Iceland Axes Palm Oil from Products – An Important Move, Says Supply Chain Expert

by | Apr 10, 2018

Leading UK frozen food specialist Iceland plans to axe all palm oil from its own-label products by the end of this year, with 130 products to be reformulated. The company says the project is “well underway,” with palm oil already having been removed from 50% of its own-label range.

“We don’t believe there is such a thing as guaranteed ‘sustainable’ palm oil available in the mass market…,” says Richard Walker, Iceland managing director, referring to the fact that the cultivation of palm oil is a major cause of deforestation. “Until Iceland can guarantee palm oil is not causing rainforest destruction, we are simply saying ‘no to palm oil.’”

A Necessary Move to Meet Consumer Demands

Moves like this are important to manufacturers as consumers increasingly become aware of palm oil’s effects on the environment. In order to operate at the forefront of the market, brands must react to consumer sustainability demands and ensure they have a deep understanding of their manufacturing processes, according to Adjuno, a company that offers businesses a platform to manage their complete supply chains with transparency and to partner with the trading community.

If a company wants to satisfy environmentally-minded consumers, but is not prepared to completely oust the ingredient from its products, it must “keep a close eye on their supply chain, and overcome challenges of visibility, transparency and real-time information,” says Alan Gunner, Adjuno’s director of business development. “The onus is on supermarkets to have a deep understanding of how the manufacturing process operates, where ingredients are sourced, products created and workers treated.”

Companies in the food manufacturing industry have been increasingly committed to sourcing sustainable supplies of palm oil, but it’s not an easy process. The supply chain is complex and there are many areas to consider, from the plantations where the fruit is grown to the refineries it is further processed on, Gunner points out. In fact, while global companies like PepsiCo and McDonald’s are working on palm oil sustainability, companies from areas where the most of it is produced seem to be far less focused on that goal. Some cite cost and a lack of demand from consumers as factors keeping them from pursuing a sustainable palm oil strategy, according to WWF Malaysia.

But complete supply chain visibility not only offers benefits to the consumer – it also holds internal advantages, says Gunner. “A retailer can confidently assess new sourcing models, improve their performance and quickly respond to specific customer demands, such as the current concerns around palm oil.”

‘Decision Demonstrates It’s Possible…’

Iceland plans to have launched over 200 new lines that do not contain the ingredient by the start of 2019. Palm oil, found in 50% of all supermarket products (as well as a top ingredient in cosmetics and biodiesel), is a major culprit of deforestation, especially in Southeast Asia, Iceland says. The company says its decision to remove palm oil will “demonstrate to the food industry that it is possible to reduce the demand for palm oil whilst seeking solutions that do not destroy the world’s rainforest.”

Earlier this year, Iceland committed to becoming the first major retailer, globally, to eliminate plastic packaging from all of its own label products by the end of 2023. The company pointed out that the technologies and practicalities to create less environmentally harmful alternatives exist, so it is “putting its stake in the ground.” New packaging will be made from paper and pulp.

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