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Produce Business

Deli Business

American Food & Ag Exporter

Cheese Connoisseur



Wal-Mart Uses New
Food Safety Initiative
As A Marketing Tool

Jim Prevor’s Perishable Pundit, February 8, 2008

Growers, packers and processors have long yearned to see a single global standard on food safety. More than we have heard complaints about tough standards, we have heard complaints about duplicative audits. We have heard complaints about inconsequential differences between the standards of different buyers.

Now Wal-Mart is promising to do something about this problem and in so doing, drive costs from the system.

In that regard, Wal-Mart has issued a statement related to food safety:

WAL-MART BECOMES FIRST NATIONWIDE U.S. GROCER
TO ADOPT GLOBAL FOOD SAFETY INITIATIVE STANDARDS

The nation’s largest grocery chain requires suppliers of private label and select food products to comply with standards above FDA or USDA requirements by end of 2008

Wal-Mart Stores, Inc. has become the first nationwide U.S. grocery chain to require suppliers of its private label and other food products such as produce, meat, fish, poultry and ready-to-eat foods to have their factories certified against one of the internationally recognized Global Food Safety Initiative (GFSI) standards.

A group of major international retailers committed to strengthening consumer confidence in the food they purchase, the GFSI now lists Wal-Mart among the companies who have agreed to improve food safety through a higher and consistent auditing standard.

Selected by CIES, the Food Business Forum, to safeguard and ensure high quality in the international food supply chain, GFSI standards provide real time details on where suppliers fall short in food safety on a plant-by-plant basis, and go beyond the current FDA or USDA required audit process. Under the GFSI program, producers of Wal-Mart and Sam’s Club private label and other foods sold in the U.S. must be audited by independently trained, approved and licensed auditors who are experts in their industry.

“The requirement for suppliers to complete these certifications demonstrates our leadership in food safety and our commitment to global safety standards,” said J.P. Suarez, Wal-Mart’s senior vice president and chief compliance officer, and a board member of the Global Food Safety Initiative. “Food safety has always been a top priority at Wal-Mart. We are taking this additional step to ensure the integrity of our products throughout the entire food supply chain. We encourage other U.S. retailers to follow our lead and to also endorse these standards.”

The GFSI requires food suppliers to achieve factory audit certification against one of its recognized standards, which include Safe Quality Food (SQF), British Retail Consortium (BRC), International Food Standard (IFS), or an equivalent such as GlobalGAP. Wal-Mart has published a schedule to suppliers requiring completion of initial certification between July and December of 2008, with full certification required by July 2009. Audits will be completed by approved third party auditing companies.

Wal-Mart private label food brands in the U.S. are Great Value and Sam’s Choice. Sam’s Club private label food brands in the U.S. include Member’s Mark and Bakers & Chefs.

“Our customers expect high quality at every day low prices when they purchase any of our private label foods, and we’re committed to meeting — and exceeding — their expectations,” said Andrea Thomas, Wal-Mart’s senior vice president, private brands. “The GFSI standards are an added step that will help us — and our U.S. food producers — keep our quality commitment.”

Internationally, Wal-Mart stores in the United Kingdom (ASDA) and Japan (Seiyu) also require suppliers of food products to comply with GFSI standards.

The Global Food Safety Initiative was launched in May 2000 to establish food safety management systems to ensure confidence in the delivery of safe food to consumers. The initiative has fostered a convergence among food safety standards, achieved cost efficiencies through common acceptance of GFSI recognized standards, and provided a forum for exchange of best food safety practices.

Since few people in the industry know very much about CIES and less still about the Global Food Safety Initiative, we thought we should help out by getting more information. We asked Pundit Investigator and Special Projects Editor, Mira Slott, to call France and see what we could learn:

Catherine Francois Catherine Francois
Senior Manager
Food Safety
CIES-The Food Business Forum
Paris, France

Q: Wal-Mart just announced it will require suppliers of its private label food products and certain other food products to adopt Global Food Safety Initiative (GFSI) standards. What does this mean?

A: Wal-Mart is one of seven international retail chains representing the governing structure of GFSI. They have been working together since spring 2000 on aligning food safety schemes and standards. The primary goal: convergence of standards through a benchmarking process that could be commonly recognized and implemented to improve cost efficiency throughout the supply chain and enhance confidence in the delivery of safe food to consumers.

Q: What other global chains collaborated in the effort?

A: Carrefour, Tesco, Metro, Migros, Ahold and Delhaize.

