The real voyage of discovery consists, not in seeking new landscapes, but in having new eyes.
- Marcel Proust
Growth is a mindset. I have come to understand this over the last 25 years; well, longer if the timeline extends beyond professional into sport and extramural activities, although in this context my scope is confined to my role in helping consumer goods companies and nimble scaleups - Goliaths and Underdogs - to develop the chops to fight it out in the most competitive retail theatres in the world. Over the last 8 years I’ve been working mostly exclusively with leadership teams at the top 10; Coca Cola, Unilever, Novartis, Nestle, Tyson Foods, PepsiCo, Pharmavite, Danone, Mars, Carlsberg and a few others, all >$10 Billion in size, mostly between London, New York, Paris, Amsterdam, California, Johannesburg, Dubai, Stockholm, etc. Helping them adapt to the flash bangs and the chaos - and the opportunities that these represent - of the last few years.
“The application of disciplined analytics that predict consumer behaviour at the micro-market level and optimize product availability and price to maximize value growth'' After exiting a super successful business I started with my cofounder and partner Simon Launay, which went on to become known as Europe's first Pricing, Revenue Growth Management & Strategy consultancy (Fifth P), I approached some old school friends who were doing well in the Valley to help in codifying some of the intellectual property we had developed, alongside other learnings working for US/ European pricing and revenue management tech startups. I've since been working closely with global consumer goods businesses and tech scaleups, applying tech with data science/ analytics and new ways of working (the latter being the unlock) to help competitors leapfrog (or more truthfully, in most cases, gobble up) the competition. And this is my take on the pandemic and how to navigate existential challenges in the new normal, with an alternate reality, anchored to facts and 'on-the-gound' experiences, informed by discussions with clients and subject matter experts, somewhat nuanced to the view that the media and your government is spinning. Before the pandemic, Western* markets were running flat out, looking hard to offset negative growth with price changes, productivity gains and switches in the mix and assortment of goods sold. (for the uninitiated, smaller pack sizes in the world of fast-moving consumer goods generate higher profits, as a general rule)
“My whole life I have done all I can to establish relations with people in other countries and cultures. It’s not only fun but also necessary to strengthen the global safety net against the terrible human instinct for violent retaliation and the worst evil of all: war. We need Olympic Games, international trade, educational exchange programs, free internet—anything that lets us meet across ethnic groups and country borders. We must take care of and strengthen our safety nets for world peace. Without world peace, none of our sustainability goals will be achievable. It’s a huge diplomatic challenge to prevent the proud and nostalgic nations with a violent track record from attacking others now that they are losing their grip on the world market. We must help the old West to find a new way to integrate itself peacefully into the new world.” — Factfulness: Ten Reasons We're Wrong About The World - And Why Things Are Better Than You Think by Hans Rosling, Ola Rosling, et al. Since 2014, more than two thirds of revenue growth and an even bigger share of profit growth - among the top 50 global CPG (consumer packaged goods) firms - has come from pricing and mix rather than volume. Covid was a sucker punch for many. Before this the forces of economic power and gravity were switching from West to East. (Factfulness, by Hans Rosling is an important and relevant source that informs my data and analysis. Bill Gates paid him and this book close attention. Africa and Asia were heading for unprecedented explosive economic growth and upsides. This event creates significant advantage for some, and significant disadvantage for others. Individuals, groups, even nations. But the lines are blurry. They're not cut across race, or ethnic group, but do affect nations, by and large. The new normal has created more inequality than ever before. If Dr Rosling was still alive today he would have had a lot to say about the new order.
“If the UN forecasts for population growth are correct, and if incomes in Asia and Africa keep growing as now, then the center of gravity of the world market will shift over the next 20 years from the Atlantic to the Indian Ocean. Today, the people living in rich countries around the North Atlantic, who represent 11 percent of the world population, make up 60 percent of the Level 4 consumer market. Already by 2027, if incomes keep growing worldwide as they are doing now, then that figure will have shrunk to 50 percent. By 2040, 60 percent of Level 4 consumers will live outside the West. Yes, I think the Western domination of the world economy will soon be over.” - Dr Hans Rosling, Factfulness, who died in 2017, finishing this book at his deathbed.
Those who have doubled down on their power, currently expect individuals to make sacrifices for the environment, the economy, public health and safety, even the very furloughs and bailouts came at the expense of taxpayers. Many of which, especially small business owners who lost everything, didn't benefit from these handouts. 18 months of shutdown, orchestrated by elites in the West, who in themselves don't deserve to be in existence because they are fragile. They were fragile 10 years ago, and have held on by hook or by crook. Colluding with government, they manage to connive, corrupt and conspire to hold onto power a bit longer. Only a bit.
That said, what can you expect as a consumer post-pandemic? 1. Inflation (input costs for commodities has risen, making it harder to get that product to your home without passing on these extra costs to the consumer) And of course Brexit anarchy. No drivers, no staff, no goods, food shortages already appearing across the island. 2. Unprecedented changes in consumer behaviour, shopping habits, and channel dynamics (where you can buy from) in the last 18 months, will be felt across all product categories for years to come. Declining brand loyalty, increased 'at-home' needs, and a K-shaped recovery (inequitable; zero sum, win-lose, competitive, not cooperative). 25-40% of consumers across global markets have tried different brands since the pandemic started. Expect more promotions to fuel brand switching.
