Logic of McDonald's Organic Move
McDonald’s is the latest multinational to jump onto the
international fast-food chain announced that it is to start selling
organic milk in its British restaurants from February onwards.
This was followed by news this week that
the multinational reported huge losses of USD 343.8 million in the last
quarter of 2002. The company reported losses for the first time due to
the closing of hundreds of its restaurants. The fast food industry is
suffering from intense price wars between chains, and a bad image due to
outbreaks of BSE in
Japan and Europe and the association of fast-food with obesity.
Consumers are increasingly shying away
from fast food and opting for healthier alternatives like fresh
sandwiches. In the
its market share has been eroded by cafés and sandwich shops like Pret A
Manger, which offer fresh sandwiches, soups and wholesome snacks.
McDonald’s is aiming to buck this trend by
using healthier ingredients. It has introduced lower-fat sauces, diet
drinks, sweeteners and promotional salads. Its switch to organic milk is
part of its strategy to give the fast-food chain a healthier and more
Organic milk is to be sold in all its restaurants from February 2nd
onwards. Semi-skimmed organic milk will be available in 250ml bottles
and certification is to be provided by the Soil Association.
Organic Monitor welcomes the move by McDonald’s as it will help ease
overcapacity in the British organic dairy sector. If successful, it will
create demand for over 1 million litres of organic milk in 2003.
The move is not likely to affect the image of McDonald’s much however.
Apart from the general poor image of fast-food, many consumers are
shunning American companies like McDonald’s because they perceive them
to be a symbol of American capitalism. American multinationals like
McDonald’s and Nike have long bore the brunt of anti-globalisation
protestors because of this perception.
Starbucks is another American company that has suffered a poor image.
The international chain of coffee shops was regularly targeted by
protestors in the
until it made a concerted effort to change its image. It has introduced
Fair Trade coffee beans in its coffee shops as well as organic milk to
Coca-Cola is another American company that is suffering from poor
international relations. It is one of many American products boycotted
by many Middle-Eastern consumers. Mecca-Cola was launched in France in
October 2002 and is developing international appeal from consumers that
do not want to buy American brands like Coke and Pepsi.
The trend towards healthy eating and ethical purchasing suggests that
McDonald’s will have to do much more than offer organic milk to
strengthen its image. Marketing organic milk is a step in the right
direction however consumers will not patronise the restaurant just to
buy organic milk. Launching more organic products, and possibly an
organic burger, backed by marketing campaigns would do wonders for the
ailing image of McDonald’s.
Posted: January 25th 2003
For permission to publish our research articles, please contact our