GFSI’s Foundation Board, a retailer-driven group with manufacturer advisory members, provides strategic direction and oversees daily management.

Q: Did these often competitive entities see eye-to-eye in meeting objectives? Did they develop and agree upon a universal set of standards?

A: A GFSI Guidance Document forms the backbone. GFSI’s technical committee, made up of different stakeholders working in the food business, set out key elements in production of food to use as a framework to benchmark existing food safety schemes. We have commonly-agreed criteria for food safety standards and minimum requirements defined by food safety experts to enable implementation and put into practice what is outlined in the Guidance Document.

We come to a point where requirements are very similar to four standards: BRC-British Retail Consortium Global Food Standard; IFS-International Food Standard; Dutch HACCP Scheme (Option B)and SQF 2000 — Safe Quality Food Scheme owned by the Food Marketing Institute. The retailers can have confidence in the results from these standards as equivalent.

Q: Isn’t there an SQF 1000 and SQF 2000? What are the differences?

A: SQF has a program that provides two standards, depending on the type of supplier. SQF 1000 covers primary production and SQF 2000 covers pack house onwards through to processing. The entire SQF program is recognized by GFSI.

Q: Does this mean that as long as a supplier has one of these four benchmarked standards — BRC-British Retail Consortium Global Food Standard; IFS-International Food Standard; Dutch HACCP Scheme; and SQF 2000 — Safe Quality Food Scheme owned by the Food Marketing Institute. — they now meet the food safety standards, and the seven retail chains agree that these are acceptable?

A: At last June’s CIES annual World Food Business Summit in Shanghai, those seven major companies announced they had come to a landmark agreement to adhere to common food safety standards accepting any of the four GFSI benchmarked food safety schemes.

Q: Are these global retailers actually implementing their agreement and mandating their suppliers follow these GFSI standards?

A: Back in June in Shanghai, these retailers agreed they would recognize these standards and all these companies are putting this idea into practice. The whole objective is to reduce duplication in the marketplace. GFSI simplifies the requirements by a multitude of retailers. It means suppliers don’t need multiple audits on their sites, which are very costly with little benefit. Suppliers could go from 80 audits to three or four.

Q: Will some retailers use this as a base and require additional, and/or more rigorous food safety measures of their suppliers beyond the GFSI agreed-upon schemes? And if so, couldn’t this undercut the goal of simplifying the process?

A: We are in a transition period. Some retailers will obviously have their own standards and policies in place. The agreement and intent is to move to and implement the four recognized schemes. Companies are at different stages of the process.

Q: What is GFSI’s role in auditing and certification?

A: GFSI does not undertake any accreditation or certification activities.

Q: Is there concern about the validity of the certifications? How comfortable do you feel that every place in the world getting certificates requires adhering to the standards? In China, for example, many questions have been raised regarding the authenticity of organic certification.

A: This is an important issue. In many ways it comes down to the actual competence of the auditors and the methods used in carrying out the auditing and certifications. We are taking a hard look at how this is handled along with other issues of food security and food safety in emerging markets. We must assure manufacturers relying on certifications provide consistent, legitimate results. It is critical we verify the integrity of the process for the consumers. We are very sensitive to this problem and it is one of the key issues we are dealing with at the moment.

Q: Does the GFSI address product testing, either raw product ingredients and or finished product testing? Why or why not? This is an issue produce companies are grappling with in the U.S.

A: One of the fundamental requirements of GFSI is to ensure that product/ingredient analysis and testing procedures are in place in the recognized standards, critical to the confirmation of product safety.

Q: Are these standards strictly limited to food safety or do they also incorporate other hot topics under the radar now, such as sustainability, social responsibility, carbon footprints, labor standards, etc.?

A: We focus solely on food safety. Manufacturers and retailers are treating food safety as the top priority and it cannot be considered as competitive. When you get into the environment and sustainability, those are different issues.

Q: What if Wal-Mart wanted to make an exception, determining the product was safe to bring in but not certified by the GFSI process? Is there a way a consumer can be confident they are getting the benefits of this program? Does the GFSI program involve promotion to consumers?

A: The schemes recognized by GFSI have no consumer logo or seal. This is a business-to-business initiative. Retailers are working with suppliers, and food safety is a non-competitive issue. Consumers expect food to be safe.

