Sustainable Food Business Sector - Essay Example

Sustainable Food Contents Contents 1 Introduction 2 Discussion 3 Triple bottom line issues affecting broader business sector 3 Specific marketing challenges facing the chosen case business 6 Potential strategies and tactics for a more sustainable and mainstream future 10 Conclusion 11 References 12 Introduction Sustainable food can be defined as food that is being produced in the healthiest way without causing any impact on the environment. The term sustainability to performing business operations without harming the environment, offering fair wages to the farmers, and extending also possible support to the farming communities. Though terms such as organic food have certain concrete definition but there is no such definition for sustainable food. However the sustainable foods are produced in the best possible ways and are traded within the ethical norms without causing any harmful impact on the society or the environment. The food products that are termed as sustainable are produced and traded in such a fashion that it contributes towards the sustainable livelihoods as well as the local economies, enhances protection towards animals and plants and also takes into consideration the welfare of wild as well as farmed species, it also takes into account all possible measures so as not to cause any damage to the natural resources and contribute positively towards the climate, and provide various kinds of social benefits such as good food quality, educational opportunities and healthy and safe products. With the rise of globalized economy there has also been an increase in demand toward the food sector. The companies in the sustainable food sector needs to meet the demand that is created in the consumer market being aligned with the environmental policies and norms and also with the sustainability agenda. There are many companies in this sector but one of the most renowned companies who have set its mark on the sustainable food sector is Krafts Food Group. Krafts Food is a grocery manufacturing company of America. The group is also into processing conglomerate. The company has its headquarters in Chicago. The company was incorporated in the year 2012 after there was a demerger that took place and the name of the original company was changed to Mondelez International. This company is now used for distributing the confectionary and snacks brand of Krafts Food. On the contrary the Krafts food group is totally focused on the North American market and deals with grocery products. The company in the present scenario is known for its sustainability measures that it incorporates in all its products so as to offer the healthiest products to its consumers and also safeguards the environment by utilizing all forms of renewable energy resources. Discussion Triple bottom line issues affecting broader business sector The triple bottom line issues comprises of the aspect of sustainability to be incorporated in the business operations. The triple bottom line takes into consideration the social equity, environmental conditions and economical balance. The goal of sustainability can be defined well in terms of people, profit and planet. The major issues that the sustainable food sector faces in this context are that it has to strike a balance between these three aspects (Baines, Fill and Page, 2010, pp.70-71).The cost that is incorporated in such business operations is very high in comparison to other field where sustainability measures are not utilized for production or distribution of food products. The major concern of the companies in this business sector is to produce a healthy food product without causing any damage towards the environment. Their concern area is not only limited to this field but it extends further towards the benefit of the society (Armstrong, Kotler, Harker and Brennan, 2009, pp. 90-91).The business sector needs to offer the best of products and also take care of their employee base as well as of the farming communities so that all the three factors of the triple bottom line concept are taken into consideration. However the cost that is incorporated to design such a sustainable structure requires huge sum of money which ultimately adds on to their product costs. In the highly competitive global environment it is very difficult to maintain such high cost products in a competitive market in which the same kind of food products are offered by other players that too at the lowest cost so as to attract more number of customers. In such a scenario it is difficult for many companies in this sector to stay at par with the competition and they often run into losses in comparison to other players who gains significant amount of profit margins through huge volumes of sales of food products. The issue of the triple bottom line can be well described through the diagram given below- (Hollensen, 2003, p.113) The triple bottom line issues comprises of one of the major issue of concern that is ‘people’ through which the business sector needs to perform the best of fair practices that needs to be beneficial for the workers, towards the society in which the business operations are conducted and also towards other communities. The business sector needs to handle the issue very carefully as all of the factors that are stakeholders, labour and corporate are not any individual fields but all are interrelated to each other (Batey, 2012, pp. 76-77).The other issue is concerned with planet which refers to adoption of the environmental policies that are sustainable in nature. The company in this business sector has to undergo huge investments so as to take care of all its production activities, waste disposal, etc., so that each of the business operations are aligned with the sustainability agenda. The profit factor is the economic benefit that is received by the companies in the business sector (Cateora, Gilly and Graham, 2010, pp. 102-103).However the host companies that are part of sustainable food industry may not be able to enjoy huge profit margins at the initial stage but there are bound to benefit in the longer run. The companies in this sector needs to consider the other benefits that it receives in terms of social and environmental issues as one of their major profits except for counting on the monetary value that it receives from its business operations. Without such social benefits that is caused by the sustainable food sector it is very difficult to analyze that the profit margins that is prevalent in this business sector is high or not in comparison to other player who do not use