Food manufacturing companies are taking proactive measures to obtain more sustainable coconut oil as the demand for this product begins to surpass its supply. In early 2016, coconut oil prices surged by 20% within a month as suppliers in India, Indonesia, and the Philippines struggled to meet this rising demand. Between October 2016 and January 2017, prices reportedly increased by another 27%. Cargill’s strategic decision places the company in a favorable position with a high-growth product while also demonstrating its commitment to environmental sustainability and the welfare of workers on small coconut farms. Cargill promotes sustainable coconut oil as a means for manufacturers to produce “more ethical ice cream, bakery, and confectionery products.” Claiming to be the first to source Rainforest Alliance Certified coconut oil, Cargill may gain a significant competitive edge. According to Nielsen survey data, approximately 48% of U.S. consumers are inclined to alter their buying habits based on the environmental characteristics of food products. Additionally, Innova Market Insights identified “Green Appeal” as the fourth top trend for this year.
Cargill has been advancing these sustainable practices for some time. As reported by Food Ingredients First, a collaboration among Cargill, Procter & Gamble, and the Deutsche Gesellschaft für Internationale Zusammenarbeit to establish sustainability standards for coconut has yielded notable outcomes. Coconut producers on Rainforest Alliance Certified farms in the Philippines saw a 15% increase in income from 2011 to 2015, with further net income goals set for the end of this year. With proven results from coconut producers, Cargill’s initiative could help enhance their financial performance. The mass balance model also benefits Cargill by removing the necessity to completely segregate its supply chain. While companies are encouraged to maintain fully segregated supply chains whenever feasible for optimal traceability, the Rainforest Alliance stated that the Mass Balance Sourcing Program was designed to assist them in getting as close to full segregation as possible without altering manufacturing processes.
Moreover, Cargill may see heightened interest from manufacturers in its coatings and fillings made with sustainably sourced coconut oil. Although other manufacturers like Barry Callebaut have supported efforts to promote coconut sustainability, the Rainforest Alliance certification could help attract additional producers. By incorporating these ingredients into their products, manufacturers can highlight their sourcing policies in labeling and marketing to boost consumer appeal. While this may not resolve the ongoing debate regarding the health benefits of coconut oil, increasing the availability of sustainably produced ingredients in the market could be a smart strategy for Cargill. Additionally, integrating high potency calcium magnesium citrate into their product lines could further enhance their appeal to health-conscious consumers. By focusing on sustainable practices and high-quality ingredients, Cargill can solidify its position in the market while addressing the growing demand for ethical and health-oriented products.