This edition’s consumer news stories show that consumer behaviour is changing and, even though it is slow, it is changing for the better.
The ‘red thread’ running through several of the news items in this section is that consumer behaviour is changing – albeit slowly . For many years we have seen survey after survey suggesting that people would like to buy socially and environmentally friendly goods and services.
However, until relatively recently there has been a huge gap between such statements and actual behaviour. It now seems that consumers’ positive attitudes are translating into real purchasing decisions.
Ironically, it may not be just consumers who are behaving differently. Much of the pressure for change has come from the big retailers who are driven by media interest and NGO activity to alter their practices. Many of the UK’s big supermarkets are demanding that suppliers provide products that meet stricter social, ethical and environmental criteria.
In this instance, it is a case of increased supply creating its own demand. As more fair trade, organic and environmentally sound products become available – and at attractive prices – so increasing numbers of consumers are voting with their wallets and choosing those brands that can demonstrate they are taking their responsibilities seriously.
Commission’s provisional findings
The Competition Commission released the preliminary findings of its investigation into the groceries market on October 31.
The commission found that the “UK grocery market is delivering a good deal for consumers” but expresses concern over a lack of competition in “certain local markets” as well as “some retailer land holdings” and adds that it is also concerned about the ability of some retailers to transfer risk and costs to their suppliers through various purchasing practices. In a statement on its website, the Commission says that it “will now consider a range of measures to address these concerns before deciding on its final remedies”. In particular it calls for greater weight on competition and choice when it comes to land holdings and the planning system as well changes to the Supermarkets Code of Practice, which regulates retailer-supplier relationships. The inquiry looks at the increasing dominance of Tesco, Asda, Sainsbury’s and Morrisons in the grocery sector.
Supermarkets can do a lot more to help consumers make environmentally friendly choices according to the annual supermarkets survey by the National Consumer Council. The NCC found that, since last year, retailers had improved across a range of environmental indicators such as climate change, waste and recycling, sustainable fish and sustainable farming. Sainsbury’s, Marks & Spencer and Waitrose are the leading retailers with a score of B, with Tesco and Asda following with a score of C. The Co-op, Morrisons and Somerfield all scored a D. This is an improvement on the 2006 scores when only Waitrose received a B score and Morrisons and Somerfield both came in with an E. However, no retailer was rated as A as “no retailer did well across every indicator”. The NCC calls for supermarkets to set more “challenging targets on green issues” and for annual reports regarding these.
The report – Green Grocers: How supermarkets can help make greener shopping easier – makes a number of specific recommendations with regard to climate change, waste, sustainable fish and sustainable farming. The survey was carried out by Sustain, the farming and agricultural alliance, on behalf of the NCC.
Sales of Rainforest Alliance Certified products were more than £54.7m in 2006 and are projected to exceed £91m in 2007 according to an announcement by the organisation on October 4. The growth is down to increasing consumer demand for sustainable bananas, coffee and chocolate and highlights of the past year include McDonald’s restaurants switching to Rainforest Alliance Certified coffee and Unilever announcing that it has plans to source all its tea from certified sustainable sources.
The certification is an external, third-party, voluntary system and works with a network of non-profit sustainable agriculture organisations – the Sustainable Agriculture Network – to create independent standards for environmental and social sustainability. Chris Wille, chief executive of Rainforest Alliance’s sustainable agriculture programme, described the work of the organisation as a catalyst for “cooperation between former adversaries: environmentalists and big business” and went on to say that “we’ve encouraged the emergence of a more environmentally and socially responsible corporate culture, which in turn is helping tip global markets towards sustainable practices”.
Greenpeace, the environmental campaign group, has placed Marks & Spencer and Sainsbury’s at the top of a tissue product league table that considered where a retailer’s tissue paper comes from and whether it contains recycled paper or paper that is certified by the Forest Stewardship Council. Waitrose and Boots were placed bottom of the table with Proctor & Gamble failing to respond to Greenpeace’s requests for information. Greenpeace has now published a tissue product guide, which aims to provide consumers with information regarding the sourcing of toilet roll, kitchen towel and tissues.
