On the Horizon: The Effect of COVID-19 on Sustainability

Interview with Juan Aguiriano, Kerry Group Head of Sustainability

Despite the looming economic downturn and current period of uncertainty, Juan Aguiriano, Group Head of Sustainability at Kerry Group, explains why sustainability will remain top of mind for consumers and should be a priority for companies across the globe.

Juan addresses how the challenges the industry is faced with pose concerns for sustainability and distils the consumer trends that will continue to drive the sustainability agenda forward.

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Interview notes:

Damien: Since January, the global food industry and its consumers have doubled down in securing food supplies. Are we about to see 10 years of commitment to sustainably behaviours abandoned, as we emerged from the COVID-19 crisis? Meet Juan Aguiriano, Kerry’s Group Head of Sustainability and welcome to On the Horizon, a webcast series from Kerry Group discussing top-of-mind business issues during the COVID-19 crisis. I'm your host, Damien McLaughlin, from University College Dublin.

Juan, this is the worst economic downturn in modern times, a stretched food supply chain and the consumer very concerned about their own personal safety. Is there any way that sustainability can retain its prominence on society's agenda?

Juan: Great question Damien, thanks for that. Let me try to give you some perspective. I think four out of the six emerging trends post-COVID-19 have a relationship to sustainability. Sustainability is here to stay. It's not going to go away. I heard a good quote the other day: “It's difficult to have a healthy life in an unhealthy planet”. I think that is a very good summary of where we are today. Some of the trends you mentioned already—food safety, trust and transparency. Three-quarters of consumers want to know more about safety. What's on their plate? Is it good for me? Is it safe for me? Fifty-one percent of consumers want to understand what's inside their food. So these are long trends that have been there, but are just being accelerated by COVID-19. The implications for manufacturers; clean labelling and reformulating etc. with natural ingredients - from food for food, rather than artificial and chemicals. Another interesting trend, which is also a long trend accelerated by COVID-19, is that a 48% of consumers are ready to pay more for local foods. If you look at the last five years, the products that were branded with some type of sustainability benefit, such as locally produced or organic, the last five years grew five times faster than the average retail products. They really represented the majority of the purchases by consumers and the majority of the growth for the brands that sold them.

So these are three trends, which are underlying long-term trends, that are being accelerated by COVID-19. You have new trends, like the immunity consumers, not that it wasn't there, asking “in the food that I eat, can I have benefits for my immune system”? It used to be more an area where people will take dietary supplements, pills or other types of small shots; beverage shots, nutritional bars, etc. Nowadays, you see that as mainstream. It's very interesting to see some of the really big mainstream brands, juice brands, launching big time with vitamins and cultures in a juice. A big prominent launch in the UK recently, with a top brand in the juice brand in the UK. You also have ingredients like beta glucans, Wellmune®, in many mainstream products. That is really accelerating. One-third of consumers are proactively looking for ingredients that help their immunity. They are also looking at more traditional things, but in a modernized version, like botanicals, ginseng, ginkgo, lavender. The halo of health that drives immunity in the food they eat.

I think another trend that is being accelerated is consumers wanting to understand if the diet I’m eating, and the foods ingredients that are in the food, are good for my health. Information on the pack, like nutri-score, which is already existing in some countries, but it's going to be widely adopted in Europe, is again something that is increasing in demand from COVID-19. You have apps where you can scan the food, in France it’s very popular. You scan the food and it gives you a score for the food. It tells you how good or bad it is from a nutritional point of view and it even proposes alternatives. Very interesting model. The usage of this type of app is also increasing.

Another area which is interesting is the innovation, Damien. We see plant protein was a long-term trend again. It used to be driven mostly by people that had vegan diets, vegetarian diets. Today, you see many people that are so-called flexitarians. An interesting name, but that means they want to eat more plant protein in their diet and so plant protein is growing very, very quickly. So are non-alcoholic beers, protein bars, cold brew coffee. All of these interesting innovations that are coming to hit the industry started before COVID-19, but are being accelerated post-COVID-19.

