tag:theconversation.com,2011:/au/topics/heineken-22240/articlesHeineken – The Conversation2024-03-26T10:13:12Ztag:theconversation.com,2011:article/2265242024-03-26T10:13:12Z2024-03-26T10:13:12ZBen & Jerry’s and why it’s hard for activist brands to stay true to themselves after corporate buyouts<figure><img src="https://images.theconversation.com/files/584067/original/file-20240325-18-e387gu.jpeg?ixlib=rb-1.1.0&rect=13%2C311%2C4407%2C3360&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Relations with parent company Unilever have become increasingly frosty. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/queensland-australia-april-15-2018-photo-1074113045">enchanted_fairy/Shutterstock</a></span></figcaption></figure><p>Since its founding in 1978, Ben & Jerry’s has been known for its advocacy on a wide range of social causes, including homelessness, fair trade and GMO-free products. In 1988, it was certified as one of the world’s first benefit-corporations or B Corps, meaning it was seen as being one of the most sustainable, socially conscious and transparent companies in the world. </p>
<p>When it was sold to Unilever in 2000, <a href="https://ssir.org/articles/entry/the_truth_about_ben_and_jerrys">the news</a> sent “shudders and shivers through the socially responsible business community”. The company had been successful, at least in part, by being perceived as an authentic brand, meaning its marketing and messaging aligned with the reality of its products, values and actions. </p>
<p>An <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781315205861-9/craft-contested-term-nadine-waehning-maria-karampela-juho-pesonen">authentic brand</a> is transparent, consistent and genuine in its communication and behaviour, which helps build trust and loyalty. The association with Unilever almost certainly damaged Ben & Jerry’s standing with some customers. All the same, the company retained its independent board and was able to continue its social advocacy as part of the deal, so there was still some hope that its core values wouldn’t change. </p>
<p>After a <a href="https://startups.co.uk/blog/the-rise-fall-and-comeback-of-ice-cream-giant-ben-jerrys/">rocky start</a>, in which it arguably lost its identity within Unilever to a fair extent, Ben & Jerry’s did a decent job of retaining its independence within the corporate structure and still selling lots of ice-cream. </p>
<p>But in recent years, there have been mounting tensions with Unilever. In 2022, <a href="https://www.cbsnews.com/news/ben-jerrys-west-bank-unilever-sale-ice-cream/">Ben & Jerry’s sued</a> its parent for selling the ice-cream business in Israel to a local licensee. Ben & Jerry’s argued that this violated Unilever’s pledge to end sales of its products in the West Bank and East Jerusalem in 2021 as a show of support for the Palestinian cause. </p>
<p><a href="https://www.theguardian.com/business/2022/dec/15/unilever-ben-and-jerrys-ice-cream-israel-west-bank">Unilever announced</a> later that year that the dispute had been resolved, though <a href="https://www.thisismoney.co.uk/money/markets/article-12973025/Ben-Jerrys-risks-renewed-clash-Unilever-Gaza-ceasefire-demands.html">Ben & Jerry’s has continued</a> to make life difficult for its owner in Israel, calling <a href="https://www.bbc.co.uk/news/business-67991822">for a ceasefire</a> in Gaza in recent months. </p>
<p>Now their unusual 24-year arrangement is coming to an end after <a href="https://www.cbsnews.com/news/unilever-ben-jerrys-spinning-off-ice-cream/">Unilever announced</a> it will be selling its ice-cream business, also including big brands like Magnum and Wall’s. The business as a whole <a href="https://www.just-food.com/news/unilever-to-address-disappointing-ice-cream-performance-amid-private-label-pressures/?cf-view">has been struggling</a> with flat sales and falling margins as a result of the recent inflation surge. The group is also cutting 7,500 jobs across the organisation <a href="https://www.fdiforum.net/mag/retail-food-service/unilever-reveals-plans-to-split-off-ice-cream-business/">to make</a> “a simpler, more focused and higher performing Unilever”. </p>
<h2>Social purpose and big business</h2>
<p>Ben and Jerry’s is not the only company that has been taken over by a large corporation which challenged its brand authenticity. The Body Shop, perhaps the world’s most famous social purpose company, has been bought and sold multiple times, and became what has been <a href="https://www.thegrocer.co.uk/high-street/body-shops-demise-highlights-the-threats-to-ethical-trading/688737.article">fairly described as</a> a “respectable and normal commercial player”. Seventeen years after it was originally sold by founder Anita Roddick, the retailer is <a href="https://www.theguardian.com/business/2024/feb/29/the-body-shop-close-stores-uk-cut-hundreds-jobs">currently being dismembered</a>. </p>
<p>Numerous craft breweries have also struggled with their authenticity after buyouts, the most famous being London-based Beavertown. It sold a minority stake to Heineken in 2018, before being <a href="https://www.theguardian.com/business/2022/sep/07/london-craft-brewer-beavertown-sells-up-fully-to-heineken">fully taken over</a> in 2022. Various leading supporters of independent brewing expressed disappointment, with <a href="https://www.morningadvertiser.co.uk/Article/2018/06/21/How-have-drinkers-reacted-to-Beavertown-selling-a-stake-to-Heineken">one retailer saying</a>, “Heineken does not have the health of the UK independent beer scene at heart,” and refusing to stock Beavertown products. </p>
<p>Beavertown’s sales <a href="https://www.mca-insight.com/finance/beavertown-brewery-increases-turnover/683985.article">actually rose 10%</a> during 2022 as a whole, though time will tell if it can continue to thrive as part of a big corporation. A company’s brand authenticity can often be eroded from this kind of arrangement. It can lead to sales becoming lacklustre and brands ultimately being sold on. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/584068/original/file-20240325-16-vfc15z.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Cans of Beavertown Gamma Ray stacked up" src="https://images.theconversation.com/files/584068/original/file-20240325-16-vfc15z.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/584068/original/file-20240325-16-vfc15z.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=458&fit=crop&dpr=1 600w, https://images.theconversation.com/files/584068/original/file-20240325-16-vfc15z.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=458&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/584068/original/file-20240325-16-vfc15z.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=458&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/584068/original/file-20240325-16-vfc15z.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=576&fit=crop&dpr=1 754w, https://images.theconversation.com/files/584068/original/file-20240325-16-vfc15z.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=576&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/584068/original/file-20240325-16-vfc15z.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=576&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">London brewer Beavertown is now trying to make Heineken hip.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/viersen-germany-april-5-2022-closeup-2145101947">Ralf Liebhold</a></span>
</figcaption>
</figure>
<p>In the case of Ben & Jerry’s, there’s no suggestion that the divestment is especially related to activism, though it does come fairly soon after the arrival of a new chief executive, Hein Schumacher. <a href="https://www.telegraph.co.uk/business/2023/10/26/unilever-boss-undelivered-turnaround-effort/">He said</a> he would tone down Unilever’s overall emphasis on social purpose after pressure from shareholders (while pointing to Ben & Jerry’s as an exception). </p>
