SIAL 2000

ADAM BLAIR

PARIS -- The European food industry is weighing the potential benefits of the Internet and so far concluding that business-to-business applications provide the brightest opportunity.

That's the word from European attendees and exhibitors here at last week's SIAL 2000, the international food and beverage trade show held every two years. Europeans said B2B appears to outshine business-to-consumer applications as the area of clearest benefit, and they are looking to the United States as a model for B2B e-commerce.

At a presentation sponsored by the consulting firm Arthur Andersen, representatives from B2B trading exchanges expressed their belief that the Internet could solve many long-standing logistics issues in the European market.

Companies can save anywhere from 5% to 25% of their operating costs through the use of Web-based technologies, according to Yves Barbieux, CEO of CPGmarket.com, a B2B exchange partially owned by manufacturers including Nestle.

"In two to three years, no company will be able to compete without using some kind of electronic platform," said Barbieux.

CPGmarket.com, which began operations earlier this year and already has pilot programs in four European countries, projects that e-service offerings including product sourcing, supply chain and fulfillment logistics will be operational by Jan. 1, 2001. The company aims to connect retailers, manufacturers and other suppliers with timely product intelligence.

"Our idea is that when a consumer buys a carton of yogurt and puts it through the grocery scanner, the plastic manufacturer will get ready to replace it," said Barbieux.

As in the United States, the potential profitability of business-to-consumer e-commerce is questionable in Europe. Paul Hurtut, an Arthur Andersen consultant, noted that logistics and their costs were the big issues, especially in the "last mile" to the customer's home.

To deliver a grocery order in Paris, for instance, "order preparation and logistics can represent 30% of the total market basket," said Hurtut.

Nevertheless, the Internet's role as a communications tool "can enable agrifood companies to establish a direct tie to the consumer," he added. "These companies had lost that role to big retailers."

More than 5,200 exhibitors from 94 countries gathered for SIAL 2000. Organizers expected the final attendee count to top 130,000.

The spectrum of products on display included fresh fruits and vegetables, meat, fish and poultry, dairy, center store and prepared foods. A new exhibit area devoted to the catering sector was introduced at this year's show.

International consumers' concerns about the health aspects of food was evident by the presence of more than 500 exhibitors displaying organic products. Food safety in general and the impact of genetically modified (GM) foods were key themes at the show.

"I'm seeing a lot of emphasis on natural and functional foods at this show," said Lindsey Bagley, a partner in Eureka, Berkshire, U.K., a food science company. "Organic foods in general are big here in Europe, more so than in the U.S."

"The European consumer doesn't want GM foods," said George Smith of Midsummer Marketing, which markets several varieties of U.S. produce in Europe, though none in any GM categories. "The consumer sees it as something that's untested." The strong dollar is also an issue for companies looking to import U.S. products, he added.

Bagley noted that BSE and listeria scares in Europe have contributed to the perception that any type of GM foods is a "non-starter" in Europe.

Food safety concerns were highlighted at SIAL with an announcement by Joel Saveuse, European General Manager for the retailer Carrefour. Saveuse announced three measures the retailer will take to deal with the possible spread of BSE: a total ban on the use of animal feed in pork, poultry, veal and fish feed; the withdrawal of growth-stimulating antibiotics from all animal feed; and systematic screening for BSE at the slaughterhouse.