What Came First: The Chicken Or The Egg?

What Came First: The Chicken Or The Egg?

http://www.thecro.com/topics/supply-chain/what-came-first-the-chicken-or-the-egg/

Supply chain lessons learned from the challenge of the ‘cage-free’ trend.

Nick Anderson

In late 2015, a small group of food companies declared they would transition to using exclusively cage-free eggs by 2025. This type of announcement was not a new for food companies, but it did set off a snowball effect of animal welfare policy changes and commitments throughout the food industry. Today, nearly every major food company, restaurant, and food retail business has some form of cage-free egg policy.

Many factors contributed to this significant and rapid industry shift, but a few of them were key: increasing consumer interest in farm animal welfare practices; companies’ willingness to commit to changes to build or protect their brand image; and, perhaps most importantly, consumers reacting positively to the term “cage-free.”

Let’s face it: cage-free sounds wonderful. Of course consumers don’t want chickens locked up in cages. Who doesn’t prefer freedom to the alternative?

The chickens, most likely. Scientific research shows that for animal welfare and on-farm efficiency, an enriched cage environment is likely the best solution for raising layers (egg-laying chickens). But because cage-free sounds so much better to consumers, it’s now being adopted broadly across the food chain.

Tackling Cage-free Challenges

Consumer sentiment was obviously strong, and it appears that many of these companies’ cage-free commitments were initiated without the opportunity for thorough consideration of the multiple challenges they would create for their supply chain. For example, starting at the farm level: barns now need to be retrofitted; new egg-collecting protocols need to be created; open-environment hygiene needs to be addressed; and even in-flock aggression must now be managed. Moreover, the costs associated with the changes will need to be absorbed by those who raise chickens or passed along to consumers.

As we move toward a cage-free future, what can we learn from how this new supply chain norm took shape? When consumers’ perceptions and preferences drive key decisions, how can someone—wherever they are on the food supply chain—work to find reasonable solutions that truly are best for everyone?

Take a 360-degree Approach

The key to mutually beneficial change in the supply chain requires a 360-degree approach, including:

• Understanding consumers;

• Aligning your supply chain; and

• Engaging influential stakeholders.

Understand Consumer Perceptions

Obviously, effectively managing consumer perception can have a tremendous impact on the success of a new product, technology, or new supply chain practice. Consider the use of genetically modified organisms (GMOs). A key component of the insulin used by millions of people with diabetes in the U.S. is produced by genetically modified E. coli. Most modern human vaccines are also made using recombinant DNA. On the farm, multiple crops have been developed using genetic engineering and millions of acres are planted with biotech seeds.

Overwhelming scientific evidence validates the safety of GMOs in both applications. However, strong support from the medical community and consumer messaging that outlined the improvements in GMO insulin as better for patients have made GMO insulin in human medicine essentially a non-issue from a consumer perspective.

Consumers were basically ignored during the launch of ag-focused GMOs. To be fair, in the 1990s, consumer interest in how food is grown hadn’t risen to the current level and most seed companies didn’t think anyone, other than farmers, would care. As a result, minimal efforts were made to develop consumer messages to explain the safety and share the benefits. Anti-GMO campaigners stepped and filled the consumer positioning void using words like “Frankenfood,” instilling fear and uncertainty. A 2015 Pew study found that while 88 percent of scientists say it’s safe to eat GMO foods, only 37 percent of consumers do.

So if an industry trendsetter is ready to roll out a new claim related to the supply chain, it’s imperative to test concepts and messages with consumers beforehand— word choice matters. Identifying the aspects of the innovation that consumers will accept and appreciate— along with the key messages that resonate best—will help guide packaging, promotion, and distribution decisions.

Align the Supply Chain

Any time a change is being considered, an audit of existing industry practices and the intended and unintended consequences of the proposed change need to be considered. Animal care practices and methods for growing crops have been studied extensively at the university and on-farm levels, and industry standards are based on what’s known to be best for the animals and our planet. Proactively explaining to supply chain partners the consumer perspective and need to align to continue to maintain or build market share works much better than bringing supply chain partners in after the fact.

It’s also worth noting that the supply chain may already be taking steps that consumers would view positively if they knew about them. Sharing supply chain stories—including best practices, policies, procedures, and audit results, can be a powerful lever to build brand equity and trust in the marketplace.

A 2016 consumer survey from Label Insight showed 94 percent of consumers are likely to be more loyal to a brand that offers complete transparency. So companies should find ways to tell supply chain stories and showcase transparency.

Engage Influential Stakeholders

Another key step in creating change that’s best for everyone is to engage with influencers that can help provide soft advocacy for the actions planned. For example, if there’s an antibiotic policy being considered, meeting with veterinarians to fully understand the implications and then working with them to build support will lend credibility to the effort. The same is true if engaging scientists or agronomists to create momentum for new tillage or herbicide policies.

Cultivating a collaborative partnership with a nongovernmental organization (NGO) is another potential avenue to help advocate for change. Forming a partnership with the right NGO—one that can support reasonable solutions that are respectful of all positions in the supply chain—can also help increase consumer trust in brands and products.

Honest, open communication up and down the supply chain will not only help every stakeholder understand how a particular change might impact all partners, but also ensure the proposed commitment is doable.

Once the proposed action is consumer-approved and deemed responsible and possible by the supply-chain partners, it’s time to advocate. Work with industry trade association or the biggest players in the industry to explore how to best gain full adoption of the change.

Follow The Science

A last bit of advice: To find solutions that truly are best for everyone, always follow the science. Not just the science of consumer market research, but also the science that validates that the proposed change is what’s best for the animal or environment. When research points to a solution, use these key findings to align the entire industry to help ensure long-term success.

The reality is, today we operate in an environment where consumer perception often influences corporate policy. In this environment, consumer research and stakeholder communications are key. Remember to take a 360-degree approach to view this proposed change through the eyes of consumers and every stakeholder in the supply chain.

After all, no one wants to be the next example of how consumers can drive supply-chain decisions that aren’t based on best practices or sound science.

Nick Anderson is an associate at MorganMyers.

Posted April 20, 2017 in Supply Chain