Maple Leaf Foods isn’t just pretending to be environmentally friendly; it’s trying to be a trailblazer in the wild kingdom of proteins.
The company has just adopted science-based targets that will help it become the first major agri-food company in the world to be carbon neutral.
Clearly motivated by the federal carbon tax and our collective acknowledgment that the planet needs help, the company is showing what environmental stewardship in agri-food should look like in the 21st century.
It’s so un-Canadian to be first, to set a world standard, especially in agri-food. But the plan deserves credit. Maple Leaf Foods is going from being a Canadian iconic brand to a global player in proteins.
Coupled with this latest move is Maple Leaf Foods’ plan to change how it operates and serves markets. The company recently announced it would create a separate division internally to develop its plant-based business, fully committing to vegetable proteins. Considering its announcement earlier this year that it’s building a $300-million plant in Indiana to support its plant-protein strategy, a change to its structure makes sense.
It was an interesting move for a company whose sales, for the most part, have historically been in Canada. Its vegetable protein business doesn’t even exceed $100 million but is expected to grow significantly in years to come, and not just in Canada. In other words, this is where Maple Leaf Foods expects a good portion of its top-line growth to come from.
Attaining plant-based product sales across the globe is Maple Leaf Foods’ gamble – and it’s likely a wise one. The company owns the Canadian market, with not much room for more growth, so it needs to play a much broader game.
Maple Leaf Foods, U.S.A.? by Sylvain Charlebois
And, most important, this market focus will help make the company reach its target for carbon neutrality.
Maple Leaf, one of the country’s largest meat processors, isn’t giving up on meat. In fact, it has reinvested in making its meat operations more efficient. A state-of-the-art chicken plant is being built in London, Ont.
But modern meat sales are marred by abnormally erratic market conditions and unpredictable food safety risks.
In recent weeks, Chinese embargoes on Canadian pork have hit Maple Leaf shares hard. Its latest quarterly results fell far short of expectations. Now that China is buying Canadian pork again, Maple Leaf can breathe, but geopolitical risks remain.
And food safety is making the meat business less attractive every day. Recalls affecting meat in Canada are rampant. So far this year, we’ve seen over 800 Canadian-made meat products recalled by the Canadian Food Inspection Agency. That’s almost three products a day, on average.
Consumers aren’t easily affected by recalls, especially Canadians. But an accumulation of food safety snags will take a toll on consumers’ perceptions of risks.
Maple Leaf is becoming a completely different company. Everything is changing, from its governance to its focus. So when you look at its performance and how the company is managed, the recent decision to become carbon neutral should not come as a surprise to anyone.
Agri-food companies, especially Canadian ones, have a long tradition of being commodity-driven, with an emphasis on production technology, high volumes and quality consistency. The fact that agri-food is inherently a low margin business doesn’t help.
In the context of global hyper-competition, the ability to understand customer needs and adapt to a wider variety of situations will become crucial. So Maple Leaf, which has been obsessed with the supply side, is adopting a demand-chain management framework for its products.
That market emphasis is very different. It’s no longer about processing commodities and cutting costs. It’s more about the continuous evaluation of perceived benefits by consumers. Market expectations are different and Maple Leaf Foods is adapting.
The brand has been well known to Canadians for decades. But Maple Leaf is clearly showing it will listen to consumers, and not necessarily just its customers. This nuance isn’t trivial.
It sells its products to retailers like Loblaws, Sobeys, Save-On-Foods and Metro, not to consumers directly. Ads and merchandising ploys are all we’ve really seen from Maple Leaf Foods over the years.
Focus groups and marketing research meant that, for example, some products would be made natural only if the infrastructure permitted. This was the dominating paradigm.
Things are clearly different now. In a demand-chain management environment, everything is on the table.
When consumers become as critical to the company’s transactional relationship as its actual customers, a company’s structure changes and benefits – provided the marketplace also changes.
And that’s exactly what’s happening at Maple Leaf Foods. The company’s goal to become carbon neutral should not be a surprise to anyone.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University, and a senior fellow with the Atlantic Institute for Market Studies.