Can Clif Bar sustain its reputation of sustainability in the face of climate change?
Although it was an early mover in the food industry’s response to climate change, Clif Bar faces mounting pressure on its supply chain and must continue to lessen its impact on the environment.
In 1992, Gary Erikson founded Clif Bar & Company after identifying that he could produce a better energy bar than those on the market. He has since positioned the organization as a “proactive” leader in the food industry’s movement towards environmental sustainability. [1] From providing stipends to employees who commute by bicycle to investing $10M in organic farming research, Clif Bar is acutely aware of climate change. [2] As environmental pressures mount, can Clif Bar sustain its value proposition and business model? Further, even though Clif Bar has led the way for some of its peers, what more can it do to reduce climate change’s impact?
The food and beverage sector is considered “perhaps the most exposed of all sectors to changes in the environment.” [3] Our planet’s food supply is dependent on agriculture, which is predicated on adequate water supply, limited extreme weather events, and stable temperatures. [4] As the environmental effects brought on by climate change impact the type and quality of food available, Clif Bar will be forced to make decisions balancing its position as a leader in sustainability with its ability to maintain the quality and cost of its product.
Sourcing Challenges
Certified by the FDA in 2003, Clif Bar uses only organic ingredients. Although the term “organic” has several interpretations, it has three primary principles: no synthetics; no Genetically Modified Organisms (“GMOs”); and limited pesticides. [5] These principles are not hard and fast rules and are often bent when the environmental good outweighs the bad (natural pesticides, for example). It is unknown, however, how these regulations and principles will evolve to reflect our planet’s changing resources. Additionally, in the face of decreasing yields, increasing pests, and diminishing nutritional value, the temptation of farmers to use GMOs and pesticides will likely increase, which may impact Clif Bar’s supply chain. [6] Clif Bar will need to incentivize its suppliers in order to maintain its integrity, manifested in its commitment to Clif Bar’s organic status.
Further, dwindling crops may threaten the recipe Gary Erikson deliberately crafted to meet his own demand as a cyclist and scaled to meet the tastes of millions of consumers. Clif Bar may need to adapt this recipe to reflect a crop mix that is more sustainable. If ingredients (such as nuts and fruit) become scarce, they may become too expensive for Clif Bar to offer at an attractive price point. Alternatively, if ingredients divert a disproportionate amount of water or other resources, Clif Bar may risk its reputation by continuing to include them. The availability and resource intensiveness of ingredients will cause Clif Bar management to strike a balance between its brand commitment to the environment and its product design.
Manufacturing Progress
In addition to its responsibility to source ingredients, Clif Bar is a manufacturer with several facilities across the US. In recent years, Clif Bar has made its manufacturing practices more green. For example, in 2015, the organization opened a manufacturing plant in Idaho committed to using 20% less energy than other bakeries through features like more efficient refrigeration. [7] Further, almost all Clif Bar products use recyclable packaging, and the organization has recently cut the amount of packaging material per bar by 10%, as demonstrated in Figure 1. [8]
Figure 1:
Manufacturing Opportunities
Even though Clif Bar has been proactive thus far, I recommend the organization do more to reduce the environmental impact of its manufacturing practices :
- Clif Bar should make all of its wrappers recyclable and label its products and advertise more effectively to drive consumers to recycle.
- Clif Bar should establish sustainability standards across all of its manufacturing facilities, not simply new facilities.
- Clif Bar should focus innovation on eliminating or further reducing packaging, as individually wrapped products inherently create waste. For example, Clif Bar should innovate the shape of its bars and how products are sold (individually or in bulk).
Call to Action
Many consider Clif Bar to be a first mover in the food industry’s march towards environmental sustainability [9], but Clif Bar’s work is far from over. Clif Bar will face tough decisions to preserve its operational model and reputation, which the organization worked so hard to architect. At the same time, it is critical that Clif Bar continue to explore new sustainable practices in order to outpace growing regulatory pressures and maintain its position as a leader in the sustainability movement. [Word Count: 723]
Sources:
[1] Clif Bar & Company. 2016. Clif Bar. [ONLINE] Available at: http://www.clifbar.com.