Q: Wal-Mart issued a press statement saying that it is the first national grocery chain in the United States to adopt the GFSI standards for its private-label products. The message was disseminated by the Associated Press and other consumer media, with analysts suggesting the move could give Wal-Mart a pro-safety image boost that would help its grocery business.

A: As far as a marketing issue, this very much depends on each individual retailer and the relationship with their consumers. It’s not for me to comment on.

Q: With these seven mega chains taking the lead and harmonizing these standards, do you find other retailers jumping on board? Can any retailer just send out a memo and say, ‘we want our suppliers to be in compliance with the GFSI standards’?

A: It’s just a question of time and for companies to become aware of the whole use of these third-party certification schemes. In the U.S., some retailers are not as familiar with these food safety programs. It’s important to underline that everyone works under the same framework. We have an operational framework and it is crucial not to create something new, which adds confusion, duplication, and extra costs we definitely are trying to avoid.

Q: What is the relationship between CIES and GFSI?

A: CIES coordinates and manages the GFSI process, communicating and building awareness of GFSI. We’re an independent global food business network, made up of some 400 members in more than 150 countries, with retailers the largest single group. Our mission is to provide a platform for knowledge exchange, thought-leadership and networking; and to facilitate development of common positions and tools on key strategic and practical issues affecting the food business.

CEIS is working with many U.S. companies, including Hannaford, Whole Foods, Harris Teeter, Target, U.S. Foodservice, Wakefern, Shop Rite, and we’ve developed a strategic alliance with NRA. We have 600 people from 45 countries around the world coming to our international food safety conference next week in Amsterdam.

Q: To clarify, do the GFSI food safety standards start at the processing level or go back to the field?

A: For the moment we’ve been focused on the manufacturing and processing side. Now we are starting to focus more on the grower. We are about to start the discussions for developing standards for the farm side and broadening the food safety program we already have solidified.

Q: Do you believe if this GFSI program had been in place for processors of spinach in California, it would have averted the spinach crisis?

A: We can never know the answer to that. We can implement schemes to make product safer. For example, after the spinach crisis, SQF put in place special modules for leafy greens. That was a great step forward to manage that whole area much better. As a proactive, preventative measure, SQF is working with producers. Whenever food safety problems arise, it is difficult to comment on if they could have been avoided.

Q: Now that the GFSI standards have been harmonized and agreed upon, is the board going to continue to evolve and add or change standards as research is conducted and new information is learned?

A: GFSI is business-driven and reacts accordingly to market needs, so the program will obviously evolve over time. Some interesting announcements are expected next week at the conference. We will ensure you receive all the updates.

Q: Can you provide any specific information now that could be useful to companies in the produce industry wanting to become more involved with your program?

A: Going to our website is a great start to find out background information and regular updates on key issues. We want to emphasize the inclusive process, and encourage points of view from all stakeholders. We are planning meetings in the U.S. during the course of the year to build awareness and international thinking on these issues, opening a window on the world.

There is a lot of good here. Duplicative audits are expensive and if we can really move to one world, one standard, it will reduce costs for producers, retailers and consumers.

Still, there are a lot of unanswered questions:

  1. What is the precise role of produce in all this? Catherine Francois of CIES tells us that “SQF 2000 covers pack house onwards through to processing.” But Wal-Mart’s release says that it is going “… to require suppliers of its private label and other food products such as produce, meat, fish, poultry and ready-to-eat foods to have their factories certified…”

The word factory is left undefined but sounds more like a fresh-cut processing plant than a packing house.

  1. Who else is really doing this? Wal-Mart uses an awkward turn of phrase in its announcement calling itself the “…First Nationwide U.S. Grocer To Adopt Global Food Safety Initiative Standards…”It is not often that this global giant calls itself a “U.S. Grocer.”Tesco, Ahold and Delhaize are all on the Foundation Board with Wal-Mart, and they all signed the Shanghai Declaration back in June of 2007 that states:

    The GFSI vision of ‘once certified, accepted everywhere’ has now become a reality. Carrefour, Tesco, Metro, Migros, Ahold, Wal-Mart and Delhaize have agreed to reduce duplication in the supply chain through the common acceptance of any of the four GFSI benchmarked schemes.

Notably, the representative for Delhaize is actually Cory Hedman, the Director of Food Safety & Quality Assurance for Hannaford. So who else is actually making this happen?

Our understanding is that Tesco has been way ahead of Wal-Mart on this initiative, having required BRC certification for a long time and that Royal Ahold and Delhaize in this country are all at varying stages of working with suppliers to make this happen. We are not aware of a firm deadline from Delhaize or Royal Ahold — but, then again, Wal-Mart has had quite a few firm deadlines on RFID come and go.

