Blue-chip firms yield to the discerning consumer

The discerning consumer could well be king of the marketplace.

Consumer demand for responsible sourcing, ethical supply chain and sustainable products has reached such a tempo that even blue-chip companies with a history of robust sales, large portfolios and established brands are acknowledging the phenomenon.

Take €44-billion Unilever. Though the multinational boasts of seven out of 10 households across the planet using at least one of its products, it still has to embrace the sustainability business model.

Last week the company's CEO, Paul Polman, at an investor presentation spoke of such a “small but growing” tribe.

Social benefits

“For this group of consumers, a more sustainable brand is a more desirable brand. Few of them will accept tradeoffs in price, performance or convenience,” he said, pointing out that they are choosing to buy brands such as Rainforest Alliance Certified Lipton Tea, and Ben & Jerry's Fair Trade Ice Cream. This was not just a “developed world phenomenon. Consumers in emerging markets are also responding to our sustainability messages,” emphasised the CEO recalling the company's hand-washing campaign in South Asia and Africa to reduce infections such as diarrhoea and drive sales of its Lifebuoy soap brand.

“Social benefits of this kind will increase in relevance in the years to come. And the brands that get their message across first will have more credibility and authority than those who come late to the party,” he said.

Our own desi Dabur brand has also felt the pull of the judicious consumer. Its entire Real and Active juice portfolio has been built on this plank.

Though the juice portfolio has given it a fillip over the years, it finds that the most encouraging consumer response has come from its latest fiber-enriched flavours, taking its latest quarter growth to a robust 42 per cent. “Herein lies the proof that consumer differentiation is the key to growth,” points out an analyst.

It's been different, yet similar for Nestle. The company that received flak years ago for promoting infant foods over breast milk, has over the years turned towards the concept of “creating shared value” to emphasise its social responsibility.

Besides focussing on affordable price points and nutritional value, in India, the emphasis is on clubbing it with development projects on the ground.

“You build your business and yet give retribution to your shareholders by linking up with the society at large in everything you do… That is how we have been going about our business since we started here… We are focusing on three areas – nutrition, water and rural development,” Paul Bulcke, Chief of Nestle SA, had said in an interaction.

Consumer behaviour research also points the same way, with luxury players too watching their step. Research commissioned by diamond major De Beers shows that the market was witnessing “more sophisticated purchase drivers”.

Consumers “had a heightened awareness of social and environmental responsibilities” with “product sourcing and supply chain standards coming under increased scrutiny” in the segment.

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