In light of global concerns, companies are shifting their business models toward decentralization. François Faelli, who leads Bain's Global Consumer Products practice, discusses how decentralization and sustainability concerns are affecting how consumer goods companies do business.
Read the transcript below.
FRANÇOIS FAELLI: The theme of the conference is Globalization 4.0. And I think globalization for CP companies has a long way to go. I think this conference marks the end of centralization. For the good part of the 20th century and for the last years, CP companies have tried from a central location to send a lot of brands and products to the entire world.
Now, the consumers are telling us, "we don't want that anymore." The next generation in China wants Chinese products. The next generation in India wants Indian products. And a lot of advisors of CP companies have misguided them into a very central model—central for tax reasons, central supply chain, central marketing teams. This is all dismantling, and the winning CPG companies will re-anchor their business model in local consumer needs. And we'd probably have to evolve their business model towards more decentralization.
Now, the consumers and the citizens are becoming closer and closer, and the citizens also have decided that it was time to literally stop shipping products all over the world and increasing the carbon footprint of everything we do ... and it's obviously applying to plastics and waste. Now, the other theme I picked up is that a lot of the efforts of CPG companies have to be optimized vertically within the model: more of the same, more efficiencies, more scale.
The impression I got from speaking to the leaders of the CPG companies is the next wave of profitable growth will be more horizontal, i.e., collaborating with retailers, collaborating with suppliers to make better, more sustainable products that create value, not only economical value, but call it world value. Do well while doing good. Do good while doing well.
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