🌱 Hunting for Hidden Costs and Easter Weggs
🌱 Hunting for Hidden Costs and Easter Weggs
Featuring Albert Heijn, Win-Win, Tony's Chocolonely, The True Price Institute and more...
Happy Monday!
This week we cover:
Focusing in on: True Cost Accounting - The Hidden Cost of Our Products
Brand Spotlight: It’s Win-Win: The Sweet Cocoa-Free Solution
In case you missed it: Slavery in UK SME Supply Chains: How can your business can help?
> Good News Last Week
🎯 Chilly's announced that their Chilly's Trade program is back - accepting reusable cups and bottles from any brand to be 100% recycled. To mark the launch, they are offering £5 off a new Chilly's product for a month.
🎯 Cawston Press | B-Corp™ announced that they are now a certified B Corp company!
🎯 Revo Foods has launched the world's first vegan octopus for retail, transforming fungi into a seafood alternative. This latest innovation is called The Kraken, produced using mycoprotein and 3D-printing technology.
> Want good news sooner? We post every Friday on LinkedIn! If your CPG brand has good news to share, let us know.
> Focusing in on
True Cost Accounting - The Hidden Cost of Our Products
We pay for what we consume in more ways than via cash, card or bank transfer. The Hidden Cost of UK Food found that for every £1 we spend to purchase food, we pay another £1 in hidden ways. Why? Because many FMCG production methodologies have impacts that aren’t accounted for - despite the fact that they do have a cost attached. That’s where ‘true cost accounting’ (TCA) comes in.
What is it?
True cost accounting, also known as true cost pricing or multi-capital accounting, aims to reflect the total cost of production - including factors such as resource depletion, pollution, greenhouse gas emissions, and social impacts like labour conditions and community health - for the products you know and love. Traditional pricing models often fail to account for these externalities, leading to products being sold at artificially low prices.
Several organisations have been pioneering TCA - United Nations Environmental Programme (UNEP) via its The Economics of Ecosystems and Biodiversity (TEEB) initiative, World Business Council for Sustainable Development, Global Alliance for the Future of Food and more. More recently, the UN Food and Agriculture Organization (FAO) issued its annual State of Food and Agriculture 2023 which focused heavily on TCA - finding that the hidden costs of food and agriculture in 2020 was $12.7 trillion — almost 10% of global GDP.
Why is this important?
Someone has to pay the true price, and (we hate to break it to you) that someone is you. Hidden costs are passed onto the taxpayer, disguised as costs associated with environmental degradation, poor health amongst the population (lost income as a result of this, too), the cost of adapting to climate change and more. This is of particular relevance to agri-food products.
It’s also a more systemic approach to pricing food - it acknowledges that our economic systems have many stakeholders and rely on many different forms of capital (natural, social etc).
How is it done?
True price pricing typically works by conducting a comprehensive assessment of the entire product lifecycle, from raw material extraction to disposal, and quantifying the environmental and social costs associated with each stage. This involves collecting data on resource use, emissions, waste generation, labour conditions, and other relevant factors.
Once these costs are determined, they can be incorporated into the pricing of goods through various mechanisms, such as adding surcharges or adjusting profit margins.
Which brands are adopting it?
A couple of brands have caught our eye over the past year…
Albert Heijn made headlines for experimenting with true price coffee, milk and oat milk across three of its locations in 2023, and they’re now working with the True Price Institute to roll out the scheme to more products and locations.
Puma has experimented with true cost accounting to evaluate the environmental impact of its supply chain and products - resulting in an Environmental Profit and Loss sheet (EP&L).
Eosta, an organic fruit and veg distributor, were a participant in a ‘True Cost Accounting in Finance, Food and Farming’ pilot programme in partnership with EY, finding ‘significant hidden benefits’ of consumers switching to organic.
It’s not as simple as it seems…
Food inequality and poverty is already threatening the wellbeing of millions. Food prices dropping in the post-war era was seen as a great success - put simply, more people could buy more food, a phenomenon which had positives (reduced malnutrition amongst kids) and negatives (higher rates of obesity, diabetes and more). Increasing the price of good food today would make it unattainable for many - incurring generational costs amongst the population. Take the current cost of living crisis as proof - we’ve seen the overall price of food and non-alcoholic drinks rise ~25% between January 2022 and January 2024 in the UK. As a result, between April 2022 and March 2023, 760,000 people were forced to turn to the Trussell Trust’s food banks for the first time - more than the population of Sheffield, to one of many food distribution charities in the UK.