[2] Ibid.
[3] Grossman, David. 2015. Geo-5 For Business: Impacts Of A Changing Environment On The Corporate Sector. Edition. United Nations. Available at: http://web.unep.org/geo/sites/unep.org.geo/files/documents/geo5_for_business.pdf [Accessed 4 November 2016].
[4] Henderson, R., Reinert, S., Dekhtyar, P., Migdal, A. 2016. Climate Change in 2016: Implications for Business. Harvard Business School Publishing, [Online]. N2-317-032, 1-12.
[5] Grist. 2016. What does “organic” actually mean? | Grist. [ONLINE] Available at: http://grist.org/food/what-does-organic-actually-mean/. [Accessed 04 November 2016].
[6] Henderson, R., Reinert, S., Dekhtyar, P., Migdal, A. 2016.
[7] Clif Bar & Company. 2016. Clif Bar. [ONLINE] Available at: http://www.clifbar.com/hubs/planet
[8] Ibid.
[9] Ceres. 2016. Global Food Companies Unite on Climate Action. [ONLINE] Available at:
https://www.ceres.org/press/press-releases/global-food-companies-unite-on-climate-action
You have outlined alterations Clif has made to its sourcing and manufacturing practices (in addition to opportunities it has to further its impact through sustainable manufacturing). The health and sports bar industry is a vast and fragmented one with many small and large players. Do you feel that there are significant opportunities for partnerships across the industry to scale some of Clif’s initiatives (along with others)?
SCWC, you’re right on by saying that Clif should not be tackling this problem alone. Clif has not only modeled the way for some of its competitors in the food industry but also teamed up with them. Last year, Clif joined forces with a dozen other food companies (from giants like General Mills and Unilver to smaller companies including Ben & Jerry’s) to pledge their commitment to climate change but to also call the global community to action. Clif Bar’s donations to third party research is also a good example of how Clif is already thinking beyond themselves.
In spite of this action, Clif Bar has more juice to squeeze out of its own operation. We have seen how Clif Bar has continued to find impact through innovation over the last decade, and I am excited to see what solutions they come up with next!
You paint an interesting relationship chain here between suppliers, Clif Bar and its consumers. As you noted, as ingredients become more scarce or expensive, could Clif Bar be forced to alter its recipe or source its products from producers that use unsustainable business practices. What role do you think pricing plays into this? Do you think that Clif Bar could potentially raise its prices to accommodate the rising costs of its ingredients or do you think that consumers in this category are less flexible on price and not motivated to spend more to support sustainable companies? Does Clif’s sustainability story play into consumer purchasing decisions right now?
I wonder if there are cost savings to be found in some of the actions you proposed such as energy efficiencies in manufacturing facilities. This could help subsidize rising prices on the sourcing side.
Some restaurants (Chipotle, for instance) are providing financial incentives for farmers to transition from conventional to organic production. You call for Clif Bar to incentivize farmers to ensure the quality of their product – what do you have in mind? Additionally, for a company as predicated on the input received from farmers, might it make sense for Clif Bar to vertically integrate farms in order to guarantee the raw materials were sustainably grown?
This is a very interesting post, since the value proposition of this brand depends heavily on environmental sustainability.
I agree with you and I think that there’s still room for this company to increase the positive impact. But in the context of their growing, do you think they would like to invest on more sustainable practices or would they prefer to invest their money in generating more market for the product? As consumers, can we do something to encourage the brand to take actions throughout the supply chain?
Thank you for this insightful post. I have always associated Clif Bar with environmental consciousness (probably due to its packaging). It is critical for Clif Bar and other early movers in the space to remain competitive and innovative in a landscape where competitors are increasingly environmentally conscious. I wonder if Clif Bar would have faced less difficulties if it had been a later mover into the environmentally friendly space. The infrastructure would have already existed but perhaps the framework would have been costly or it would have been difficult to reshape the organization’s production process and vision.
