Diversity, Equity & Inclusion – the topic du jour

Much has been written about Diversity & Inclusion in the FMCG sector. It has to be said that the FMCG sector is possibly one of the more diverse sectors I’ve seen to date. However, this varies significantly from one region to region and from company to company. Today’s blog explores what some of the best in class companies, for diversity, do differently.

Senior and middle management who are advocates of diversity

It is not enough that companies have senior management who are supportive of diversity in the workplace. Middle management also need to be advocates of this. At the end of the day, middle management are the senior management of tomorrow. Also, middle management make the active hiring decisions of today.

Colour/gender blind hiring practices

Companies should encourage applicants to apply with CVs that do not mention names or gender details and with no photographs. While it is common practice in most countries to not note gender in CVs and to not put photographs in, it is equally common practice to look up applicants on LinkedIn. So more companies should consider asking candidates to apply without names by allocating serial codes to applicants. Companies should consider communicating through an app/platform that shields the applicants’ email (which can give clues to their name).

A workplace welcoming of flexible working

I have been lucky to previously work in companies that were supportive of flexible and remote working. While certain managers were more supportive of this than others, I learned that working from home does not need to impact the quality of output and sometimes, it helps generate better work in less time than expected! So companies should not shy away from implementing flexible working.

It has been widely noted that flexible working promotes diversity, equity and inclusion in the workplace. “Workplace flexibility can be mutually beneficial to an organization and its personnel, and is recognized to help achieve gender parity,” said Fatou Haidara, Managing Director of the UNIDO (United Nations Industrial Development Organisation) Directorate of Corporate Management and Operations.

Flexible working does not have to mean working from home permanently. In fact, that can be a deterrent too in case their home life is chaotic. Flexible working simply means allowing your employees to work from home when they need to and from an office during other times. Also, it may include different hours. It maybe that some people work 10 hours on 4 days and just do a 4 day work week, some do the regular 8 hour, 5 day work week and others, somewhere in between the two.

I keep hearing that it is difficult to find female applicants for certain roles, especially when it comes to technology and sales. But I’ve never had a problem finding great female talent for technology or sales roles in any of my previous roles or at salesBeat.

The key is to signal how open and supportive your team or company is to people from different backgrounds or to neuro diverse people.

Thriving in the era of uncertainty

In December 2021, Harvard Business Review published a book by John E. Katsos and Jason Miklian – Preparing for the Era of Uncertainty. This book posits that we are currently living in the era of uncertainty and gives organisational leaders the frameworks and tools, that are used by organisations and businesses in conflict zones, to survive and even thrive.

The book focusses on the culture that needs to be embedded in the organisation and the leaders of the organisation and includes interviews with seasoned leaders, charitable organisations that operate in conflict ridden parts of the world and draws learnings from communities that share purpose.

This book couldn’t have been more timely as we went from living through Covid and into war. For any business leader interested in learning more about the leading through uncertainty, I highly recommend the book, Preparing for the Era of Uncertainty

In this blog, we look at how sales teams and leaders can survive and even thrive during this time.

The reason HBR and the book consider this the era of uncertainty is due to all the various forces impacting our day to day lives. Even prior to the Coronavirus pandemic, we were living through rapid, unrelenting change – from unpredictable weather upending our expectations of living through normal seasonality to unexpected political and economic outcomes and everything in between. We had 2020, which necessitated an entirely new way of living and working. And now we have rising inflation and the conflict in Ukraine.

This has not just disrupted the way we live, but also the way we work. This disruption is most felt in the fast moving consumer goods(FMCG) sector (aka consumer packaged goods (CPG) sector) where any changes to the way we live and work impacted sales in the sector.

The disruption is most felt in sales and in marketing/innovation at these companies. This is because of two reasons:

  1. The first, as you may have guessed, is that these products are meant for consumers and any factor influencing our decisions impact sales and how we perceive the brands. Given the prevalence of ‘Cancel culture’/’Call-out culture’ companies and brands need to be hyper-aware of public perception of their brands.
    A recent example is how consumers took to social media with #boycottPepsi, #boycottCocaCola & #boycottMcDonalds, which were all trending last weekend.
  2. The second is that fast moving consumer goods companies are at least one step removed from consumers as most companies/brands are not direct to consumer. They sell into ‘aggregators’ like supermarkets, convenience stores, wholesalers and distributors, and the product is available to consumers through supermarkets, convenience stores and other grocery stores. So companies are not as in-sync with the end consumer as they need to be. This results in major jolts to sales and marketing when unexpected external factors influence consumer behaviour.

