they should shop. A renewed emphasis on learning about our most valuable customer – today’s shopper – will be a big part of the equation for the industry’s future growth formula.

Within our industry, it is exciting to see innovation also occur internally, with new business models emerging and companies reevaluating old organizational structures to help reduce costs, speed up the decision making process, and speak to customers with one unified voice.

Collaboration between trading partners is increasing, as companies begin to recognize that no one player holds all of the answers.

Despite some predictions that the Y2K computer bug would be akin to Armageddon, America’s grocery industry sailed through the period before and after January 1, 2000 with no reported disruptions. So was all the time, money, and angst spent on the Y2K issue worth it? Yes, I believe it was. Companies throughout our industry were prompted to make serious upgrades in their technology systems, making room for greater efficiencies and capabilities as we move into e-commerce; joint industry cooperation and information sharing among supply chain partners and with the federal government and Congress will lay the groundwork for even greater cooperation in the future; and Y2K reinforced the trust American consumers have in the food industry, as much of the consumer stockpiling that was predicted simply never occurred.

Now that Y2K is safely behind us, we can expect the industry to put those technology resources toward major e-commerce initiatives. The launch of the first Extranet linking suppliers, distributors, wholesalers, third party networks, financial institutions, and other supply chain partners, is expected early this summer. This new system, called UCCnet, should transform how we do business in a number of ways. Acting as a "pipeline" for companies to communicate and conduct business transactions, UCCnet will provide a uniform standard for an electronic trading network, eliminating much of the paper trail associated with doing business in our industry.

This Internet-based, easily-accessible trading community, will allow companies to reduce many of the costs associated with inaccurate data, proprietary communications systems, and specialized equipment that currently exist. And it will be a technology platform accessible to all players, allowing small and medium-sized companies to access advanced data and communications technologies that were previously too expensive. After the foundation is set, GMA will work hard to redefine business processes that are built on synchronized data. Think of a world where mass EDI communication is a given. How can trading partners change beyond that?

We can also expect business-to-consumer electronic commerce to continue expanding into the grocery industry this year. While online grocery shopping accounts for just a fraction of total grocery sales right now, the sheer number of players getting into this arena is indication that many consumers are interested in a vastly different shopping experience. As an industry, we need to be especially in tuned with both younger shoppers, who use the Internet for just about everything, to aging baby boomers, who will turn more and more to the convenience of the Internet as traditional shopping becomes more burdensome. Most likely, we will see many successful models for online grocery shopping emerge – those that combine the most logical logistical infrastructure with the greatest benefit to the consumer.

The debate about biotechnology and foods derived from biotech ingredients continues here in America. Should these foods be labeled? Are they safe? What lies ahead for the future of biotech foods? We believe this debate will continue through 2000, but industry surveys show consumers are likely gain a better understanding of the benefits of biotech foods – not through mandatory labeling, but through better dissemination of information about these ingredients. While the opponents of biotech foods focus on the narrow issue of food labeling, survey after survey shows us that consumers want information about biotech foods – detailed information that cannot be conveyed through labels. That information will continue to be shared and expanded upon through company 1-800 hotlines, retailer brochures, news stories and Web sites, such as the one maintained by the Alliance for Better Foods at www.betterfoods.org. As consumers strive to understand more about the future of food, we believe much of the initial hype surrounding the biotech issue will be replaced by a serious discussion about the benefits of biotech – and that FDA’s science-based labeling policy is still the strongest litmus test in the labeling debate.

Finally, look for 2000 to be a pivotal year for globalization in the food, beverage, and consumer products industry. Standardization of supply chain practices across the world will become a reality, making it easier to communicate and conduct every day business across borders. The newly formed Global Commerce Initiative will focus on standardizing the key technologies and processes within the grocery supply chain, eliminating commerce barriers between continents. The need for such standards is pressing – technology is moving at such a rapid rate that we face even more complexity and a proliferation of proprietary systems if global standards aren’t created quickly. Tariff reduction will also be a major fight this year, as the grocery industry struggles with taxes that range between 40 and 50 percent, while average industrial tariffs have declined to an estimated 4 percent.

While I’ve touched on just a few ideas here, they encompass the major themes trickling through every portion of our businesses – technology, science, innovation, and globalization. And while we don’t have the answers to tackle every challenge that lies ahead, we’re aiming to continue a dialogue on these fascinating future forces – forces that will surely dominate discussions and initiatives throughout the industry, and within GMA, in 2000.