Big food loses when it keeps consumers in the dark

Discussion
Feb 18, 2016
Warren Thayer

Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.

Seems like everyone from Bernie Sanders to Donald Trump is tapping into the anger of America. And what are we so mad about?

Well, for starters, Congress is bought and sold. All the “rules” favor the rich. Major corporations lie and keep things opaque so consumers are kept in the dark as much as possible.

Yeah, people — especially those coveted Millennials — are mad as hell. They want change, honesty, and things done for the public good, not just for the fat cats. And these awakened, angry people vote, most notably in this context with their wallets.

Our politicians are at least talking the talk that they know people want to hear. Will they walk the walk? I doubt it. But just talking the talk may be a step in the right direction.

And so begins my rant at many of you who lead trade associations and “Big Food” and their ongoing anti-GMO labeling battles and other efforts to obstruct transparency requirements around the food supply chain. Do you really think you can continue winning by making vigorous attempts at keeping consumers in the dark about what they’re eating? That you can continue to bribe Congress to help line your pockets at the expense of consumers?

Sure, some of you in Big Food who are perceptive enough to be worried are attempting genuine inroads here. Congratulations, although you may have already burned your bridges. Fact is, I’ve never seen so many enthusiastic start-ups where the calling is about producing good, healthy food more than it is about cutting corners to max out profit. And they’re gaining share against Big Food, as was noted in a Fortune magazine cover story last summer. Most of Big Food remains focused narrowly on quarterly earnings and stock prices. When some of these Big Food companies and their suspender-snapping CEOs crash and burn, I won’t miss them.

DISCUSSION QUESTIONS: Will smaller companies focused on health and consumer transparency continue to gain share against Big Food? Should Big Food be more motivated to increase transparency around the food supply chain?

Braintrust
"Rather than spending many millions fighting consumer actions like labeling laws, only to lose customers no matter what the outcome, they would be wise to think like a start-up and move towards filling market demand."
"There are millions of people on this planet that would be happy to have access to the kinds of foods Millennials and others disdain. Why? Because the alternative is starvation."

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13 Comments on "Big food loses when it keeps consumers in the dark"

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Ken Lonyai
BrainTrust

The GMO labeling issue is the poster child for Big Food’s problems. More and more people want disclosure about GMOs (although they are still a minority) and producers spend more and more to fight it. Ultimately, as the voice for labeling grows stronger and big corporations continue to try and hoodwink consumers, the door opens for start-ups that produce what the tide of consumers want.

Any strategic large food producer that wants to grow and be profitable in the future needs to wake up and smell the coffee. Rather than spending many millions fighting consumer actions like labeling laws, only to lose customers no matter what the outcome, they would be wise to think like a start-up and move towards filling market demand. The Big Food companies that can leverage their scale and distribution to deliver healthy (or seemingly healthy) foods with ingredients that consumers want, will win every time.

Paula Rosenblum
BrainTrust

Amen, brother. I suspect not everyone on this panel agrees with you, but you can count me in!

The fact is that social media has created the transparency that “Big Food” tries to suppress. And that we are among the last developing nations to NOT have that transparency doesn’t help Big Food either. I can remember country of origin being on fresh fruits and vegetables in Australia all the way back in the ’90s. We’re just getting there here now.

The bigger issue is that it becomes a class-oriented concern. Because it costs more to buy organic/local, etc., it ends up being something the wealthier do, while the poorer just keep being squeezed into chemicals. And the fact that empty calories are so bloody cheap here keeps them buying fast food (which we know is essentially addictive).

Until the poor are offered healthy options, Big Food will continue doing what it does: obfuscating, paying their local Congressman and carrying on business as usual.

Ian Percy
BrainTrust

I sure hope so — just got involved in the “nutrient dense” food business. If consumers (i.e. the general public) were a listed company they’d be buying back shares. We’ve sold out to Bid Whatever for far too long and we’re buying back control. Kudos to Warren!

Others may find the link to the Fortune Big Food article helpful.

Adrian Weidmann
BrainTrust

The companies that focus on health and consumer transparency will be rewarded if they maintain their diligence and commitment to those principles. Consumers will pay a premium if your product and brand help the world — its people, its environment, its well-being. Recent news cited a number of cheese manufacturers using cellulose filler, products labelled as “extra virgin olive oil” being cut with cheaper canola oil and a number of other false advertising claims. Big Food may be making healthy profits until exposed but they have zero brand equity.

Those smaller companies that can supply local markets with healthy, cost-competitive (not cheap) alternatives that support a meaningful cause will be commercially rewarded by Millennial and forthcoming Generation Z shoppers.

