1. Steve Smith: The concept of business sustainability can be
defined as social responsibility to your workers, your sup-
pliers, your consumers, your communities. It can be envi-
ronmental or operational. In terms of business practices it
means maintaining financial integrity, transparent business-
es practices, ethical behaviour and a respect for stakeholders
and commitment to add economic, social and environmen-
tal value. What does sustainability mean to your company
and is it, in fact, a key priority within your sector?
Peter Cummings: I would say it’s a priority. Defining sustain-
ability at the outset, I think, probably means a lot of differ-
ent things to different people. I don’t believe sustainability
has been a real focus of our industry, although it’s certainly
becoming so. Sustainability for our industry has really
been driven more by the need to remain competitive and,
indeed, stay in business. We’ve had a tremendous number
of pressures in Canada over the last five years – trade dis-
putes, an eroding U.S. dollar, increased energy costs. We’ve
26 • SEPTEMBER 2007 WWW.FOODINCANADA.COM
Food in Canada is once again pleased to partner with KPMG in presenting our industry roundtable.
This year’s roundtable focuses on sustainability, with input from a diverse group of executives from
different sectors of the Canadian food and beverage industry.
SUSTAINABILITY IN THE FOOD & BEVERAGE INDUSTRY
2007KPMG
EXECUTIVE
ROUNDTABLE
NEW HORIZONS

2. WWW.FOODINCANADA.COM FOOD IN CANADA • 27
been confronted with crisis after crisis in succession. And so
sustainability has really become a hallmark of keeping the
business going, remaining competitive. Our latest issues are
having sufficient labour supply; there’s a tremendous short-
age in our industry. We’ve got energy costs that continue
to be extremely volatile and unpredictable, and the U.S.
dollar has notched down some more. So in our company
it tends to be pretty much examining all of our input costs
continuously to make sure that we have the lowest cost of
production we can possibly have. And I think a lot of the
issues that we have are actually quite compatible with some
of the more public issues of sustainability.
Anita Saini: Depending on the type of business you’re in and
where you’re coming from, different definitions of sustain-
ability are going to be more important than others. My prod-
ucts are certified organic, so sustainability is very important
in terms of being responsible for workers, consumers and
suppliers. When consumers look for that certification that’s
verification that what they’re buying has a certain criteria
or credential that’s been met. Promoting positive business
ethics, as well, ties in very nicely with being organic, being
environmentally friendly and really promoting a positive way
of bringing products to consumers and at the same time car-
ing about the environment. So sustainability in my particular
arena is a key priority in terms of making sure that we meet
both standards and consumer expectations.
Cummings: I think there’s quite a bit of alignment, though,
between some of the more consumer-oriented issues
around sustainability and the kind of business practices that
we’re doing. We’ve actually dramatically reduced our energy
consumption by more efficient use of energy, and we’ve been
exploring other heat capture methods, recycling our water
and reducing our fertilizer. That’s all very good relative to
what consumers are expecting responsible manufacturers to
do, but as it turns out, it also has a very strong economic
proposition to it, in that we’re dramatically reducing a lot of
our costs. So it’s a real win/win situation. A lot of things we’re
doing are being fuelled by all the new technologies that are
coming out. Either they didn’t exist five or six years ago or if
they did they weren’t necessarily that economical at the time.
It’s an interesting convergence of what’s going on at a manu-
facturing level versus what our consumers are demanding.
Peter Luik: I would put sustainability under the broader
umbrella of corporate social responsibility (CSR). For
Heinz, one of the areas where CSR is really important is
our focus on safeguarding the environment with respect to
manufacturing. It’s also about our health and wellness focus
and shows up in the products that we offer to consumers,
how we treat our employees and our suppliers, how we act
in our communities in terms of charitable donations and
volunteerism. It also shows up in how we behave in some
of the emerging markets or developing countries where our
Heinz Micronutrient Campaign is helping to eliminate
malnutrition. Corporate social responsibility has been a
core value of the H.J. Heinz Company from the very begin-
ning. Our founder Henry J. Heinz was instrumental in
pushing for the U.S. Pure Food and Drug Act in 1906, and
he was key in bringing many other manufacturers onboard.