<p>The clash between profit and values was recently highlighted as one leading investor, Terry Smith of investment firm Fundsmith, was <a href="https://www.ft.com/content/30efd993-8c23-4f1b-9385-132bbba3d863">quoted in the FT</a> as saying: “The group had become obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business … The Ben & Jerry’s row was the most obvious manifestation of this.”</p>
<h2>Lessons to learn</h2>
<p>Acquiring a brand with strong environmental and social values clearly comes with challenges. Integrating a culture of genuine brand activism <a href="https://www.sciencedirect.com/science/article/abs/pii/S0148296318303217">requires a</a> full alignment of values between the parent company and the acquired brand. Multinationals often struggle with this and brand authenticity is the ultimate casualty.</p>
<p>In such situations, it’s sometimes incumbent on the social purpose brand to fight back. Howies, a clothing company in Wales, sold to The Timberland Company in 2006. It <a href="https://howies.co.uk/blogs/news/on-our-own-two-feet">described itself</a> as being “a tiny part of a US$2 billion company and that was not easy”. When Timberland was in turn sold to US clothing group VF, Howies was able to take back to control, completing a <a href="https://www.vfc.com/investors/news-events-presentations/press-releases/detail/174/vf-completes-acquisition-of-the-timberland-company">management buyout</a> in 2012 that allowed it to become “focused on sustainability issues again”.</p>
<p>The effect of this journey on Howies’ brand authenticity is hard to say. However, it is still going and its mission is “to improve how clothing is manufactured by pushing for more sustainable practices in an industry renowned for damaging the environment”. </p>
<p>We’ll have to wait and see whether Ben & Jerry’s will be able to concentrate on being “Berry Revolutionary”, like one of its ice-cream flavours. It will only be a small part of a bigger business, which is either likely to be listed on the stock exchange or sold to a private equity firm, so it could prove challenging.</p><img src="https://counter.theconversation.com/content/226524/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nothing to disclose </span></em></p><p class="fine-print"><em><span>Bob Doherty, Karolos A Papadas, and Victoria Wells do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Vermont ice cream business is one of various brands that have chafed under multinational ownership.Bob Doherty, Dean and Professor of Marketing at School for Business and Society, University of YorkKarolos A Papadas, Associate Professor of Marketing, University of YorkNadine Waehning, Senior Lecturer in Marketing, University of YorkVictoria Wells, Professor of Sustainable Management, University of YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2104752023-08-10T15:13:41Z2023-08-10T15:13:41ZWestern firms still doing business in Russia finance the war – here’s how to recoup the huge cost to taxpayers<figure><img src="https://images.theconversation.com/files/541911/original/file-20230809-5449-jcu04a.jpg?ixlib=rb-1.1.0&rect=0%2C31%2C2914%2C1962&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/world-economic-sanctions-force-country-obey-2120624531">eamesBot/Shutterstock</a></span></figcaption></figure><p>In Russia this summer, you can <a href="https://www.bbc.co.uk/news/business-66101852">still enjoy</a> a Cornetto, but you can forget about eating a <a href="https://www.bbc.co.uk/news/uk-scotland-scotland-business-60625374">Tunnock’s tea cake</a> or a <a href="https://www.theguardian.com/world/2022/jun/12/mcdonalds-restaurants-in-russia-reopen-under-new-brand">Big Mac</a>. This is because Cornetto’s UK-headquarted parent company, Unilever, is still operating in Russia after its invasion of Ukraine, alongside many other western firms such as <a href="https://www.bloomberg.com/news/articles/2023-07-07/pepsico-mars-see-business-boom-in-russia-after-staying-behind">PepsiCo</a>.</p>
<p>While lots of firms, including McDonald’s and the Scottish confectionery maker Tunnock’s, have <a href="https://som.yale.edu/story/2022/over-1000-companies-have-curtailed-operations-russia-some-remain#:%7E:text=Companies%20totally%20halting%20Russian%20engagements%20or%20completely%20exiting%20Russia...">cut business ties</a> with the country since the war started, the Kyiv School of Economics <a href="https://b4ukraine.org/pdf/BusinessOfStaying.pdf">estimates</a> western companies still operating in Russia made over US$213.9 billion (£168.2 billion) in revenues in 2022. </p>
<p>The resulting US$3.5 billion in taxes on profits paid to Russia is only a small part of their contribution to the war: the income taxes and social contributions of their employees, as well as the VAT on their sales, feed into the state’s budget. The sense of normality they give to Russian citizens also arguably <a href="https://www.bbc.co.uk/news/world-europe-64703768">fosters support</a> for the invasion of Ukraine. </p>
<p>Companies still doing business in Russia also hurt the citizens of the countries they come from. By essentially supporting the war, they share responsibility for <a href="https://www.theguardian.com/business/2023/feb/21/energy-crisis-ukraine-war-uk-cost-gas#:%7E:text=A%20study%20by%20the%20Energy,spent%20in%20a%20normal%20year.">higher energy prices</a>, for example. They also increase the cost on western taxpayers of supporting the defence of Ukraine.</p>
<p>Like many western companies that have stayed in Russia, <a href="https://contact.pepsico.com/pepsico/article/pepsico-suspends-production-sale-of-pepsi-in-russia-continues-to">PepsiCo</a> and Unilever (Cornetto’s parent company) have <a href="https://www.nytimes.com/2023/03/02/business/russia-companies-exit.html">defended the decision</a> by claiming they provide essentials and need to stay for humanitarian reasons. </p>
<p>In addition to detailing donations made to Ukrainian refugees, the statement from PepsiCo said the company “must stay true to the humanitarian aspect” of its business as a food and beverage company by continuing to offer “daily essentials” in Russia “such as milk and other dairy offerings, baby formula and baby food”. PepsiCo pointed out it also continues “to support the livelihoods of our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain”.</p>
<p>Unilever said <a href="https://www.unilever.com/news/press-and-media/press-releases/2023/unilever-statement-on-the-war-in-ukraine/">in a statement</a> earlier this year that, while it’s still selling products in Russia, it stopped imports and exports, all media and advertising spend and other capital flows into and out of Russia in March 2022. It’s not “trying to protect or manage” its business in Russia, the company said, but “exiting is not straightforward”.</p>
<p>Indeed, many of those who provide non-necessary items say they cannot leave because the Russian government would <a href="https://www.ft.com/content/c6108c1a-97dc-4469-aeb3-8b81ab52aaa9">seize their assets</a> and intellectual property if they do. </p>
<p>But every time a business makes the choice to leave Russia or has their assets seized, the ones who stay face lower competition, and potentially make even more profit. As of today, the only price they pay for staying <a href="https://edition.cnn.com/2023/07/10/business/russia-companies-leaving-putin/index.html">is a tarnished reputation</a> in western countries.</p>
<h2>A tax on the cost of war</h2>
<p>But there is a way to make foreign companies pay the cost they impose on the world, while acknowledging the impossibility of making them completely leave Russia. </p>
<p>In fact, western governments have already designed the two main tools necessary. What it would take is a <a href="https://www.ft.com/content/a9750db3-5d5c-4afb-a33e-e5b960b63a93">coalition of sanctioning countries</a> and a mechanism that’s already being used in other regulations: the “<a href="https://www.oecd.org/tax/beps/oecd-releases-pillar-two-model-rules-for-domestic-implementation-of-15-percent-global-minimum-tax.htm">Pillar 2</a>” OECD strategy on taxation, due to come into force next year, as well as the EU’s new <a href="https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en">Carbon Border Adjustment Mechanism</a>, due to come into force in October 2023.</p>