  1. What seems to have happened is that these giant retailers have worked over several years to benchmark four different standards: BRC-British Retail Consortium Global Food Standard; IFS-International Food Standard; Dutch HACCP Scheme (Option B) and SQF 2000 — Safe Quality Food Scheme owned by the Food Marketing Institute.

They probably asked questions about differences between the standards, and this process has led to sufficient harmonization that the retailers feel comfortable these standards are sufficiently equivalent that they can be accepted interchangeably.

Then, however, Wal-Mart throws into its release this line: “The GFSI requires food suppliers to achieve factory audit certification against one of its recognized standards, which include Safe Quality Food (SQF), British Retail Consortium (BRC), International Food Standard (IFS), or an equivalent such as Global-GAP.”

This is odd in two ways: In the specific sense, GlobalGAP is not equivalent because it does something different. Here is how GlobalGAP defines its purpose:

  • GLOBALGAP is a pre-farm-gate standard, which means that the certificate covers the process of the certified product from farm inputs like feed or seedlings and all the farming activities until the product leaves the farm…

These other standards deal mostly with processing. If you read our interview with Jo McDonald of the British Retail Consortium, she explains that its standards are not horticultural:

It would not be wise for the BRC to have a primary produce scheme as it would be in competition with the national AFS scheme. Globally as well, it would be competition with EurepGAP, NZ GAP, Chile GAP, and SQF1000.

So if they are not even doing the same area of the business, how can BRC be “equivalent” to GlobalGAP?

In the more general sense, isn’t the whole point that these four standards have been vetted and benchmarked by the Consortium? Who gets to decide if some other standard is “equivalent?” Shouldn’t standards that want to be recognized as equivalent have to make application and then be declared by the Global Food Safety Initiative to be a fifth standard that is equivalent?

  1. If these food safety standards are important, why are they only being applied by Wal-Mart to private label items? We can understand that Wal-Mart might want to give vendors that aren’t as closely aligned with Wal-Mart a little more time. But if these standards are important, shouldn’t Wal-Mart give a schedule for all its vendors to meet the standard?
  2. Wal-Mart mentions that Wal-Mart USA is imposing these standards as do Wal-Mart’s operations in Japan (Seiyu) and the United Kingdom (ASDA), but if we are talking food safety, why wouldn’t this be a universal requirement? Surely the people in Mexico and other areas in which Wal-Mart operates want safe food.
  3. It is widely known that certifications are not always reliable. Pay offs and pressure not to destroy a community business can lead to certifications being issued when they are not merited. Notably missing from the participants in the Global Food Safety Initiative is Marks and Spencer.

When we were in South Africa, we were frequently told by producers complaining about multiple audits that Marks & Spencer had the toughest of all the retail audits. However, Marks & Spencer did not accept a third-party certification; they certified with their own people. This initiative seems to have paid an enormous amount of attention to the standards but paid not quite enough attention to ensuring the integrity of the certifications.

We suspect that food safety won’t be enough. Add-on modules related to sustainability and social responsibility are also required. Otherwise everyone will still have multiple audits.

Though the program itself is admirable, this announcement by Wal-Mart looks like a public relations gambit by Wal-Mart. We didn’t put on our trench coat and get passed a document in the dark of night to write this story.

Wal-Mart sent out a press release that was picked up in an Associated Press story and many other stories. The press release contains vague allusions to competitors not up to the Wal-Mart standard: “We encourage other U.S. retailers to follow our lead and to also endorse these standards.” The release does not name its partners in the Global Food Safety Initiative. If we were one of those partners, we would be pretty miffed at Wal-Mart’s attempts to make hay out of food safety.

And if we were not one of those partners, we would be miffed at the implication, without any evidence, that Wal-Mart’s preferred path to food safety is superior to their own.

There are good reasons for this initiative — but mostly they relate to driving costs out of the system and encouraging the free flow of commerce through standardization.

Perhaps we could understand a press release to the trade pointing out those benefits. But this consumer release seems an attempt by Wal-Mart to use food safety as a way of gaining the affiliation of consumers. That is marketing food safety and is bad for the industry.

One day when there is an outbreak that includes product sold at Wal-Mart, this focus on Wal-Mart’s superior food safety program will be bad for Wal-Mart as well.

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