Consumers today have the ability to learn more than ever about the products they choose to buy, and they have growing options in how they’re able to buy. That means companies like Coca-Cola must be more transparent, more engaging and more innovative.
Chairman and CEO Muhtar Kent, who was a featured speaker at the recent Consumer Goods Forum in New York, said modern consumers are “empowered like never before.”
“Most of us began our careers in the days of consumer-push supply and value chain,” he said. “Products were pushed out by manufacturers with very little individual transparency into our processes and supply chain practices. Then, with the widespread adoption of the internet in the late 1990s, more control shifted to the consumer. … In this era, consumers have to be at the center of our business models if we want to win their hearts and minds and their advocacy.”
This change led to Coca-Cola’s involvement in the Future Value Chain initiative. Kent's remarks were followed by comments from the co-chair in the initiative, Jerry Black, senior executive vice president and chief digital officer of AEON, a large and influential retailer in Asia.
“Disruptive forces in our business environment are changing the ways consumers think, behave and interact,” Black said. “The exponential rise in Web and social media connectivity continues to change the consumer landscape. Meanwhile, we’re also seeing significantly different consumer attitudes around trust, transparency and sustainability.”
Kent noted a growing consumer interest in local production. “Today, in the U.S., for instance, 90 percent of consumers consider where a product is produced before making their purchase decision,” he said. “And three quarters say they will pay more for locally produced goods.”
The consumer products industry can help people find—and feel good about—products that are sustainably sourced, manufactured, distributed, marketed and merchandised, Kent added. “I think of this as the era of the ‘values-based value chain’ where consumers have visibility into every aspect of our businesses,” he explained.
The landscape is even more complex because of the diversity of global markets. Emerging markets are producing a fast-growing urban middle class, while many parts of the developed world are aging.
The Consumer Goods Forum and Capgemini will soon publish a study about the evolving landscape called “Rethinking the Value Chain: New Realities in Collaborative Business.”
Kent said the traditional focus on a value chain is no longer enough. “The study suggests that the very essence of the value chain is changing and coming to resemble more of a ‘value network,’” he said.
For example, consumers today often make purchase decisions that involve social media, online research and store visits.
“We should shift from our traditional focus on bilateral manufacturer-to-retailer collaboration to a ‘value network’ approach, one that places the consumer at the center of the network,” Muhtar said.
The chairman said that the number of people connected to the Internet ballooned to 3 billion last year, on the way to 5 billion consumers and 1 trillion devices by 2025.
“Ultimately, I believe this evolution of the value chain offers tremendous opportunities for all of us, if we get it right. And I believe we will,” he concluded.
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