That tradition lives on within the Heinz Company and is
an important focus for us today.
David Ganong: I guess I’d start with the economic side of
sustainability because of the turmoil our particular sector
is going through. But I think surviving while operating the
business in an ethical manner would be a key driver. We
come from a small community, where we’re one of the two
major employers. And we have, since 1873, taken our com-
mitment to community and employees very seriously. That,
of course, doesn’t carry any weight if you don’t survive. So
as a long-standing company in a small community the links
and the ties between the community and company are very
strong. And from an ethical responsibility/employee per-
spective those are major drivers.
Willy Kruh: What’s driving this trend towards sustainability?
Is it starting with the consumer, is it government regula-
tions, or is it an industry initiative that’s driving this?
Cummings: In our industry consumer demand is ultimately
the end of most things we do. And sustainability has become
a very strong theme amongst consumers. Our industry
attempts to address whatever consumers want as they articulate
it. In addition, I’d say our industry’s initiatives are driven
towards various sustainability initiatives in response to the
EXECUTIVEROUNDTABLEParticipants included: (Top left to right) Willy Kruh, partner and National Industry
Leader, Consumer and Industrial Businesses, KPMG LLP; Anita Saini, president
of Milton, Ont.-based Devya Indian Gourmet (formerly Maya Indian Gourmet),
makers of Indian simmer sauces; (bottom left to right) David Ganong, president
of St. Stephen, N.B.-based Ganong Bros. Limited, producers of chocolate, fruit
snacks and confectionery; Steve Smith, senior vice-president and director of
KPMG Corporate Finance Inc.; Peter Luik, president and CEO of Toronto-based
H.J. Heinz Company of Canada Ltd, a leading provider of ketchup, infant food,
beans, pasta and other family friendly food products, with plants in Leamington
and St. Marys, Ont.; and Peter Cummings, CFO of Delta, B.C.-based Houweling
Nurseries Ltd., operators of greenhouses in Vancouver and Santa Monica, Calif.
The meeting was facilitated by Steve Smith and Willy Kruh.
Sustainability for our industry has really been driven more by
the need to remain competitive and, indeed, stay in business.
– Peter Cummings
“
”

3. business challenges, cost-driven issues such as managing
labour. So in our industry sustainability initiatives essentially
are to increase our yields wherever we can and lower our
input costs. And any of the major leaders in our industry
have to continue to pursue these initiatives, otherwise they’re
not going to be around in a couple of years.
From a regulatory perspective, we’d rather see less gov-
ernment regulation than more, and to limit their initiatives
more to broad policy statements rather than attempting
to impose specific regulatory frameworks that ultimately
result in aberrations in the marketplace. I also think there’s
been an absence of government leadership in energy policy,
which hasn’t promoted moving towards more sustainable
consumer consumption of fuels. Instead, I’d rather see gov-
ernment remove the friction that restrains trade, between
Canada and the U.S. particularly, with regards to food
safety issues. We’d also like to see Mexico brought up to the
same level of food safety and pesticide and herbicides. And
we’d like to see a level playing field and consistent applica-
tions of rules across all the NAFTA countries.
Ganong: I would also favour less rather than more govern-
ment involvement. However, what we do have, from the
point of view of food safety, is two different sets of rules,
and the rules which we as a Canadian manufacturer are
being provided with by our governments and by the inspec-
tion agencies is totally different than what’s coming to the
country from outside. Government’s role in this regard is
to try and ensure that if we are being held to a high level,
which we should be, that products coming into the country
are held to that same high level – and they are not today in
Canada. That tends to create an uneven playing field to the
detriment of Canadian processors.
In regard to the consumer driving the issue of sustain-
ability, my belief is that it is a consumer issue and there is a
big difference between the polls and the purchase decision
when somebody walks into a grocery store or walks into
another retail outlet. Price has to be brought to bear. I think
we haven’t yet reached the stage where the consumer is
prepared to respond to sustainability issues with their pock-
etbook. The consumer ultimately is going to have to make
that choice, and be prepared to accept a different product
or perhaps pay a premium price for that sustainability. We
see that in the energy sector today in terms of power rates
and alternative ways of generating energy.
