ESM: European Supermarket Magazine is proud to launch 'The A-Z of Retail', a new subscriber-only series that offers a deep analysis of the retailers, suppliers and individuals making the news each week. Today: M is for Multinationals.
Despite what President Donald Trump might think, successful American companies have got to where they are today by championing a global mindset, rather than an isolationist ideology.
Trump's 'America First' credo is the antithesis of the multinational approach that has enabled all-American firms like Coca-Cola, P&G, Hershey, Amazon and Apple to achieve international prominence.
Over the past century, slick marketing campaigns of these billion dollar brands have been imprinted on consumers minds' around the world, such as Coca-Cola's classic Christmas campaign, or Apple's era-defining sleek designs.
Such achievements would never have been possible under an era of protectionism, and while the perma-tanned billionaire in the White House might believe that his policies will deliver a stronger America, they go against the very core of what has made the US home to some of the biggest brands in the world.
'Powerful Engine'
Last week, Coca-Cola CEO James Quincey addressed the President in all but direct terms, in an interview with Bloomberg Television at the World Economic Forum in Davos.
Asked to comment on Nafta, which has been in Trump's sights since he took office, Quincey said that while "very few trade deals are perfect," it's not the role of world leaders (or businesses for that matter), to start tearing up agreements that have led to global (and American) prosperity.
"I don’t think we should start deconstructing global trade," Quincey said. "I think it’s been a powerful engine for lifting all boats.”
Quincey, who took over as Coca-Cola CEO in 2017, also addressed (again indirectly) Trump's border policy, suggesting that a strong North America, working together, can be the answer to illegal immigration.
“Having a community of North America where all the economies are growing actually helps solve that problem,” he explained.
It's hard to tell whether Trump, himself present at Davos, was listening.
Bureaucratic Hurdles
At the same time, however, even the most successful multinationals will be aware that they must try harder, if not to appease the panderings of a hot-blooded president, then to get their own respective houses in order.
For one thing, the majority of multinationals are heavily over-staffed. At many large firms multitudinous layers of bureaucratic obstruction throughout company hierarchies inhibit any culture of entrepreneurship from flourishing.
Constant meetings and focus groups are the curse of the multinational and as a result the big names tend to be slow to innovate and develop new products.
In addition, the more 'global' an operation, the more challenges it faces in terms of identifying the idiosyncrasies of particular markets. In some cases, regional managers frequently don’t speak the language, or are insensitive to the local market ethos.
No Time To Waste
However, being truly global does not have to be a bad thing.
Meetings such as the Consumer Goods Forum Global Summit - attended by some of the biggest businesses in the world - can act as instigators for real change on matters that have global significance, such as plastic waste.
The consumer is now obsessed with the problems that plastic waste is generating for the environment by polluting our oceans.
Two weeks ago the European Commission launched the first ever Europe-wide strategy on plastics, which aims to make all packaging in the EU market reusable or recyclable by 2030.
And last week, again at Davos, Coca-Cola responded to the challenge, by setting a goal to recycle one bottle or can for every one that it sells by 2030.
It has also, along with other firms such as Evian, L’Oréal, Mars, M&S, PepsiCo, Unilever and Walmart, pledged to become a corporate leader in reducing plastic waste, which has wreaked havoc on the oceanic eco-system.
At the World Economic Forum, 11 leading brands, retailers and packaging companies announced a pledge to work towards using 100% reusable, recyclable or compostable packaging by 2025 or earlier.
Multinationals, with their global approach, have also proven themselves adept at combatting diet-related challenges, such as the obesity crisis - with snacks and beverage manufacturers putting considerable investment into healthier alternatives to many of the snacks and treats on which they established their names.
Elephant In The Room
At the same time, however, the elephant in the multinational boardroom is the proliferation of private label products. Retailers around the world have been upscaling their own brand development, while heavily undercutting big brand prices.
What was once a fledgling industry with limited impact on big brand sales, is now very much a burgeoning presence on the shelves of major retailers.
Through private label, retailers have been able to wrest control back from the major brands, and create additional benchmarks for themselves in terms of food quality, innovation, and new product development.
In many cases, such as in France, major brands' response to the mounting challenge of private label has been to cut prices.
But ESM suggests that a different approach is needed.
Big brands need to assert their authority - to recapture their standing in the minds of consumers, and ensure that they wouldn't choose any other product. In order to achieve this, they will need to streamline their operations, and cut away some of the middle management that adds little to the business.
A successful brand is one that understands the need to back up a quality product with a quality marketing message.
After all, if they are willing to shout down a President, isn't it time the consumer started hearing their voice a little more?
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Kevin Duggan, Kevin Kelly and Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