<p>The coalition of sanctioning countries must first implement a tax on a western company’s Russian revenues. This is public information available in company financial reports – other <a href="https://leave-russia.org/">organisations already track</a> this information. The tax would cover the company’s sales, based on the goods and services bought by people in Russia. But the tax would be collected by the country in which the company is headquartered.</p>
<figure class="align-center ">
<img alt="Hands counting Russian notes, piles of rouble-denominated notes on the table in foreground." src="https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541934/original/file-20230809-29-8o0yyx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Doing business in Russia.</span>
<span class="attribution"><span class="source">Andrey Sayfutdinov/Shutterstock</span></span>
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</figure>
<p>In the case of sales of Cornetto ice creams, for example, Unilever is the parent company and is based in <a href="https://www.ft.com/content/dbaa61b7-e3c6-4e82-9680-9745953a056b">the UK</a>. So the UK government would have the first option to tax Unilever, but if it chose not to, any other country in the coalition could do so instead. </p>
<p>That would mean a country has nothing to gain from protecting its national businesses. If the UK does not tax Cornetto sales in Russia, Unilever could be taxed by the EU or US and the proceeds would go into their government coffers instead.</p>
<p>The OECD’s Pillar 2 tax agreement uses this principle in its aim to end the practice of fictionally <a href="https://www.sciencedirect.com/science/article/pii/S0047272722001785">locating profit in tax havens</a>. By the end of this year, countries have committed to charge at least 15% in profit tax to the largest multinational companies <a href="https://www.consilium.europa.eu/en/press/press-releases/2022/12/12/international-taxation-council-reaches-agreement-on-a-minimum-level-of-taxation-for-largest-corporations/">in the EU</a> and <a href="https://www.gov.uk/government/publications/introduction-of-the-new-multinational-top-up-tax-and-domestic-top-up-tax/multinational-top-up-tax-and-domestic-top-up-tax-uk-adoption-of-oecd-pillar-2">in the UK</a>. </p>
<p>If some part of a multinational’s profits is not taxed abroad, the country in which the company is headquartered can tax extra, up to the 15% limit. And if that country does not impose the extra charge, other countries in which the firm is active can collect the unpaid tax. </p>
<h2>What about non-western companies?</h2>
<p>Charging the tax on western companies only would disadvantage them in global markets. It may also make it even more profitable for other countries to trade with Russia. To avoid such “<a href="https://www.annualreviews.org/doi/abs/10.1146/annurev-environ-120820-053625">leakage</a>”, non-western companies who trade with the west and continue to do business with Russia should also be made liable for the tax. </p>
<p>This amounts to a form of <a href="https://academic.oup.com/jcsl/article/27/1/53/6528963">extra-territorial trade sanction</a>. The approach <a href="https://www.sciencedirect.com/science/article/pii/S0014292120302026">is simple</a>: if a company wants to do business with the west, it must pay a fine for any trade in Russia. The US already does something much stricter to companies trading with Iran or Cuba. French bank Société Générale <a href="https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-criminal-charges-against-soci-t-g-n-rale-sa-violations">paid US$1.3 billion to the US government</a> in 2018 as a punishment for providing financial services in Cuba. </p>
<p>Taxing foreign companies to level competition is very similar to a <a href="https://www.journals.uchicago.edu/doi/full/10.1093/reep/rey020">border adjustment mechanism</a> for polluting industries. This is what <a href="https://www.sciencedirect.com/science/article/pii/S0140988323001718">the EU will begin to do</a> in 2026 under the Carbon Border Adjustment Mechanism. It will charge a carbon tax on certain products or activities, starting with the most <a href="https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en">energy-intensive industries</a> such as cement, iron and steel production, unless a company can prove it has already paid the equivalent at home. </p>
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<img alt="Child with flowers in hair holding sign with Ukrainian flag colours that says " src="https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541933/original/file-20230809-13146-9hchag.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">shutterstock.</span>
<span class="attribution"><span class="source">Mykola Romanovskyy/Shutterstock</span></span>
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<p><a href="https://www.politico.eu/article/russia-ukraine-war-invasion-slammed-russias-global-reputation-poll-shows/">Global public opinion</a> has turned against Russia since the invasion of Ukraine. Just like with global tax evasion and climate change, most countries understand that it is in everyone’s interest that a nuclear power is not allowed to invade other countries with no consequence. </p>
<p>The tools the world has developed to cooperate on international taxation and carbon emissions could now be used to take definitive action on economic sanctions and make the war in Ukraine much more difficult for Russia to sustain.</p><img src="https://counter.theconversation.com/content/210475/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Renaud Foucart does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Some western companies have continued operating in Russia since it invaded Ukraine, while others have left the country altogether.Renaud Foucart, Senior Lecturer in Economics, Lancaster University Management School, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/683832017-05-24T15:06:35Z2017-05-24T15:06:35ZBig alcohol is poised to expand into Africa. Why this is bad news for health<figure><img src="https://images.theconversation.com/files/170546/original/file-20170523-5782-13lvwn3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The alcohol industry is doing exactly what the tobacco industry did several decades ago to ensure growth and increase profits: expanding into Africa as an underdeveloped market. As a result, exposure to alcohol in African countries is expected to increase in the next few years. With it comes <a href="http://www.bmj.com/content/351/bmj.h6087">alcohol-related health and social problems</a>.</p>
<p>Strategy hints coming out of the <a href="http://www.timeslive.co.za/sundaytimes/businesstimes/article1836806.ece">US$ 103 billion merger</a> between SAB Miller and AB InBev provide a good reference point. The merged entity’s strategy clearly shows that Africa will be a critical <a href="http://www.ab-inbev.com/content/dam/universaltemplate/ab-inbev/investors/releases/11November2015/Investor%20Presentation%20-%20Building%20the%20First%20Truly%20Global%20Beer%20Company%20-Final.pdf">driver for growth</a>. <a href="http://www.worldfinance.com/wealth-management/africas-untapped-beer-market">Competitors</a> like <a href="http://www.bizcommunity.com/Article/196/82/132044.html">Pernod Ricard</a> and <a href="https://www.forbes.com/forbes/welcome/?toURL=https://www.forbes.com/sites/greatspeculations/2015/04/30/diageo-could-africa-be-the-motor-for-growth/&refURL=https://www.google.co.za/&referrer=https://www.google.co.za/">Diageo</a> are not far behind. </p>