However, this conversation is increasingly important and brands and governments alike should take note. Producers adopting more sustainable practices often limit their own market because they have to increase their prices in parallel. A clear business case for governments to (e.g.) adjust their subsidy strategy accordingly could swing prices heavily in the favour of the producers who aren’t degrading our environment. Overall, it’s a fascinating conversation to watch develop and, more than anything, it’s hopefully the start of an important mindset shift from both consumers, brands and the wider food and goods industry.
> Brand Spotlight
It’s Win-Win: The Sweet Cocoa-Free Solution
Chocolate’s Bitter Truth
As Easter approaches, chocolate takes centre stage those who celebrate. But before we dive into our favourite treats, let's take a moment to unwrap the less-than-sweet reality of traditional chocolate production. From environmental degradation to social injustices like child labour, the cocoa industry is far from perfect.
According to Fair Trade, cocoa farmers earn on average only 6% of the total cost of a chocolate bar. What’s more, due to the pressures to satiate the high demand of chocolate, it’s estimated that 70% of Ivory Coast’s - one of the biggest cocoa producers - illegal deforestation is from cocoa farming. One study showed that cocoa farming is a driver for over 37% of protected area forest lost in Ivory Coast. With climate change already impacting cocoa yields, chocolate prices have risen exponentially - the London cocoa bean futures market saw a 223% price increase in cocoa beans since October 2022. With a firm favourite impacting people, the planet and even our wallets, an alternative is needed.
Crafting a Cocoa Alternative
Enter Win-Win, a pioneer (they actually won the SeedLegals Startup Game Changer Award) in the world of chocolate. Founded in 2020 by Ahrum Pak and Dr. Johnny Drain - ex-management consultant and chef-scientist, respectively - Win-Win is here to offer a deliciously cocoa-free solution to our chocolate cravings.
Using innovative techniques borrowed from traditional cocoa production, they've replaced cocoa with legumes like carob and barley to create a cocoa-free chocolate that's just as satisfying as the conventional stuff. Last Easter, they even unveiled the world’s first cocoa-free Easter egg, the Wegg, further solidifying their commitment to sustainable indulgence.
But Win-Win isn't just about delicious chocolate; it's about making a positive impact. Collaborating with My Emissions, they discovered that their dark and vegan m*lk products produce 80% less carbon emissions than their standard chocolate equivalents, all without sacrificing taste. Co-founder Johnny, in an interview with Research Features magazine, emphasized their mission to "future-proof that flavour profile that we know and love," showcasing their dedication to preserving both taste and more conscious alternatives.
Thinking Outside the (Chocolate) Box
Using Win-Win’s methods to provide a solution to current challenges, here are some key takeaways for brands:
Core Message with Flavour: Win-Win demonstrates that having a core message doesn't mean sacrificing taste. By focusing on removing cocoa to avoid the complexities tied to cocoa-farming, while still delivering delicious chocolate, they've carved out a unique niche in the market.
Tweak Traditional Methods: Leveraging already well-defined production methods, Win-Win has successfully tweaked them to create innovative new products. By thinking creatively within established frameworks, brands can innovate sustainably.
Interdisciplinary Collaboration: Win-Win's success underscores the power of interdisciplinary approaches to tackle complex challenges. By honing shared values and combining diverse expertise, brands can drive meaningful change in the world of business and beyond.
It’s clear they’re already being recognised for their work, being jointly awarded the Most Innovative Sustainable Solution with Planet A Foods at Food Ingredients Global. With their commitment to innovation, we can't wait to see what delicious delights they'll craft next. Here's to a future filled with even more delectable Easter surprises from Win-Win!
Take a closer look at Win-Win:
> In case you missed it
Slavery in UK SME Supply Chains: How can your business can help?
Featuring Tony Chocolonely, Mackie's of Scotland, TRIBE Freedom Foundation, innocent drinks and more...
Read about how TRIBE Freedom Foundation teamed up with the UK government to fight exploitation in food supply chains and how Tony’s Chocolonely have been shaking up the chocolate industry.
> Follow up with…
Guide: Methodologies for true cost accounting in the food sector
Analysis: Cocoa: True Price of Tony’s Chocolonely from Côte d’Ivoire and Ghana
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