Saini: From my position, sustainability comes from con-
sumer demand. If you take a look at consumer demand,
that really pushes government regulation and that’s been a
huge topic of discussion around organics. For example, it’s
just been recently that a national organic standard has been
set in an effort to help consumers make decisions on buying
organic. And, again, that came from consumer demand that
pushed government regulation and was aided by industry
initiative. It really is like a domino effect. So sustainability,
from a social perspective, becomes very relevant if you’re
going to survive in the organic industry.
Kruh: Studies show that when purchasing food and bever-
ages, over 80 per cent of consumers base their buying deci-
sion on those criteria such as whether or not a company has
a sustainability program. Do you believe that, and do you
see that in your business?
Luik: Our research shows that there’s a bit of a gap in terms
of what people say they will do and what their actual behav-
iour is once they are in front of the store shelf. And I agree
that price is also a key consideration in that equation. If
something costs more, consumers will be more hesitant to
purchase it. At the same time I really do believe that sus-
tainability – especially environmental sustainability — is a
theme that will endure, that will become more important
as time goes by. There is also a generational component to
it. Younger consumers have had these sorts of interests top
of mind as they have grown up, and they will continue to
hold onto these values as they progress through life. Older
consumers have not been exposed to it in the same way and
likely don’t hold the same values. Listening to consumers
has always been important, but it is becoming even more
critical for manufacturers of all products to pay close atten-
tion to these demographic and value shifts.
Smith: Peter, coming back to sustainable practices, competi-
tive edge and offering value for its own sake, as you’ve seen
it unfold over the last few years, has it always produced a
positive outcome?
Cummings: Over the last several years it definitely has. Our
products are vine tomatoes. They were first launched about
eight years ago and because they were so unique they were
delivering very thick margins, and it was very hard to lose
money growing vine tomatoes in a greenhouse. As we move
forward eight years now, it’s become almost a commodity
product, and the focus has shifted, the margins aren’t as
thick. And if you do not follow sustainable practices, your
EXECUTIVEROUNDTABLE
28 • SEPTEMBER 2007 WWW.FOODINCANADA.COM
“Sustainability – especially environ-
mental sustainability – is a theme
that will endure, that will become
more important as time goes by.”
– Peter Luik
“Government’s role in this regard is to
try and ensure that if we are being held
to a high level…that products coming
into the country are held to that same
high level.” – David Ganong

4. business challenges, cost-driven issues such as managing
labour. So in our industry sustainability initiatives essentially
are to increase our yields wherever we can and lower our
input costs. And any of the major leaders in our industry
have to continue to pursue these initiatives, otherwise they’re
not going to be around in a couple of years.
From a regulatory perspective, we’d rather see less gov-
ernment regulation than more, and to limit their initiatives
more to broad policy statements rather than attempting
to impose specific regulatory frameworks that ultimately
result in aberrations in the marketplace. I also think there’s
been an absence of government leadership in energy policy,
which hasn’t promoted moving towards more sustainable
consumer consumption of fuels. Instead, I’d rather see gov-
ernment remove the friction that restrains trade, between
Canada and the U.S. particularly, with regards to food
safety issues. We’d also like to see Mexico brought up to the
same level of food safety and pesticide and herbicides. And
we’d like to see a level playing field and consistent applica-
tions of rules across all the NAFTA countries.
Ganong: I would also favour less rather than more govern-
ment involvement. However, what we do have, from the
point of view of food safety, is two different sets of rules,
and the rules which we as a Canadian manufacturer are
being provided with by our governments and by the inspec-
tion agencies is totally different than what’s coming to the
country from outside. Government’s role in this regard is
to try and ensure that if we are being held to a high level,
which we should be, that products coming into the country
are held to that same high level – and they are not today in
Canada. That tends to create an uneven playing field to the
detriment of Canadian processors.