<p>The alcohol industry is <a href="http://money.cnn.com/2016/05/13/news/alcohol-sales-fall/">under pressure</a> and needs to develop new sources of growth and profits. Markets in the developed world are under threat as a result of saturation. This is coupled with the fact that only a limited numbers of new drinkers are entering the market each year due to low population growth rates. </p>
<p>The expansion into developing economies comes as warnings about the <a href="http://www.sciencedirect.com/science/article/pii/S0140673612620893">harm</a> that alcohol causes are gaining traction. As a result several countries have <a href="http://www.who.int/substance_abuse/activities/gsrhua/en/">revised</a> their guidelines on alcohol consumption. In the <a href="https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/489795/summary.pdf">UK</a> for example, there’s a move to regulate the sale and marketing of alcoholic drinks. And in <a href="http://researchonline.lshtm.ac.uk/1367685/">Scotland</a> a minimum price for alcohol is about to be introduced. </p>
<p>As a result the alcohol industry is targeting less regulated but more affluent low and middle income countries. Africa is becoming a key <a href="http://onlinelibrary.wiley.com/doi/10.1111/add.12468/abstract;jsessionid=536328C1D79591080051A024681EFDAE.f03t02">focus</a>.</p>
<p><a href="http://www.sciencedirect.com/science/article/pii/S0140673612620893">Studies</a> show this is bad news for the continent. Alcohol is a risk factor for non-communicable diseases such as liver cirrhosis, heart disease and a range of common cancers of the breast, throat and mouth. Alcohol also <a href="http://www.worldbank.org/en/news/feature/2013/09/09/global-burden-of-disease-findings-for-sub-saharan-africa">interacts</a> with other health challenges such as HIV, road traffic accidents, violence – including domestic violence – and mental health.</p>
<h2>Alcohol use in Africa</h2>
<p>Sub-Saharan Africa provides particularly fertile ground for growing market share due to the high proportion of the population in many countries who <a href="http://forut.custompublish.com/getfile.php/2430323.994.qqcrwxxybe/Endal+Bakke+Half+the+world%5C%5C%5C's+population+do+not+drink.pdf">don’t yet consume alcohol</a> (especially among <a href="http://www.add-resources.org/african-women-are-non-drinkers.4947859-79090.html">females</a>), the <a href="http://www.un.org/esa/socdev/documents/youth/fact-sheets/YouthPOP.pdf">high youth population</a> in most countries, and the <a href="https://www.weforum.org/agenda/2016/05/what-s-the-future-of-economic-growth-in-africa/">growth in GDP</a> in certain countries. Low advertising costs, weak regulation, <a href="http://apps.who.int/iris/bitstream/10665/112736/1/9789240692763_eng.pdf">high-intensity consumption</a> of beer in these markets make for an ideal environment for global brands.</p>
<p>The dangers of alcohol are well documented. Across the globe, more than <a href="http://www.who.int/substance_abuse/publications/global_alcohol_report/msb_gsr_2014_1.pdf">3.3 million</a> people die from harmful use of alcohol each year. More than 20% of deaths from liver cirrhosis, certain cancers of the mouth and throat, interpersonal violence and self-harm are due to alcohol use.</p>
<p>Alcohol is responsible for more than <a href="http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(16)31460-X/fulltext">7% of all deaths</a> globally and it was the 9th leading risk factor for death and disability globally in 2015, up from tenth place in 2005 and eleventh in 1990. In the southern sub-Saharan Africa region alcohol ranked fifth as a risk factor for death and disability. With rising alcohol exposure, the extent to which alcohol contributes to various negative health outcomes are expected to also increase. </p>
<h2>Using tobacco tactics</h2>
<p>The global alcohol industry’s new focus in low and middle income countries mirrors the moves made by big tobacco companies in penetrating these markets.
Transnational tobacco corporations have succeeded in driving up smoking in African markets through <a href="https://link.springer.com/article/10.1007/s10552-012-9914-0">aggressive marketing strategies</a>. Their strategy included disguising marketing as <a href="http://www.who.int/tobacco/media/en/tob-industry.pdf">corporate social responsibility</a> programmes.</p>
<p>Alcohol firms are using the same <a href="http://onlinelibrary.wiley.com/doi/10.1111/add.13048/abstract">strategy</a>. Under the guise of corporate social responsibility they have run campaigns to promote “responsible” and <a href="http://www.sab.co.za/alcohol-issues/tavern-talks-bozzas-tavern/">“moderate” drinking</a>. </p>
<p>Alcohol companies also position themselves as being committed to promoting the consumption of lower alcohol products. For example AB InBev’s campaign, called <a href="http://www.ab-inbev.com/better-world/a-healthier-world/global-smart-drinking-goals.html">Global Smart Drinking Goals</a>, states that its objective is to: </p>
<blockquote>
<p>Ensure no- or lower-alcohol beer products represent at least 20% of AB InBev’s global beer volume by the end of 2025.</p>
</blockquote>
<p>This may appear to be a positive message, but <a href="http://onlinelibrary.wiley.com/doi/10.1111/add.13048/abstract">research</a> on similar strategies suggests otherwise. It indicates that this is unlikely to be about substituting regular beer products for lower alcohol beverages. Rather the aim is to increase the overall size of the beer market through an expanded range of products.</p>
<p>Alcohol companies have also developed low-cost, entry-level products aimed at attracting new consumers, citing the greater safety of commercially produced products over homebrews. </p>
<p>An example is the introduction of commercially manufactured ‘<a href="https://www.bloomberg.com/news/articles/2012-03-15/sabmiller-tries-selling-african-home-brew">Chibuku Shake Shake</a>’ beer by SABMiller in Zambia. It’s based on a locally brewed traditional sorghum beer but is marketed as offering more consistent quality and safer than the home-brew variant. </p>
<p>The promotion of brewers products as safer alternatives forms part of a wider corporate social responsibility agenda aimed at highlighting the positive social impact that companies are having. A good example is <a href="http://www.diageo.com/en-row/newsmedia/pages/resource.aspx?resourceid=2730">Diageo’s water sanitation project</a>.</p>
<p>Another <a href="http://journals.co.za/docserver/fulltext/m_sajbl/5/2/m_sajbl_v5_n2_a12.pdf?expires=1489518543&id=id&accname=guest&checksum=722FBA029D87B54F08C4D3D690A905A5%20pages%20104-105">strategy</a> used successfully by tobacco companies as well as alcohol companies is government partnerships. </p>
<p>These have become an effective avenue through which the industry <a href="http://onlinelibrary.wiley.com/doi/10.1111/add.13048/abstract">influences</a> and limits regulation. For example, national alcohol policy documents from four sub-Saharan countries (Lesotho, Botswana, Malawi and Uganda) have been found to be identical and reflecting the alcohol industry’s <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1360-0443.2009.02695.x/full">preferred policy</a> wording.</p>
