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Socially Responsible Sourcing: Not So Simple

While this is a hypothetical, we don’t have to look far for actual examples.   Looking at McDonald’s old friend, Chipotle, shows how quickly things can go sideways.  While Chipotle is dealing with bigger issues these days around E.Coli, it wasn’t long ago when the fast-casual chain started making claims about non-GMO ingredients.  Within months, Chipotle was accused of misleading consumers and engaged in a class-action lawsuit.  In the consumer packaged goods world, PepsiCo had to pay $9 million to settle a lawsuit for “all natural” claims with its Naked juice brand.  In both cases, you could argue that the companies were mostly right but mostly does not make the cut here - you have to be perfect. Even if the brand is perfect, there is still potential for internal strife within a company.  Look at Cheerios shifting to non-GMO ingredients for its flagship yellow box of regular Cheerios.  One fine day, regular Cheerios was non-GMO, yet Honey Nut Cheerios, the other handful of Cheerios products and all the rest of General Mills were still presumably GMO. If one brand makes a socially responsible sourcing change, do the rest of the brands have to follow?  PepsiCo and Unilever, which operate as houses of brands, could probably get away with picking and choosing.  Could you imagine Apple saying that the iPhone is made with responsibly sourced materials while the iPad is not?  The need for 100% compliance can often extend beyond a given brand to the entire company as well. Focusing on sourcing can distract from what originally made a company successful Misguided efforts will more likely cause brand confusion and distract consumers from the reasons they originally loved that brand.  Consider this example from Lay’s.  In the early 2000’s, sodium became public enemy number one.  Consumers clearly cared about the side effects of excessive sodium consumption, so Lay’s began reformulating its products.  Before long, Lay’s advertising stressed less sodium and virtually ignored the product’s trademark flavor and crispiness.  What happened?  Sales declined.  Consumers don’t want too much sodium but they also don’t buy potato chips because they have less sodium than before.  Lay’s did a U-turn and went back to its traditional “irresistible” positioning.  Sales recovered and all was well again. The jury is still out on whether any of this matters to consumers The very real downside could be worthwhile if it’s balanced with tremendous upside.  Despite the slew of socially responsible sourcing announcements in the past year, there is still very little data that indicate they will make any difference.  Is anyone really buying the Egg McMuffin because it has cage-free eggs?  Is anyone not buying an Egg McMuffin if it has regular eggs?  Do cage-free eggs give McDonald’s a competitive advantage against Starbucks, Dunkin Donuts and other competitors?  McDonald’s must have more convincing data on-hand internally because I could not find much in my desktop research.  

While this is a hypothetical, we don’t have to look far for actual examples.   Looking at McDonald’s old friend, Chipotle, shows how quickly things can go sideways.  While Chipotle is dealing with bigger issues these days around E.Coli, it wasn’t long ago when the fast-casual chain started making claims about non-GMO ingredients.  Within months, Chipotle was accused of misleading consumers and engaged in a class-action lawsuit.  In the consumer packaged goods world, PepsiCo had to pay $9 million to settle a lawsuit for “all natural” claims with its Naked juice brand.  In both cases, you could argue that the companies were mostly right but mostly does not make the cut here - you have to be perfect. Even if the brand is perfect, there is still potential for internal strife within a company.  Look at Cheerios shifting to non-GMO ingredients for its flagship yellow box of regular Cheerios.  One fine day, regular Cheerios was non-GMO, yet Honey Nut Cheerios, the other handful of Cheerios products and all the rest of General Mills were still presumably GMO. If one brand makes a socially responsible sourcing change, do the rest of the brands have to follow?  PepsiCo and Unilever, which operate as houses of brands, could probably get away with picking and choosing.  Could you imagine Apple saying that the iPhone is made with responsibly sourced materials while the iPad is not?  The need for 100% compliance can often extend beyond a given brand to the entire company as well. Focusing on sourcing can distract from what originally made a company successful Misguided efforts will more likely cause brand confusion and distract consumers from the reasons they originally loved that brand.  Consider this example from Lay’s.  In the early 2000’s, sodium became public enemy number one.  Consumers clearly cared about the side effects of excessive sodium consumption, so Lay’s began reformulating its products.  Before long, Lay’s advertising stressed less sodium and virtually ignored the product’s trademark flavor and crispiness.  What happened?  Sales declined.  Consumers don’t want too much sodium but they also don’t buy potato chips because they have less sodium than before.  Lay’s did a U-turn and went back to its traditional “irresistible” positioning.  Sales recovered and all was well again. The jury is still out on whether any of this matters to consumers The very real downside could be worthwhile if it’s balanced with tremendous upside.  Despite the slew of socially responsible sourcing announcements in the past year, there is still very little data that indicate they will make any difference.  Is anyone really buying the Egg McMuffin because it has cage-free eggs?  Is anyone not buying an Egg McMuffin if it has regular eggs?  Do cage-free eggs give McDonald’s a competitive advantage against Starbucks, Dunkin Donuts and other competitors?  McDonald’s must have more convincing data on-hand internally because I could not find much in my desktop research.  

