When we talk about externalities in this article, we mean social and environmental costs such as underearning or soil depletion that are not usually calculated or reflected in a product’s market price.

Martijn Versteegh is Director Sustainable Concept Development at Albert Heijn (AH). In our conversation, he tells us about the True Pricing experiment he helped set up at the start of 2023. He tells us about the importance of using specific data in calculating a product’s True Price, how the True Pricing methodology can fit within corporate business models to help them make better food available for all, as well as what the True Price methodology can learn from corporate business strategies.

The specifics of data

Right at the start of our conversation, Martijn tells us about AH’s mission to make healthy and sustainable food available to all. This perfectly aligns with the True Pricing methodology: analysing (food) value chains to discern where a product negatively affects people or planet. A partnership between AH and True Price is obvious. During the AH coffee to go experiment, True Price used regional and national data to determine social and environmental costs (or: externalities) within the coffee sector of Brazil and Ethiopia to determine the True Price of AH’s to go coffee (a blend of beans sourced from both countries). Martijn notes that True Price includes things such as soil degradation in these costs, which does not usually feature in corporate businesses’ sustainability strategies. Insights into a product’s impact on such – previously unknown – externalities are very useful to AH’s sustainability strategy. On the flip side, using generic national and regional data provides very broad information, which accurately reflects the coffee sector country-wide, but not – for example – the specific plantations from which AH sources its coffee. Why could the data not be more specific?

Change starts with transparent value chains

It all comes back to transparency – one of True Price’s most important values. Accurate data requires transparent food value chains. This means knowing where your coffee is sourced and how people and planet are treated along the chain: from the coffee bean picker, to the processor, to the retailer, to the supermarket. As Martijn points out, this is no easy task. AH’s coffee is a blend, sourced from different countries, different plantations, and different processors, before being combined to form our morning fix from the local AH to go. Lack of knowledge on where coffee is sourced means a lack of regional data at farm level. More importantly, it prevents action: if you do not know where in the chain the social and environmental costs are greatest, you cannot reduce them. Together with Rainforest Alliance, to whom the proceeds of the experiment was donated, AH is currently working to retrieve data that is more specific to its coffee value chain.

How True Pricing can benefit from corporate business strategies

Insights from the True Pricing experiment have had a definite impact. Next to making efforts to attain more specific data on AH’s coffee value chains, the True Pricing experiment has – amongst other things – caused AH to provide more opportunities to buy coffee with plant-based milk, and to explore opportunities to source their products more locally. But what can the AH – True Price collaboration learn from corporate business strategies? Martijn points out that to encourage consumers to make a more sustainable choice, you need to keep things simple, affordable, and fun. Furthermore, you need to be able to communicate exactly why anyone should pay a higher price for a True Price product. True Price includes so many factors in their calculations that it is difficult for clients to know what difference paying more would make: do proceeds go towards tackling deforestation? Or towards eliminating forced labour?

Martijn’s insights here show that, in business, communication is key. In future collaboration, both AH and True Price are ready to take his recommendations on board.

Future: price vs. value

So once True Price messaging is more clear and understandable for consumers, what’s the next step to further incorporate True Pricing in the global food system? According to Martijn, True Pricing is a strong mechanism to create awareness that the price we pay for food simply does not cover the impact it has on people and planet.

AH will continue to investigate the True Price of products and improve the value chains of products’ sources – nationally and internationally. We advise you to keep a close eye on them!