The bees are dying! The implications are manifold – 85% of all food crops for humans are pollinated by bees. Studies have shown that climate change has caused the range within which bumble bees live in the northern hemisphere to shrink. Scientific data has further revealed that as global temperatures rise, bumble bees do not migrate north like many other species do.,  As of July 2015, this had already led to a decrease in bees’ southern ranges by 300 kilometers. This catastrophic loss of bees has been consistent across continents and poses a threat to all.
Of particular concern to guacamole-lovers and certain multinational corporations alike is the crisis of skyrocketing avocado prices. One company that has been notably impacted by this is Chipotle. As of August 25, 2017, avocado prices had risen over 75% in less than a month’s time. With avocados representing approximately 10% of Chipotle’s costs to serve food, such an increase can have extremely substantial ramifications. Jason West, a Credit Suisse analyst, recently estimated that “every 10 percentage-point increase in avocado prices would lower Chipotle’s earnings per share by 30 cents on an annual basis.” In the risk factors found in Chipotle’s annual 10-K report, management specifically calls out avocados when describing the risk of fluctuations in food prices.
While avocado prices have been particularly impacted in 2017 by a poor harvest that coincided with rapidly rising demand, the crisis is not limited to avocados. Additional crops that are reliant on pollination from bees include apples, almonds, oranges, cucumbers, blueberries, cherries, and onions. It is estimated that one third of the food we eat depends on insect pollination. For those crops that require pollination through bee hives that are delivered to the growing areas, the price paid per colony delivered has been rising due to the bee shortage. Between 2015 and 2016, the price per colony used in pollination of avocados rose from $27.7 per colony to $40.8. Near the high-end of the range, the price paid per colony to pollinate almond trees was $167 per colony.
Guacamole currently represents one of Chipotle’s most popular food items on its menu. To address the concerns around its cost, management at Chipotle has been striving to decrease the quantity used without losing customers. The approach has been twofold: minimize waste and offer alternatives. Company-wide initiatives designed to decrease waste have been effective in decreasing quantities of all food (including guacamole) that is discarded. Additionally, in 2017, Chipotle added a new menu item: queso. The hope of management is that queso sales will cannibalize sales of guacamole and ultimately decrease consumption of avocados. While these strategies show promise in decreasing the amount of avocados used, they ultimately are not designed to combat the global bee crisis.
In considering ways that Chipotle could look to make a greater impact on the issue at hand, management could look first to the actions taken by General Mills to respond to the same issue at hand. Over the last year, General Mills has taken multiple steps to save the bees. In November of 2016, General Mills made a $2 million commitment to add more than 100,000 acres of bee and butterfly habitat on or near existing crop land. Further, as was widely publicized in March of 2017, General Mills used its Cheerios brand to embark on a nation-wide campaign to encourage the planting of wildflower seeds. This campaign led to the 1.5 billion wildflower seeds being sent to Americans and Canadians within the first week of the initiative. Haagen-Dazs, another General Mills Brand, has donated more than $1 million to honey bee research since 2008.
In light of the looming bee crisis as well as some recent negative publicity, now is a prime time for Chipotle to display a strong commitment to sustainability across its entire supply chain. On its website, Chipotle has already shown a commitment to not use preservatives, to ethically source meats, to use almost no GMOs (disclosures shown if they are present), and to buy locally sourced produce whenever possible. Missing from these commitments is a commitment to the bees. With avocados coming primarily from California and Mexico, a commitment should be made to promoting the health of bees in those areas. Investing in and expanding avocado-growing operations in those areas offers a chance to alleviate costs to the business in the long-term. Alternatively, donations to create bee and butterfly habitats near the avocado farms pose a similar opportunity to revitalize the bee populations in the areas most affected by this crisis.
As a key stakeholder, how should Chipotle approach the bee crisis? For all companies whose supply chains are dependent upon insect pollination, how can they play a larger role in protecting their supply chains by saving bees?
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