Catering to the global consumer means understanding them at the local level
When Partner & Managing Director Bernardo Silva—the business strategist, not the soccer star—started out with The Coca-Cola Company in southern Brazil in the ‘90s, managing brands such as Sprite and Coca-Cola, the consumer products world was very different. At that time, global brands dominated in the consumer mind thanks to the sheer scale of operations: they could secure shelf space at leading retail outlets and invest heavily in TV spots, distributing their product from well-established manufacturing and distribution infrastructure.
Brazil became too small for Bernardo’s personal and professional ambitions, and he moved to the U.S. to pursue an MBA at Northwestern University’s Kellogg School of Management. He has since carved out a career as a multilingual (English, Portuguese, Spanish, and French) business strategist and management advisor, who has helped consumer products companies evolve as the global market became more connected, complex, and fragmented.
For example, in 2016, when Bernardo was advising Molson Coors on the acquisition of the Miller brands, the critical challenge was not only to enable routes to market and commercial operations across more than 90 countries, but also to define a coherent business strategy for a newly acquired international footprint.
“The key to managing that complexity was to quickly develop an understanding of how seemingly different markets could share a common solution. For example, we found that some markets in West Africa, Southeast Asia, and South America behaved similarly in terms of consumer preferences, trade structure, and distribution infrastructure,” he explains. “You can draw those comparisons as you're trying to navigate a large number of markets.”
Globalization and digitization changed the game. Consumers today can discover new brands through social media and order directly from the company.
“All of sudden you didn’t need to pay slotting fees to gain shelf space at retail stores because you could reach consumers directly online, you didn’t have to invest millions of dollars in TV advertising because you could build your brand in social media, and you didn’t have to invest billions of dollars to build your manufacturing and distribution infrastructure because that could all be contracted out to co-manufacturers and third-party distributors or brokers,” Bernardo explains.
Lower barriers to entry and growing consumer interest in sampling new brands created opportunities for smaller players to chip away at established brands’ dominance and erode the importance of scale as a source of competitive advantage. “Over the past decade or so, large consumer products companies have lost share, and billions of dollars in sales revenue, to smaller, more nimble competitors,” he says.
To compete in this new landscape, consumer products companies need to understand local values, tastes, and social norms. Globalization has provided consumers around the world with access to similar brands and multi-national companies have gained space from (or acquired) local players, but that doesn’t mean that consumer behaviors and demand patterns have completely homogenized. In fact, local trends can be a huge source of potential. “Companies need to think global, and act local,” says Bernardo.
The need to identify growth opportunities and satisfy the consumer appetite for novel offerings has driven Bernardo to become increasingly interested in Hispanic and Latinx consumers in the U.S.
Hispanic and Latinx populations represent around 20% of the United States, but trend younger than other ethnic categories and have accelerating buying power: the Latinx contribution to U.S. GDP is on par with the economy of France. The rapid expansion of Latinx brands like Goya Foods in turn speaks to a growing consumer base of non-Hispanic shoppers.
But it’s a mistake to think about Hispanic and Latinx consumers as a monolithic segment. There are meaningful differences between countries of origin, ethnic backgrounds, migrant generations, age groups, and socio-economic status that marketers and strategists need to understand.
Bernardo recently hosted Isaac Mizrahi—the author of Hispanic Market Power, America’s Business Growth Engine—for an AlixPartners’ talk in concert with the HOLA employee resource group on the momentum of the Hispanic consumer.
“Isaac opened our eyes, not only to the size and importance of the Hispanic and Latinx community from a market demand standpoint, but also to how diverse that population is,” says Bernardo. “You can’t ignore the distinct socio-cultural traits.”
Bernardo believes in prizing diversity and working to understand the unique experiences colleagues bring to the table.
“Building diversity into our makeup as a firm not only allows us to bring better, more powerful ideas to solve difficult business challenges,” Bernardo says. “but it also allows us an opportunity to connect with clients at a more personal level and in more authentic ways.”