While these constant changes may be viewed as a threat, they can also be viewed as opportunities by sales leaders and teams as all companies in the sector are facing the same challenges. This then becomes more about transforming risks into opportunities.

So how can companies do that?

Data can tell a story. While so far, companies have been using data to provide analyses of historical performance, times dictate that companies start using data for predictive purposes.

The wealth of data that FMCG companies and retailers have to hand can be processed through the lens of the consumer to understand how they would behave given different circumstances. Channel, brand and change management decisions can then be taken in accordance with these results.

What are consumers likely to buy in the near term? How much are they likely to buy?

Both these questions can be addressed by data. However, companies need to transition from manually processing and interpreting their data to using AI driven platforms and models to process the data and interpret these results so they are not constantly chasing numbers, but are ‘on top of it’.

Companies can also use this time to trial new ideas and concepts for launch.

Times like these always bring with them opportunities. Looking back at history, revolutionary ideas were adopted & owned by consumers, primarily during periods of crisis. FMCG companies and supermarkets should use this time to trial product ideas and concepts that have, so far, been viewed as a risk by management.

Sustainability and cutting out (plastic) packaging

This has never been more critical. 2020 & 2021 have been the two worst years for climate change to date, despite fewer people commuting to work. Consumers are now paying attention to brands that are putting sustainability first. There has been a noticeable increase in demand for brands that have been doing this through the pandemic. Trialling these concepts during these uncertain times can help set you apart from other brands for consumers and help drive sales during these difficult times.

Pay attention to your consumers

While this is not a new concept (both CPG & FMCG have the word consumer front or centre!), both brand owners and retailers need to pay more attention to social media channels to track and respond to consumer sentiment about their brands. This can help with not just retaining, but also growing market share during times like these as you would be better placed to respond to or anticipate consumer needs and wants.

These days consumers do not shy away from expressing their opinions on social media. However, companies currently are not leveraging this information enough. They use this information primarily for new products/innovations and marketing activities. However a case can be made for using this information to understand consumer demand, sales volumes to be precise.

If you would like to discuss any of the above in more detail or gain more information on how data can be leveraged during this time, feel free to email me on veena@salesbeat.co

Surviving inflationary & supply chain pressures

At the start of 2022, everyone was breathing a sigh of relief as we started to accept that non-lethal variants of Covid-19 were going to be a part of our lives going forward, just like influenza and how we live with it.

However, by February 2022, everyone was talking about rising food prices and how inflation was at a record high. This was because the agricultural sector had been impacted by the lack of people available for sowing, pruning and harvesting due to the pandemic. As sowing season was not maximised and 2020 & 2021 were two very unpredictable years for weather, the resulting harvests were/are not as plentiful as they could be.

All of these had impacted food prices by Jan/Feb 2022. However, by the end of February, the conflict in Ukraine had started and till date there has been no sign of this abating.

In fact, on Friday 11 March 2022, there were reports of the Russian forces hitting grain silos, ports and the infrastructure needed to gather and distribute the harvest, as well as food storage facilities according to The Toronto Star and The National post.

This is expected to have significant further impact on availability and prices of food and oil prices, which in turn drives up inflation further.

Between Russia & Ukraine, they export c. 25% of the world’s wheat, and c. 70% of the world’s Sunflower oil (46% from Ukraine & 23% from Russia). Ukraine is a leading corn(c. 13% of the world’s corn) and soybean exporter as well. For centuries, Ukraine was considered the breadbasket of Europe. So the conflict has a major impact on food prices. Even before the conflict, prices for sunflower oil were expected to increase and wheat prices had already increased due to the constraints imposed by climate change and the pandemic.

The alternative to the significant current and expected shortfall in Sunflower oil and Wheat supply in 2022 is to source Sunflower oil from the US and wheat from Australia. However, market pressures and increased demand for US Sunflower oil from other countries has resulted in already high prices skyrocketing due to limited stocks available, and Australian wheat farmers are struggling with supply chain bottlenecks and climate change challenges.

This shortfall in food supply is not expected to ease in 2022 as in the Ukraine/Black Sea region, the sowing season for Sunflower oil is April/May for harvesting in September/October, for Wheat harvesting is in August/September and for corn, planting starts in early May and harvesting in September.

Further to these food related bottlenecks, we are also facing rising prices for oil and gas due to sanctions on Russia and complex supply chains due to the conflict. Russia produces nearly 11m barrels of oil a DAY. They are the 3rd largest producer following the US and Saudi Arabia. Russia is the world’s biggest exporter of oil to global markets and the second-largest exporter of crude oil, exporting about 2.85 million barrels per day by sea lanes and pipelines, according to the International Energy Agency. In 2021, 70% of Russia’s oil produced was exported. As a result, oil prices have jumped by more than 30% since 24 February.