Last but not least, and I finish here, is the environmental sustainability. The big picture around climate, energy and carbon. So, 50% of consumers, it’s a staggering number and has never been so high, are looking to consume more responsibly the foods that they have every day on their plate. Again, as in some of the examples we gave before, plant protein is not only eaten because of nutritional and health issues, but also because consumers know that the environmental impact is excellent. Big brands are making advertising around the life cycle analysis and comparing their plant burger versus a meat burger and saying “hey, it's 80% less water, 80% less carbon in the production”. So I think there is a lot of interest here. Obviously, you have to balance this with affordability and cost. We are facing an economic crisis, but I think the trend here is these are not niche anymore. They're moving from niche brands to mainstream brands and to private label. So the affordability of these products is something that is mainstream.

Damien: Juan, you've given an excellent overview of the consumer side and the demands that consumer will have. Unsurprisingly, they're focused heavily, from your view, on health, immunity, wellness, the idea of the consumer protecting themselves. In order for us to have a healthy planet and a healthy citizen, industry really needs to act, and particularly needs to act on carbon emissions. When you look at the kind of investments that the great food producers are making, I'm sure they're making investments to meet consumer demands. But are they also making investments to improve their carbon footprint? What does the balance of investment look like between the two?

Juan: Again, great question Damien. A good example that comes to mind, which is an example of a win-win, is a very large brewing brand, the largest brewing company in the world, has announced that they are going to brew their brand on 100% renewable electricity. They are putting that on the pack, on the can—"brewed on 100% on renewable electricity”—in the U.S., in Europe and in China, their top three markets. So this is not a small mini brand. It's a big investment, moving to 100% renewable electricity. Many companies are setting up what they call “virtual PPAs”. They are establishing an agreement with the utilities provider and the utilities provider arranges the renewable electricity across all their sites. There is not an agreement one for one, so they will put extra renewable electricity capacity on the line. They will supply the brands. In this case, it could be a solar photovoltaics park in South of Spain, or it could be with wind energy in the North Atlantic, etc. So you have both the operations and the companies operating on renewable electricity, which nowadays is close to parity in a number of regions already. Grid parity means similar price to traditional fossil fuels. But the consumers express their preference. The brands expressed the differentiation by the logo on pack, and the consumers express their difference by giving preferential consumption to these brands. Another example would be a plant-based milk, so called milk. It's flying off the shelves. It has a carbon logo on the pack saying that the footprint of these is so much more efficient and less carbon, etc. It’s mainstreaming and very interesting to see. I've been a long time in sustainability and you can see that there've been trials before, in and out, but this time you’re talking about mainstream brands and it’s very interesting.

Damien: Juan, one of the things I guess we've all seen in supermarkets and heard about at a retailer-, and I guess, governmental-level, has been the stockpiling of food and consumers leaving supermarkets with vast quantities of foods in their shopping carts and loading them into the car and driving home. Is there a possibility, or a likelihood, or what is your sense of the impact of this kind of stockpiling on the food waste crisis? I mean, we've always said a third of all food was wasted, but are we likely to see a surge in food waste post COVID-19, as their stockpiling works its way through the system?

Juan: We do waste 33% of the food every day, food loss or food waste. One-third of that every day? If you do the mathematics this is about 185 kilos per inhabitant over the year. Over half a kilo every single day is wasted. The pandemic period has not been good for food waste. Obviously, the loss of business in foodservice meant that there were a lot of suppliers who had stock and products prepared for delivery, and they had to write off at least two months, if not three months, of those. So there will be a surge. The likelihood of consumers also having to throw away more things because they stockpiled, and they go past that product expiration, past due dates, is also likely to create an increase in food waste statistics when we record this later in the year. Is it permanent? Hopefully not. We have to tackle food waste. It's one of the best ways that the industry and the consumers have to contribute to a lower environmental footprint. Imagine the amount of energy and water embedded into every kilo you throw every day.

Damien: So how can we tackle it, Juan? Is this just a behavioural change, that we have to change shopping behaviours? Or are there some new technologies there that we could work with? This is, as you say, a scandalous situation in global society.

