Are CPG giants the losers of digital transformation?

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Are CPG giants the losers of digital transformation?

Thomas Reiner | 21.02.2020

Many large brand owners are losing market share to small and very small players in the consumer-packaged goods market. While the market share of the giants in the US fell from 57.5% to 55.5% between 2013 and 2018, the small players were able to increase their share from 23.5% to 25.7%.

A reason for this is digital transformation. It levels out the sheer “advantage through size” that used to be the deciding factor and enables even small players to reach and supply consumers directly and in an unprecedented way.

Powerful, old barriers to market access have thus fallen. Online retail has established itself as a viable CPG channel. Large investments in building a brand or the exhausting fight for a place on the limited shelves have become unnecessary. The small and very small have settled in the formerly exclusive market of brand giants and are growing magnificently. They are fast, flexible and innovative.

If the big brands want to stand up to them, they can no longer reduce digital transformation to social media and e-commerce. They must face the new reality strategically. Only then can they create the space for urgently needed innovations.

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Google Search reveals: The pressure continues to mount on plastic packaging

Google Search reveals:

The pressure continues to mount on plastic packaging

Thomas Reiner | 14.02.2020

The search term “Plastic Waste” is making a rapid career on Google. Since the end of 2017 in particular, interest in the topic of plastic waste has increased dramatically. In September 2019, the search term reached the highest possible value of 100 on Google, and since April 2019 it has been consistently above the 70 mark.

As interest in the subject of plastic waste increases, so does the pressure on plastic packaging. This is happening on a global scale, as the geographical distribution of search queries shows.

One thing is clear: the pressure will continue until there is a solution to the problem. The companies in the industry must face up to this. The right way to do so:

  • Communicate honestly and openly with consumers and supply chain partners.
  • Find concrete solutions to the problem together with the right partners. Integrate sustainability into your corporate culture and processes. Ensure that your packaging is truly recyclable and ensure that it flows safely into the right cycle.

At B+P we’re passionate about supporting our partners at identifying solutions and opportunities concerning sustainability and love exchanging ideas & experiences with those interested or involved in the topic. Feel free to me know if you’re keen on having a chat about it too.

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Edible packaging’s a great step towards sustainability– Regionality & seasonality even greater

Edible packaging’s a great step towards sustainability–

Regionality & seasonality even greater

Thomas Reiner | 12.02.2020

The Rewe Group is the first retailer in Germany to test the use of coatings for fruit and crops. These are given a wafer-thin, edible coating consisting of a mix of natural substances such as sugar residues, cellulose or plant-based oils. The coating is applied by spraying or dipping the food.

The applied, natural coating reduces the cellular respiration of the harvested products. To achieve this, the coating is designed to allow more carbon dioxide than oxygen to pass through. This creates a kind of modified atmosphere in the fruits, in which the goods remain fresh for longer. The prolonged quality should help to reduce loss and waste of food.

Coating is an interesting new packaging approach. Rewe’s initiative is creative and explorative, which is something that can only be welcomed. However, it would be even more consistent and ultimately more sustainable to tackle the problem at its root.

If it works out to accelerate the supply chain, for example, by means of more regionality and seasonality in the range of goods on offer, this will lead to a “decoupling” of shelf life and packaging costs. What needs to be stored and transported for a shorter period of time needs less protection from the packaging – whatever material it may be made of.

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Without creativity there is no sustainable strategy. Four approaches help solve this

Without creativity there is no sustainable strategy.

 

Four approaches help solve this

Thomas Reiner | 06.02.2020

At universities, students learn that for strategic issues, structured analysis tools are to be used. The problem with this is that although these tools are ideally suited to analyze existing business, they are hardly suitable for developing ideas for change.
This is where creativity is required. Because in times of disruptive changes caused by sustainability, circular economy and digital transformation, the future can no longer be simply derived from the past. As a result, we’ve got to approach strategic issues much more creatively in order to find valid and successful solutions.
Four approaches for developing ground-breaking strategies can be described under the terms “contrast”, “combination”, “constraint” and “context”. Kudos to Adam Brandenburger for his respective contribution in the Harvard Business Review.

Contrast
This approach involves identifying, questioning and, if necessary, refuting the basic assumptions of the existing strategy. For example, the founders of PayPal refuted the widespread assumption that payment transactions are only possible and secure between institutions.

Combination
How can traditionally separate products or services be combined? This approach is about creating connections across borders. For example, a Chinese social media platform now offers integrated services for mobile payments. This means that users no longer have to leave their social network to make purchases (or sales).

Constraint
Creative thinking can turn constraints into opportunities. In principle, several approaches are possible in every situation. However, constraints lead to the fact that we may only think in one direction, which later turns out to be wrong. Example: Tesla did not have a dealer network at the beginning of its activities unlike the established car manufacturers. Instead of pursuing the obvious idea of building a dealer network, they decided to sell their vehicles online.

Context
This approach involves removing a problem from its original context and looking for another context in which a similar problem has already been solved. The “comparative context” may well come from a completely different industry or even from a different time. An example of this is the “Intel Inside” campaign, with which Intel transferred the “brand product” approach to the high-tech industry of microprocessors.

We have to drastically increase the use of PCR! Coca-Cola’s use of rPET in Sweden is a good start.

Source: The Coca-Cola Company

We have to drastically increase the use of PCR!

Coca-Cola’s use of rPET in Sweden is a good start.

Thomas Reiner | 03.02.2020

Coca-Cola is replacing its conventional PET bottles in Sweden with bottles made from 100 percent recycled PET. According to the company, this saves 3,500 tons of virgin plastic per year. CO2 emissions from business operations in Sweden are reduced by 25 percent as a result of the conversion.

For Coca-Cola, the measure in Sweden is only a first step. By 2023, the company aims to achieve a quota of 50 percent recycled material for beverage bottles throughout Western Europe.

It will be interesting to see how Coca-Cola implements this target in the large markets of Western Europe. After all, Sweden with its 10 million inhabitants represents only about 2 percent of the population in the EU. And the decisive factor is coverage of the main markets.

However, Coca-Cola is taking the right path, especially as – according to Greenpeace – “the world’s largest producer of plastic waste”. After all, it is not enough to provide packaging that can be easily recycled. This measure only makes sense if we drastically increase the use of recycled plastic at the same time. Only then does the cycle close.

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