Which sector will be the next food sector?

May 04, 2006

Two years ago I supplied feedback to the latest corporate responsibility report from a well-known UK food manufacturer. It was an expensive looking document that discussed certain corporate responsibility impacts and credentials

But it did not discuss issues such as food additives, ingredients, obesity issues and the marketing of the company’s products to children. My observations, which were “unfortunately the value of what you have produced is rather undermined by your failure to discuss and report some key areas”, were politely received.

Soon afterwards I met a television station with a large audience of children. It wanted to chat about its corporate responsibility impacts. The staff who were present were surprised when I stated that they had some major issues concerning food and drink advertising and potential regulatory activity. I suggested that they put their heads together with their major advertisers to decide on joint policy and action.

That was then – this is now. We are now in the post Super Size Me world where the food sector and businesses associated with it are under much greater scrutiny. Despite these developments it appears that many food industry companies have not addressed these matters within their corporate communications and reporting.

London based City University recently produced a fascinating survey, that looked at the corporate websites, annual reports and corporate responsibility reports of the world’s ten largest food manufacturers, retailers and the five largest food service companies.

  • 15 out of 25 companies did not report action concerning salt,
  • 20 out of 25 companies did not report action concerning sugar
  • 21 out of 25 companies did not report action on fat
  • 23 out of 25 companies did not report action on portion size
  • 21 out of 25 companies did not report policies concerning advertising
  • 14 out of 25 companies did not report a policy on product labelling.

The survey did not look at sales and marketing information and other communications I believe that many of the companies surveyed produce much more of this sort of information for the benefit of their customers.

What can be drawn from this story? Clearly many food sector companies do not believe that the audiences for their ‘corporate’ information are interested in their strategies and performance in this area. The recent experience of the UK-listed beverage company Britvic is interesting in this context. Following a recent and unanticipated fall in demand for its fizzy drinks (and consequently newly floated shares), the company has addressed its investor strategy in this area by reporting its plans to address the ‘better for you’ or ‘healthier’ drinks market directly within its investor communications.

The Britvic example indicates that this type of information is relevant to corporate audiences, such as investors, as corporate strategy and management activity in this context may well be directly relevant to share price. Strangely this message does not seem to have been grasped by the sector as a whole leaving companies vulnerable to the charge that they are not managing this issue from their corporate audiences.

History indicates that the importance of corporate responsibility matters can often catch industry sectors ‘on the hop’, leading to much reporting and communications activity being reactive rather than proactive and companies and their products being portrayed in an unnecessarily poor light. My own experience is that first movers often gain a significant commercial and reputational advantage. Will your sector will be the next food sector?

Tim Purcell is chief executive of corporate communications company CO3, www.co3.coop.

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