I agree with Kiley that this is mostly a PR play for Haagen Daazs, though on slightly different grounds. Namely, Haagen Daazs is not the player who can actually impact this issue. First of all, Haagen Daazs is a small player relatively speaking, with revenues around $2B (https://www.forbes.com/sites/yehongzhu/2016/06/21/the-worlds-top-selling-ice-cream-brands-2/#63c33ce75a89). And, as Kiley pointed out, this is only a tangential issue for them as it only impacts certain of their flavors.
I believe that this consumer-focused campaign is really to create “buzz” (pun intended). If they cared deeply about the bee issue, they would hammer their fruit and nut suppliers, whose entire businesses depend on bees.
Moreover, HD is owned by General Mills, so why have a brand-specific campaign if not for marketing purposes?
Thanks for writing this article – you’ve shed light on a serious issue, which is that pizza is now at risk of losing its key ingredient: the love of the chef.
Jokes aside, I take issue with two aspects of your essay. First of all, you claim that consumers are increasingly concerned about where their food comes from, and that they will vote for their food values with their dollars. I am not sure to what extent this is true. For example, only 21% of British shoppers feel they can influence climate change through what they buy (https://www.theguardian.com/sustainable-business/sustainability-food-consumers-live-chat). I think that people are much more concerned with quality and price of food, and thus supply chain digitization in food should focus on improving those aspects, through lower/fresher inventory, etc.
Additionally, I am not sure how much upstream influence a company like Prodal could have. You mention that they should digitize their supply chain, but that requires participants upstream who are willing to invest in their own infrastructure to support product tracking. I would doubt that Prodal has enough weight to throw around to effect this change, and thus they will have to wait until the market (i.e. consumers) demand traceability on a large enough scale, should that ever be the case.
Fascinating essay, Henrique. One idea that struck me as I read this is that Munich Re could consider broadening its service offering to include consulting for businesses that are subject to natural catastrophes or other negative effects of climate change. Given Munich Re’s information advantage on climate change trends, they could sell this information to companies who can then better assess and make decisions regarding potential climate change risks to their businesses. They could also help companies plan their operations around these risks – for example, they could study a company’s existing supply chain and help them to develop emergency plans or alternative plans for if/when disaster strikes. This could mitigate the impact of the adverse events, leading to lower payouts.
One point to consider from a regulatory standpoint as well – should governments require some minimal level of catastrophe insurance for all companies or companies in certain industries? The idea behind this would be to ensure that the risk pool is as broad as possible, much like the logic of mandatory insurance in the US healthcare system. One could argue that since all parts of the economy are so interdependent, all should share in bearing the risk. Even if certain companies on the surface do not appear to face climate change risks, they may depend on others who do, or their customers may, and so on.
I really enjoyed this essay, particularly given my affinity for pasta. It would be difficult to argue against the notion that this digitization of Barilla’s supply chain will reduce food waste and improve safety. I would, however, challenge the notion that consumers will factor this into their purchasing decisions, or that they are “more drawn to the brand”. First of all, as you said, consumers are bombarded with buzzwords and claims about sustainability, fair trade, etc. on their food labels. I don’t think another QR code will influence them to purchase this. Additionally, even if we believe that consumers will appreciate this transparency and base purchasing decisions off of it, it will only be a short-term advantage for Barilla, as other companies will follow suit, particularly if we believe that this type of digitization will occur industry-wide.
Great essay, Anuj. I wanted to respond to the question you posed, “Should Apple commit the capital to manufacturing in India, which may not have equivalently skilled labor and technological know-how as China?” I think that while there may not be as many skilled laborers in India on an absolute basis, there would certainly be enough to manufacture iPhones. My assumption is that most of the design and engineering work would occur in the US, and the Indian operations would largely be confined to manufacturing. Especially given Apple’s global reputation, I find it hard to believe that Apple would not be able to staff its Indian operations with skilled employees. Additionally, India’s workforce is growing much faster than China’s, which is actually expected to shrink (https://www.reuters.com/article/us-india-workers/help-wanted-indias-make-in-india-drive-lacks-skilled-labor-idUSKBN0K71E020141230), so over time this workforce inequality may even out.
Jordan – very interesting article. I think you’ve highlighted an interesting tension between the benefits and costs of in-sourcing. I have a few issues with the notion that you raised in your last paragraph that sourcing domestically will be a net positive to US workers as they will benefit from job creation at the expense of higher prices.
First of all, I think that countries with a cost advantage in production should continue producing. The US would be better off having its workers be temporarily unemployed/displaced but trained and redeployed to more productive areas of the economy, which would increase their incomes without an increase in the cost of goods at places like Wal Mart. We see unemployment rates at ~4% right now (i.e. very close to full employment), so I’m not sure how big of an impact bringing jobs back to the US via domestic sourcing would have.
Additionally, not all Wal Mart shoppers are low income. I think that changing the supply chain in a way that increases prices would drive many shoppers to places like Target, where they can also get a better shopping experience for a slightly higher price.
Wal Mart’s reason for existence is its low prices, and any intentional change to its prices would be unwise in my opinion.