CIES CONGRESS

DAVID ORGEL

STOCKHOLM, Sweden -- Executives from top global food retailers last week urged the food industry to reassess its environmental policies in the wake of growing consumer concerns about issues including food safety.

Speaking at the Annual Executive Congress here of CIES, the global food organization of retailers and manufacturers, executives from Ahold and Carrefour stressed the need for more proactive corporate stances. They spoke as food retailers in Europe and other parts of the world were hit by a new food-safety crisis involving Belgian poultry, eggs and other products that some have called the biggest European food problem since the "mad cow" fiasco.

The contamination of animal feed in Belgium by the cancer-causing chemical dioxin has led many countries to ban Belgian chickens, eggs, pork, beef and dairy products. The United States was impounding shipments of chicken and pork from the European Union. The developments led many retailers to pull suspect products from shelves, including products related to eggs or poultry, such as pasta, mayonnaise, biscuits and baby foods.

Supermarket retailers interviewed last week at the CIES event said they pulled products while awaiting further word from authorities. Henri Mestdagh, chairman and chief executive of Belgium's Mestdagh, said his 50-unit operation removed some 600 products from the shelves, a move while helped restore consumer confidence. Irish retailer Feargal Quinn, chief executive of Superquinn, Dublin, said his store pulled about 42 products early this month at the start of the crisis, including Belgian chicken and pork.

It was against this backdrop that the Ahold and Carrefour executives discussed the need for increased attention to overall environmental issues. "Today, consumer confidence is shaken," said Chantal Jaquet, international trading director-food, for Carrefour Merchandises International, France.

"The mad cow crisis was awful. It made consumers doubt the health value of food," she said. "The dioxin scandal will give further impetus to this. We need to be accountable."

Jaquet said Carrefour has been proactive on environmental issues. In the mid 1980s the company focused on the issue of waste recycling for packaging, she said. The retailer has increased its determination over the years to rid foods of genetically modified substances, a controversial issue in Europe and some other parts of the world.

After two years of work, Carrefour was able to insure consumers that its store brands were free of genetically modified elements, such as ingredients and additives. "The analysis and traceability was worked out with suppliers," she said. "Now we want to do this with pet food as well."

Carrefour does not allow animal-based feeds to be used in development of products for its brands. The company also began investigating its meat suppliers two years ago to head off the possibility of a dioxin-related crisis.

"We wanted to be accountable in advance," she said.

David Rosenberg, director of environmental affairs for Ahold, Zaandam, The Netherlands, told the Congress that "a new wave" of environmental concern is rolling. He said that means retailers must upgrade their approaches, in areas including sourcing transportation and urban planning.

"It's often been said that customers don't care," he said. "But now they do care. And it's not just about dioxin and mad cow. Pesticides are an issue for many countries. There are concerns about industrial farming."

Rosenberg said consumers increasingly want to insure that the supply chain is clean and retailers are accountable. Some key challenges for a more proactive retail approach include the need for new environmental tools; the recognition of the importance of rewarding environmental initiatives; and the requirement that companies recognize the urgency to act.

Rosenberg urged retailers to integrate policies into key business units; set realistic expectations and deliver, and lead from top management on down.

Ahold's advantage is the ability to spread knowledge across its many divisions, he said. "On issues like waste management we can take know-how and spread it around the world. But what works in the Netherlands may not work in Boston."

Ahold also communicates its environmental efforts to consumers, investors and other groups in a multitude of ways. For instance, it uses its consumer magazine to describe the origins of products to shoppers.

Moderating the CIES session on the environment was Torsten Michelsen, business development manager for Kesko Corp., Finland's biggest wholesaler, which has 2000 member retailers as shareholders. "The Belgian dioxin crisis shows that great problems can arise and we need to find new ways to deal with the environment," he said.