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by Martin Summers 9th July, 2019
3 min read

Carlsberg: proof that producing poor products sustainably isn’t sustainable – and shouldn’t be celebrated.

“Probably NOT the best beer in the world”

Carlsberg has won lots of plaudits for its frank new advertising campaign (pictured) admitting that ‘we lost our way. We focused on brewing quantity, not quality; we became one of the cheapest, not the best.’ A new TV campaign on this theme starring Danish actor Mads Mikkelsen starts this summer.

Sustainability practices

Carlsberg has been celebrated for its sustainability credentials but its core product (in the UK at least) has not been commercially sustainable (only the UK-specific formulation will change.).

This highlights a situation whereby sustainability practitioners are encouraged to support good sustainability practices in companies whose business model and core offer is unsustainable, in the wider sense of having a viable long-term commercial future that won’t be (deservedly) disrupted.

Other markets

GK has worked in several sectors where new entrants and their investors recognise the massive potential for disruption (and returns.)

Think beer, coffee, tobacco, supermarkets, cars, and retail banking: in all these cases the future health of the overall categories (but not always the dominant providers) has been given a much-needed boost – rather than a death sentence – by new entrants.

Many of the existing incumbents have great sustainability credentials but do little to improve the overall sustainability of their sectors because they are wedded to established models and ways of thinking.

Rethinking business models

The ultimate sustainability of these sectors is, somewhat paradoxically, secured by new entrants that may do little that is explicitly focused on sustainability, but they are rethinking business models and products in a way that meets the changing needs of consumers and society – and more successfully than well-established providers .

Our approach to strategic communications and ESG (environmental, social and governance) is that companies should identify these broader beneficial impacts rather than focus only on a standard sustainability menu of positive impacts, such as healthy eating and responsible sourcing – all of which are essential but may miss other big areas for positive impact.

Lidl and Aldi have done more to boost the sustainability of the supermarket sector and high street than the traditional big players in the UK. They have shown that high street supermarkets can thrive (with a different business model) at a time when many chains have pulled away from the high street with out of town ‘big box retailing’ that is only accessible by car or bus. They have enhanced social value and reduced journey times and costs for many consumers – all key sustainability impacts – but the intention may not have been.

Similarly, the beer sector has benefited from the craft beer movement, which focused (and had to) on taste and quality rather than marketing and distribution muscle (the reason for Big Beer’s prior dominance.) And high street coffee chains have had to respond to the growth of the independent ‘artisan’ coffee movement by doing more to highlight quality and provenance

Celebrate them!

The lesson should be that sustainability practitioners and commentators should celebrate companies that disrupt and improve their category or sector, rather than merely try to catch up (typically by imitation or acquisition)

Great sustainability credentials are not, in isolation, evidence of a truly sustainable sector. There are many sectors that are associated with sustainability but seem ripe for disruption (See, for example, the sectors listed as Vulnerable or Volatile in Accenture’s fascinating Disruptability Index.)

One of the key goals of the sustainability community should be to encourage change that benefits consumers and society. Companies that, for example, greatly improve their supply chain should indeed be celebrated.

But that praise should be qualified where there is little evidence of wider efforts to raise the categories they operate in.

Sustainability leadership is important, but companies will only contribute to the sustainability of their sector in the widest sense if they pursue market leadership – by shaping consumer expectations and demand through innovative and markedly better offers and business models.

It’s why we should continue to celebrate the likes of Unilever, who have done this consistently, and be more cautious in celebrating companies that don’t.

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