What’s more Russia is the largest supplier of Gas to the European market. The combined impact of the two are putting further pressure on already high energy prices and driving inflation up even more.

Due to the price increases expected, consumers should consider buying locally produced grains, beans and oils, and use public transport (or bike/walk) to reduce spend and ease the pressure on the above mentioned foods and oil/gas in 2022.

Fast moving consumer goods companies are caught in between with reduced supply of raw materials and fuel and soaring prices for both. While there are options and alternatives for us as consumers, companies that produce food and beverage brands have fewer options.

For example, Corn is an essential ingredient of Kelloggs corn flakes and they’ll find it difficult to move from using Corn as a major ingredient.

They would also experience increased costs (from increased costs of corn and the energy used for production and logistics), which, if they pass on to consumers, would impact demand and sales in 2022 and, alternatively, if they decide to absorb all or some of the costs, would significantly impact on margins and profit.

While we’ve used the example of The Kellogg Company, all FMCG (CPG) brands will experience this, some worse than others. For example, those that use oil, wheat, soy beans or corn as an (essential) ingredient or in the production process will see significant cost increases and those that do not will still experience cost increases due to energy price increases.

In order to mitigate the revenue impact, FMCG/CPG companies will need to look toward increasing volumes of sales through new products, markets or consumer groups. In order to manage costs they need to look toward reducing the costs of other raw materials that go into their products.

Continuing with my example above, The Kellogg Company could look to reducing the cost of packaging and printing for its corn flakes by looking to cheaper options for its cardboard and printing. While this may not mitigate the increase in the cost of corn, the reduced cost of packaging and printing may help mitigate the increase in corn and energy prices to an extent. Another, more environmentally friendly, option maybe to use this as an opportunity to introduce packaging free product and refillable canisters at stores. This can help The Kellogg Company reduce the cost of packaging significantly while attracting more consumers for its climate friendly practices.

Refillable stations of The Kellogg Company range at ASDA in the UK

While in the short term, they may still experience some cost increases, in the long term, they would be set up to overcome significant economic and supply chain shocks due to a diverse supplier base, to resist competition, and retain or even grow their market share due to their environment friendly practices.

Sustainability and stock

For FMCG/CPG companies, optimal retail stock levels is about maintaining enough stock at a retailer’s warehouse or at a store level to eliminate out of stocks in stores. For retailers, optimal retail stock levels is about maintaining just enough stock to eliminate overstocking in stores or at their warehouses.

However, optimal stock levels need to be about balancing the two – ensuring that consumers always find the SKUs they want at stores while eliminating overstocking. Due to complex demand patterns, dictated by customer buying behavior, this can be difficult to achieve.

Today we explore how sustainability and stock levels are linked and why it is imperative for FMCG companies to ensure they maintain optimal stocks and sell optimal volumes to retailers. Over the past 5 years, we’ve heard of several companies in the luxury sector disposing of their excess stock (burning them or sending them to landfill) and the adverse impact this has on climate change and the environment.

Many of us have not heard of FMCG companies doing this. However, those of you who are close to or in the FMCG sector know that packaged food is often destroyed once past the expiry date or given to farms as cattle feed.

While companies see this as a waste of money, this has even greater implications on sustainability. Not only does the production process consume energy and resources, but the destruction process is as energy intensive.

With sustainability becoming the epicentre for business strategy in FMCG/CPG companies, focus should not just be on sourcing, water utilisation, energy consumption and minimising waste in the production process. Managing stock and raw material write offs is an integral part of this.

Morrisons, one of the large supermarket chains in the UK, recently made the news when they announced that they were scrapping expiry dates on their range of own brand milk. According to Morrisons, Milk is the third most wasted food and drink product in the UK and 1 litre of milk can account for up to 4.5kg of CO2.

Personal care and cosmetics products have longer shelf life, but are also known to expire and either sent to landfill or destroyed. These are often mixed with coloured dyes to prevent reuse, if sent to landfill. And if you were wondering about the carbon footprint for personal care products and cosmetics, this may give you an indication. An average bottle of shampoo (c.30 hair washes) can account for up to 10kg of CO2. And when expired shampoo units are sent to landfill or burnt for energy, the implications are much worse.

Retailers and FMCG companies should be looking at data driven software that can model consumer buying behaviour to optimise stock levels at retailers, minimising write offs, and the resulting carbon footprint.