Global sourcing of food and ingredients has soared as marketers and retailers look for lower-priced suppliers
June 16, 2008
- Noreen O'Leary
Americans accept that much of what they buy these days is sourced from low-cost manufacturers in foreign countries.
To see how global the sourcing of food ingredients has become, look no further than the juice in your child's lunch box. Apples, an iconic ingredient long the stuff of all-American pies and dunking contests, now come from the orchards of growing regions like Shaanxi province, with China, the world's largest grower of apples, exporting more apple juice concentrate than any other country.
Americans accept that much of what they buy these days -- whether household electronics and appliances, or textiles and clothes -- is sourced from low-cost manufacturers in foreign countries, primarily China and other Asian countries. What many don't realize is the extent to which this has been occurring in their grocery carts.
There's a good reason for this: marketers are not required to disclose that information.
Because of foreign trade changes brought about by the World Trade Organization and the North American Free Trade Agreement since the late 1980s, global sourcing of food and ingredients has soared as marketers and retailers look for lower-priced suppliers -- often in evolving markets with little regulatory oversight.
Imports now account for 15 percent of the U.S. food chain, an increase of about 50 percent in the last six years, according to Bill Hubbard, a former associate commissioner at the Food and Drug Administration, who retired in 2005 after 33 years with the agency.
This went largely unnoticed until last year, when U.S.-branded pet food with contaminated wheat gluten from China killed thousands of household pets. For the first time, consumers got a glimpse of the extent to which American companies outsource ingredients and branded products to contract manufacturers. Food sourcing has now become synonymous with safety concerns.
In a new survey from Deloitte & Touche released last week, Americans expressed great reservations about foods produced outside the U.S. More than half -- 56 percent -- say they think imported foods are "not at all" or only "somewhat" safe. In contrast, 80 percent of Americans say they believe that domestically produced foods are safe.
"It doesn't get much more personal than something you're buying for your children to eat or you're eating yourself," says Pat Conroy, leader of Deloitte's U.S. consumer products practice.
But wary consumers may be getting some help -- the kind that could create a new vulnerability for marketers, who spend millions to win the public's trust and loyalty in their brands. On Sept. 30, mandatory country-of-origin labeling (COOL) will be enforced for beef, lamb, pork, fruit, vegetables and peanuts. The provision was originally approved as part of the Farm Security and Rural Investment Act of 2002, but special interests have lobbied to delay it since then. (Purveyors of wild and farm-raised fish and shellfish, nonetheless, have had to disclose their origin since 2005.) And as the date nears, COOL is gaining momentum in Washington: Last month, the Food, Conservation and Energy Act of 2008 expanded the list of covered commodities to include chicken, goat meat, ginseng, pecans and macadamia nuts.
Of even more concern to marketers: In April, two Democratic congressmen from Michigan, Rep. John Dingell and Rep. Bart Stupak, leaders of the Energy and Commerce Committee, proposed country-of-origin information be extended to include product ingredients, which would be detailed on manufacturers' Web sites. For the first time, consumers would see the extent to which many venerable American brands outsource ingredients around the world.
A major impetus for the legislation was actually inspired by a pharmaceutical. Con-taminated batches of the blood thinner heparin sold in the…