‘Voting with wallets’: Fonterra CEO urges industry to wise up to sustainability demands or consumers will walk away

By Pearly Neo contact

- Last updated on GMT

Consumers across the food and beverage landscape will simply walk away from brands that merely pay lip service to sustainability concerns, argues Fonterra’s APAC CEO. ©Getty Images
Consumers across the food and beverage landscape will simply walk away from brands that merely pay lip service to sustainability concerns, argues Fonterra’s APAC CEO. ©Getty Images

Related tags: Sustainability, Food security, digitalisation

Consumers across the food and beverage landscape will simply walk away from brands that merely pay lip service to sustainability concerns, argues Fonterra’s APAC CEO, who believes that many are already ‘voting with their wallets’.

Judith Swales’ comments came as the Asia Pacific Economic Cooperation (APEC) intergovernmental forum made food security, sustainability and food system digitalisation major areas of focus to accelerate the recovery of the food system in the Asia Pacific region.

APEC comprises of 21 member countries that border the Pacific Ocean including both APAC and non-APAC (Canada, Chile, the United States, etc.) countries. Its main objective is to foster free trade in the region, and this year all APEC discussions are being hosted by New Zealand.

Across a series of meetings, APEC government ministers and food industry representatives have highlighted food system sustainability, digitalisation and food security as vital areas of focus for the industry to recover from the impacts of COVID-19.

Amongst these, one of the major impacts COVID-19 has had on consumers is a rise in demand for sustainability, according to Fonterra APAC CEO Judith Swales.

“The power is in the hands of the consumers, and they will vote with their wallets,”​ she told the floor at the recent APEC 2021 business forum.

“Consumers today are getting more and more concerned to know that food companies are taking sustainability seriously, and are willing to pay more for this. Many will walk away if they have doubts – this applies across the entire food industry whether it’s soft drinks or dairy or others.”

Consumer buy-in is crucial to ensuring the food industry’s recovery from COVID-19, and if sustainability is what they are looking for, it is something that all food manufacturers need to take heed of when making their products.

“Fonterra has invested in a lot of consumer research in our key markets over the last 18 months and have found that there are two groups – in the more mature markets like Australia and New Zealand, consumers are already expecting [food firms] to be doing something about things like biodiversity and climate change,”​ said Swales.

“[On the other hand] in more developing markets the focus is on sustainable nutrition for families, and they look at things like cared-for cows and naturally-sourced dairy, so many of our brands like Anchor and Fernleaf which are linked to New Zealand provenance and sustainability [are connected with] better nutrition.

“Operational actions are also important, and at Fonterra sites in Malaysia and Indonesia we’re using solar panels and collecting rainwater to use – [all important] to show consumers that we’re serious about sustainability.”

Fonterra Chief Executive Miles Hurrell concurred and urged food firms across the region to respond accordingly to consumer demands and expectations for sustainable foods.

“Over the past 18 months it’s been amazing to see how quickly the science world has been able to find a vaccine to COVID-19. Imagine if we had the same kind of focus and resources going into finding a way to reduce methane emissions – we’d have it solved next week,"​ he said.

Food security

In a separate APEC Ministerial Meeting, governments from all 21 APEC countries committed to a new 10-year food security roadmap, dubbed Roadmap 2030, emphasizing that the COVID-19 pandemic has pushed food security up the list as a vital priority.

“While food security was already a challenge [before], COVID-19 showed us that there are vulnerabilities in our food systems and in our economies, and that our food systems need improvement,” ​said New Zealand Minister of Agriculture Damien O’Connor, who chaired the meeting.

“[It is vital to implement these improvements rapidly as] without food security for all our people, we cannot achieve the other goals we have for our economies.”

The roadmap will leverage heavily on public-private partnerships to achieve food security, and the major goals that have been laid out are Productivity, Inclusivity, and again Sustainability.

“All economies will hold workshops by early 2022 to transition from Roadmap 2030 to a specific implementation plan, including developing specific ‘next steps’ [and implementation plans] on each of the identified actions,”​ said the ministers via a formal statement.

“A review of the actions and progress will be conducted in 2025, and a review of the roadmap in 2030.”

Digitalisation

The ministers also named digitalisation of the food industry as an important component of food system recovery in APAC moving forward, especially given that COVID-19 has made both the food industry and consumers much more reliant on digital platforms.

“The COVID-19 pandemic accelerated digital transformation, highlighting the ability of an innovative digitally enabled economy to better recover and thrive,”​ they said.

“In addition, digitalisation and other innovative technologies have the potential to transform the food system and enhance food security by increasing productivity and efficiency, minimising food loss and waste, mitigating and adapting to climate change, and reducing costs and facilitating food trade.”

To promote accelerated recovery, a Food Security Digital Plan will also be drawn up and implemented which will have heavy emphasis on emerging technologies as well as bringing technology to markets with limited access.

For example, actions under this plan will include increased access to broadband digital infrastructure in underserved areas via investments and structural reforms, training to improve food system related digital literacy for underserved communities, and increased public-private investment to encourage innovative technologies for the whole food value chain, particularly MSMEs.

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