March 2010
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The Age of the Asian Consumer :How to build a Sustainable Value Chain

If the rest of the world were to adopt a European lifestyle, the resources of two and a half planets would be needed to support consumption.

As the emerging middle class in Asia seeks to consume more products and services, what will be the future business model for manufacturers and retailers? How may players along the value chain collaborate to realize sustainable solutions?

Key Points

• India offers huge opportunities as a consumer market.
• Sustainable solutions need to be found to increased consumption – both in India and around    the world
• Businesses have a responsibility to develop environmentally friendly business models
• There is an emerging consumer market that desires products with a lower carbon footprint
• Technology has a key role to play in creating environmentally friendly products
• A global “fair share” index should be established

Synopsis

Consumption in India has grown massively over the last 20 years and is set to grow further. A number of factors are responsible: economic growth has given people more disposable income and they feel confident about the future; conspicuous spending is no longer frowned on as it was during the austere post-independence period; television and the Internet have raised awareness about consumer products; and liberalization has enabled a far greater variety of goods to enter the market.

Changes in attitudes and lifestyles have created new growth markets – in personal and luxury goods, restaurants and health products.

With its large population, India offers huge opportunities as a consumer market. It is probably the youngest market in the world – the median age is 25 – and many of its young consumers have grown up on a diet of television and advertising.

Although “value” has different meaning to Indians of different social strata, the vast majority are lured by price-point strategies. Businesses can look forward to modest margins but very high turnover.

Sustainable solutions need to be found for this increased consumption. Opinions differ as to whether these should be driven by business or the consumer.

Businesses have a responsibility to find ways of operating that are socially relevant and environmentally sustainable. As well as developing viable economic models, they need to be conscious of the communities in which they operate and develop a “spirit to give back”.

Some are beginning to see the benefits of having a sustainable value chain. There is an emerging consumer desire to have products that leave a lower-carbon footprint – although consumers do not want to pay more for them.

Technology has a key role to play in providing innovative new ways to meet consumer needs in an environmentally friendly way. It is also vital to eliminate waste and inefficiency in supply chains.

A global “benchmark” should be created – governed, ideally, by the United Nations – to consider what denotes a “fair share” of consumption.



 
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