<p>As the global alcohol industry moves to expand across the continent, more research, policy and public attention needs to be paid to industry practices and governance mechanisms to help understand and prevent the negative impact this will have on the population’s health. Industry expansion into African markets will be sold as being progressive, as providing new jobs, access to safer and healthier alcohol products. Perhaps nearer to the truth would be to describe this as <a href="http://www.camy.org/about-us/staff/">David Jernigan</a>, the leading health academic who has analysed the impact of alcohol and its marketing did, labelling it <a href="https://books.google.co.za/books/about/Thirsting_for_Markets.html?id=uJ9bXwAACAAJ&redir_esc=y">“Thirsting for Markets”</a> and as possibly even as part of the recolonisation of Africa.</p><img src="https://counter.theconversation.com/content/68383/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Karen Hofman receives or has received funding from the IDRC Canada, BMGF, the MRC SA, USAID. </span></em></p><p class="fine-print"><em><span>Charles Parry does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Under pressure to create new markets, big alcohol producers are scouring the African continent in what promises to yield negative socioeconomic consequences.Karen Hofman, Program Director, PRICELESS SA ( Priority Cost Effective Lessons in Systems Stregthening South Africa), University of the WitwatersrandCharles Parry, Director of the Alcohol, Tobacco & Oher Drug Research Unit, South African Medical Research CouncilLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/689562016-11-23T10:08:53Z2016-11-23T10:08:53ZThe weaker pound is a mixed bag for UK PLC as rivals move to adapt<figure><img src="https://images.theconversation.com/files/146728/original/image-20161121-4544-lumu2r.jpg?ixlib=rb-1.1.0&rect=59%2C79%2C940%2C573&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-323763059/stock-photo-one-pound-coin-on-fluctuating-graph-rate-of-the-pound-sterling-shallow-dof.html?src=Dckjtmb8uQZwgIgJw27Gzw-2-84">Valeri Potapova/Shutterstock</a></span></figcaption></figure><p>The value of the pound plummeted after the Brexit referendum. From close to US$1.50 before the vote to leave the European Union, sterling has now found a new <a href="http://www.xe.com/currencycharts/?from=GBP&to=USD&view=1Y">level close to US$1.20</a>. This has been greeted as a welcome boost to UK exporters as it makes it cheaper for other countries to buy British goods. But this is a simplistic take. The reality is far more complicated and dependent on the markets in which these companies operate. </p>
<p>The <a href="http://www.thisismoney.co.uk/money/markets/article-3701788/What-sterling-s-slump-means-UK-s-economy-businesses-households.html">conventional wisdom</a> about a falling currency and exports fails to acknowledge some fundamental points. <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2843755">Our research</a> highlights that such analysis typically does not account for the existence and nature of a company’s competition, domestically and overseas. </p>
<p>In other words, nimble corporate rivals can quickly adapt to counter any potential gains from currency effects, and that applies to UK-focused firms as well as exporters. Let’s take an example from one of Britain’s favourite pastimes: beer. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/146782/original/image-20161121-4564-1qxeamg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/146782/original/image-20161121-4564-1qxeamg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/146782/original/image-20161121-4564-1qxeamg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/146782/original/image-20161121-4564-1qxeamg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/146782/original/image-20161121-4564-1qxeamg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/146782/original/image-20161121-4564-1qxeamg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/146782/original/image-20161121-4564-1qxeamg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/146782/original/image-20161121-4564-1qxeamg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The tippling point?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/andywilkes/2481933944/in/photolist-4Mjyuy-6EsBky-2VK1Gm-GaA8f-9dSq2a-CXuzn-DDA12-iEwMm-39hwn6-5LMGRC-iEwKW-5RdGNR-3bmBpQ-4MjyBu-6DwLz5-6C68Ec-6Cagi5-8CaK7-2rbhJ-4MfoYz-6DwLif-BF7jy-9cYLym-397iC-98aXMm-6ffCew-6DsBHr-25pc5-24F2K-4TLWV-twRQ-9hvmws-H1eo-6DsBPB-2kd9y-ikoK-wTsuK-kSgo-rRHh-mvTQ-4oz3N-VU1U-4xRqce-twMg-o1Be-QuMp-mvVz-mvSF-hE3b-vSpd">Andy Wilkes/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<h2>Losing its fizz</h2>
<p>Our research studied data from 22 multinational firms and nine markets. One such firm was the brewer SABMiller, a British exporter, which competes in an <a href="http://www.economist.com/node/18651308">international duopoly</a> with Belgian group AB-InBev, the maker of beer brands such as Budweiser, Corona and Stella Artois. We looked at a period before the companies agreed a merger which was <a href="http://www.wsj.com/articles/sabmiller-ab-inbev-shareholders-approve-100-billion-plus-merger-1475059015">approved by shareholders in September</a>. </p>
<p>Now, under conditions of a falling pound, SABMiller would in theory enjoy an increase in its profits as foreign buyers snapped up products now markedly cheaper in their home currency. However, that assumes that its Belgian rival failed to cut its own product prices by what was required to offset the change in the GBP/EUR exchange rate. If AB-InBev is on the ball, and sensitive to exchange rate changes it can very easily decide to cut its product price by more than the increase in the exchange rate. In that scenario, the profits of SABMiller could fall.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/146783/original/image-20161121-4544-1u86zzd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/146783/original/image-20161121-4544-1u86zzd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/146783/original/image-20161121-4544-1u86zzd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/146783/original/image-20161121-4544-1u86zzd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/146783/original/image-20161121-4544-1u86zzd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/146783/original/image-20161121-4544-1u86zzd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/146783/original/image-20161121-4544-1u86zzd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/146783/original/image-20161121-4544-1u86zzd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Muscling in?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/waltermera182/9514909861/in/photolist-bAE4RS-5k6Nad-9riTv7-5bdRpv-e6vzgM-84dYoJ-7ACBYj-8aT42e-88Gjd3-55QM1h-dHvgA-8fNbuC-dihQkj-4s7jic-dHvyK-8vt2aY-cvd7kS-dHvBH-59aMyo-6mdG3n-7mp44V-4bmT2C-25cRBJ-25cRRo-4bUN7Z-fv3EB7-4CPbKB-aS9xQt-fuNpd2-7UM9wi-ewBZ1s-38hDMs-8c8Pu6-s49Nv-EYo9vC">Walter Gustavo MERA MELO/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>Then, what if you have to factor in a third competitor, such as the Netherlands-based Heineken, which shares the same currency as AB-InBev? This means that the exposure of SABMiller will also be affected by Heineken’s change in its product price in response to the exchange rate fluctuation of the euro relative to the pound. The picture here becomes more complex because the degree to which foreign competitors will change their product prices will also depend on the degree of competition between them in their own home markets. It will also depend on their desire to curb product prices in any attempt to offset a boost to the competitiveness of the UK firm; how much margin they are willing to sacrifice in order to stay competitive. </p>
<p>If our UK brewer also faces a domestic competitor then the picture becomes even more complex. SABMiller’s profits would also be affected by the pricing decisions of that local rival in response to changes in the exchange rate.</p>
<p>In short, these are far muddier waters than some would have you believe. The profits of UK-based exporters might enjoy a brief window of opportunity if rivals are slow to adapt, but earnings could just as easily take a hit from a rapidly changing environment as a sector gets used to new realities. Our conclusions don’t only apply to British exporters. It is the same for any multinational firms which face competitors at the international and local level. The sports market is another good example, with its <a href="http://www.economist.com/blogs/graphicdetail/2013/08/daily-chart-14">international oligopoly</a> of US firm Nike, the global leader, and two German firms, Adidas and Puma.</p>
<h2>Kindness</h2>