3. The K-shaped recovery. Let's talk about the inequality that is driving this. Thanks to the US and UK stimulus packages that reached a few but not all of those who elected to support the 'in it together' campaign, wearing masks and taking shots for the team, the 'stimulated' or fluffed up recovery is asymmetrical, and ‘growth’ is now going to come from high-income government supported or previously rich households, whilst there will be a slower consumption recovery for low-income households; their incomes have been affected disproportionately by this event or attack, depending on your world view. Sad but this is how these fiscal packages - on the other side of a national ‘we’re in it together’ war cry - has created such devastating inequality. Leaving a dangerous vacuum that threatens our health and safety. After all, if one of us is not safe then all of us is not safe. And with the inequality game, we've seen the devastation in countries like Cuba, Haiti, South Africa, etc. With much thanks to US/ UK banks and the uncivil service (fragilista's).
4. In Europe, extensive government support (fragilistas again) has limited the impact of employment (for some), and therefore also their disposable income. Any sign of recovery is skewed heavily to higher income households who received handouts, bailouts and furloughs, whilst the outlook for low-income households who were discriminated against by G7 governments after making existential sacrifices, will be negatively impacted by the decaying labour market. In Asia, the largest drivers of growth will be in line with Hans Roslings predictions (Factfulnes) ie increasing incomes and spend of low-to-mid households.
5. Shopping habits have changed. ie basket sizes, fewer trips to the store, and evolving consumer preferences. Less impulse purchasing, more stock-up and fill-in buying. If you're in Britain, Brexit has necessitated 'pantry-filling' and long range purchasing decisions even further.
6. Pricing is a key issue. Historically it has trailed behind inflation for consumer goods firms, creating inevitable pressures on margins for consumer goods companies. Brands have over-traded (discounted or promoted) creating margin pressure, and the impact of this latest event/ attack is going to make things worse for consumers.
What can you do as a consumer? Caveat emptor. Become more mindful (eksipnos in Greek or alert, awake) of where you shop for your basket of goods. Look, in Proustian terms, with new eyes. There's a lot of green-washing and bull-shit floating around right now, particularly from the Goliaths (the slow to adapt fragilistas) doubling down on anything they can to survive. Consider buying local, private label, or even German if you're in Brexit Britain at Lidl, who have, ironically, managed to out-compete many UK players in the brutal game of retail, quietly going along their way to become a prominent, humble and trusted brand on every high street in the UK and even beyond into Europe and the US.
Support fresh and local (locavore). Economies of scale are still being piloted for new industries and sectors (ie lab grown food) which have lofty ambitions but as yet still need to to be proven on measures of consumer health, safety, cultural acceptance and environmental impact.
Support your butcher, fishmonger, farmers and any private family run businesses. The reason there are so many fragilistas** in business and government today is because of monopolised, centralised, legacy-heavy slow moving unresponsive dead wood companies, and the people who run them.
Hold these arrogant 'traditional' businesses to account on prices and remaining competitive. Natural products are still the feast in a world of increasing famine. Get rid of your dodgy government who would rather let their people go hungry in an effort to save face. Build bottom up ecosystems for trade, support, equitable growth and progress. In a zero sum game we have to shake the trees and earn even grab our share of the fruits.
*The US, UK, Western Europe ** Fragilistas: According to Taleb, the problem with the fragilista is that they “make you engage in policies and actions, all artificial, in which the benefits are small and visible, and the side effects (are) potentially severe and invisible.”
In Part 2 of this series we explore actions that leaders can take, to mitigate risk and capitalise on a rapidly evolving landscape, through the lens of Revenue Growth Management strategy and nimble, adaptive ways of working.
Sources: As cofounder in tech startups I’ve benefitted from and also contributed to various industry sources, publications and seminars including. These include but are not exclusively limited to: McKinsey (https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/revenue-growth-management-the-time-is-now?utm_source=DSMN8&utm_medium=LinkedIn) US Federal Reserve & Economic Data, Bloomberg, The Financial Times, Bain, BCG, various industry white papers and keynote speeches in the US and Europe.
Logo credit: Mollie
About the author: Andrew Soteriou, Founder & CEO of Ubuntu Strategy Inc and FlowLabs, fmr COO at Fifth P, Strategic Advisor at PWC/ Strategy&, Global Revenue Growth Director at UpClear (New York & London) and CMO at Strategy & Consumer Tech Scaleups, Expert in Price & Advanced Revenue Growth Strategy & Capability and Host of FlowLabs 🎧 podcast. Speaker: US Consumer Goods And Technology webinars and keynotes delivered in London & New York, speaker at the Price Optimisation Institute (Geneva and Budapest), and panel member and keynote at the AI/ Big Data and Smart Cities Expo (Amsterdam)
Published by Andrew Soteriou
Founder & CEO | LinkedIn Top Voice | Retail, Consumer Products & Startups | Global Venture Partner & Advisor | Keynote Speaker & Host: FlowLab Podcast 🎧 Powering sustainable, inclusive growth, profit and impact.
Published • 2y Market, political and economic challenges along with legacy decisions are forcing consumer-packaged-goods companies to rethink their strategies for revenue growth management. What is nobody saying, and that you need to consider, to survive and thrive in the 'new normal'? Part 1 looks at the consumer view with regards revenue growth management strategy and ways of working; global challenges and opportunities. Part 2 will focus on the actions glocal (global mindset of interdependence, local execution and impact) leadership teams can take to build agility and trust at scale, for sustainable profitable growth.
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