Those who think that a Republican held Congress and Trump presidency will ease the pressure on the food and beverage industry are missing the forest through the trees. The pressure on the sector will shift but it will not go away and it may even become more complex to manage as a diverse set of stakeholders seek to fill the leadership void. Industry efforts over the past eight years to cooperate with the Obama administration have set high expectations amongst stakeholders and consumers and is a critical reputational factor of the industry. External stakeholders will be watching closely to see if industry stays the course on progressive policy decisions or opportunistically dials back.  A decision in either direction will have a significant and lasting impact on reputation and license to operate both domestically and abroad

Donald Trump won through an Electoral College mandate but  he did not win the popular vote. Food and nutrition policy is a pet issue of progressives who now make up more than 50 percent of the electorate. Given millennial interest in food issues, as millennials age into the system and boomers age out focus on these topics is likely to continue to grow. Passage this week of soda taxes and animal husbandry laws are an indicator that progressive policy entrepreneurs at the state and local level will see this as a tremendous opening to grow their power as de-facto regulators of the industry in the face of a vacuum at the federal level. Expectations of consumer and health advocacy groups for industry self-regulation will not abate and will continue to hold industry accountable for commitments made. The move from the White House to private life, will continue if not build the influence of the popular soon-to-be former First Lady over one of her pet issues. If Trump’s transition team is any indication of a longer term trend (the appointment of prominent climate change skeptic to manage EPA being a notable example), significant unease amongst activist groups will lead them to engage in more aggressive and publicly visible advocacy to mobilize their base – many of whom are not supportive of the administration and motivated to make their voices heard. The U.S. election will do little to change the global influence of groups like the WHO and FAO and Trump’s strong stance against global engagement may limit the moderating authority of the United States over policy proposals from these groups.

The Trump policy agenda includes a number of mega-issues with significant impact on the food and beverage sector including global trade, taxes and immigration. Immigration in particular may put this industry in opposition to some of Trump’s most controversial and divisive proposals. As large employers, how companies advocate on domestic policy issues like equal pay, family leave, discrimination and healthcare are critical for recruitment and retention. This sector is unique because every stakeholder is a potential consumer of their products or services. How companies align on policy issues impacts brand loyalty and willingness to buy. Millennial consumers in particular will be watching food and beverage companies very closely, will make their opinions on corporate engagement known and will expect companies to respond to their concerns through their statements and action.

Much has and more will be written over the coming weeks regarding Trumps promises to immediately cancel executive orders, repeal laws and dial back cumbersome regulation. The narrow Republican majority in the Senate will require compromise with Democrats on legislative proposals. As a graduate student in public policy a professor once counseled us that many a new appointee with big ideas has had to “behold with awe the powerful path dependency of the American bureaucracy, career government employees and the institutions in place to protect them.” Thus, we can expect changes at the margins of unpopular or cumbersome laws or regulations but wholesale change to policies already in place will be slow if not unlikely.

However the impact on regulations under development or not yet fully implemented is a big unknown. Given the significant cost to industry already invested to implement changes related to FSMA, updates to the Nutrition Facts Panel or menu labeling it seems less likely that those will change significantly. It is too soon to tell what may happen with updates to the FDA definition of healthy, natural, GMO labeling, voluntary sodium reduction and even USDA alignment to the FDA Nutrition Facts Panel. The impact on the process for the development of the 2020 Dietary Guidelines and those appointed to be on the advisory committee is a similar unknown. 

Food and nutrition was a cornerstone of the Obama agenda. First Lady Michelle Obama’s leadership catalyzed a wave of progressive policy and public awareness that literally reshaped the food and beverage sector. The food and beverage industry has played nice in the sandbox with the Obama administration over a range of issues impacting nutrition, health and sustainability and has been publicly supportive of pro-nutrition policy changes to programs like school meals or sodium reduction goals. Changes to corporate practice have extended beyond those required by law, including voluntary self-regulatory initiatives on food marketing to children and front-of-pack labeling. These decisions have stabilized if not improved the reputation of the sector with critical stakeholders. We are at a fragile and volatile moment for these stakeholders who see the impact and legacy of their achievements as being at risk. These stakeholders will be watching the sector closely to see who stays the course and who reverses.

APCO believes that those who continue on the trajectory of evolving their portfolio and corporate practices to align to global stakeholder and consumer expectations for better governance and transparency, improved human and environmental sustainability and alignment of commitments globally will be rewarded in the long run. Those companies that opportunistically dial back commitments in the United States believing the pressure is now off are likely to face long term damage to their reputation and license to operate globally.

Melissa Musiker

Melissa Musiker, senior director, is APCO Worldwide's global food, consumer products & retail practice lead based in New York. Read More