Strategies to Drive a Sustainable Supply Chain

This report discusses the ethical strategies employed by food and drinks manufacturers to improve the sustainability of their supply chains. As consumers come to expect the produce they buy to be organic and fair-trade, we ask what more manufacturers can do to add value to their goods, which steps will resonate with consumers, and what is at stake if companies fail to act.

• Understand the relationship between organic food and a sustainable supply chain.
• Assess the value of the fair-trade market by country and category.
• Identify which manufacturers are successfully establishing an ethical business profile.
• Understand the shifts in consumer concerns that are driving the move towards fairly traded and organic foods.
• Understand the obstacles and constraints that prevent manufacturers from implementing sustainability measures.

The global market for organic food and drinks was estimated to be worth E44.5bn in 2010, up 8% on the previous year. The largest markets are the US (E20.2bn), Germany (E6bn), France (E3.4bn), and the UK (E2bn). The use of organic produce is recognized as being crucial in the creation of sustainable agiculture.

Hershey has pledged to use only certified cocoa in its chocolate by 2020 in a bid to combat child labor in Africa, a move it made following criticism from the "Raise The Bar" campaign. This is a strong example of sustainable sourcing, and one that suggests the potential that could be derived from greater co-operation with the third sector.

In an example of a more imaginative initiative that will resonate with consumers, Branston, a major UK supplier and processor of potatoes, uses its food waste from the factory and outgrade potatoes in an anaerobic digestion plant that produces a steady 400kW of electricity.

• How significant are the areas of organic food, fair-trade, and local sourcing in determining the sustainability of a company's supply chain?
• What is the value of the market for fair-trade-certified products, by country and category?
• Which manufacturers are leading the way in sustainability initiatives?
• What comes next in the evolution of a sustainable supply chain: what features can be used to justify a price premium?

Table of contents

About the author
Disclaimer
Introduction
About this report
Definitions
Unsustainability of food and drinks industry
Food and drinks industry embraces sustainability
Strategies for improving sustainable sourcing
Summary
1. Organic food and drink
Size of the market
Types of product
Organic and sustainability: areas of conflict
2. Fair trade
Types of products
The principles of fair trade and how it meets sustainable sourcing
Fair trade and sustainability: areas of conflict
3. Local sourcing
Growth in local sourcing
Farm retailing
Multiple retailers targeting the local sourcing trend
National food producers add support to local sourcing
Sustainability of local sourcing
Buying seasonally
Local sourcing and sustainability: areas of conflict
4. Sustainable sourcing
Fish stocks becoming depleted
Standards for sustainable sourcing of fish and how they meet the sustainability strategy
Size of the market
Food industry responds to sustainable sourcing of fish
5. Waste reduction in the supply chain
Manufacturers target waste reduction in the supply chain
PepsiCo UK commits to reducing its environmental impact
Control of the supply chain
Unilever raises the bar
Mars maintains supply by working with farmers
Conclusions and recommendations
Sustainable policies becoming standard
New initiatives to justify a price premium
Economic influence
Risk and reward
Appendix
Bibliography/references

TABLES
Table: Impact on sustainability in the food and drinks industry, 2012
Table: World market for organic products by value (%), 2010
Table: UK market for organic products (£), 2002–11
Table: World market for fair-trade-certified products by country (Em), 2011
Table: UK market for fair-trade-certified products (£m), 2001–11
Table: World market for fair-trade-certified products by type, 2011

FIGURES
Figure: Sustainability model, 2012
Figure: World market for organic products by value (%), 2010
Figure: UK market for organic products (£), 2002–11
Figure: World market for fair-trade-certified products by country (Em), 2011
Figure: UK market for fair-trade-certified products (£m), 2001–11
Figure: World market for fair-trade-certified products by type, 2011
Figure: Importance of the supply chain on a product's sustainability

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