Sara Lee: “Eco” Claims about “Eco-Grain” (2010)
Based on a paper by Geoff Brennen
Summary by Geoff Brennen
In 1985, Consolidated Foods decided to change its name to its most popular brand, Sara Lee. Since then, Sara Lee Corporation has been providing customers with premiere bakery goods, meats, and beverages. Sara Lee brands generate more than $13 billion in annual net sales and
employees around 53,000 worldwide. The Sara Lee corporation includes popular house-name brands such as Jimmy Dean, Ball Park, and Hillshire Farm. Sara Lee made a key acquisition of The EarthGrains Co. in 2001 and helped them become the number two bread producer in the industry.
In 2010 Sara Lee received a lot of criticism over the aggressive marketing campaign of their EarthGrains bread products. Sara claims a new “Eco-Grain” ingredient in their EarthGrains breads, reduces the use of synthetic fertilizers by fifteen percent. Sara Lee even made a bold claim that "Eco-Grain" is more environmentally sustainable than organic grain. The Cornucopia Institute, a farm policy research group from Wisconsin, issued a report about EarthGrains "Eco-Grain" products. They found that for every twenty-four ounce loaf of Sara Lee’s EarthGrains bread, only twenty percent contained “Eco-grain” flour . The other eighty percent of the flour is traditionally produced by using toxic chemicals and fertilizers. Consumer's and the organic community is enraged that Sara Lee taken advantage of their ecological interests and "green washed" them for profit.
Individualism in business ethics, also referred to as “The Economic Theory”, is the pursuit of profitability for the company as well as shareholders by operating within the constraints of the law. The year following the acquisition of EarthGrains, Sara Lee saw profits increase by twenty-five percent in the North American Baking region. Sara Lee's sales were not affected by this negative attention. The North American Banking Region produced $2.6 billion dollars in sales in the first quarter of 2010 which is slightly higher than the $2.2 billion dollars in sales in the final quarter of 2009. Sara Lee saw food produced environmentally sustainable as a growing industry and profited off consumer's "green" dollar. By referring to their product as natural and their grain as "Eco-Grain", Sara Lee is not violating the strict FDA regulations that come with producing food organically. The Economic Theory would view Sara Lee’s behavior as socially acceptable and profitable business tactics.
Utilitarianism in business ethics concerns maximizing overall happiness for stakeholders. Some of the major stakeholders in this case include management, customers, organic farmers, as well as stockholders. Sara Lee's management has been happy with EarthGrains past products, but in this case management had to remove ads and suspend the whole advertising campaign. The EarthGrains brand has been tarnished. Sara Lee’s customers felt deceived and were outraged to learn only 20% of EarthGrains breads contain "Eco-Grain". Consumers feel that Sara Lee took advantage of their ecological interests and are only interested in profit instead of truly being environmentally sustainable. When Sara Lee made false claims that “Eco-Grain” is more sustainable than organic grain it hurt the business of small-scale organic farmers.Organic farmers take pride in providing food that is environmentally friendly produced without the use of toxic chemicals and were extremely unhappy with Sara Lee's action. Overall, a utilitarian would see that all of Sara Lee's stakeholders are unhappy and therefore deem Sara Lee's behavior as socially unaccpetable.
Kantianism is the ethical theory that revolves around doing what is right because it is the right thing to do. The intentions and motivations behind the company’s actions come in to question when using the Kantianism theory to evaluate ethical business behavior. Companies should never lie, deceive, or withhold critical information from stakeholders that they affect the most. Clearly Sara Lee deceived there customers by withholding critical information about how their product was produced. Sara Lee used their customers merely as a means to profit. The actions taken by Sara Lee were unethical because they came from the wrong motivations. Profit is Sara Lee’s number one motivator not being environmentally sustainable.
The final ethical theory, the virtue theory, aims to develop the character traits and habits that will allow you to live a joyous, full life. . The four virtues most applicable to business include courage, honesty, temperance and justice. Management showed courage by launching their new “Eco-Grain” bread line and releasing controversial advertisements making bold statements. Management also exhibited honesty in their comments responding to the Cornucopia report by owning up to their actions.Small-scale organic farmers showed temperance and justice in the manner in which they handled the case. They exhibited temperance in the way that they lived up to the reasonable expectations and desires of customers who are looking for organically produced food. They displayed justice by working hard, following the rules, and being fair. Virtue Theorists would view Sara Lee's behavior as unethical.Moving forward Sara Lee must put a strong emphasis on improving their character by acting with courage, honesty, temperance, and justice.
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"Organic vs Natural EarthGrains." "Choose Organic" Cornucopia Institute, n.d. Web. http://www.cornucopia.org/eco-grain/eco-grain-fact-sheet.html
Broyson York, Emily. "Sara Lee May Pass Its Bread Business." Chicago Tribune. N.p., 20 July 2010. Web. 14 Apr. 2013. http://articles.chicagotribune.com/2010-07-20/business/ct-biz-0721-sara-lee- bread-20100720_1_bakery-sales-sara-lee-bread-business
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