While this is a hypothetical, we don’t have to look far for actual examples.   Looking at McDonald’s old friend, Chipotle, shows how quickly things can go sideways.  While Chipotle is dealing with bigger issues these days around E.Coli, it wasn’t long ago when the fast-casual chain started making claims about non-GMO ingredients.  Within months, Chipotle was accused of misleading consumers and engaged in a class-action lawsuit.  In the consumer packaged goods world, PepsiCo had to pay $9 million to settle a lawsuit for “all natural” claims with its Naked juice brand.  In both cases, you could argue that the companies were mostly right but mostly does not make the cut here - you have to be perfect. Even if the brand is perfect, there is still potential for internal strife within a company.  Look at Cheerios shifting to non-GMO ingredients for its flagship yellow box of regular Cheerios.  One fine day, regular Cheerios was non-GMO, yet Honey Nut Cheerios, the other handful of Cheerios products and all the rest of General Mills were still presumably GMO. If one brand makes a socially responsible sourcing change, do the rest of the brands have to follow?  PepsiCo and Unilever, which operate as houses of brands, could probably get away with picking and choosing.  Could you imagine Apple saying that the iPhone is made with responsibly sourced materials while the iPad is not?  The need for 100% compliance can often extend beyond a given brand to the entire company as well. Focusing on sourcing can distract from what originally made a company successful Misguided efforts will more likely cause brand confusion and distract consumers from the reasons they originally loved that brand.  Consider this example from Lay’s.  In the early 2000’s, sodium became public enemy number one.  Consumers clearly cared about the side effects of excessive sodium consumption, so Lay’s began reformulating its products.  Before long, Lay’s advertising stressed less sodium and virtually ignored the product’s trademark flavor and crispiness.  What happened?  Sales declined.  Consumers don’t want too much sodium but they also don’t buy potato chips because they have less sodium than before.  Lay’s did a U-turn and went back to its traditional “irresistible” positioning.  Sales recovered and all was well again. The jury is still out on whether any of this matters to consumers The very real downside could be worthwhile if it’s balanced with tremendous upside.  Despite the slew of socially responsible sourcing announcements in the past year, there is still very little data that indicate they will make any difference.  Is anyone really buying the Egg McMuffin because it has cage-free eggs?  Is anyone not buying an Egg McMuffin if it has regular eggs?  Do cage-free eggs give McDonald’s a competitive advantage against Starbucks, Dunkin Donuts and other competitors?  McDonald’s must have more convincing data on-hand internally because I could not find much in my desktop research.  

