Comment: Behind Maple Leaf Foods’ bold call to become carbon neutral

The company is now listening to consumers, not just customers, in an effort to grow

Maple Leaf Foods is not just pretending to be environmentally friendly, it is trying to be a trailblazer.

The company has just adopted science-based targets that will help it become the first major agri-food company in the world to be carbon neutral.

It’s so un-Canadian to be first, to set a world standard, especially in agri-food. But the plan deserves credit. Maple Leaf Foods is going from being a Canadian iconic brand to a global player in proteins.

Coupled with this latest move is Maple Leaf Foods’ plan to change its structure, in the way it operates and serves markets. Maple Leaf Foods recently announced that it would create a separate division internally to develop its plant-based business.

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It was an interesting move for a company whose sales, for the most part, have historically been in Canada. Its vegetable protein business does not even exceed $100 million today, but is expected to grow significantly in years to come, and not just in Canada.

In other words, this is where Maple Leaf Foods expects a good portion of its top-line growth to come from, across the globe.

The company owns the Canadian market – not much room for growth anymore – which is why it now needs to play a much broader game. And, most important, this new rejuvenated market focus will help make the company reach its target for carbon neutrality.

Now, Maple Leaf Foods is not giving up on meat. Au contraire: it has reinvested in its meat operations to become more efficient. But the meat market these days is marred by abnormal erratic market conditions and unpredictable food safety risks.

In recent weeks, Chinese embargoes on Canadian pork have hit Maple Leaf Foods shares hard. Now that China is buying Canadian pork again, Maple Leaf Foods can breathe, but geopolitical risks remain.

Maple Leaf Foods is becoming a completely different company. Its governance, its focus, everything is changing. When you look at its performance and how the company is managed, its recent decision to become carbon neutral should not come as a surprise to anyone.

Agri-food companies, especially Canadian ones, have a long tradition of being commodity driven, with an emphasis on production technology, high volumes, and quality consistency. The fact that the agri-food sector is inherently a low-margin business doesn’t help either.

In the context of global hyper-competitivity, the ability to understand customer needs and adapt to a wider variety of customer situations will become crucial. Market expectations are different, and therefore, Maple Leaf Foods is adapting.

What’s most interesting is that Maple Leaf Foods is clearly showing its will to listen to consumers, not necessarily just its customers per se.

This transactional nuance for Maple Leaf Foods is not trivial. It sells its products to retailers like Loblaws, Sobeys and Metro, and not to consumers directly.

Now, things are clearly different. In a demand-chain management environment, everything is on the table. When consumers become as critical to the company’s transactional relationship as its actual customers, a company’s structure changes and benefits, provided that the marketplace also changes.

And that’s exactly what is happening at Maple Leaf Foods.

About the author

Contributor

Sylvain Charlebois is senior director, Agri-Food Analytics Lab, and professor in food distribution policy, Dalhousie University.

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