CIES MOVES AHEAD WITH FOOD-SAFETY PROGRAM

DAVID ORGEL

PARIS -- The global food industry is making progress in developing a sweeping food-safety program that will eventually certify suppliers in accordance with accepted manufacturing standards, according to Richard Fedigan, chief executive officer of CIES-The Food Business Forum, a global organization of food retailers and suppliers here.

Fedigan spoke about food safety and other standards-based initiatives in an interview with SN on the eve of the CIES World Food Business Summit, which is being held in Atlanta June 19 to 21. This is the first time since 1997 that CIES has held the annual event in the United States.

"Food safety has taught the food business how to be in the firing line," Fedigan said. "The industry is very focused on addressing this issue."

The multi-stage, CIES-led effort, called the Global Food Safety Initiative, recently cleared a major hurdle by identifying the criteria it will use to judge existing food-safety standards, Hugo Byrnes, CIES director of food safety, told SN. This summer executives involved in the initiative will determine which existing national or global standards meet the criteria. All of this activity is aimed at the ultimate goal: determining which suppliers are manufacturing according to the approved standards. Those suppliers that make the grade will be certified, a process that may take years to complete.

"We don't want to call the Global Food Safety Initiative a standard," Fedigan said. "There are already standards around the world. We are just benchmarking existing standards and will focus on implementation."

The project will be supported by Internet tools that facilitate rapid exchange of information about food safety. One of these will be an Internet information site that enables supply partners to quickly understand the scope of specific safety problems, Byrnes said. Another tool will be an interactive Web site that allows users to post and update information in real time pertaining to a crisis, he said.

"Often the lack of information is the biggest problem," Byrnes explained. "That was the case, for instance, with the Belgian Dioxin crisis. You need to get out information timely so people can act. Some of the information will come from screening of Internet Web sites on a continuous basis. We will also disseminate government information and get input from food-business people. We'll have people in different parts of the world posting messages, alerts and warnings on the site, which would be like a bulletin board for members only. Members will be able to discuss problems, assess implications and decide how to act. Would the information require a recall? Should they alert authorities? Those will be questions to deal with."

Fedigan conceded that some suppliers were less than enthusiastic about the food-safety initiative because they viewed it as a case of retailers questioning the practices of vendors.

"We created a stakeholders group to bring in manufacturers in a more direct way and made progress on an early-warning system between retailers and manufacturers," Fedigan said.

The effort to standardize global practices is one of many attempts by the food industry to find common ground. Probably the most high-profile standard of sorts in recent times is the euro currency, which was successfully implemented earlier this year, with no small debt owed to European food retailers, Fedigan stressed. "Retailers took on a lot," he said. "They became the bankers for consumers. That effort helped improve consumer trust in retailers and enabled retailers to move forward as a sector, and as companies and brands."

Global retailers are also dealing with standards issues in areas ranging from electronic commerce to supply chain efficiencies, with ECR Europe a major participant in the latter project.

The growth of standards initiatives results from the increasingly global nature of the retail industry, Fedigan said.

"The transformation of food retailing into a global sector has brought unprecedented complexity in terms of accountability and retail strategy," he elaborated.

Along those lines, the theme of the upcoming CIES summit is "Who is Accountable for the Global Economy?" That theme is crisply summed up in CIES' summit marketing brochure as follows:

"The food business has never had a higher profile in the eyes of the global community. The downside is that the global citizen is demanding more and more accountability. How will we deal with being first in the firing line?"

Addressing this issue at the summit will be Lee Scott, chairman and CEO of Wal-Mart Stores, Bentonville, Ark., and Pascal Lamy, a member of the European Trade Commission.

"September 11 exacerbated some of the doubts and worries about the consequences of a global society," Fedigan said. "Companies must manage increasingly complex relationships with employees, consumers and others. In Atlanta, there will be a debate over rights and responsibilities in this global society."

The CIES event will also include case studies involving changes in the North American retail landscape. Jeff Noddle, president and CEO of Supervalu, Minneapolis, will discuss the company's efforts to drive business back to center store in an effort to compete with alternative retail formats. Gerald L. Storch, vice chairman of Target, Minneapolis, will detail how the company is differentiating its format from other big-box stores. Richard J. Schnieders, president and chief operating officer of Sysco, Houston, will describe how the food-service business is currently serving the consumer.

Also at the summit, Daniel Bernard, chairman and CEO of Carrefour, based here, will address the multi-national retailer's local/global operating strategy across its 30 markets. Regarding the latest trends in the internationalization of food retailing, Fedigan said operators have reached a new stage.

"International expansion is maturing as retailers achieve greater scale and experience," he said. "Mergers and acquisitions have slowed a little. Now global consolidation has reached a second phase as retailers integrate their different markets and businesses into their overall activities."

Citing the example of one global retailer, he said, "Ahold has global promotions with different manufacturers. Leveraging relationships is very important to them. Ahold also uses its knowledge network around the world to link companies in its group."

Fedigan stressed that the successful companies will "develop the right balance between global and local business and integration of markets. Competitiveness is as much about local knowledge as it is about supply chain efficiencies."

Understanding local markets may be the best defense against the increasingly unpredictable nature of global business, Fedigan said.

Also at the CIES summit, Pierre-Olivier Beckers, president and CEO, Delhaize Group, Brussels, Belgium, will be named chairman of CIES for a two-year term. He will succeed Roland Fahlin, who is a member of the supervisory board of Netherlands-based Ahold.