THE COCA-COLA RETAILING RESEARCH Councils SUSTAINABILITY, SOCIAL MEDIA… AND THE FUTURE OF RETAIL Global Retail Summit London, August 2012 The first Coca-Cola Retailing Research Council was formed in 1978 in North America to help retail customers address industry issues through organized discussion and commissioned research. Today, the Company sponsors six Councils throughout the world: North America, NACS North America, Europe, Asia, Latin America, and Eurasia & Africa. Each Council is comprised of up to 20 retail leaders and non-voting Coca-Cola system executives. Widely considered to be among the industry’s most prestigious retail think tanks, the Coca-Cola Retailing Research Councils have published more than 50 proprietary studies on issues ranging from shopper insights and new market dynamics to technology, innovation and social media. THIS PUBLIcatION IS A COLLECTION OF PAPers PRODUCED FROM PresentatIONS at GLOBAL RetaIL SUMMIT. Panel DIscUSSIONS DURIng THE SUMMIT WERE NOT RECORDED. © 2012 THE COCA-COla EXPOrt CORPOratION, UNDER THE AUSPIces OF THE COCA-COla RetaILIng ResearcH COUncIls CONTENTS FOREWORD FACING UP TO NEW REALITIES Muhtar Kent PAGE 2 SUSTAINABILITY THE CHALLENGE FOR RETAILERS HRH Prince Charles PAGE 4 WELCOME TO THE NEW NORMAL Lord Deben PAGE 8 THE QUEST FOR CHANGE Carter Roberts PAGE 12 WHY LESS HAS TO MEAN MORE Dr Jason Clay PAGE 16 SOCIAL MEDIA BACK TO THE FUTURE? James Quarles PAGE 22 BE YOURSELF… SIMPLY FLAWSOME Wendy Clark PAGE 28 IT PAYS TO TALK. BUT KEEP IT RELEVANT… AND HONEST Richard Reed PAGE 30 THE FUTURE OF RETAILING HOW TO PREPARE FOR THE ‘PERFECT STORM’ Mark Price PAGE 34 SUMMARY THE PROMISE OF SUSTAINABLE GROWTH PAGE 38 LIST OF MEMBERS PAGE 40 CCRRC Global Retail Summit RepoRt FOREWORD FACING UP TO NEW REALITIES Muhtar Kent Chairman and Chief Executive Officer The Coca-Cola Company ince 1978, the Coca-Cola Retailing This is why I am convinced that sustaina- Research Council has generated over bility and social media will forever be con- 40 extensive, proprietary studies on nected at the hip. Today alone, 560 million a wide range of retail issues, from Facebook users will check out their accounts shopper insights and new market dy- by mid-morning, and a large percentage of Snamics to technology, innovation and, most that group will do so before having breakfast recently, social media. The enduring nature or getting dressed. of the Research Council is due largely to our Before the sun goes down tonight 250 mil- collective ability to take many of these ideas lion new photos will be posted on Facebook and actions and implement them success- and a similar number of updates or Tweets fully into our businesses. will have been added to Twitter. Now, as we launch the next leg in the If you think that does not matter to you, Council’s journey, we should all feel in- stop and think again. Today one of the most “ spired. Environmental sustainability is top- talked about topics in social media is food. TODAY ALONE, of-mind for everyone in the retailing world. People are talking about what they are eat- 560 MILLION More than 80 per cent of our global consum- ing, drinking, cooking and buying. And they FACEBOOK USERS ers say that it is important for businesses to are giving their opinions about those expe- take a leadership position in environmental riences – by the millions – every day. These WILL CHECK OUT sustainability. conversations lead to purchasing decisions THEIR ACCOUNTS BY In the pages to follow, you will hear from and brand-building opportunities. Clearly, MID-MORNING some of the world’s foremost thought lead- we are entering an era where we must man- ers about the role the retailing sector can play age entirely new sets of economic, environ- MUHtar” kent in addressing environmental and agricultur- mental and consumer realities. al challenges that impact the health of our In the following pages, you will hear about businesses, planet and lives. three critical, inter-connected themes that At the same time, you are going to be ex- will shape our businesses and brands in the amining some of the best thinking and strat- years ahead: egies around social media. Not surpris- n Food security ingly, the world’s most environmentally n Agricultural and supply chain innovations conscious age demographic – 18 to 34 year n Ongoing quest for human dignity olds – are also the leading users of social me- dia. But every day, the demographics skew Food security is about ensuring we have the older. And every day, social media is becom- right resources, technologies and distribu- ing the new mainstream media. tion systems in place to feed a community, a Millions of people today rely on digital nation or even an entire region of the world. media as their number one source of news By 2050, the world will grow