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Value Chains

Why the biggest brand sometimes isn't the best innovation partner

By Anonymous (not verified), December 4, 2012
Heinz sells 80 percent of British beans. That may be exactly why they passed on a chance to do so in a more innovative way. Photo: <a href="">Kevin Spencer (flickr)</a>
Heinz sells 80 percent of British beans. That may be exactly why they passed on a chance to do so in a more innovative way. Photo: Kevin Spencer (flickr)

A new case study of the Ethiopian bean industry includes a depressing anecdote reminding us that innovation rarely starts at the top of the market.

Catholic Relief Services, a nonprofit looking to bring Ethiopian crops to new markets, discovered that Ethiopia's white pea beans were perfect for the canned baked beans so beloved by the British. They eagerly brought this news to the UK's market leader, Heinz.

Sorry, Heinz said. Too risky:

Tests undertaken in the UK revealed that Ethiopian beans had excellent factory canning qualities: low moisture content, high canning processing levels and excellent ‘mouth-feel’. They cost less than competitors’ beans, and would also boost the buyers’ corporate social responsibility credentials. …

It soon became clear that Heinz was not interested in investing in Ethiopia. Having captured 80 percent of the UK market for canned beans, the company was highly sensitive to any risk factors that could be associated with its brand, and was not keen to test new options. Heinz officials were concerned about the quality of Ethiopian beans, the reliability of supply, and about public perceptions of trade with a food-insecure country.

Heinz had become a prisoner of its own success. (Set aside the maddening irony that Ethiopia's reputation as a place of starvation was hurting its farmers' ability to compete in the agriculture export market.)

Fortunately, the parable has a happy ending:

Premier Foods, on the other hand, came across as a more aggressive, risk-taking organization. Its buyers were keen to buy from Ethiopia, not only because of the opportunities it presented in terms of cost and volume, but also to develop an ethical trading story. The company was interested in bringing a certified bean into the UK market, and suggested a three-to-four year timeframe to achieve this goal.

Check out the International Institute for Environment and Development's full report (PDF), released last month, to read more about the generally positive outcomes for Ethiopia's bean farmers.

For other nonprofits looking to build relationships between small suppliers and major buyers, this is also a quick reminder that the most receptive partners may be companies a few slots behind in the corporate pecking order.

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