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Notes and commentary from the 2004 CIES World Food Business Summit

ROME – It isn’t many industry conventions at which one can hear speakers quote from treatises written in 1759, much less make reference to the enduring value of great art.

Nevertheless, those were just two of the points made during the opening sessions of the annual CIES World Food Business Summit here, an event attended by more than 900 delegates from 42 countries, and bookended by loud protests and synchronized swimmers. It was an afternoon that highlighted the notion of value and values in their various forms, starting with discussions of supermarkets’ role in society at large.

Mike Moore, the former director general of the World Trade Organization (WTO) and a former prime minister of New Zealand, made an impassioned plea for retailers to engage in transparent and ethical behavior, noting that “you have to get ahead of the wave or you’ll be punished.” In the modern world, Moore suggested, the establishment and communication of values can be a value-added proposition for a consumer base particularly attuned to such notions.

It was Moore who talked about how Adam Smith, who wrote “The Wealth of Nations” as a guidebook to capitalism and economic prosperity, also wrote in 1759 a book entitled “The Theory of Moral Sentiment,” in which he attempted to create a case for ethical behavior in a political and cultural context, arguing even then that capitalism and morality are not diametrically opposed.

“It is good that companies have to explain themselves to their shareholders,” he said. “If anything, business should get ahead of the curve.” Such a stance, he noted, is required because the realities of modern communications mean that utter transparency and appropriate behavior are absolutely necessary. “Big Brother is not watching us,” he said. “Rather, consumers are watching Big Brother. This cannot be stopped. It should not be stopped. The question is, how do we manage it?”

Moore also made an excellent point for encouraging the active participation of employees in helping companies think and act in an ethical fashion. “No one ever cleaned a rental car,” he said. It is only when people actually have some ownership of the car – or the business – that they will behave in a way that keeps it in good running order. (This seems to stand in sharp comparison to certain US retailers who seem to believe that their employees are the problem rather than the solution to corporate ills.)

It was ironic that as Moore was speaking to issues of values and ethical behavior, the air was thick with loud, recorded protests from a Greenpeace truck that was sparked just outside the conference center. The protests, broadcast in several languages, seemed to be trying to get the assembled CEOs to address issues of bio-technology and animal rights, and to give consumers a choice. Retailers, of course, usually do offer consumers just such a choice – but they’re not taking sides in the bio-tech issue. (Which is what really annoys Greenpeace, an organization that seems more dedicated to restricting choice than promoting it.)

Perhaps coincidentally, Moore – who said he was a member of Greenpeace – said that business would be foolish to ignore the possibilities that science has to offer. “Science and culture are advancing faster than our political ability to cope,” he said. “But if we don’t embrace science, we revert to the age of witchcraft.”

A promised panel discussion on the subject of sustainable business practices - moderated by the estimable food industry writer Denise Larking-Coste – was marred by the fact that most of the participants seemed armed with position papers rather than prepared to engage in thoughtful conversation. It was hardly a surprise, for example, that Wal-Mart International CEO John Menzer said that his company’s primary goal was to “raise the standard of living and quality of life on a worldwide basis,” and that Wal-Mart is highly focused on “fair and ethical treatment” of both suppliers and associates; Wal-Mart’s position seems to be that whatever allows it to cut prices for consumers is good, and that whatever prevents it from doing so is bad.

It wasn’t hugely surprising that Ahold CEO Anders Moberg said that his main job these days is to make sure that Ahold’s various chains are “individually sustainable,” though folks at Giant of Maryland who are losing their jobs because of consolidation with Stop & Shop might raise an eyebrow or two at that one.

Nevertheless, there were points in the discussion worth making. Larking-Coste referred back to last year’s Summit closing speech by Bob Geldof, in which he outlined the five requirements for the food business to achieve sustainable success:

1. Is your business responsive to consumers?
2. Is your business dominant?
3. Are your brands bullies?
4. Do you as a sector grab too much of taxpayers’ subsidies?
5. Do you as a sector enjoy an unfair share of the world’s water supplies?

And two retailers on the panel – both CEOs of cooperatives – suggested the level to which retailers need to be responsive.

Vincenzo Tassinari, chairman of Coop Italia, told the audience that his organization has made as a priority to collaborate with suppliers on issues of food safety, environmental care, and human rights – and to make adherence to proper ethical behavior a cornerstone of operations and relationships. “This is not done for marketing advantage,” he said, but to create in fundamental ways a foundation upon which the business can survive long-term. (Coop Italia already has a pretty good track record for survival – it is celebrating its 150th birthday this year. But still, forward momentum cannot and should not be slowed.)

And Claude Hauser, chairman of Migros in Switzerland, told how his organization has established a code of conduct for itself and suppliers, and is aggressively communicating the values it associates with organic and private label brands to consumers.

Where did Van Gogh come in?

Well, in the final session of the day, Britain’s Lord Hindlip – known as Charles Henry Allsopp before his elevation – spoke of his near five decades as an auctioneer at Christie’s, a subject that might seem to have little to do with the sales and marketing of groceries.

But Lord Hindlip, while acknowledging that to many of us the price of fine art such as an original Van Gogh or Picasso seems completely beyond reality, noted that in comparative terms over the past fifty years, the price of a haircut, a pair of shoes, real estate in a major city, or a decent restaurant meal in London has gone up far more.

It was an interesting point. Value, when you think about it, is essentially arbitrary. It is decided upon by consumers, who evaluate and deliberate and finally act – or don’t act – upon their reaction to a thing of art or beauty or commerce. And one’s values often can be defined by the things to which we assign value.

That’s a concept worth thinking about. Often retailers make decisions about what they seen as having value, and assume that the consumer will go along and see it their way. That may not always be the best idea.

As Warren Buffett once said, “Price is what you pay. Value is what you get.” Retailers determine price, but it is consumers who ultimately define value.

And about those synchronized swimmers? They were members of the Italian Olympic team, who entertained the audience during the evening cocktail party, sponsored by Coca-Cola.

Something for everyone here at CIES 2004…and we’ll have more for you tomorrow on the subjects of food politics and obesity, both of which are scheduled to be discussed today.

  • In other news, CIES announced the election of Claude Hauser, Chairman of the Board of Directors, Federation of Migros Cooperatives, Switzerland, as its new chairman. He will hold the position for the next two years. He succeeds Delhaize’s Pierre-Olivier Beckers, who is completing his term of office.

    In addition, four new board members were named by CIES:
    - Kenneth Bengtsson, President and CEO, ICA AB, Sweden,
    - Steven Esom, Managing Director, Waitrose, United Kingdom
    - Bill McEwan, President and CEO, Sobeys Inc., Canada
    - Sean Summers, CEO, Pick’n Pay Retailers, South Africa.
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