Corporate Social Responsibility practices in Indian food industry:

A Critical analysis

By:Sharad Agarwal

IIM Ranchisharad2021@gmail.com

Introduction• India is the second most populous country in the

world and is expected to become home for largest number of people on earth by 2025.

• Food processing sector contributes about 12.7 % of the country's GDP and provides nearly 60 % of all job opportunities by directly employing around 1.6 million workers.

• The worth of the Indian processed foods industry was USD 91 billion in 2010 and it is growing at the rate of 13%per annum.

• By 2016, it is expected to touch USD 175.2 billion (GyanResearh, 2012).

Introduction (Continued)• Food processing companies invested over US$2bn in

Indian operations between April and October 2013 (Whitefield, 2014).

• During the year 2013, Hindustan Unilever, PepsiCo, Cadbury and Nestlé have all announced substantial investments in the country

• These companies majorly serve the ‘elite’ section of the society.

• Do they have responsibility towards other stakeholders such as those living below daily average earning of USD 1.25 or the ‘Bottom of Pyramid’ (BoP)? If Yes, then how do they perform it?

Soft Drinks create health concerns

• Carbonated soft drinks and other beverages make up an increasing percentage of energy intake leading to weight gain, obesity, and other cardiometabolic problems. (Kleiman,et.al.,2012),

• Ismail et.al. (1997) talks of concern due to the rise in the consumption of sugar-containing carbonated beverages in a number of developing societies: China, India, Vietnam, Thailand, and other Southeast Asian countries, which are currently major growth markets for the soft drink industry

Processed food harmful for health• Fruit Juices are also culprits !• A study published in the journal Nutrition (Walker

et.al. 2014) shows that on average, fruit juice has a fructose concentration of about 45.5 grams per litre, only a bit less than the average of 50 grams per litre for sodas

• Manufacturer hence add so called “flavor packs” to the juice, to bring back the flavour that was lost during processing (Gunnars,2014)

• Fast food, Snacks and Beverages are all harmful for consumption.

Other Social Concerns

• The soft drinks and water bottling companies in India have also been accused of depleting the ground water in the areas where their bottling plants are located.

• Domino’s Pizza is continuously condemned for risking the life of its drivers and other pedestrians on the roads as they strive to meet 30 min. delivery promise.

• According to a doctor at AIIMS, New Delhi India "On weekends, on an average two or three delivery boys (not necessarily from pizza outlets) land up in the hospital. Most of them have suffered trivial to serious trauma," (quoted in Rediff, 2012).

CSR aims to increase Sales• Dorfman et. al. (2012), in their study on the CSR

campaigns of Soda and tobacco industry, found that as sugary beverages are implicated in the global obesity crisis, major soda manufacturers have recently employed elaborate, expensive, multinational corporate social responsibility (CSR) campaigns.

• They argued that soda company CSR campaigns explicitly aim to increase sales, including among young people.

CSR• According to World Business Council for Sustainable

Development, 2001, CSR is ‘‘the commitment of business to contribute to sustainable economic development, working with employees, their families, and the local communities’’

• Frankental (2001) mentions that "CSR is a vague and intangible term which can mean anything to any body, and therefore is effectively without meaning”.

• We argue that CSR attains its meanings from the underlying social and economic conditions of the society in which the company operates as these conditions are highly unique for each society and hence determines the responsibility of the corporations.

Methodology• Content analysis was used to generate the underlying data

for our research. It has been widely used in corporate social and environmental responsibility research (e.g. Singh & Agarwal, 2014; Singh & Agarwal, 2013; Nieminen & Niskanen, 2001; Maignan & Ralston, 2002; Castaldo et al., 2010;Muthuri and Gilbert, 2011).

• It is a ‘‘technique for making inferences by objectively and systematically identifying specified characteristics of messages”

• We analyzed the websites, annual reports and sustainability reports of the companies, taken in our sample

List of companies analysed in this study

S. No. Fast Food

9 CavinKare

1 café coffee day 10 Haldiam Snacks (pvt.) Ltd

2

Jubilant Food works (Dominos, Dunkins

donuts)11 Haldiram's Food

International Limited

3Mc. Donalds (North & East) Beverages & Fruit Juices

4Mc. Donalds

(South & West) 12 Coca Cola India Ltd.

5 Monginis 13 Mother Dairy (Safal Juice)

6Subway Systems India Pvt

Ltd 14 Pepsi Co India

7

Yum Food (KFC, PIZZA

HUT)15 Surya Foods (Priyagold)

Snacks 16 Rasna international pvt. Ltd

8 Bikanewala foods (pvt) Ltd

Methodology (Continued)We coded the individual CSR into following 8

broad areas :• Health • Education • Community Welfare • Entrepreneurship Development• Environment• Work Place • Market Place • Rural Development

Data Coding Scheme

Activities Explanation

EducationThe food companies working in the area of promoting education. For e.g. establishing

engineering colleges, schools, etc.