<p>It is clear the argument that a weakened currency makes domestic exporters better off is not necessarily true. Whether or not a fall in the currency is a good thing for an industry depends on the market structure, and specifically on the size of the price sensitivities with respect to exchange rates of their international competitors.</p>
<p>When <a href="https://www.theguardian.com/business/2016/jan/26/mark-carney-fails-to-rule-out-eight-year-term-at-bank-of-england">Mark Carney</a>, the governor of the Bank of England, said, that Britain “depends on the kindness of strangers”, he had in mind UK’s heavy current account deficit. We argue that British exporters also “depend on the kindness of rivals”. </p>
<p>There is a clear link between the ability of a firm to pass on the exchange rate changes to its customers and the magnitude of their exposure to rival firms operating in the same market, both domestically and overseas. In our example of the beer market, the ability of AB-InBev to pass on the increase in the euro to the price of its beer affects the profits of SABMiller. The higher the former is, the lower the profits of SABMiller will be. This clearly depends on how loyal (i.e. non-price sensitive) the consumers of the Belgian brewer and SABMiller are. </p>
<p>Our theoretical and empirical results suggest that a falling currency is not always good for exporters. If the companies ignore these complex relationships between firms’ price setting behaviour, profits and exchange rates, mistakes are more likely and sometimes these will benefit the exporters of the appreciating country at the expense of the firms in the depreciating country. </p>
<p>The idiosyncrasies of each market, and the price sensitivity of consumers, will play a significant role in determining whether a devaluation will be beneficial for the exporters of a country. Simplistic arguments that a weakened pound is good for British exporters fail to take these into account.</p><img src="https://counter.theconversation.com/content/68956/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>All the talk about a golden time for UK exporters forgets one crucial point.Xeni Dassiou, Reader in Economics, City, University of LondonAthanasios Andrikopoulos, Lecturer in Finance, University of HullLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/622292016-07-15T11:30:06Z2016-07-15T11:30:06ZHow social investment projects started making sense for big companies<figure><img src="https://images.theconversation.com/files/130688/original/image-20160715-2147-1wln45h.jpg?ixlib=rb-1.1.0&rect=8%2C188%2C5991%2C3808&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/cat.mhtml?lang=en&language=en&ref_site=photo&search_source=search_form&version=llv1&anyorall=all&safesearch=1&use_local_boost=1&autocomplete_id=&search_tracking_id=IlJe-zc4Ir6J66WVFQjz7w&searchterm=globe%20office&show_color_wheel=1&orient=&commercial_ok=&media_type=photos&search_cat=&searchtermx=&photographer_name=&people_gender=&people_age=&people_ethnicity=&people_number=&color=&page=1&inline=257102155">pathdoc/Shutterstock</a></span></figcaption></figure><p>Companies are cottoning on to the idea that social investment projects can be good for business even if they don’t show up in the balance sheet. There has been a shift in corporate thinking about how value is created. The evidence increasingly shows that more meaningful social investment projects are being envisaged and put in place. </p>
<p>If you have worked for a big company, you might be familiar with the old style of corporate social investments. They might include small community projects and volunteering days for employees. These barely make a dent in profit and loss accounts and have been seen for the peripheral, feel-good fluff that they are – great for boosting staff morale but perhaps not much else. </p>
<p>We have looked at the experience at companies such as Heineken, Unilever, GlaxoSmithKline (GSK) and the National Australia Bank (NAB), one of the world’s top 50 banks. And they have started to see social investment linked to their operations as a genuine value creator. They don’t yet have the comprehensive data to prove it, but they all say they believe it improves reputation, attracts customers and employers, and builds trust and resilience to see them through difficult times. In other words, it has a value. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/130690/original/image-20160715-2133-ripc5w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/130690/original/image-20160715-2133-ripc5w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/130690/original/image-20160715-2133-ripc5w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=330&fit=crop&dpr=1 600w, https://images.theconversation.com/files/130690/original/image-20160715-2133-ripc5w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=330&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/130690/original/image-20160715-2133-ripc5w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=330&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/130690/original/image-20160715-2133-ripc5w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=415&fit=crop&dpr=1 754w, https://images.theconversation.com/files/130690/original/image-20160715-2133-ripc5w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=415&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/130690/original/image-20160715-2133-ripc5w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=415&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Sticking their neck out?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/glauberamos/2393739896/in/photolist-4Dwxtw-7pci97-a64PQM-9bvb1y-5MCbiM-5oCLh8-ccGdVJ-4H5miX-o3MLWQ-oMzDpe-kSrUW-5KqvYG-5S5KBw-7vwW33-8YHvgP-5Kqt8h-9S8EhF-kSrUT-kSrUS-aEdWwC-fXXPSf-bxsV1g-kSrUU-kSrUQ-4HcdNU-5JCV1v-2yNmLm-55r6QZ-3hAMdB-mMKdu-bWQQCm-6JvYAY-9rCUgy-4ZrBKx-9DGBsY-2yNmNj-29kr5n-HZ3pt-cUsvY-7yKVF2-6mHjYf-2j1QzD-iP6U4-dihFjk-5qhKEh-dqQx6-53aJFA-9DDKaz-83pjmN-9DDK8R">Glauber Ramos/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<h2>A new era</h2>
<p>It has been a notable change that social investment initiatives have been detailed in these companies’ annual reports in a way which explicitly links them to increased corporate value. </p>
<p>Unilever’s <a href="https://brightfuture.unilever.com/stories/482407/From-Homemakers-to-Breadwinners-Shakti-Ammas-are-Leading-the-Way.aspx">Shakti</a> direct-to-consumer distribution scheme, for example, recruits Indian female micro entrepreneurs. Local distribution programmes such as this add <a href="https://www.unilever.com/Images/unilever-ar11_tcm244-421850_en.pdf">€80m in incremental turnover</a> for the company, while providing a livelihood for people who may not otherwise find work. Its <a href="https://www.unilever.com/sustainable-living/the-sustainable-living-plan/improving-health-and-well-being/health-and-hygiene/">Hygiene Education Programme</a> in Vietnamese schools contributed to volume growth in the Vietnamese market. Linking Unilever Brands with social investment programmes has been part of their growth strategy.</p>