Juan: Yeah, the solution is not simple. There's no silver bullet there. Consumers need to change their behaviours towards responsible consumption. Better habits, basically buying less portions, managing the fridge. When you go to a restaurant, ordering the right portions. Even when you order food service delivery at home, make sure you don't over order. It's typical. You over order and there is 30%, 50% leftover. You keep it for the next day and never finish it. So, there are a lot of behavioural elements there.

There are also things that industry the value chain needs to do. At the at the farm level and then the supply chain, and unfortunately in emerging countries, a lot of times the cold chain breaks and the products go literally rotting on the side of the road. Better infrastructure will help in emerging markets. Food waste is a lot lower in emerging markets; only 20%. Big culprits are America, unfortunately, at top of the charts here. 40% of the food, by all estimates, is wasted there every day. But Europe is not always much better; 25 or 30%, depending on the countries.

I think the industry has a lot of smart technologies that we could use. Repurposing waste into ingredients. We've done that historically and have some examples, like in dairy. For instance, whey is a relatively low value by-product, but you can repurpose it into very high nutrition protein for performance. You can imagine taking stocks—the grandmother cooking the chicken on Sunday and we repurpose what's left of the chicken into soup on Monday. While you can, the industry has been doing that for a long time. So there are things that are already done which respect the principles of the circular economy. But there is a lot more that can be done. So, bio-processing, fermentation. A number of other things can be done there. Then there is the whole thing around shelf life, right? The consumer doesn't want artificial preservatives or chemical preservatives. So what you do is, you have to have natural preservation systems that protect the food longer, if possible, but with no chemicals. You are using here solutions which might sound to some of us traditional, but which are very powerful. You are using solutions which are vinegar based solutions, using fermentation metabolites, using natural functional flavours, protective cultures, plant extracts. These are all food-based solutions that help protect the food through less oxidation, less microbial activity, which means that the food doesn't spoil and doesn't rot, stays fresher for longer. And you minimize the food waste, right? So this is an example solution there.

Other innovations which are around plastic, or smart packaging. How do you replace single use plastic and at the same time keep food safety? It's difficult, right? So you need to have innovations on packaging. And then finally, technology digital solutions. The retailers can optimize the category management using a number of sensors on the package. When the food gets bad, it automatically detects it through artificial intelligence. Other types of big data and block chain in the supply chain that help you trace the food and minimize the losses.

Damien: Well, it's a tremendous survey, and I guess the good news for those of us who have a commitment to sustainability, particularly in the food industry, is that there are some strong beacons of hope. Thank you for your time today, Juan. We appreciate it, and your expertise.

To learn more about how COVID-19 is affecting the food and beverage industry, including changes in consumer preferences and purchasing behaviours, visit Kerry’s COVID-19 resource page.

About Juan:

Juan Aguiriano is a corporate sustainability pioneer with over 25 years of experience leading businesses and working at the C-suite level at some of the world’s biggest food, chemical and fiber companies to provide strategic guidance in helping develop and implement innovative strategies to transform businesses and operations towards triple-bottom line sustainability.

Currently leading the sustainability strategy at the Kerry Group, a world leader in Taste & Nutrition, Juan is focused on creating significant, positive impact on the environment and society, by driving businesses’ sustainability leadership.

An expert in corporate strategies for sustainability, risk management, business innovations and organizational change as well as stakeholder engagement and communications, Juan has worked with executives in some of the world’s top 500 corporations to transform the way they do business and ensure they are incorporating societal and environmental criteria in their values, behaviours, strategies and business decision making.

Juan is also focused on disruptive and emerging sustainable technology ventures investments, partnerships and collaborations which have the potential to transform existing markets, products and value chains in profitable and sustainable ways.

Juan has a bachelor’s degree in economics and social sciences from the University of Geneva in Switzerland and a master’s degree in economics and business from the University of Texas at Austin in the United States. He has furthered his competences in strategy and sustainability in several executive leadership programs at IMD in Lausanne, Switzerland and IESE in Barcelona, Spain. He speaks five languages fluently.

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