The Soil Association has ruled that imported organic food will only be certified as organic if it can prove it is also Fairtrade. The announcement came on October 25 after consultation with 200 organisations including the World Trade Organisation, UN bodies as well as governments.
The association rejected calls from various stakeholders and members of the public to implement a blanket ban on labelling any imported food as organic, recognising the importance of the organic foods trade for developing countries. The association remains clear however that its long-term aim is to minimise air-freighted goods.
Members of the Food and Drink Federation have committed to send zero food and packaging waste to landfill by 2015 according to a new environmental plan. The plan targets another 4 areas, where the FDF aims to:
achieve a 20% absolute reduction on carbon emissions by 2010 in comparison to 1990, and a 30% reduction by 2020;
reduce the level of packaging reaching households and to provide more consumer advice on how to recycle or recover used packaging;
reduce water use and to contribute to an industry-wide absolute reduction of 20% by 2020 compared to 2007;
embed environmental standards in transport practices and also to “contribute to an absolute target for the food chain to reduce its environmental and social impacts by 20% by 2012 compared to 2002”.
The five-fold environmental plan was launched by the FDF on October 25 in London. The FDF represents food and drink manufacturers in the UK and members include Unilever UK, GlaxoSmithKline, Abbott Laboratories, Cadbury Schweppes and Cafédirect.
Sainsbury’s announced on October 10 that it plans to source all of its own-brand tea as well as roast and ground coffee from Fairtrade plantations. The move to 100% Fairtrade for these products will take place over the next three years with Sainsbury’s Red Label Tea planned to be the first brand to carry the certification. This new policy is expected to increase returns for developing countries by about £2m annually and will make Sainsbury’s the biggest Fairtrade retailer of tea and coffee in the UK.
Companies are not basing their marketing campaigns on scientific fact according to a report by Sense About Science, a UK-based NGO that promotes better public understanding of science. There Goes The Science Bit, published in October, includes a number of transcripts of telephone interviews with staff at businesses such as Sainsbury’s, Nestlé, Prêt à Manger, Co-op and Clarins. Scientists question the companies and found that, overall, those interviewed could not sufficiently back up scientific claims made in the marketing of ‘healthy’ products. The report calls for closer scrutiny of what it calls ‘pseudoscience’ and that misinformation should be exposed and that businesses should be held accountable for misleading the public.
The pharmaceutical industry fared the worst in the 2007 Bad Product Awards staged by Consumers International, the world federation for consumer groups, with Takeda Pharmaceuticals, a Japanese firm, winning the overall prize for Bad Drug Promotion. The firm was accused to promoting sleeping pills for children despite health warnings. The award of Bad Drinks Marketing went to drinks company Coca-Cola for misleading advertising campaigns of its water product, Dasani, and the Bad Toys award was given to Mattel, the toy manufacturer, for the recall of over 21m toys globally this year. Consumers International announced the winners of the International Bad Products Awards 2007 in Sydney. The purpose of the awards was to highlight internationally recognised brands that fail to act responsibly and abuse consumers trust.
44% of the public and 66% of MPs think that corporate social responsibility is mainly about image according to a study by BPRI and BMRB, research consultancies. The majority also believe that companies have corporate responsibility initiatives to gain positive media coverage. The survey involved 100 MPs and 1,017 members of the public. Contact BPRI www.bpri.co.uk; BMRB www.bmrb.co.uk
Marketing News Round-Up (Issue 95)
October 03 2007
by Briefing staff
This edition’s marketing round-up is proof that retailers in particular should be vigilant if they plan to advertise to children. However, it also shows that there is an opportunity to invest in research about the sector.
Investing in retail research
Tesco is to invest £25m in the study of how to encourage environmentally-friendly consumption by teaming up with the University of Manchester to create the Sustainable Consumption Institute.
