Executive Update

2012 Sustainability Summit Session Highlights

The 2012 Sustainability Summit program was designed to give companies the tools, connections and proactive solutions to take their sustainability programs to the next level. Attendees had the opportunity to tailor their conference experience by selecting sessions from different content tracks, allowing them to dive deep into discussions and address industry issues on a more intimate level. Below you will find a sampling of session highlights from the conference.
 

CONSUMER FUTURES 2020: What Does This Mean for Sustainability?

In the opening general session, Dr. Sally Uren, deputy CEO of the Forum for the Future discussed how quickly the industry and the world in general, can change.

As an example, Uren showed attendees the front page of the New York Times from October 2004, October 2012, and what it may look like in October 2020, demonstrating how the difference of just eight years can drastically affect what the industry’s priorities and capabilities are.

“In 2004, we didn’t have iPhones, banks were able to do what they wanted, and the thought of citizens in the middle-east bringing down a dictator by social media was unheard of,” explained Uren.

  In fact, technology has advanced so quickly that in 1984 there were 1000 devices capable of accessing the internet. Today there are 1.2 billion devices with internet capability, and by 2020 that number will at least triple, if not more.

There are many trends however, that we can be relatively certain of, such as the estimated global population by 2020 will be 7.6 billion, commodity costs will go up and remain volatile, and that sustainability will continue to play a large role in the industry.

Uren presented various scenarios likely for the future, and based on research conducted by the Forum, in all of these scenarios, sustainable consumption will be mainstreamed and become the business norm, regardless of the economy and demand. Sustainable consumption will therefore lead to smarter use, better choices, more social value and smarter growth across the globe. With this in mind, Uren suggested five key recommendations for the industry to utilize in the future:

1. Take innovative business models to market – it’s time to start experimenting to get new products and services in the market.

2. Work with your value chain to find new solutions – have conversations and find out where you can improve along the supply chain.

3. Strengthen local brands and local production - think about the local interpretation of your global brand. Consumers like it when something comes from a local source.

4. Build up long-term trust through transparency – use consumers desire to understand where their products are coming from to build trust.

5. Use the power of marketing to accelerate sustainability - don’t wait, use your marketing muscle to create consumer pull.

 

Trouble in Aisle 5: A Look at Changing Attitudes and Patterns of Millennials and Baby Boomers

Scott Mushkin, managing director and senior equity research analyst of Jefferies & Co. shared insights from the study Trouble in Aisle 5, discussing future trends in the CPG industry as baby boomers begin to pass the baton to the millennial generation.

“In 2010, millennials made up 5 percent of U.S. adult population, and by 2020 they will make up 19 percent. In other words, by 2020 1 in every 3 adults will be millennials. The baton is being passed to millennials, who simply shop differently than boomers,” explained Mushkin.

How do millennials shop differently?

Unlike baby boomers, millennials are looking for a full shopping experience, not just getting in and out of the store. They tend to be less brand loyal than boomers, are influenced by price rather than brand, and are likely to shop private label for things like more variety and healthier products. They want what they want, when and where they want it; consumption will be on their terms.

However, the main factor in millennials’ decision to purchase a product is convenience.  Although millennials will pay more for fresher or greener products, they are willing to sacrifice that for convenience and nutrition.  They want instant access to products, making technology a more likely shopping avenue, which is why things like grocery delivery services, convenience stores and online retailers are becoming increasingly popular among the generation.

“Millennials, generally speaking, are not a one issue generation. Natural and organic, flavor, and convenience mean a lot," said Mushkin.

This is partially why the trend for millennials to shop at mass merchants rather than traditional grocery stores is growing.

“Mass merchants are becoming the cross section; everyone goes there for different reasons.”

Many large grocery chains are beginning to incorporate the needs of millennials into their future business plan, proving that these generational trends will likely have a lasting effect on the traditional grocery shopping experience.   

 

Harnessing the Power of “And”

With 1.8 billion servings consumed every day, 20 million customers every week and nearly 300 global bottling partners, Coca-Cola has become a leading brand around the globe. This recognition not only brings many benefits, but also many challenges, including the expectation of being a leader in sustainability.

With that in mind, Brian Kelley, chief product supply officer at Coca-Cola Refreshments (CCR) discussed their goal of building sustainability into their culture at all levels of the organization, starting with their 10 year vision focused on the six “P’s”: profit, people, portfolio, productivity, partners and planet. With this vision, and shifting consumer attitudes on the importance of sustainability, companies who take the sustainable approach have an opportunity to connect with consumers around the world, often leading directly to higher profits.

CCR has taken steps towards a more sustainable business approach by measuring the consumption of water and energy use more carefully; reducing water usage by setting goals to return an amount equal to what they use to manufacture a product; and significantly reducing the amount of travel a product does in the supply chain. Also, Kelly touched on its PlantBottle, a fully recyclable PET bottle made with up to 30% plant-based material.

One of the most important steps CCR is focused on however is operating in healthier, more sustainable communities.

 “It all comes down to healthy communities – we have to make sure the community that we operate in is a sustainable community. We won’t win, we can’t win, and we don’t win if we don’t take seriously the community. “

And although CCR has made many strides in sustainability leadership, there is still a lot of progress to be made.

 “We are a long way from where we know we will be. They don’t just buy our product, they buy our value and we feel that sustainability is a value consumers will buy for the foreseeable future, and we’re well along the path, with a long road ahead of us. “

 

Farming on Demand:  Dialogue about Sustainability Between Farmers and Buyers

This panel session, featuring Debra Eschmeyer, James Beard Leadership Award Winner and organic farmer; Harriet Hentges, partner at Hentges, Khan, Strauss and Associates; Diane Holdorf, chief sustainability officer and vice president of health and safety at Kellogg Company; and Fred Yoder, past president of National Corn Growers Association addressed the importance of facilitating stronger supply chain relationships that enhance farm to fork collaboration for companies.

The panel agreed that having genuine conversations between farmer and buyer is essential, beginning with where our food is actually coming from. 

 “Food and beverage business is our life, it’s what we do every day and how we sustain ourselves and our families, but in so many ways we can be removed from where our food actually comes from. That reconnect is essential to get back to,” said Diane Holdorf.

These conversations should not only involve the farmer and buyer, but all of those that are part of the supply chain from beginning to end, to help understand the challenges they face from every angle. 

“In agriculture, by involving the retailer, farmer, non-expert and expert in a conversation, they are able to use that experience to create an understanding of what each other’s challenges are,” said Yoder.“We have trouble connecting the dots of the supply chain, from where the seed is planted to when the product ends up in the store. However, retailers are good listeners, because they face the customer every day. The process of inviting them to the farm, it changes the mindset of just the product they’re dealing with in the store, and creates an environment for collaboration and new ways of thinking.”

Although many farmers and manufacturers/retailers are already beginning to have these conversations and reconnecting with their food from the start, one of the major challenges they both face is connecting the information back to the consumer.

“Consumers are very interested in where food comes from and how it’s processed, but the challenge is how do we connect that back to them,” asked Holdorf.  “More than 98 percent of our growers are all family owned farms, but how do we help take those kinds of stories and share them with consumers?”

Yoder added that farmers have a similar challenge. “We have the same common denominator of education and transparency that the food industry has to deal with on a regular basis. The main thing is that people need to know that we’re very proud of what we do out on the farm and they need to understand what we’re doing, and to have a bigger dialogue about the products we’re supplying. There is an interest to know more, a real curiosity, but the easy means of getting it isn’t there.”