to nine billion and information. people, up from seven billion today. That 2 CCRRC Global Retail Summit RepoRt Eyes front… Council members listen attentively on the opening day of the Summit is food security issue number one: feed- eration, over-nutrition has come to eclipse ing nine billion people, and doing it against under-nutrition as the world’s greatest “ headwinds of greater consumer demand, health threat. Today one billion people are FOOD SECURITY scarcer land and resources, higher costs and overweight, while 900 million battle with is BECOMING a changing climate. malnutrition. A VERY COMPLEX Just look at what we have experienced this We grow enough food. The problem is that past year. Global food prices have risen eight 40 per cent of all calories grown for human GEOPOLITICAL ISSUE per cent and will likely continue to climb consumption never make it into our mouths. MUHtar” kent as oil prices increase, weather conditions Bad infrastructure, corruption and wasteful worsen and Asia’s escalating demand for habits are the main culprits. In 2012 alone, food imports continues to surge. nearly three trillion pounds of food was expected to go to waste. That, McKinsey es- o here we are with higher energy, food timates, is $250 billion dollars of waste. But and transportation costs. Add to that if we reverse our thinking and focus on solu- the sustained increase in demand for tions, that’s a $250 billion dollar opportunity food and energy that is being prompt- to get things right. ed by rising living standards in emerg- Food security and agricultural innovations Sing nations. As people earn more, their di- are, at their core, basic human rights issues. ets and preferences also change. In many Social justice and food justice are tightly parts of the world, people can now afford an connected. Presidents Clinton and George additional meal each day. Little wonder we W. Bush, and others, have said that what are seeing agricultural outsourcing on such is lacking is not food but the political will to a massive scale. fairly produce and distribute food. Think about China’s recent buying sprees Ironically, the catalyst that triggered the of farmland in sub-Saharan Africa. revolutions across North Africa and the Mid- In Congo alone, China purchased a swath dle East was the Tunisian government’s of land larger than Belgium to produce palm denying a young man the right to sell fruit oil. In the Sudan, South Korea recently pur- from his street stand. They denied him not chased 1.5 million acres of farmland, while only his livelihood but his dignity. the United Arab Emirates purchased a mil- Today, one quarter of the world’s work- lion acres to grow grain. ing population is employed in either grow- This is not just an Asian or African trend. ing or distributing food. They are feeding Sweden, for instance, recently purchased the world on less than half of the world’s thousands of acres of agricultural land in arable land. So the question becomes, how Kazakhstan. Even land-rich America just do we help create a more just world for those purchased 100,000 acres of prime wheat who earn their living through agriculture as fields in Ukraine. well as those who suffer from poverty and This is just the tip of the iceberg. Food malnutrition? security is becoming a very complex geopo- Part of the answer is that we have to inno- litical issue – one that our industries will have vate. We have to invest. We have to contin- to navigate with great skill and diplomacy. ue doing what all of us do best – grow and ex- Closely related to food security are agricul- pand our businesses, and provide new op- tural and supply chain innovations. This is portunities for sustainable employment. another area where our industries can have It is a big responsibility. It requires us to a huge impact. Agricultural innovations learn more, to stay curious and always try come with the promise of saving mankind to understand the changing trends shaping and the planet. And they have come a long our world. This report will play a vital role in This article © 2012 way in a short time. In the span of one gen- doing just that. The Coca-Cola Company 3 CCRRC Global Retail Summit RepoRt THE CHALLENGE FOR RETAILERS Food manufacturers and retailers touch the lives of everyone every day – so they are perfectly placed to lead the debate on sustainability, suggested Prince Charles in a video address at the start of the Global Retail Summit. How they respond to the challenge will define the planet’s future. Here is what he said: HRH The Prince of Wales here are some seven billion people in stability of the world’s ecosystems and the the world and you represent an indus- durability of the Earth’s limited natural re- “ try that touches each and every one sources – not the other way around.