Jeronimo Martins is the largest food distribution group in Poland and Portugal. The company operates in three business segments: distribution; manufacturing; and marketing, representations, and restaurant services.
Impacts and Opportunities for Food Retail Companies
The United Nations Food and Agriculture Organization defines sustainable diet as “those diets with low environmental impacts which contribute to food and nutrition security and to healthy life for present and future generations.”
Jeronimo Martins has implemented numerous initiatives aimed at creating sustainable diets. For instance the company has adopted the Ecosystems Services Review method proposed by the World Resource Institute to assess the risks of ecosystems. In 2013, Jeronimo Martins launched risk assessments for 10 species of fish that are most important to the company in terms of biomass and these results will be used to establish the requirements and principles of its Policy for Sustainable Sourcing for fish.
Healthy Food Products
According to the World Health Organization, by 2015 it is estimated that over 1.5 billion people will be overweight ((World Health Organization. (2014) Part Two. The Urgent need for action. Retrieved from http://www.who.int/chp/chronic_disease_report/part2_ch1/en/index16.html)). If recent trends continue, projections forecast that by 2030, 2.16 billion people will be overweight and 1.12 billion will be considered obese ((Kelly T, Yang W, Chen CS, Reynolds K., HE J. (2008). Global burden of obesity in 2005 and projections to 2030. Retrieved from http://www.ncbi.nlm.nih.gov/pubmed/18607383)).
In 2012 and 2013 Jeronimo Martins repackaged 800 items (in stock keeping units, or SKUs) in Poland to place a greater emphasis on nutritional information. During this same time, the company removed over 1400 tons of sugar, 24 tons of saturated fat, and 39 tons of fat from its private brand products. In Poland, the company supports the Milk Start program—a program developed to help address malnutrition amongst Polish children. Milk Start cereals are enriched with vitamins and minerals and sold at an accessible price, without any profit to Jeronimo Martins.
Packaging plays an important role in the environmental impact of food products. Packaging that contains recyclable or post-consumer recycled content, or minimizes the use of materials, gives companies the opportunity to reduce their environmental footprint by reducing their waste output. Companies that introduce eco-friendly packaging in their products will be at an advantage in mitigating their environmental impact.
Jeronimo Martins works to improve the eco-efficiency of packaging based on eco-design strategies in order to reduce the environmental impact, specifically waste, of its private brand products. Other benefits include reduced packaging costs and optimization of transportation and logistics. In 2013, the company’s distribution sector was able to avoid transporting goods that would have generated the equivalent of 397 tons of carbon dioxide, while also saving 2,313 tons of packaging materials.
Areas for Improvement
Jeronimo Martins operates over 2500 stores, however the company only has 12 eco-stores. Eco-stores include 10 standard measures to reduce water and energy consumption and to manage waste. The company also plans to test and implement Building Research Establishment Environmental Assessment Method (BREEAM) certification at its eco-stores in Poland. Portfolio 21 would like the company to expand the use of its eco-store and BREEAM certification to further reduce the direct environmental impacts its stores have.
Sustainably Certified Products
Despite the risk assessments Jeronimo Martins carries out, currently only a limited number of the company’s products have sustainability certifications. We would like to see the company set more aggressive product certification goals.
Industry: Consumer Staples
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 8/31/14 and may not reflect current opinions or subsequent events.