I was very interested in the conflict Clif Bar is facing between maintaining the integrity of its initial mission of creating an organic product and its focus on the environment. I imagine this conflict is common among many organizations and I am curious to see how Clif Bar’s management team will handle it. I hope that some type of balance exists and that Clif Bar is able to innovate and produce an environmentally conscious and organic product.
Hi MB!
Thanks for the great post. As someone who is obsessed with the nutrition/energy bar space, I find it very interesting to consider how sustainability might be able to play a factor in Clif Bar’s overall brand positioning, value statement, and market differentiation. Clif Bar is known in the space as a performance bar. It’s recyclable wrappers have been made clear to consumers, and they do well to label their products as organic. However, over time, many newcomers have entered the space and have begun to crowd out Clif Bar and steal market share. The are the healthy snack bars (KIND), the protein bars (Power Bar), the low calorie bars (ThinkThin, Quest), and a slew of emerging brands that focus on being truly organic (see: http://www.breakfastcriminals.com/wholesome-nutrition-bars-quest-bars/). This leaves very little room for Clif Bar to differentiate in today’s market where it is kind of smack in the middle on most of these dimensions (kind of healthy, kind of performance-focused, kind of organic…).
We often conflate in our heads the notions of sustainable and organic. These are not the same things, as you’ve noted (see: http://www.forbes.com/sites/henrymiller/2014/11/19/why-organic-isnt-sustainable/#192b098e37aa). I would love to see Clif Bar take their brand to the next level and explore how they can be the Sustainable Bar. This would require rethinking their ingredients and the supply chain for those ingredients, as you note here. Ultimately, such a move could impact their bottom line through cost savings in the long-run (if supply falls due to climate change of core ingredients, also as noted, for example), but also by revitalizing their positioning in the market, the same way Kind bar is now the fastest growing bar, not based on product, but more so known for its social impact mission (http://finance.yahoo.com/news/kind-bar-ceo–our-social-impact-doesn-t-persuade-customers-133322809.html).
Thanks for exploring all of these topics and stimulating this rant… (again, obsessed with nutrition bars).
-angelo
Hi MB!
Super interesting post. Like Angelo above, I am an avid consumer of nutrition bars, so was happy to see a post that wrote about one of my favorites! It seemed a lot of your recommendations for Clif focused on focused on improving the manufacturing side of the equation, however I was curious to hear about your thoughts on the use of GMOs. I am by no means an expert in the topic, but it seems like there’s mixed literature out there as to whether or not GMOs are actually bad. That, coupled with the tension that you describe above in terms of maintaining a reliable supply in the face of climate change, seems to point to a world where GMOs could actually be incredibly useful…especially if you are doing it with the objective of increasing crop yields / resilience in the face of rising temperatures and decreased access to water, etc. Do you see a future (in the long term) for a Clif bar that proudly trumpets the use of GMOs?
Thanks for the insightful post. I agree that for sustainability leaders in their fields, whose images (whether accurately or not) reflect sustainability and wholesome nutrition, there is a sliding scale where being “somewhat sustainable” and “somewhat nutritious” is simply not enough.
On the topics you raise, I agree wholeheartedly that sourcing organically and sustainably at a market-leading cost will be incredibly challenging for Clif. In addition, Clif bars have been called out for being rather unhealthy from a nutritional standpoint and their brand equity has been eroded by more nutritionally-conscious bar brands already. I think they should seize this opportunity to push the frontier on these two topics, shifting ingredient mixes to be both more sustainable and more nutritious and launching a new Clif (perhaps as a sub-brand initially) that is new and improved. This may lead to a differential price-point at first but I wonder whether savings on the recyclable packaging as your propose or other green money initiatives can help subsidize some of those incremental costs such that the end consumer would not pay for all of it.