<p>The <a href="http://www.gsk.com/en-gb/responsibility/health-for-all/access-to-healthcare/">GSK Access to Medicines</a> programme, meanwhile, flexibly prices drugs for different markets and benefits the developing world, where drug affordability is a key issue. At the same time, it allows GSK to achieve one of its strategic priorities, moving away from reliance on the <a href="http://www.telegraph.co.uk/finance/newsbysector/pharmaceuticalsandchemicals/7158658/GSK-seeks-to-abandon-white-pill-and-Western-markets-strategy.html">“white pill and Western markets”</a> model. GSK acknowledges that “fulfilling social responsibilities” is part of being a successful and sustainable business. While there are obvious difficulties in putting an exact <em>financial</em> value on this, the simple acknowledgement of its value is an important step.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/130692/original/image-20160715-2120-4pw1va.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/130692/original/image-20160715-2120-4pw1va.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/130692/original/image-20160715-2120-4pw1va.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/130692/original/image-20160715-2120-4pw1va.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/130692/original/image-20160715-2120-4pw1va.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/130692/original/image-20160715-2120-4pw1va.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/130692/original/image-20160715-2120-4pw1va.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/130692/original/image-20160715-2120-4pw1va.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Affordability: a pharmacy in Eritrea.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/barduran/272484039/in/photolist-q5y1F-9YBNnH-4mG4SA-nmRLUr-cHqvBm-532UwP-53741j-532W1D-532PKH-532JHr-gdnVLi-gdoHyw-532NEv-537e41-5376PL-52QRWm-52LBDR-7WkNfg-ggz25K-7WkSe2-532T78-787Lv9-7RBM1w-8gUAYi-4f4vfA-65gnEq-ni47ZG-gdeZF9-gdogFt-7mu9Y3-783DBR-787D4h-52LFJM-7885ty-532KbD-52LF4t-532NA4-785zyG-537cKj-78aadY-532PBT-ggyiJ6-532UmV-537bZJ-537d5u-785APS-787Swj-9fkrMv-784aZB-9fkoCP">Barbara Durand/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>Heineken’s impact in <a href="http://www.theheinekencompany.com/sustainability/local-sourcing-africa/partnering-for-growth-in-africa">African communities</a> is largely mediated through their suppliers and distributors, so they have set a target to expand local sourcing of raw materials in Africa and have implemented farm training affecting 30,000 African households. This increases the reliability of supply and reduces transport costs. </p>
<p>Australian bank NAB claims that its <a href="http://www.superbrands.com.au/volumes/nab-2/">Fair Value Agenda</a> makes banking fairer, simpler and more affordable by relieving financial hardship and debt collection. Responsible lending is seen as a source of competitive advantage; a way to distinguish the bank from other large institutions. It helps the bank deliver on a strategic priority of enhancing NAB’s reputation. </p>
<p>Companies are also realising the importance of partnerships in social investment activities. NAB’s community finance store, <a href="http://www.nab.com.au/about-us/corporate-responsibility/our-programs-and-initiatives/social-and-financial-inclusion/microfinance">Good Money</a>, was set up in partnership with the Victorian government and Good Shepherd Microfinance. It offers financial counselling and access to cheap, small loans to people on low incomes.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/129992/original/image-20160711-24067-1lj43iq.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/129992/original/image-20160711-24067-1lj43iq.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/129992/original/image-20160711-24067-1lj43iq.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/129992/original/image-20160711-24067-1lj43iq.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/129992/original/image-20160711-24067-1lj43iq.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/129992/original/image-20160711-24067-1lj43iq.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/129992/original/image-20160711-24067-1lj43iq.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/129992/original/image-20160711-24067-1lj43iq.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Melbourne: home of NAB.</span>
<span class="attribution"><a class="source" href="http://www.pikore.com/m/1273021951293812848_311937331">Photo by Jack Adams @jadams_adventures</a>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<h2>Change in thinking</h2>
<p>Key to these changes in the approach to social investment is a shift in corporate reporting which has pushed companies to rethink what drives value creation – and indeed what value creation is. The balance sheet conveys only part of a company’s value, and investors are seeking information on activities which contribute to forms of value which are not easily translated into monetary terms from one quarter to the next.</p>
<p>Unilever and NAB have followed guidelines in <a href="http://drcaroladams.net/integrated-reporting-and-the-six-capitals-what-does-it-all-mean/">integrated reporting</a> led by the International Integrated Reporting Council (IIRC) and supported by professional accounting bodies around the world. Any company that wants to be able to say it complies with the <a href="http://integratedreporting.org">International Integrated Reporting Framework</a> must report how they create value in broad terms and think about their business model and strategy in terms of multiple ideas of capital. That means incorporating human capital, natural capital, social and relationship capital, and intellectual capital, as well as thinking about money flows and profit accumulation.</p>
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<p>It is catching on. Heineken and GSK have not been directly involved in the IIRC’s work, yet over the period of development of the Framework, their reporting has changed significantly to adopt many of its features. The influence of reporting on aligning social investment strategy with business strategy should be welcome news for firms seeking to change but lacking the capacity or know-how for disruptive transformation.</p>
<p><a href="http://drcaroladams.net/exploring-the-implications-of-integrated-reporting-for-social-investment-disclosures/">Our study</a> examined various types of reports published by these four companies over the period of development of the Framework and saw a small, but noticeable shift. Social investment by companies is moving away from its previous role as a philanthropic act, outside of strategy, which is leveraged for marketing benefit after the fact. Increasingly, it now sits inside strategic decision making and, as with NAB’s community finance store, partners are brought in to make the delivery more targeted and effective. </p>
<p>The companies at the forefront of this are integrating social investment with business strategy, actively seeking to demonstrate that their social investments are purposeful, accountable, respectful, ethical, and contribute to long-term business success. Social investment is featuring in the overall value creation story woven through their reports. It is important to note that this is generally not audited and concern remains that reporting may be prone to exaggeration. But it is no longer being pasted in as an afterthought, unconnected to success on the bottom line.</p><img src="https://counter.theconversation.com/content/62229/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Feel-good fudges designed to boost staff morale are giving way to tangible projects which can be reported to shareholders.Carol A Adams, Professor of Accounting, Durham UniversityBrad Potter, Asssociate Professor, The University of MelbourneJodi York, Research Fellow, Social Investment, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/500892015-11-02T13:19:25Z2015-11-02T13:19:25ZHow Dr Dre picked up the ball and ran with it despite Rugby World Cup’s tight marketing scrum<figure><img src="https://images.theconversation.com/files/100508/original/image-20151102-16514-sg4z0a.jpg?ixlib=rb-1.1.0&rect=3%2C0%2C1020%2C686&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Heads you win.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/slnguyen/4294018523/in/photolist-7xrY78-b8nUfn-b8nTTT-aCR5e2-beXcNP-7vSQGY-b8nTv4-b8nTGF-7u5UHa-7vSQGW-7vSQH7-aCUWfG-8V2wad-8XGvv8-7xrXz2-7xrWYB-b8nUwP-wx2ipB-7xrWmH-aer1UZ-b8nU3k-b8nTCi-b8nTja-b8nTyD-b8nToz-b8nTYt-b8nTrX-aCR5mM-99n5Fz-9V3CAA-ctntXd-eeomAT-eewSHJ-aCUWn1-aucPju-aCUWpb-aDMsPA-98dqBS-o8bNZD-b2obit-bhbiGM-bVocxF-8jsvV3-aAFUuo-o9XFZD-nQrMYm-onNGVk-aMFgbX-94CL63-aMFjPi">Sean Nguyen</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>The favourites New Zealand chalked up their second successive Rugby World Cup victory in a competition dominated by the <a href="https://theconversation.com/the-beautiful-south-how-australia-and-new-zealand-dominated-the-rugby-world-cup-49965">southern hemisphere</a> teams. But who were the winners among the global corporations seeking to stand out in the marketing scrum? The tournament sought to keep its doors closed to the kind of unofficial marketing that leaves official sponsors furious, but an American rapper may have rattled their cages.</p>