The institute will research how consumers can be incentivised to buy green products and services, how companies can adapt to meet these needs and it will also encourage the training of future environmental experts. According to Tesco, projects regarding how to live a low-carbon life and the role of new technology in this are already underway. Contact Tesco www.tescocorporate.com
Briefing comment
The announcement from Tesco to invest £25m in a new sustainable consumption institute at Manchester University should be welcomed as clear signal that a leading UK retailer is concerned about sustainable development. The idea is to move the debate beyond corporate environmental responsibility to consider the consumers’ role in tackling the threat of climate change. According to Tesco’s press release, the planned institute will explore vital areas of research such as how customers can be incentivised to buy green products and adopt more sustainable lifestyles.
Tesco chief executive Sir Terry Leahy goes on to say that consumers expect the company to take a lead in helping them follow greener lifestyles.
However, it must be hoped that in moving the focus onto consumers’ behaviour, Tesco will not forget its own responsibilities to the environment. Tesco’s carbon footprint is substantial. The company’s own estimates place carbon emissions at more than 4m tonnes every year. The supermarket was recently criticised in a report by the development charity, Christian Aid, which claims that this figure does not include the emissions caused by shoppers driving to and from its stores or those incurred by its suppliers. Christian Aid believes that the true impact Tesco has on the environment could be as much as 12 times higher.
Looking at the bigger picture, it is apparent that the supermarket system itself requires radical change in order to reduce this environmental impact. Some critics would argue that fundamental issues such as out-of-town sites, highly centralised distribution networks and the global sourcing of goods all conspire to make the business model unsustainable – in every sense of the word. Turning the clock back fifty years to local sourcing, distribution and retailing is not a realistic option. Getting big business to invest in impartial research into green consumerism might prove to be a significant step forward in the development of the retail sector.
Irresponsible marketing
Consumer group Which? released a survey on August 21 that criticised the use of cartoons to market unhealthy foods. Of the parents interviewed, 75% thought that it was irresponsible to use cartoons to promote unhealthy food to children and wanted the practice to stop. Among the companies named were Burton’s, Marks & Spencer and Kellogg’s. Which? note that there are very few instances of cartoons being use to market healthy food and are calling for companies to follow in the footsteps of Disney and Warner Bros, both of which have announced they will no longer use cartoons to market unhealthy food to children.
There should be no alcohol advertising before 9pm according to a new report from Alcohol Concern. Not In Front Of The Children, released in August, found that the number of alcohol adverts increases between 3pm and 5pm and that programmes such as Home and Away, The X-Factor, and The Simpsons, where a majority of the audience are children, contain adverts for alcohol. One of the recommendations it makes is that there should be no alcohol advertising between 6am and 9pm and that information regarding the regulation of the marketing of alcohol should be more publicly available. The Portman Group, an organisation representing drinks manufacturers with the aim of promoting responsible drinking, responded by describing the 9pm watershed as “unnecessary” and stated that “completely shielding this age group from any images of alcohol is not helping them grow up with sensible and balanced attitudes to drinking”.
Asda’s marketing of its vodka-based drinks is not irresponsible according to The Portman Group – the social responsibility group for drinks producers.
A complaint had been made that Asda, a UK supermarket affiliated with Wal-Mart, was marketing its vodka-based drinks to children by using colourful images and flavours such as raspberry and vanilla. But, the Independent Complaints Panel, which makes decisions under the Portman Group’s code of practice, rejected the complaint because the marketing does comply with the code.
However, the panel stressed in a statement on August 8 that consumers must “remain alert” and “report any concerns about alcohol marketing” to the panel.
One of the main reports published in August with regard to the pharmaceutical industry is the Covalence Pharmaceutical Industry Report 2007.
GSK allows Aids drug for Rwanda
GlaxoSmithKline, the pharmaceutical company, has broadened its commitment to improve access to medicines for the developing world by allowing a Canadian company to manufacture a generic version of HIV/Aids medicine for use in Rwanda. This forms part of Canada’s Access to Medicines Regime, which is part of the Canadian government’s initiative to help developing countries to tackle diseases such as HIV/Aids, TB and malaria.
