The Incredible Power of Reaction

In the last month, three very high-level executives, from Danone (France), Carrefour (France) and Tereos (France), very respectful and admired organizations, under different situations of pressure did public statements at the press or social media telling they would not source products from Brazil (or Mercosur). The argument was relatively the same: the issue of compliance with social and environmental rules, according to their own evaluation and demonstrating huge lack of knowledge about practices and requirements for farmers and companies operating in Brazil, most of these certified by international organizations.

These statements rapidly gained global media creating huge problems of image to Brazilian production, since the strength of these companies and their brands are incredible. The statements rapidly were available in Brazil and ended up generating a lot of reactions from agribusiness institutions, suppliers, buyers and individuals against these companies, creating trouble for the subsidiaries in Brazil, damaging their image and putting risks to their value and sales. Social media including Instagram, LinkedIn and WhatsApp groups are able in this new era of rapid communication to spread the information and produce a lot of damage in a single day, what was impossible in the era of “the printed newspapers”.

When the boycott against its products was growing, Danone was able after four days to calm down the situation issuing a global statement that there was a misunderstanding in the comprehension of what its CFO said and reinforcing its commitment to buy from Brazil, its very important presence in the country and the situation is now under control, but certainly represented learnings inside the company.

In the case of Carrefour, at the moment where this article is written, the situation is getting worser since after three days even with statement of the Brazilian subsidiary, the second largest in the world, there is an increasing movement of boycott from large meat suppliers threatening their meat supplies for the coming days, putting in risk their shelves and also from restaurants and caterers associations, damaging consumption and final consumers in WhatsApp groups and social media. This movie is still in the middle and will be interesting to follow the next episodes. Carrefour was able to stimulate the production of something unique: a letter of protest signed by more than 50 large organizations in Brazil, a historical document, probably because these are getting tired with constant attacks.

The case of Tereos France is newer and is gaining traction now, we will have to follow the next days, although the local subsidiary was fast to produce a public statement.

I trust in markets and freedom, so any company in France, the Netherlands, Germany or other countries has the right to try to supply what they need from the source they want, if regulations of the country allow this freedom, which is the case of these three in France. They have taxes, but they can buy from where they want.

If they want to give preference, to protect local production or local suppliers, is something I also understand and even wrote about this movement, called “buy local” or other names that end up taking to the same direction of keeping and stimulating local development. Several supermarkets even identify shelves where local production can be bought by consumers. What must be understood is that if you force all your supply to be local and it is more expensive (less competitive) than other international sources, you will force the consumers to pay more, bringing food inflation. And this is against freedom.

Danone, Carrefour, Tereos and other respected companies can do whatever they want in terms of supply, but they need to justify the preferences, the choices, using a right and an honest argument. It is just the case to tell the consumers and the public (media) that they will source only from France or from other places because of local development or other types of justified protection. When you explain your choice by attacking other suppliers you end up producing injustice and damage to other people’s, companies’ and countries hard work and image.

To inspire future statements, interviews from executives of other multinationals or even local companies the learnings with these cases are: a) be transparent in the arguments to justify your choices; b) don’t attack any production from any country because you may generalize, be unpolite, commit injustice and demonstrate lack of knowledge; c) in case you attack, understand that the reactions will happen from all stakeholders (from local organizations suppliers to buyers, influencers, press, consumers) and these will be potentialized by the incredible strength of social media, producing damages to the local branch of the company and the image.

Marcos Fava Neves is a businessman and a professor of strategy and planning at the University of São Paulo, Brazil (favaneves@gmail.com)