It is not so much what is going into products, but the manner in which they are produced that dominated the debate at Wild's industry convention in Heidelberg, Germany.
Speakers, including former German president Richard Weizsacker and professor C.B. Bhattacharya of Boston University, attempted to answer whether it really pays off for the dairy and beverage industry to be socially responsible in their operations. "A renunciation of ethics, leads to a renunciation of success," Weizsacker told delegates from throughout the beverage, dairy and food industry. Wild, a Germany-based ingredients supplier, hosts the annual convention.
While agreeing with this theory in principal, Bhattacharya said that to reap the benefits of adopting a social responsibility ethic, a company must fulfil a number of qualities. However, he added that under the right conditions, if these factors were met, corporate social responsibility can be a powerful driver for growth. He took the example of Danone and its subsidiary Stoneyfield Farm as a reflection of how corporate responsibility was changing the way that dairy, and more specifically yoghurt, was being marketed and consumed.
Though the two brands are ultimately owned by the same company, two different approaches have been taken on the issue. While Danone has its own social responsibility policies in place, it remains very much an aside from its core business, Bhattacharya said. He added that Stoneyfield by comparison, is specifically branded to have a more ethical approach.
Meanwhile Stoneyfield claims it brands, treatment of workers and supply chain all feed into the social responsiblity ethic, from sourcing of ingredients, packaging and marketing, right down to the production level. Using a web-based survey of 11,000 yoghurt consumers aged between 18 to 65 from the north-eastern US, Bhattacharya looked at the different reactions to the two companies policies.
From a 31.5 per cent of response rate, he concluded that consumers of Stonyfield's brands were far more aware of its corporate social responsibility drives than Danone's. Due to this greater identification with the company, the survey found that there seemed to be a stronger identification to Stoneyfield as a brand that was ethical in how it made its products.
While this awareness had not yet been found to significantly affect sales compared to Danone's brands, he added that it created long-term insurance for a brand against unfavourable changes in the market. In this market place, consumers felt they could actually "taste" the benefits of corporate social responsibility.
Along with a group's consumers, corporate social responsibility had other benefits for a number of stakeholders, he said. By acting to improve conditions for its employee's along with offering the opportunity of involvement in charitable and community projects, production and job satisfaction could be positively affected, Bhattacharya said.
At the same time pointing to another study of 113 firms over a three-year-period, Bhattacharya stressed that when it came to businesses and responsibility, as with most things in life: "You can't fake it." He added: "Social responsibility must be combined with innovation and high quality products. If these are absent, the market will often react negatively to a company that attempts to operate as a good corporate citizen."
The two-day conference ends today.
Dairy Reporter journalist Neil Merrett is attending this year's convention. His trip was funded by Wild.