While this is a hypothetical, we don’t have to look far for actual examples.   Looking at McDonald’s old friend, Chipotle, shows how quickly things can go sideways.  While Chipotle is dealing with bigger issues these days around E.Coli, it wasn’t long ago when the fast-casual chain started making claims about non-GMO ingredients.  Within months, Chipotle was accused of misleading consumers and engaged in a class-action lawsuit.  In the consumer packaged goods world, PepsiCo had to pay $9 million to settle a lawsuit for “all natural” claims with its Naked juice brand.  In both cases, you could argue that the companies were mostly right but mostly does not make the cut here - you have to be perfect. Even if the brand is perfect, there is still potential for internal strife within a company.  Look at Cheerios shifting to non-GMO ingredients for its flagship yellow box of regular Cheerios.  One fine day, regular Cheerios was non-GMO, yet Honey Nut Cheerios, the other handful of Cheerios products and all the rest of General Mills were still presumably GMO. If one brand makes a socially responsible sourcing change, do the rest of the brands have to follow?  PepsiCo and Unilever, which operate as houses of brands, could probably get away with picking and choosing.  Could you imagine Apple saying that the iPhone is made with responsibly sourced materials while the iPad is not?  The need for 100% compliance can often extend beyond a given brand to the entire company as well. Focusing on sourcing can distract from what originally made a company successful Misguided efforts will more likely cause brand confusion and distract consumers from the reasons they originally loved that brand.  Consider this example from Lay’s.  In the early 2000’s, sodium became public enemy number one.  Consumers clearly cared about the side effects of excessive sodium consumption, so Lay’s began reformulating its products.  Before long, Lay’s advertising stressed less sodium and virtually ignored the product’s trademark flavor and crispiness.  What happened?  Sales declined.  Consumers don’t want too much sodium but they also don’t buy potato chips because they have less sodium than before.  Lay’s did a U-turn and went back to its traditional “irresistible” positioning.  Sales recovered and all was well again. The jury is still out on whether any of this matters to consumers The very real downside could be worthwhile if it’s balanced with tremendous upside.  Despite the slew of socially responsible sourcing announcements in the past year, there is still very little data that indicate they will make any difference.  Is anyone really buying the Egg McMuffin because it has cage-free eggs?  Is anyone not buying an Egg McMuffin if it has regular eggs?  Do cage-free eggs give McDonald’s a competitive advantage against Starbucks, Dunkin Donuts and other competitors?  McDonald’s must have more convincing data on-hand internally because I could not find much in my desktop research.  

While this is a hypothetical, we don’t have to look far for actual examples.   Looking at McDonald’s old friend, Chipotle, shows how quickly things can go sideways.  While Chipotle is dealing with bigger issues these days around E.Coli, it wasn’t long ago when the fast-casual chain started making claims about non-GMO ingredients.  Within months, Chipotle was accused of misleading consumers and engaged in a class-action lawsuit.  In the consumer packaged goods world, PepsiCo had to pay $9 million to settle a lawsuit for “all natural” claims with its Naked juice brand.  In both cases, you could argue that the companies were mostly right but mostly does not make the cut here - you have to be perfect. Even if the brand is perfect, there is still potential for internal strife within a company.  Look at Cheerios shifting to non-GMO ingredients for its flagship yellow box of regular Cheerios.  One fine day, regular Cheerios was non-GMO, yet Honey Nut Cheerios, the other handful of Cheerios products and all the rest of General Mills were still presumably GMO. If one brand makes a socially responsible sourcing change, do the rest of the brands have to follow?  PepsiCo and Unilever, which operate as houses of brands, could probably get away with picking and choosing.  Could you imagine Apple saying that the iPhone is made with responsibly sourced materials while the iPad is not?  The need for 100% compliance can often extend beyond a given brand to the entire company as well. Focusing on sourcing can distract from what originally made a company successful Misguided efforts will more likely cause brand confusion and distract consumers from the reasons they originally loved that brand.  Consider this example from Lay’s.  In the early 2000’s, sodium became public enemy number one.  Consumers clearly cared about the side effects of excessive sodium consumption, so Lay’s began reformulating its products.  Before long, Lay’s advertising stressed less sodium and virtually ignored the product’s trademark flavor and crispiness.  What happened?  Sales declined.  Consumers don’t want too much sodium but they also don’t buy potato chips because they have less sodium than before.  Lay’s did a U-turn and went back to its traditional “irresistible” positioning.  Sales recovered and all was well again. The jury is still out on whether any of this matters to consumers The very real downside could be worthwhile if it’s balanced with tremendous upside.  Despite the slew of socially responsible sourcing announcements in the past year, there is still very little data that indicate they will make any difference.  Is anyone really buying the Egg McMuffin because it has cage-free eggs?  Is anyone not buying an Egg McMuffin if it has regular eggs?  Do cage-free eggs give McDonald’s a competitive advantage against Starbucks, Dunkin Donuts and other competitors?  McDonald’s must have more convincing data on-hand internally because I could not find much in my desktop research.  