Ryan Mathews
BrainTrust
It seems to me there is no question that “David” producers and suppliers will continue to battle — with increasing success, by the way — against “Goliath” food companies. And, there is no question that transparency is — in general — a sound go-to-market principle. But the issue here really is one of affluence. Put bluntly, this is (relative to global averages) a rich person’s problem. There are millions of people on this planet that would be happy to have access to the kinds of foods Millennials and others disdain. Why? Because the alternative is starvation. Oh, and speaking of those critics … how deeply do they look at what it is they are really eating? Warren raises a great point. People ought to have access to clearer labeling, but they also need the education to understand what those labels do and — perhaps more importantly — don’t mean. How many Millennials would ask for a little extra shaved Parmesan on their truffle oiled shrimp risotto if they knew federal standards allow up to four percent of their “cheese” to be cellulose or that their shrimp were harvested by slave labor? How would those “organic” field greens taste if the person munching down on them knew… Read more »
Anne Howe
BrainTrust

Hooray to Warren for being so frank about the ugly truths in much of the Big Food industry. I agree, but will add that working in Big Food kept my family going financially for a long time. But over time, we switched our preferences to more locally-produced and organic foods, and now we use very few “packaged” items.

I fully support the plethora of new brands that are working hard to give us healthier options and providing full disclosure on how they are made, even if the prices are higher. The trend toward transparency and accountability, fueled by access to truthful information, is not going to reverse. So if Big Food continues to ignore the shopper and not deliver, the shopper will vote with his/her wallet and the outcome will not be pretty for the classic CPG brands.

And let me be clear: tiny changes that really don’t address the issues will not save the biggest brands. The companies that fully address what the shopper wants and understand that this culture shift is the new normal will prevail.

J. Peter Deeb
BrainTrust

Wow Warren, you are really fired up about this! I happen to agree with you that there is more to be gained by staying current with what consumers are looking for than fighting against the inevitable. The labeling is one issue and the story that came out this morning about a store-brand Parmesan cheese that was labeled as Parmesan but actually was a Swiss and Cheddar blend is another. Truth and transparency are needed!

Lee Peterson
BrainTrust

Quality leads to growth. Growth does not lead to quality. That statement is an old retail standby that especially holds true for Big Food, but more importantly now should be the mantra for smaller manufacturers. There’s been some negative press about Whole Foods lately, but their efforts at changing the center store with the 365 label go a long way to the central question here.

Didn’t Lincoln say something about fooling all the people? I’m just sayin’.

Tony Orlando
BrainTrust
This article is well written, and stores need to offer options for consumer choice. Herein lies the problem if I may be so blunt. Organics are wonderful, and our U.S. standards are very high. However, I can not sell any organic produce or meats in my store, as our population cannot and will not pay for them. This is true of the majority of stores in rural areas, not the exception, and we have to provide value to our customers everyday. The GMO issue is changing, as more and more companies are offering the non-GMO foods at fair prices and they can produce them on a large scale. This is just not the case when it comes to organic perishables, and I wish it were different, but a quality broccoli or a tomato at a good price is what our customers need, and across the rural towns in America this is how most consumers buy their perishables, as they simply can not afford to go all organic to feed their families. These are my honest thoughts on the subject, and until the organic perishable pricing gets closer to the products we sell in price then I don’t see much change,… Read more »
Lee Kent
BrainTrust

Although I am on the side of transparency, I can’t help but go back to the old supply and demand. This article talks about whether smaller companies focused on healthy food can make inroads to Big Food? For the wealthy, maybe. But that is not a choice that low income families can make. They must buy what they can afford.

Take out the healthy smaller companies making inroads from this article and focus on just transparency and we’ve got something to talk about. We do need to do a better job of letting folks know what is in their food. Does shredded cheese have cellulose in it? Yep, it sure does. Is it harmful? No. It’s fiber and it’s filler. Makes the cheese go farther.

The point being, tell people what they are eating and let them make the choice.

For my 2 cents.

Craig Sundstrom
Guest

Hmmm, people are living longer than ever before — except in places like Russia — and what food related problems we have are often related to small, artisan suppliers (Chipotle) or the misguided efforts of “experts” (trans fats). Sorry, while I (almost) always like Warren’s writing, I can’t go with his rant.

As for the (other) question, will small companies continue to gain share? Sure; it’s always easy to gain share when you’re small, and in this case two trends favor them (1) higher incomes, which substitute higher-class goods for lower, and (2) significant numbers of people who equate “small” with “good”… the facts notwithstanding.

Tom Redd
Guest

As many mags have said, “the war against GMOs has more basis in economics and democracy than it does in physical health.”

All the health freaks that spend big money on supposed extra healthy food do not realize the reality that super healthy, etc, all relates to the quantity you consume. Natural, un-caged eggs will not improve your health vs regular old eggs. Same with regular milk vs organic. All your time as a health nut will chop into your retirement savings … and at most you might live 2 minutes longer.

Big food has a big job — to keep a large nation fed and gain enough margin to keep growing. GMOs play a role in helping to grow food as more creatures invade the farms.

Keep going wild over all this. You are a small minority and always will be.

Kai Clarke
BrainTrust

No, just because a company is smaller, doesn’t necessarily mean that it will be successful against Big Food. However, creating transparency around the food supply chain only benefits everyone involved throughout the entire process. This is only a winning proposition, regardless of what size you are.

wpDiscuz
Braintrust
"Rather than spending many millions fighting consumer actions like labeling laws, only to lose customers no matter what the outcome, they would be wise to think like a start-up and move towards filling market demand."
"There are millions of people on this planet that would be happy to have access to the kinds of foods Millennials and others disdain. Why? Because the alternative is starvation."

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