Monday, February 8, 2010


Increased awareness about the relationship between food and health is going to be the drive engine for substantial changes in the business strategies of food conglomerates in the coming years. Serious meaning governments, incessant campaigns by NGOs and social activists and more emphasis on food related basics in education are setting a trend where consumers do not buy blindly any foods without understanding what harm it can do to them. Studies after studies have brought out the fact that consumers would make reasonably sound decision in buying healthier foods if sufficient nutritional information is provided either through the labels on the food pack or displays in restaurants. This indeed is a welcome change.

According to a recent confession by Chief Executive of the $43 billion global chocolate giant Cadburys that companies like hers have business compulsions in moving away from the established beverage field into more healthier food segments because of the shifting perceptions of the consumer regarding what they want. Added to this controversies like pesticide residues, use of HFCS, Caffeine and phosphoric acid in cola beverages dented its image further. During the last two decades, consumers have been slowly moving away from carbonated soft drinks that once comprised 90% of Pepsi's beverage business. Significant population of consumers transferred their loyalty to bottled water for quenching their thirst. Unable to face the barrage of criticism regarding the expanding business of its snack portfolio considered high in calories, salt and fat, the company quietly acquired Quaker Oats and other wholesome brands known for health protecting features to improve its image. But its long time intention can be gauged only if the R & D priorities are shifted to areas concerning consumer health. Though the over all research budget has seen an increase of almost 38% over the last three years, it will take some time before this investment bears fruit.

If Pepsico's activities are scrutinized closely there appears to be a genuine concern about the past performances pursuing profit at any cost and recent hiring of nutrition experts and physicians for transforming their existing product portfolio into more healthy and less controversial from nutritional angle gives hope that this multinational food and beverage monolith will deliver on its promises to be a more socially responsible business organization. It is going to be an Herculean task for the company to achieve the target of $ 30 billion as the annual turnover with new products that will be oriented more towards nutrition and health and relatively less concerned about sensory aspects. While profit taking is a genuine goal for any business, equally important is the contribution industry like Pepsico can make to improve the living standards of the population around their manufacturing facilities. The recent rain water harvesting projects initiated in India by this company have attracted favorable attention all around and more needs to be done to enhance its image as a socially caring organization.

ITC Ltd borne and thrived on tobacco is another example of an industrial giant compelled to change their business direction due to consumer compulsion. After tobacco was indicted for its role in human cancer and billions of dollars awarded to consumers for the damages tobacco had done during the last so many years, some of the tobacco industry players started diversifying into other business ventures. ITC, besides its hotel portfolio, also ventured into food processing in India probably with a view to withdraw from tobacco business eventually. It has already established in several food areas like "heat and eat" foods, baked products, atta, snacks, salt etc and can be expected to be a major player in the field very soon. ITC's e-choupal concept for helping farmers in rural farm lands with quality inputs for agriculture in areas like wheat and soybean has already established its credentials as a farmer caring industry and probably it may emerge as one of the most socially responsible business corporates in India.

Consumers have powerful influence on the course of an industry and educating the consumer is like empowering him to punish "wrong doers" and "business at any cost" industry players, many of whom think that high pressure and saturation promotions through electronic media can "brain-wash" the consumers, by shunning them consciously. The slogan that "consumer is the king" has still some relevance even to day if the examples of Pepsico and ITC are taken into consideration.


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