While this is a hypothetical, we don’t have to look far for actual examples.   Looking at McDonald’s old friend, Chipotle, shows how quickly things can go sideways.  While Chipotle is dealing with bigger issues these days around E.Coli, it wasn’t long ago when the fast-casual chain started making claims about non-GMO ingredients.  Within months, Chipotle was accused of misleading consumers and engaged in a class-action lawsuit.  In the consumer packaged goods world, PepsiCo had to pay $9 million to settle a lawsuit for “all natural” claims with its Naked juice brand.  In both cases, you could argue that the companies were mostly right but mostly does not make the cut here - you have to be perfect. Even if the brand is perfect, there is still potential for internal strife within a company.  Look at Cheerios shifting to non-GMO ingredients for its flagship yellow box of regular Cheerios.  One fine day, regular Cheerios was non-GMO, yet Honey Nut Cheerios, the other handful of Cheerios products and all the rest of General Mills were still presumably GMO. If one brand makes a socially responsible sourcing change, do the rest of the brands have to follow?  PepsiCo and Unilever, which operate as houses of brands, could probably get away with picking and choosing.  Could you imagine Apple saying that the iPhone is made with responsibly sourced materials while the iPad is not?  The need for 100% compliance can often extend beyond a given brand to the entire company as well. Focusing on sourcing can distract from what originally made a company successful Misguided efforts will more likely cause brand confusion and distract consumers from the reasons they originally loved that brand.  Consider this example from Lay’s.  In the early 2000’s, sodium became public enemy number one.  Consumers clearly cared about the side effects of excessive sodium consumption, so Lay’s began reformulating its products.  Before long, Lay’s advertising stressed less sodium and virtually ignored the product’s trademark flavor and crispiness.  What happened?  Sales declined.  Consumers don’t want too much sodium but they also don’t buy potato chips because they have less sodium than before.  Lay’s did a U-turn and went back to its traditional “irresistible” positioning.  Sales recovered and all was well again. The jury is still out on whether any of this matters to consumers The very real downside could be worthwhile if it’s balanced with tremendous upside.  Despite the slew of socially responsible sourcing announcements in the past year, there is still very little data that indicate they will make any difference.  Is anyone really buying the Egg McMuffin because it has cage-free eggs?  Is anyone not buying an Egg McMuffin if it has regular eggs?  Do cage-free eggs give McDonald’s a competitive advantage against Starbucks, Dunkin Donuts and other competitors?  McDonald’s must have more convincing data on-hand internally because I could not find much in my desktop research.  

While this is a hypothetical, we don’t have to look far for actual examples.   Looking at McDonald’s old friend, Chipotle, shows how quickly things can go sideways.  While Chipotle is dealing with bigger issues these days around E.Coli, it wasn’t long ago when the fast-casual chain started making claims about non-GMO ingredients.  Within months, Chipotle was accused of misleading consumers and engaged in a class-action lawsuit.  In the consumer packaged goods world, PepsiCo had to pay $9 million to settle a lawsuit for “all natural” claims with its Naked juice brand.  In both cases, you could argue that the companies were mostly right but mostly does not make the cut here - you have to be perfect. Even if the brand is perfect, there is still potential for internal strife within a company.  Look at Cheerios shifting to non-GMO ingredients for its flagship yellow box of regular Cheerios.  One fine day, regular Cheerios was non-GMO, yet Honey Nut Cheerios, the other handful of Cheerios products and all the rest of General Mills were still presumably GMO. If one brand makes a socially responsible sourcing change, do the rest of the brands have to follow?  PepsiCo and Unilever, which operate as houses of brands, could probably get away with picking and choosing.  Could you imagine Apple saying that the iPhone is made with responsibly sourced materials while the iPad is not?  The need for 100% compliance can often extend beyond a given brand to the entire company as well. Focusing on sourcing can distract from what originally made a company successful Misguided efforts will more likely cause brand confusion and distract consumers from the reasons they originally loved that brand.  Consider this example from Lay’s.  In the early 2000’s, sodium became public enemy number one.  Consumers clearly cared about the side effects of excessive sodium consumption, so Lay’s began reformulating its products.  Before long, Lay’s advertising stressed less sodium and virtually ignored the product’s trademark flavor and crispiness.  What happened?  Sales declined.  Consumers don’t want too much sodium but they also don’t buy potato chips because they have less sodium than before.  Lay’s did a U-turn and went back to its traditional “irresistible” positioning.  Sales recovered and all was well again. The jury is still out on whether any of this matters to consumers The very real downside could be worthwhile if it’s balanced with tremendous upside.  Despite the slew of socially responsible sourcing announcements in the past year, there is still very little data that indicate they will make any difference.  Is anyone really buying the Egg McMuffin because it has cage-free eggs?  Is anyone not buying an Egg McMuffin if it has regular eggs?  Do cage-free eggs give McDonald’s a competitive advantage against Starbucks, Dunkin Donuts and other competitors?  McDonald’s must have more convincing data on-hand internally because I could not find much in my desktop research.  


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