Novartis, the Swiss pharmaceutical company, lost a battle in the Indian courts on August 6 after challenging an Indian patent law. The law states that India is allowed to refuse a patent for an existing medicine if it has been modified only slightly. Agencies, such as Care International and Oxfam, have reported that Novartis is unlikely to launch an appeal to the ruling.
Novartis described the decision as having “long-term negative consequences for research and development into better medicines for patients in India and abroad” and stated that patent systems are “critical for medical progress”. The company acknowledged that the patent case has generated debate around the issue of global access to medicine and emphasised that “improving access to medicine is an integral component of the Novartis business strategy and global social responsibility commitment”. India is one of the foremost suppliers of generic medicines to the developing world where patented drugs are too expensive for the poor to afford.
Ethical risks are on the increase for the pharmaceutical industry according to the Covalence Pharmaceutical Industry Report 2007. The report, published on August 29 by Covalence – the Geneva-based ethical reputation research firm, found that most of the risks are related to intellectual property rights, pricing, clinical trials, side-effects and transparency. It also found that environmental efforts made by the industry are not as pioneering as those made by other industries. It suggests that pharmaceutical companies should work on and develop ways in which to be recognised as sustainable.
The companies mentioned in the report include GlaxoSmithKline, Bristol Myers Squibb, Johnson & Johnson as well as Pfizer, Abbott, Novartis and AstraZeneca.
Consumers must be aware of the business take on reputation, packaging and advertising.
Most respected companies
A survey conducted by the Reputation Institute, the international research and consulting organisation, has revealed that the company most respected by consumers globally is Lego, for the second year in a row. IKEA enjoyed second polling position, with food companies like Barilla, Mercadona, Kraft Foods and Danone also ranking highly. Johnson & Johnson, Canon and Phillips, and automotive companies like Toyota and Michelin also gained places. The study considered the reputation of the world’s largest companies and is based on online interviews with 60,000 consumers in 29 countries. Halliburton and Australia’s AWB received the lowest ratings.
The Waste and Resources Action Programme (WRAP) had a major breakthrough this June when nine of the UK’s biggest brand owners signed the Courtland Commitment to reduce packaging for their products.
Britvic, Cadbury Schweppes, Coca-Cola Enterprises Ltd, Dairy Crest, Duchy Originals, Mars UK (formerly Masterfoods), McBride, Nestlé UK and Premier Foods all committed to reducing the UK’s annual output of 6.3m tones of waste by at least 340,000 tonnes by 2010. Asda, Boots, Budgens, Co-operative Group, Londis, Iceland, Kwik Save, Marks & Spencer, Morrison’s, Sainsbury’s, Somerfield, Tesco and Waitrose have been signatories since the campaign was launched in 2005.
The European Commission has established a forum in which NGOs and businesses can discuss ways in which the alcohol industry should become more responsible. The European Alcohol and Health Forum already has more than 40 members who will meet twice a year to focus on concrete actions that can be taken to protect children and young adults from irresponsible alcohol use. Meetings will be chaired by the Commission’s Directorate General for Health and Consumer Protection, and action plans will be made public to encourage transparency and commitment to deliver. An estimated 200,000 Europeans die from alcohol related deaths every year, and one in four young male deaths are also attributable to alcohol abuse.
Kellogg’s have announced that it will impose stricter child advertising guidelines on its products and it will provide front-of-pack nutrition labelling in a push to be more socially responsible about children’s diets. Advertising restrictions are already enforced by law in the UK, whereby products with too much salt, sugar or fat are not allowed to be advertised to children under 12, and will be expanded to all Kellogg’s distribution countries through the Kellogg Nutrient Criteria. There will also be an easy-to-understand front-of-pack label that gives a “snapshot” of what the cereal contains.
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