Friday 31 July 2015

Adrian Pryce in Belgium

Adrian Pryce, Senior Lecturer in Strategy, International Business and Cross Cultural Management at Northampton Business School gives his opinion on why Tesco’s bold move is to be welcomed.

“Tesco’s recent decision to ban the UK’s best known kid’s soft drinks from September is a brave and welcome move.

Coming from a company that has lost its way in recent years, with a fall in financial performance after more than 20 years of strong growth to become the UK’s dominant grocer with 33 per cent market share, Tesco has been in the news of late for various negative issues including manipulation of profits, horsemeat problems and undue pressure on and market abuse of suppliers. This announcement, in what is an important and no doubt lucrative drinks category, must be partially driven by a desire to be seen as a caring corporate citizen for a change.

Sugar has recently taken over from salt and tobacco as public health number one. This week the British Medical Journal (BMJ) published a ‘head to head’ article from two prominent experts discussing a sugar tax of up to 20 per cent.  Rising problems of obesity and diabetes in the UK, especially amongst children in the lower socio-economic groups, is a major public health issue that needs to be tackled, and Tesco’s stance, as market leader in the fiercely competitive supermarket sector, should be applauded. Twice the size of its nearest rival Sainsbury’s, in the ‘oligopoly’ grocery market it is usual that what Tesco does sends a strong signal to influence the other players.

But will the other big supermarket chains follow suite? Where will this end? Will Tesco take on Coca Cola? What about sugar in biscuits, cereals, ice cream, confectionery etc? And the issues of consumer choice – should we be free to abuse our bodies, or those of our children? It is the case that with growing awareness of the adverse effects of sugar that public behaviour has to adapt. As with tobacco, education and legislation will change habits – but large corporates have their role to play as well.

Most of the big food manufacturers that supply Tesco are already reformulating their products to reduce salt as well as sugar. With trust in business at its lowest ever point, it is good to see Tesco putting ‘doing the right thing’ ahead of short term profits for once. Its motives may be questioned, but with society increasingly expecting business to think beyond short term profit maximisation and move towards building long term ‘stakeholder’ value, Tesco is taking a gamble in the hope that it will rebuild its brand equity. As Andy Haldane, the Bank of England’s chief economist argues “the law should be changed to encourage companies to share corporate spoils more equally, paying attention to other stakeholders, such as employees and customers.”

​ Tesco’s bold move is to be welcomed. Let’s hope that many others follow before Tesco changes its mind, and that companies can be clearly be seen to be doing well by doing good – so that everyone in society benefits.”

Adrian is also Communications Director of the Centre for Citizenship, Enterprise and Governance (CCEG), which is undertaking ground breaking work in the area of ‘social value’ to help promote good corporate ‘citizenship’ through innovative new metrics that measure social value, modern slavery and supply chain transparency.

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