sustainable measures. The other major issue being that majority of the population would choose products that are within their budget then to opt for food products that are healthy but have higher prices (De Mooij, 2009, pp. 91-92).The ‘trust’ factor is a most common issue that is associated with this business sector. People have very low trust levels when it comes to choose any kind of food products no matter how much eco-friendly measures has been utilized by the company to develop such food products (Doyle and Stern, 2006, pp. 101-102). This trust level can only be diminished when this business sector considers profit to be a small part of its business goals and equal focus should be given planet and people so that the actual sustainable measures can be achieved. The major issues still lies in the field of producing sufficient quantity food so as to meet the future and this issue would be increasing due to lack of available and to support such activities (Hastings, 2013, pp. 78-79).There is also an increase in terms of environmental regulatory burden so as to reduce the level of greenhouse gases and this poses a great challenge to the business to increase the level of productivity with the help of existing technologies and also to use all forms of sustainable measures. The business sector of sustainable food cause of these triple bottom line issues also faces some barriers to its path of innovation mainly in the form of a supply chain that is fragmented having many small group of players enabling slow transmission of ideas and low innovation capacity, there is a shortage of skill, there exist more of conservatism amongst the mediums sized and small sized producers of sustainable food products, insufficiency in terms of research on the key issues that are identified in the innovation and strategic research agenda and there is a very slow uptake of business ideas in comparison to other players in the market and also from the knowledge base. These are some of the challenges that need to be addressed by the companies in this business sector and these issues of the triple bottom line gains its importance with the rising demand in the consumer market and also with the increased competition in the food sector that results into low profit margins for the players in this business sector. Specific marketing challenges facing the chosen case business Krafts Food Group over the years has been able to provide the best quality food products to all its customers and it still aims at adopting the best possible sustainable measures so that it is able to benefit the society along with meeting the business goals and objectives. The company also has incorporated sustainability wheel in its business operations so that from the manufacturing to the delivery of products to the customers all the three aspects that is people, planet and profit are taken into consideration. The sustainability wheel that is sued by the company can be further described in the diagram below- (Hesterman, 2012, p.90) The company utilizes appropriate marketing tools aligned to the sustainable strategy of its business operations so that it can sustain the brand image of delivering the best quality food to all its customers without causing any form of impact on the environment as well as other communities in the society through its business operations. The major challenge that the company is facing is decline in its sales volume that was not the scenario few years back when the company was the most dominant player in the market (Hooley, Piercy and Nicoulaud, 2012, pp. 145-146).The company offers a wide range of confectionary, grocery and snacks items to its customers that are manufactured in the most sustainable form and has been able to acquire huge profit margins. The marketing of such sustainable food products needs to be very strong as the price of such products are very high and in a price sensitive market it is difficult to trigger the growth of revenue margins of a company that operates in this sector (Lau, 2011, pp. 56-57).The reason behind the current marketing challenge that the company is facing is mainly because of the demerger of the company that took place in 2012. One section of the company that is Mondelez International takes care of the confectionary and snacks products of the company. The action plan of demerger has split the power of the company that has made Krafts Food Inc has the most dominant player in the American market. The logistics system of the company has also been divided which has brought the quality level of the food products that the company offered to all its customers in the initial stage of its business operations. The split of the company had resulted into some actions that have limited the growth rate of the company (Mobbs, 2012, pp. 117-118).The marketing activities of the company are now limited into the domestic market and that too not much of marketing tools can be employed in the grocery segment. This has even take away the opportunity from the company to expand its business operations in some of the emerging markets across the globe such as India, Russia, Brazil and China. The cost factor of the company is also one of the challenges that is faced by the company and also poses a major threat for the company in the future years. The company is not being able to increase its revenue margins but the cost factor of the company is growing especially after the split as much of the activities related to business operations have been divided (Palmer, 2012, pp. 156-157). The growing competition and the huge costs that are associated with using sustainable tools for the manufacturing and distribution of the food products of the company is a very big challenge. Also the company has not been able to promote the brand of its sustainable food in the right way and thus the trust level in the minds of consumers has not been created so that they opt for such products. The major marketing tools that are used by the company is in-store retail promotions and through billboards and hoardings (Richter, 2012, pp. 133-134).These marketing tools for promotions have not been able to drive the attention of consumers which in turn has caused a decline in the sales volumes of the company. The company offers healthy products but at a very high price in comparison to other players in the market and the justification behind the high price has not been communicated well to the customers which has made the consumer base shift to other food product brands that offers the same products though not through sustainable measures but within the affordability