business news in context, analysis with attitude

Notes & comment by Kevin Coupe

NEW YORK – Justin King put to rest what he called “myths” about how consumers behave during an economic downturn. Marion Nestle scolded the food industry for what she said were continuing crimes against consumers’ best nutritional interests. Indra Nooyi suggested that it was food manufacturers have to cater to how people live, not how idealists would like them to live. And Lee Scott said the he wished he’d been a better Walmart CEO.

That was pretty much the gist of the third and final day of presentations made at the 53rd annual CIES World Food Business Summit, which took place here last week.

High points from Friday’s proceedings:

• Justin King, the CEO of J. Sainsbury, said he wanted to debunk three myths about consumers’ recessionary behavior.

One, he said that while most people believe that consumers down-trade during a downturn, and it is true that “they are shopping more carefully and buying more cheaper items,” his company has seen that “they are buying at last as much of even more high quality items,” which suggests that they are compensating for other suspended behaviors in how they eat at home. Two, he said that Sainsbury’s experience is that rather than getting mire selfish during a downturn, he has found that “people get more concerned about people less fortunate than they are,” which is one reason that companies cannot and should not abandon their commitment to ethical sourcing even in a recession. And third, King said that “the middle” remains a critical part of Sainsbury’s business model, that “how you execute is what matters.

Indeed, King said, when Sainsbury was having troubles a few years ago, “our failure was one of execution, not of positioning.” And he said, Sainsbury has regained its footing not by charting a new course, but rather by rediscovering and remaining true to its core DNA, “staying true to our tradition.”

• Marion Nestle, professor of nutrition at New York University, returned to the themes she sounded five years ago at the CIES Summit in Rome, criticizing the food industry for making unsubstantiated claims for a wide variety of food products and for pursuing ratings systems that she said were largely unreliable and a form of self-endorsement that was essentially meaningless.

Interestingly, in a panel discussion that followed her presentation, Sainsbury’s King said that he thought it was “disgraceful” that the industry isn’t engaging with these issues” in a meaningful way, and said that “we are going to reap what we sow if we don't engage on these issues.” King suggested that the food industry is “making it very easy” for the critics to attack the food industry and call for legislative approaches to food labeling and nutrition issues, and that industry will have no complaint if it does not get out in front of these issues in a meaningful way.

• Some of Nestle’s strongest broadsides were saved for PepsiCo, which she implied was defrauding the American public by self-endorsing itself for creating so-called healthier foods that would not stand the test of scientific analysis. Indra Nooyi, PepsiCo’s chairman/CEO, followed her on the program and offered a small smile and a light defense of the company’s behavior. “She has an interesting point of view,” Nooyi said, noting that “we care as much about obesity as she does,” but that Nestle “doesn’t get remunerated like we do.” Nooyi agreed that companies like PepsiCo “need to transform our portfolios, but not suddenly, not overnight, but over time. We need to take the consumer with us.”

(In her defense, Nooyi may have gotten bad advice from her PR people. If it had been me, I might have urged her to say with a greater degree of force that it is all well and good for tenured university professors to deliver lectures, but that corporate CEOs don’t have that luxury. I would have urged her to suggest that Pepsi’s portfolio is radically different today than it was 10 years ago, and is likely to be radically different 10 years from now…but that imposing lack of choice on consumers would in fact diminish its ability to create real nutritional change in America. Of course, Nestle believes that processed foods are the root of all nutritional evil … and since Pepsi is in the processed foods business, there is only so far it can go in making its defense. But I might have been a little tougher.)

• Lee Scott, the now-retired CEO of Walmart who remains as chairman of the executive committee, said that he regretted the fact that he lost time at the beginning of his tenure because he was “homegrown” and not as sophisticated as he should have been about issues like sustainability. “I was so internally grown that it took me too long to get my mind around it,” he said.

Scott also said that whatever success he enjoyed stemmed from the fact that he “never took credit for anything that other people did,” and that their successes “flowed back” to him. “For me to be a CEO, it took a village,” he said.

• Finally, Benjamin Zander, conductor of the Boston Philharmonic and author of “The Art of Possibility,” used classical music and humor to urge the delegates to practice a more nurturing approach to management and leadership, suggesting that “ the rhythm of transformation is different than the rhythm of exhortation” because it is lighter and it inspires, and creates possibilities rather than just expectations.

Ironic words, since the retailer-driven CIES is, as reported here last week, undergoing its own transformation – becoming the Consumer Goods Forum, an organization that is led both by manufacturers and retailers.

There clearly is a lot of work to be done between now and the 2010 World Food Business Summit, which is scheduled to take place in London. The first step may be to change the company’s website – because as of this morning, it is still

Change takes time.
KC's View:
One of the features of the World Food Business Summit was a series of video segments that gave the global delegates a taste of some of the various food retailing experiences available to US shoppers, with a theme of “ingredients for success.” The videos were sponsored by JohnsonDiversey, and I thank them for their continuing support of a series of video projects that I’ve had the opportunity to work on.

There is a limited supply of videos available exclusively to the MNB community…and so if you’d like one, send me an email with your name, title, company and street address … and I will pass it along to JohnsonDiversey so they can send you a copy while supplies last