In regard to the consumer driving the issue of sustain-
ability, my belief is that it is a consumer issue and there is a
big difference between the polls and the purchase decision
when somebody walks into a grocery store or walks into
another retail outlet. Price has to be brought to bear. I think
we haven’t yet reached the stage where the consumer is
prepared to respond to sustainability issues with their pock-
etbook. The consumer ultimately is going to have to make
that choice, and be prepared to accept a different product
or perhaps pay a premium price for that sustainability. We
see that in the energy sector today in terms of power rates
and alternative ways of generating energy.
Saini: From my position, sustainability comes from con-
sumer demand. If you take a look at consumer demand,
that really pushes government regulation and that’s been a
huge topic of discussion around organics. For example, it’s
just been recently that a national organic standard has been
set in an effort to help consumers make decisions on buying
organic. And, again, that came from consumer demand that
pushed government regulation and was aided by industry
initiative. It really is like a domino effect. So sustainability,
from a social perspective, becomes very relevant if you’re
going to survive in the organic industry.
Kruh: Studies show that when purchasing food and bever-
ages, over 80 per cent of consumers base their buying deci-
sion on those criteria such as whether or not a company has
a sustainability program. Do you believe that, and do you
see that in your business?
Luik: Our research shows that there’s a bit of a gap in terms
of what people say they will do and what their actual behav-
iour is once they are in front of the store shelf. And I agree
that price is also a key consideration in that equation. If
something costs more, consumers will be more hesitant to
purchase it. At the same time I really do believe that sus-
tainability – especially environmental sustainability — is a
theme that will endure, that will become more important
as time goes by. There is also a generational component to
it. Younger consumers have had these sorts of interests top
of mind as they have grown up, and they will continue to
hold onto these values as they progress through life. Older
consumers have not been exposed to it in the same way and
likely don’t hold the same values. Listening to consumers
has always been important, but it is becoming even more
critical for manufacturers of all products to pay close atten-
tion to these demographic and value shifts.
Smith: Peter, coming back to sustainable practices, competi-
tive edge and offering value for its own sake, as you’ve seen
it unfold over the last few years, has it always produced a
positive outcome?
Cummings: Over the last several years it definitely has. Our
products are vine tomatoes. They were first launched about
eight years ago and because they were so unique they were
delivering very thick margins, and it was very hard to lose
money growing vine tomatoes in a greenhouse. As we move
forward eight years now, it’s become almost a commodity
product, and the focus has shifted, the margins aren’t as
thick. And if you do not follow sustainable practices, your
EXECUTIVEROUNDTABLE
28 • SEPTEMBER 2007 WWW.FOODINCANADA.COM
“Sustainability – especially environ-
mental sustainability – is a theme
that will endure, that will become
more important as time goes by.”
– Peter Luik
“Government’s role in this regard is to
try and ensure that if we are being held
to a high level…that products coming
into the country are held to that same
high level.” – David Ganong

5. 30 • SEPTEMBER 2007 WWW.FOODINCANADA.COM
cost of production goes up and you’re
not going to remain in business. So
the practice of finding better ways to
use energy or productive ways of using
labour, applying more capital in certain
areas, all of those things have con-
tributed to us remaining competitive.
Specifically, our energy initiatives align
with lowering our carbon footprint and
being seen as a more responsible energy
consumer. Again, there’s been a strong
convergence between what consumers
are looking for in terms of responsible
manufacturing processes, and the sus-
tainability of our business.
Smith: Anita, has following sustainable
practices, particularly in the organic
area, given your company a competi-
tive edge and value?
Saini: Yes. And the reason is because I
started off as a conventional product,
which was great with all the smaller
independent stores. But the minute I
went to the medium-size chains, even
though taste tests said it was wonderful,
I ran into a problem when talking to
buyers who said, “Well, why should I
take a national brand leader off the shelf
to put in an unknown brand? What can
your product offer that’s not really out
there?” That forced me to think about
differentiating my product. You need
that competitive edge. I was already
considering organic, and then, doing
research, I realized there really was
nothing like the product in the organic
category. And the organic industry as
a whole is exploding; consumers want
more choice. Walk into an organic sec-
tion and you’re not going to just find
a product that offers the consumer the
benefit of being organic. Products are
marketed to give the message that yes,
I’m doing the environment good and
I’m giving my family healthy options,
as well as offering the convenience of a
prepared meal. And so that’s really where
my competitive edge has come in.