of the consumers. The company has limited its marketing activities to any of the international markets that have a high income level and rising population who can easily afford such sustainable food products. The North American region where the company operates is saturated with intense competition and the market is very sensitive in terms of customer spending (Solomon, 2008, pp. 143-145).The other players of the industry places its products as healthy and easily affordable by customers but the scenario is not the same in the case of Krafts group as the cost of their product range is high but the only USP that the company could have utilize through their marketing is that their products are manufactured in the most sustainable way without any impact on the society. However in today’s scenario most of the companies in this sector adopt this measure so as to reach out to their customer base without any significance as to real sustainable measures are being incorporated by a company or not (Steers, 2006, pp. 67-69). This is somewhere the biggest challenge that is faced by the marketing department of the company. The marketing team still faces the challenge of promoting the product in the right way to the right people. The other issue with the marketing segment is that maintaining sustainability is a hidden fact that cannot be communicated very strongly to the customers but the company even lack ability towards creating value addition for their consumer base through marketing approaches (Vemon, 2000, pp. 167-168).The biggest challenge is to control their operating costs so that significant amount of fund can be allocated for marketing of the food products because if the marketing of the company is not strong then it cannot be able to create a strong brand position in the market so as to attract more number of customers. Potential strategies and tactics for a more sustainable and mainstream future The company has succeeded in the early years of its business operations mainly because of the activities that the company has taken as a whole to expand its operations in all possible segments. However the growth in the competitive business environment has limited the success of the company as it operates in a sustainable food sector. The operations that the company has to undertake requires huge amount of funds which increases the overall cost of the company and this is reflected in the price of the products that the company promotes in the market. The major disadvantage that the company faces is in context of high prices of its food products (Viljoen and Wiskerke, 2012, pp. 142-143).The price of the products that is offered by the company is relatively high as per the competition in the market. There are some tactics that can be applied by the company which can ensure that the company has a sustainable growth for long run. On the other hand the company can utilize the biggest strength that the company has in terms of producing food in the most sustainable form and providing maximum benefits possible to the environment and society. This is one of the strategies that the company can use in its marketing activities so that it can communicate the message well to its consumer base the reason behind the high prices of the products of the company (Walker, 2008, pp. 70-71). The company should also not be bound to a specific market or region it should focus on international expansion so that it can cover more of markets and reach out to a large consumer base in order to generate more of revenue margins. The best possible way is to promote its sustainable food products in some of the emerging markets like that of Brazil and Russia where the price range of its products would be within the affordability of consumer market as the income level of the population in such markets are relatively high. The expansion strategy for the company would be beneficial as the operations of the company would not be bounded (Wheeler, 2009, pp. 122-123).On the other hand it can also utilize certain promotional techniques through different media platforms and describe the ways through which the products are being sustainably manufactured and distributed by the company so that people can realize the added value that the company is trying to deliver and they choose healthy food for their family in comparison to other cheaper food products in the market. The other strategy or tactic that can be utilized by the company is in the form of more expanded product range so that it can offers more of products that are healthy and forms a basic necessity of the consumer market or rather enter into such a category that is unexplored by the company. Conclusion Sustainable food sector is such a business segment that has gained importance in the recent times as people are becoming more of health conscious and there are strict regulatory norms in concern with the environment. Sustainable food sector takes into consideration that the healthiest food reaches people without causing any kind of harm to the environment or the society within which the company performs its business operations. This approach takes into consideration that none of the animals or any kind of wild or farms species are harmed during the course of business operations. There are various factors that are taken into consideration so as to take care of the planet and people around and also to seek desired profit margins for future growth of the company. Krafts Food Group is one of the most renowned companies in the sustainable food sector and has been a dominant player in the American market. Though the company faces a lot of challenges in the present scenario but there are certain tactics that is implemented in the most appropriate way can be beneficial for the company in long run. References Armstrong, G., Kotler, P., Harker, M., and Brennan, R. 2009. Marketing: an Introduction Pearson Education Limited: Essex. Baines, P., Fill, C., and Page, K. 2010. Marketing. UK: Oxford University Press. Batey, M. 2012. Brand Meaning. USA: Psychology Press. Cateora, P., Gilly, M., and Graham, J. 2010. International Marketing. New York : McGraw-Hill. De Mooij, M. 2009. Global Marketing and Advertising: Understanding Cultural Paradoxes. London: Sage. Doyle, P., and Stern, P. 2006. Marketing Management and Strategy. Prentice Hall: Essex Hastings, G. 2013. The Marketing Matrix: How the Corporation Gets Its Power – And How We Can Reclaim It. New York: Routledge. Hesterman, O. B. 2012. Fair Food: Growing a Healthy, Sustainable Food System for All. New York: PublicAffairs. 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