‘We have an imperative to look after the farmers’
Nick Bunker was appointed president of Kraft Foods and Cadbury for UK and Ireland in February 2010. Before this he was vice-president and managing director of Kraft Foods UK and Ireland. He has worked for Kraft since 2000.
Bunker spoke to Ethical Corporation’s Oliver Balch.
Ethical Corporation: How do you define “sustainability” and what does it mean for a company like Kraft?
Nick Bunker: For us, sustainability isn’t to do with CSR. It’s to do with the fundamental underpinning of our business. We are one of the world’s biggest purchasers of cocoa, coffee and cashew nuts. Therefore we are dependent on the sustainability and security of that supply. We have a social imperative as well to look after the welfare of the farmers on whom we depend.
Ethical Corporation: Is sustainability of supply a growing issue for Kraft, then?
Nick Bunker: We all know that the pressures on the planet are increasing. We know that rising living standards and increasing populations will make food production harder and we’ll have more mouths to feed. The other context is that most of these commodities are grown in developing countries, which have their own social, environmental and economic challenges.
Ethical Corporation: Devising solutions that are scalable is obviously an imperative. How is Kraft going about this?
Nick Bunker: Certification is a good example. We have 15 brands that have the Rainforest Alliance or Fairtrade mark. I believe it’s good to support the co-existence of different [certification] schemes. As a significant global player, by working with both we can bring scale to sustainability that maybe others cannot. To put it in context, 100% of our Kenco coffee is bought from Rainforest Alliance-certified farms, which equates to about 96m cups of coffee per week.
Ethical Corporation: How is Kraft looking to make consumers more sustainable?
Nick Bunker: Kenco offers a case in point. Two years ago, we introduced a refill bag instead of glass jar. The refill has 97% less packaging than the jar, with obviously a huge amount less energy going in to making it. About 25% of our sales are now with the refill bag.
Ethical Corporation: Do you think consumers can realistically drive sustainability?
Nick Bunker: You only have to look at Cadbury Dairy Milk to see how much sustainability resonates with today’s consumers. Since going 100% Fairtrade in 2009, the brand is growing double digits. The market share and penetration has also gone up for Kenco since becoming certified. Consumers are seeking value for their values. But you have to put it in their language and make it easy for them. You shouldn’t charge a premium.
Ethical Corporation: If you can’t charge a premium, who takes on the extra cost?
Nick Bunker: It comes from us making investments in our value chain. If we want to make a positive difference with scale, it has to be mainstream. Mainstream means that consumers should not have to pay a premium to be good. That’s very clear from research across a whole range of food categories. So we made a deliberate investment decision in paying more for certified cocoa and coffee, and we manage it like any other business investment.
Ethical Corporation: What practical difference is Kraft’s commitment to certification making to producers?
Nick Bunker: We’ve sold about 300m bars of Dairy Milk since going Fairtrade. As a result, about £2.5m has been transferred through the Fairtrade premium to cocoa cooperatives in Ghana.
Ethical Corporation: You recently visited Ghana to see the work of the Cadbury Cocoa Partnership. What did you take away from the experience?
Nick Bunker: Where we’ve seen a real difference being made is when programmes are community-led. So, that £2.5m we’ve given, it’s for the communities to decide how it’s spent – not us. The same goes for the Cadbury Cocoa Partnership. We’ll invest over 10 years some $45m in cocoa growing communities. We work with great partners there – Care and World Vision – but it’s ultimately the farmers themselves who must choose the best paths to their development.
Ethical Corporation: You talked about working through industry initiatives. Why’s this important?
Nick Bunker: It would be madness to suggest that any company has got everything right. There’s still a lot more to do. These are exceptionally complicated and challenging issues that can only be addressed through coalitions of industry, governments, NGOs, and so on.
Fast facts: Kraft Foods
Headquarters: Northfield, Illinois, US
Net revenue (2010): $49.2bn
Net profit (2010): $4.1bn
Number of employees: 127,000