The food industry is a risky business. The best run companies can be hit with scares, real or imagined, which have a massive adverse effect on their business. Pressure group campaigns can throw up problems you never expected, while individual executives can find themselves targeted by protests. Chris Lyddon looks at how you should prepare for the worst.
Go deeper with GlobalData
The problem does not have to be real in the scientific sense, David Edwards, Managing Director of CMi Consulting told the Marketing Week conference “Predicting and Managing Issues, Threats and Risks in the Food Industry,” in London recently.
He quoted the definition of a food scare coined by Dr Vincent Covello, the founder and director of the New York-based Center for Risk Communication, as an “unplanned event which triggers a real or perceived or possible threat to safety”.
Perception as important as reality
“Covello was the first guy who started to recognise that perceived risk was as important as real risk,” Edwards said.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe problem was that many in the food industry did not take perception seriously enough. “They tend to reject consumer reaction to a perceived risk as silly,” he said. “You have to deal with both.” It didn’t make any difference to consumers whether the risk was perceived or real. “Business and government have not always reacted in the right way,” he said. Scientists and consumers judged risks in different ways. “Both are valid. Both need to be built into strategy,” he said. “The consumer tends to think about what happens to me. They don’t care about populations.”
They also tended to filter out any information which conflicted with their first opinion. European consumers’ rejection of genetically modified food showed how decisions shouldn’t be based on science. “In commercial terms reality is perception,” he said.
But human life was not all about avoiding risk. “Sometimes we want risk. That’s why we get a thrill out of skiing or dangerous sports.”
Need for honesty
Edwards stressed the need for honesty. “What governments are learning is to be more honest about the complexities and uncertainties and ambiguities. It’s what Stephen Dorrell should have done,” he said. Stephen Dorrell, UK health minister at the time, had insisted there was “no conceivable risk from BSE,” at the start of a scare which cost £7.58bn (US$13.8bn). But judging by US Agriculture Secretary Ann Veneman’s recent announcement that “BSE is an animal health problem,” the lesson had not been learned everywhere.
He identified a series of triggers for media reaction and consumer fear. A conflict, or the suspicion of blame, would get editors’ interest. If there were high profile people involved, or links to sex and crime, it would help stimulate their interest, as would visual impact, or human interest stories.
The factors creating fear among consumers started with whether it would affect them. Unfairness or inequality in the distribution of the problem made things worse, as did the feeling they couldn’t do anything about it or get away from it.
Something new, or man-made, was more likely to trigger consumer fears. “Scientists never think something is riskier just because it is manmade,” he said. “If consumers have two risks of the same order, they tend to say the manmade one is riskier.
David Walker, joint managing director, Issues Management and International Affairs at PR agency Weber Shandwick, stressed the need to be on the look-out for approaching problems. “You’ve got a huge amount of information out there,” he said. “Scan it every half an hour.” There was a need to compare what was going on with the triggers which would turn a problem into a scare. David Edwards criticised the Scottish salmon industry, the subject of a minor health scare in January. “The salmon industry should have done this type of analysis some time ago,” he said. “It knew it had a problem and it was in a state of denial about it.”
Don’t let scientists loose on the public!
The industry should not have rubbished the US research which started the scare. “Scientific uncertainty is one of the things that makes people fearful,” he said. But he advised against using untrained scientists as spokespeople. “Scientists often don’t talk in the right terms to consumers.”
Nadia Sood, senior issues manager at Nestlé, advocated a systems-based approach to tackling risk. “Issues are increasing in complexity,” she said. “You also have an increasingly sophisticated consumer base.” There were more stakeholders and a greatly increased volume of information, transmitted at a greatly increased speed.
Managing issues successfully depended as much on people as on strategy. There was a need to involve technical experts from inside and outside the company. Strategic thinkers could play an important role in making sure strategy made long term sense. “You need to have people involved who understand the issues.”
Nestlé’s issue management was run by an Experts Panel with a cross section of experts from across the company, who sit down on a quarterly basis and look at all the data.
There was a critical need to collect and distil information, both formally, by giving company experts a watching brief, either on company critical issues, or on societal trends, or informally, through regular contracts with both friends and critics. There had to be a system for distilling the information, with structured weekly updates and input to those responsible for issues management. That had to be followed by systematic analysis of intelligence by the issues manager.
Formal structure is vital
It had to be a formal structure. “Without a formal structure the chance of something slipping through the cracks is much higher,” she said. It also avoids the panic which crisis tends to breed. “A formal structure provides a forum for reasoned, measured discussion and decision making,” she said.
It also meant that people would not make decisions “from the perspective of their own silos,” she said. “Gathering information and perspectives in a systematic way from a variety of parties will give you a better picture of what is actually going on.”
The particular crisis Sood used to illustrate how Nestlé reacts to problems involved accusations of slave labour being used in West African coffee plantations. It showed the importance of establishing networks inside and outside the company. “If we hadn’t been in touch with the NGOs and labour unions who have been critical of us we wouldn’t have understood the problem.”
“About three years ago there were stories alleging that cocoa was produced by child or forced labour, especially in Ivory Coast,” she said. There was a need to work with the rest of the industry. “This was potentially such a major issue that we decided we would have to work together.” Nestlé arranged meetings with its major critics, like the International Labour Organisations, and gathered information on the accusations being made. “How do you manage an issue when you don’t know what’s going on?,” she said.
But Nestlé’s issues management structure did not cover handling the media. Media inquiries were referred to the relevant trade association.
“The facts are never king”
Sood echoed other speakers’ stress on perception. “The facts are never king,” she said, citing news reports which had knocked down the slavery story. “Perception is the ruler.”
Paul Rylott, chairman of the Agricultural Biotechnology Council, stressed the need to “dampen down a story before it’s got legs”. His organisation is a grouping of the big biotechnology companies and aims to counter anti-GM campaigns. It had appeared to consumers that the biotechnology industry was hiding behind the government, he said. “They wanted to see people from the industry standing up and defending the technology.”
The industry had formed the ABC to campaign on a single platform. “We all jumped in one canoe and paddled in the same direction,” he said. “We had to smarten up our act in terms of smart rebuttal of misinformation.”
Rylott, who is the head of bioscience at Bayer CropScience UK, is used to protestors with a range of motives. “Some people just don’t like us because we’re a big company,” he said. They follow him around. As it to prove his point, one appeared during the conference lunchbreak and threw a cake at him.
Chris Lamb of the Meat and Livestock Commission explained how the industry had responded to BSE, called “Britain’s most costly peacetime catastrophe.” The first stage of response was purely defensive, involving simple things like setting up a system for handling telephone calls. “The key thing was to draw the industry together,” he said. The MLC encouraged other parts of the industry to use its press releases and position statements, so as to give a coherent message.
After an initial sharp fall, consumption recovered quickly, reaching a pre-BSE level by 1999. “Basically the consumer loves beef and wanted to be given permission to continue to buy it,” he said.
The short-lived nature of the salmon scare showed how consumers could make logical decisions. “They can sort out fact from hysteria,” he said.
There was a tendency, in the early stages of a crisis, to think you can handle it on your own, Lamb said. Nobody from the US had asked the MLC how to deal with BSE. “It’s later on that people ask for help.” Japan had looked for advice. “I’ve lost count of the number of people who’ve come over to ask us what we did,” he said.
This article is based on The North American Market for Organic Meat Products, a new report by Organic Monitor. For full details of the report, click here.