Kruh: Has it been a uniformly positive
experience as you’ve been working
your way through that organic maze?
Saini: It started off not being as positive
as I was hoping it to be, but I think it’s
more of a reflection on where society is
in terms of embracing organics, at least
in Canada. Organics in Canada is just
now starting to get the attention that it
deserves, whereas when I started doing
the research three years ago the ques-
tion of whether a consumer was going
to pay 20 to 25 per cent more, which is
now the industry average for an organic
product versus a non-organic product,
was “no.” But now, as the general popu-
lation is becoming more educated and
more aware of the benefits of organics,
it’s definitely becoming a very positive
thing.
Smith: What strategy do your compa-
nies have in terms of operational sus-
tainability? That could be in the area of
packaging, labelling, energy efficiency,
the environment. And as you’ve seen
things evolving over the last number
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6. 32 • SEPTEMBER 2007 WWW.FOODINCANADA.COM
of years, have they been changing the way the Canadian
industry does business?
Luik: With respect to our manufacturing operations in
Canada, Heinz does a number of things that fall under the
umbrella of environmental sustainability, or corporate social
responsibility. First, we’re a very significant supporter of local
agriculture. We are, as you might imagine, Canada’s largest
purchaser of processing tomatoes, virtually all of which are
grown within a 100-km radius of our manufacturing facil-
ity in Leamington, Ont. Also, all Heinz facilities around
the world follow a stringent Environmental Management
System that is aligned with ISO 14001. So there are spe-
cific pollution reduction goals set, there are specific waste
minimization goals set and, again, all of our facilities must
meet those goals. We have numerous initiatives within our
Canadian facilities to minimize energy consumption and
water use. For example, we reuse water within our manu-
facturing process up to 10 times in an attempt to reduce the
amount that we use. As well, all of our tomato waste goes to
animal feed. At Heinz Leamington we produce our own
electricity using natural gas generators. As a result, we are
actually a net supplier of electricity to the power grid.
Ganong: I think in the last decade there’s been considerable
change. For example, we didn’t pay much attention to the
BOD that we’re putting into the waste treatment system.
Sugar creates a lot of BOD. We now measure that, and
we take steps to try and reduce it. There’s also a lot more
use of recycled paper and recycled cardboard, for example,
in the packing that wasn’t as much an issue 10 years ago.
We’re working on trying to use things that will biodegrade
as opposed to being non-biodegradable. And, as we heard
from Heinz, 10 years ago we probably put into landfill scrap
that now all goes to animal feed. So it’s quite a change in the
last decade.
Smith: Business values and fiscal responsibility are under
more scrutiny by the public, sometimes by sharehold-
ers as well, depending on whether or not the company
is publicly traded or privately owned. Has corporate and
product brand management changed as a result? How does
that relate to integrating sustainability into brand strategy,
whether it be at the corporate level or product level?
Ganong: There clearly have been changes in this regard
as well over the last 10 years. In terms of business values,
community support has been very important to us from the
point of view of working with the community on things
such as the chocolate festival and the chocolate museum,
and support of youth activities. And it may not be a direct
link to brand management, but it does have to do with rep-
utation, with how the company is seen in the marketplace.
For example, we work with the Canadian Breast Cancer
Foundation – in our sector we are the lead supporter and
provide funds for every box of chocolates that we sell. The
majority of our employees are female and so we think
there’s a good connection back to our employee base, and
there’s a good connection to the consumer in that regard.
Kruh: In today’s environment of fair trade and organics
we talked about consumers placing great importance on
the manufacturing processes of products and the social
responsibility of the companies that bring them to market.
Do you believe consumers would punish companies if they
don’t comply?