HealthThe food companies working in the area of health care for the needy and deprived. For

e.g., distributing medicines, etc.

Community WelfareThe food companies working for the welfare of various sections of the society For e.g.

Philanthropic donations during floods etc.

Entrepreneurship

Development

The food companies working towards promotion of entrepreneurial activities For e.g.

proving free solar coolers to the entrepreneurs for selling company’s products

EnvironmentThe food company states a policy of minimizing negative environmental impact For

e.g. reducing water consumption in their manufacturing processes.

Market PlaceThe food companies working in issues related to its core marekt. For e.g. meeting

international standards for food production.

Rural DevelopmentThe food companies carrying out activities for the development of rural areas/tracts.

For e.g. educating farmers for best practices.

Findings

Community Welfare

• Yum brands, which owns and operates Pizza hut, KFC & Taco Bell brands in India has initiated the concept of “Specially abled restaurant” which is run and managed by specially abled employees.

• Yum! Restaurants India was awarded with the prestigious National Award for the Empowerment of Persons with Disabilities-2014 by the Ministry of Social Justice and Empowerment, Department of Disability Affairs, Government of India.

Environment

• Jubilant food works, franchisee of Dominos Pizza brand in India, Nepal, Bangladesh and Sri Lanka and Dunkin’ Donuts in India, runs an initiative, “We Care”, a beach cleaning initiative post Ganesh Immersion Ceremony

• Mother Dairy, promotes the Bulk Vended Milk, better known as 'Token' milk. Mother Dairy sells approximately 10.5 lakh litres of token milk in Delhi alone and thus ensures more than 5 tonnes less consumption of plastic.

Education

• Café coffee day has set up the Shankarakudige Veerappa Gangaiah Hegde Education Trust. The trust setup in 2002 as a non-profit trust works with the mission of “Education for All”. It runs two institutions, Amber Valley Residential School and SVGH Vocational Training College.

• CavinKare (manufactures of Maa Fruit Drinks and Garden Namkeens) operates CK School of Practical Knowledge and CK Engineering and College of Technology

Marketplace

• Monginis take a moral responsibility of upholding all the laws levied by the FDA.

• It believes in using the highest quality of raw materials and ingredients in its manufactured goods and takes pride in having implemented the processes which ensure consistency and ensure safety from hazardous mishaps

Rural Development• e KOcool Solar Powered Cooler: Coca Cola India is distributing solar

powered refrigeration units (solar coolers) free of cost to women retailers in rural areas that are plagued by no or intermittent power supply.

• The solar coolers also have a provision for charging mobile phones and solar lanterns. The solar lantern allows the owner to keep her store open even after the sun sets. The mobile charging port helps the women retailer stay connected for her business and personal needs and provides an additional source of revenue in rural areas as she charges the consumers for the charging service.

Health• Mc. Donald (North & East), as part of their CSR, runs an

initiative, “I care for eye care”, where they support Dr.Shroff's Charity Eye Hospital's endeavours to eradicate preventable childhood blindness from India.

• They also talk of making the difference in the communities where they operate and talk of their sensitivity towards environment for being sustainable

Entrepreneurship Developement

• Coca Cola India runs “5by20 - Women Economic Empowerment” initiative.

Critical Analysis• Given the food companies’ expertise in food production and marketing,

would it be a good idea for them to undertake other social causes?• Domino’s Pizza restaurants across 170 Indian cities (as of October 30,

2014), as part of their CSR runs initiatives such as National Road Safety Awareness Program and National Poster Competition on Road Safety

• The company’s motivation for taking up the issue of road safety seems to be coming from the negative publicity faced by the business policies of its brands (Domino’s) such as “30 minutes delivery”, which leads not only its employees (drivers) but also the general public at road to greater risk of road accidents which could be fatal

Coca Cola Solar coolers• Coca Cola India claims to distribute solar powered

refrigeration unit (solar coolers) free of cost to women retailers as a tool to empower them.

• The increased sales of company’s soft drinks should lead to enhanced earnings and hence empower them financially.

• This seems to be a sales strategy for the company to penetrate into the Indian rural markets rather than an effective plan for empowering the rural women folk.

Educating ‘elite’ as CSR• Some companies reports to be adopting the cause of

education as part of their CSR practice. • We do not see any links of their initiatives benefitting the

disadvantaged sections of the society.• For example, Café coffee day reports to be operating

Amber Valley Residential School which seems to be catering to the elite section of the society

• A school for the illiterate or poor section of the society would have made few more poor students to be able to read and write

Conclusion and Suggestion• These CSR initiatives lead us to believe that the CSR activities of the

companies are motivated by their business needs rather than the needs of the stakeholders for which they are actually targeted

• Since these companies have expertise in food management with access to relevant resources, it is expected from them to effectively address the issues of hunger and malnutrition.

• We therefore propose the idea of building a consortium of companies of food sector in India to take issues of social relevance with sincere and serious intent. Each company can through that consortium contribute its own expertise through product, people or place as required.

Thank you