<p>The RWC is now firmly established as a top ten world sporting event that can boast a hike in <a href="http://www.novagraaf.com/en/news?newspath=/NewsItems/en/don-t-get-into-a-fight-with-the-rugby-world-cup-2015-organisers">sponsorship revenue of more than 50%)</a>. Huge leaps have been made to <a href="http://www.thedrum.com/news/2015/09/24/italy-sees-largest-rugby-world-cup-interest-spike-outside-top-10-ranked-sides">give the sport global scale</a>.</p>
<p>You could see the practical impact of this as deep-pocketed sponsor Emirates airline’s brand appeared on match officials’ shirts, <a href="https://theconversation.com/why-england-cant-lose-from-hosting-the-rugby-world-cup-47788">a first for the tournament</a>, and a move which illustrates a willingness to create new marketing assets. </p>
<h2>Swing lower</h2>
<p>However, despite the largely sold out stadia, the biggest crowds, and the narrowest winning margins (although still some 30 points), TV sponsors were still facing 25% advertising value losses <a href="http://www.thedrum.com/news/2015/10/05/rugby-world-cup-brands-play-down-commercial-losses-england-s-lacklustre-exit">due to England’s early exit.</a></p>
<p>It wasn’t for want of trying. Official sponsor Land Rover, surely the ideal rugby vehicle, ran extensive grass roots game vignettes emphasising its rugged, real and authentic dimensions. As part of the pre-tournament hype, it even floated a bespoke Defender in an oval balloon down the river Thames. </p>
<p>Heineken’s £20m sponsorship propelled it to the top of the <a href="http://www.thedrum.com/news/2015/09/22/heineken-tops-rwc2015-digital-engagement-non-sponsor-guinness-comes-second">competition’s digital engagement rankings</a>, closely followed in second place by non-sponsor and close competitor Guinness with its “made of more” campaign, with Land Rover taking fifth spot. Also in the top ten were non-official sponsors O2, using an evocative approach dubbed <a href="http://www.thedrum.com/news/2015/10/05/rugby-world-cup-brands-play-down-commercial-losses-england-s-lacklustre-exit">“wear the rose - make them giants”</a> that claimed 5m acts of shirt wearing support. </p>
<p>The biggest surprise to most would have been a Dr Dre brand coup as it rode on the coat-tails of a genuine tournament hero with a campaign titled “the game starts here” and starring All Blacks captain Ritchie McCaw. The Beats headphone, speaker and music streaming business which Dr Dre founded is now owned by Apple, but the company <a href="http://www.theguardian.com/media/2012/jul/31/dr-dre-beats-olympic-brand-police">has form in ambush marketing</a>. It is an alluringly effective strategy for a youth-culture-focused brand no doubt. Using the highly recognisable Kiwi skipper allowed Beats to achieve a stand-out top ten ranking without signing up for an official sponsorship package.</p>
<h2>Giants felled</h2>
<p>England’s long-term telecoms sponsor, O2, got into that top 10 despite having to give up its Twickenham stadium sponsorship for the 44-day-long tournament. It did though <a href="http://news.o2.co.uk/?press-release=o2-gives-rugby-fans-chance-to-earn-one-of-50000-official-england-rugby-shirts">give away 50,000 O2-branded shirts</a>, adding to the 150,000 that are sold each year. You might even have some pity for them as that “wear the rose” campaign featuring oversized cartoons of celebrity players to tap into powerful emotional nationalism, came to a rather sudden halt as England crashed out embarassingly.</p>
<p>O2 might have foreswarn ambush marketing, but it wasn’t left entirely to chance. Bespoke anti-ambushing legislation wasn’t introduced but the RWC organising body England 2015 did pre-purchase the outdoor outlets <a href="http://www.udl.co.uk/docs/default-source/default-document-library/ambush-marketing.pdf?sfvrsn=2">around their venues</a>, effectively establishing a 500m advertising exclusion zone. </p>
<p>The RWC also relied on trade mark protection, rather than what some have criticised as the draconian legislative measures <a href="http://www.onechoix.com/ambush-marketing-what-it-means-for-the-2015-rugby-world-cup-and-euro-2020">used by the Olympic movement</a> at London and for next year in Rio, and in so doing avoiding negative coverage and legal costs. Some hold the view that tighter sponsor rights protection actually makes it more likely that mega sports events will be ambushed; think of the notorious antics of <a href="https://theconversation.com/models-messi-and-wacky-races-the-art-of-ambush-marketing-22622">Paddy Power, Bavaria Beer and Pepsi</a>. Seven out of the ten most shared World Cup adverts were unofficial at FIFA’s 2014 premier football event.</p>
<h2>Bounced out</h2>
<p>And so the main sponsors kept the ambushes at bay, but maybe didn’t eradicate them completely. I noticed hostess teams outside Twickenham handing out megaphones featuring branding from power company SSE, which were confiscated by the stadium security. SSE was a sponsor of UK commercial broadcaster ITV’s coverage of the World Cup, but it was not an official sponsor per se.</p>
<p>Guinness, sponsor of all four home nation teams and yet ousted from the stadium experience by Henieken, sought to harness its credentials with rugby supporters directly at pubs and bars. It tried to get 500,000 people to try Guinness with an omni-channel roadblock media buying strategy aimed at hitting every screen and giving away 10,000 point of sales kits to landlords and owners.</p>
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<figcaption><span class="caption">Samsung put itself in the background in a campaign that leant on comedy for impact.</span></figcaption>
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<p>Another non-sponsor, Samsung, grabbed attention with its school of rugby campaign featuring comedian Jack Whitehall and former England captains Martin Johnson and Laurence Dallaglio. Their humorous content strategy heavily pared back on the Korean tech brand’s visibility. Blink and you might have missed it. </p>
<h2>Sponsorship form</h2>
<p>Perhaps, after all, the biggest surprise was on the field as <a href="http://www.theguardian.com/sport/2015/sep/19/south-africa-japan-rugby-world-cup-2015-match-report">Japan beat South Africa</a>. Very modest evidence of England 2015 ambush ads probably signals a win for RWC management’s effort to protect exclusive sponsorship rights. Consumers don’t differentiate of course, and in that halo of confusion there was some success in related, but not infringing, marketing from Guinness, Samsung, and O2.</p>
<p>The thing is, they all have serious, long standing pedigrees as official sports sponsors. And in truth the RWC probably won’t be too bothered that some potential sponsors for the game stole a little of their thunder this time around. Bearing that in mind, it was perhaps only Beats by Dr Dre that ruffled the tournament’s carefully orchestrated protectionist feathers. So who will step up to take on the lawyers and stadium bouncers at next year’s Brazilian Olympics?</p><img src="https://counter.theconversation.com/content/50089/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Professor Justin O'Brien does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The attempt to hand-off unofficial advertising during the RWC failed.Professor Justin O'Brien, MBA Programme Director, Royal Holloway University of LondonLicensed as Creative Commons – attribution, no derivatives.