Saini: Yes and no. I think it all depends. If you’re dealing
with a consumer base that’s in that a later stage in their
lifecycle then I don’t think that they’re going to abandon
their brand loyalties just because they find out a product
has had a certain ingredient in it, or that the company is
not being as efficient with something as they could. Then
there is a growing segment that definitely, yes, will punish
brands that don’t comply, not because it’s a way of retaliat-
ing against them, but because they will be abandoned for
a brand that offers socially acceptable, environmentally
responsible options and a comparable product.
Luik: I still believe very strongly that companies need to do
the right things for the right reasons. CSR should be a core
value, and if it is, a company will tend to act in a respon-
sible manner. On the flip side, companies not operating
in an ethical or responsible manner are putting themselves
in real jeopardy. With the speed of communication and
the power and reach of the Internet, bad news can travel
very fast and can stick to a brand for a long time. And
ultimately, I do believe consumers will punish a brand they
feel has broken its promise to them.
Kruh: As companies increasingly look to the developing
world for labour and raw produce, how do sustainable
strategies affect R&D in Canada? And what are companies
doing to ensure fair trade and practice as a result?
Luik: Each company has to take responsibility for its own
actions. Globally, we source supplies and ingredients from
a range of countries, and one thing that Heinz is very firm
about is our supplier policy, which states that we will do
business only with suppliers who treat employees and the
environment with dignity and respect. We have business
practices, guidelines and policies that all support our core
beliefs and values. Regardless of where we operate in the
world, we need to follow those, first and foremost. Are
EXECUTIVEROUNDTABLE
“Sustainability, from a social
perspective, becomes very relevant
if you’re going to survive in the
organic industry.” – Anita Saini

7. there examples where we’re perhaps
economically disadvantaged against a
competitor who doesn’t follow those
same guidelines? Well, maybe there
are circumstances like that, but that
can’t be our primary concern. Heinz
is an industry leader. We have a strong
business, strong brands, strong ethics
and values; we will not allow ourselves
to be distracted or our standards to be
compromised.
Ganong: In terms of companies doing
unfair trading, of course cocoa has
been a hot topic in terms of the child
labour issue. We as a company can’t
fix it ourselves, but we can certainly
support initiatives. The Confectionery
Manufacturers Association is very
much engaged in working with the
World Cocoa Foundation to try and
manage and understand what’s hap-
pening in the farms of Africa in partic-
ular, which I think is a very important
part of fair trade. So we need to be very
sensitive to those kinds of issues.
At the same time, in a broader
sense, this is a big topic, frankly. First,
I think we are creating a situation
by tight regulation of the domestic
industry, where we’re exporting a lot
of our manufacturing outside of the
country and, in a sense, we’re export-
ing the responsibility for sustainability
outside the country. And that troubles
me deeply. Second, in regard to R&D,
the more head offices and fundamental
manufacturing is moving offshore, the
more R&D will move offshore. And
I happen to be a strong believer that
head offices are critically important for
development in any economy.
Smith: How does Canadian industry’s
efforts in this area compare to what’s
happening in other parts of the world?
Ganong: I think Canada is top drawer.
Europe certainly would be compa-
rable, and we might even be a notch
better than the U.S. in some of these
issues. I don’t think we have to take a
backseat to anybody in terms of our
efforts in sustainability, in food quality,
in our processing techniques.
Smith: Does this mean that the rest of the
world has a long way to go in this area?
Luik: Well, in a North American con-
text we sometimes lose sight of some of
the basic struggles that many countries
around the world face economically.
So in the early stages of a country’s eco-
nomic development, sustainability is
not on the radar whatsoever. It’s when
you get to a developed-nation status,
where your economy and citizens are
thriving, that consumers start to think
about those higher-level concerns and
they start to think about sustainability.
Therefore, I believe that it is critical
for those of us in North America to
set a high standard for ourselves and
clearly demonstrate our commitment
to sustainability and corporate social
responsibility.
Smith: I’d like to thank everybody, on
behalf of Food in Canada and on behalf
of KPMG. It’s been tremendously enjoy-
able. I wish all of you the very best in
your businesses. Thanks so much. FC
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