Who knew that a mere vegetable – the humble purple, shiny brinjal, eggplant, aubergine – could create such an uproar?

And why retailers and consumer product companies should be concerned about genetically modified (GM) crops is a complicated story with multiple twists and turns across political, economic, social, scientific and philosophical landscapes.

At their basic level, brinjals have so far been possibly equally hated and loved for their flavour and texture across the world. But their newest avatar – Bt Brinjal – is now being viewed on the one hand as an evil alien transplant that will kill everything good and natural, and the first step of capitalist monopolies to dominate food crops in a large and growing market, while on the other hand it is seen as a saviour of the embattled farmer, an eco-friendly alternative to pesticides and a well-thought out scientific solution to agricultural productivity.
 
Though it might appear that genetically modification is a 20th century invention, the fact is that such food is not new. Since the time we began farming some 10,000 years ago, we have been carrying out genetic screening and selection, and modifying to create plants and animals that suit our purposes. All farmed products are a product of artificial rather than pure natural selection, as humans have pure-bred and cross-bred strains of crops that are seen as more beneficial in terms of nutrition, hardiness and ease of cultivation.

However, there are some important differences between earlier efforts and now, which underlie the recent loud and violent debate. Let me outline the concerns as seen from the anti-GM side of the table.

• Firstly, time.

Previous genetic selections and modifications happened not just over generations of plants, but generations of human beings. By default, this allowed time to try and test different variants and arrive at varieties that met multiple criteria – profitable cultivation, nutrition, taste, durability and safety. There are concerns that not enough is known about the eventual impact of the new GM crops on human and environmental health, and the speed of adoption frightens people. (In 1948 a Swiss chemist was awarded the Nobel Prize for his work on DDT’s effectiveness as a pesticide, just a few short decades before it was banned from widespread agricultural use for – among other things – apparently causing cancer, and being acutely toxic to organisms other than the pests at which it was targeted.)

• Secondly, variety as an insurance.

In the past, if some variety was wiped out due to climatic variation or pests, it was very likely that alternative varieties were close at hand to substitute it. (Estimates about the number of brinjal varieties in India alone vary widely, from 2,000 to over 3,500 though most of them are not actively cultivated in any significant number.) On the other hand the agricultural information and supply chain today is far more integrated, allowing a previously unknown speed and completeness of adoption of new technology and inputs, frequently at the cost of traditional knowledge. Extinction of natural species is not just due to hunting or disasters, whether man-made or natural. If a new engineered variety is profitable in the foreseeable future, farmers would very likely replace other varieties without examining the long-term impact. (This is true also of other inputs, like overuse of heavily promoted synthetic fertilisers or pesticides.)

• Third, the methods of genetic engineering itself.

Previous ‘engineering’ was restricted to pollination, grafting and selection, whereas now we are attempting to manipulate individual genes or sets of genes, and transplanting genes across species (from a bacterium in the case of Bt). This approach is similar to how we look at most things, today – individually, separate from or devoid of the natural context, ignoring any interaction with other elements (other genes, in the case of genetically modified crops). While in some cases there may be no significant impact on the outcome, our knowledge of genetics is far from complete and holistic to be able to confidently make the statement about no long-term harm.

• Finally, the politics of economics.

All agriculture in the last 10,000 years was based on the assumption that future generations of the crop could be raised from seed saved from previous generations. Current genetically modified varieties, on the other hand, are seen as corporate intellectual property created with huge investments, where the return of investment is sought from fresh seed being sold by the company to the farmer for each planting. This is one of the most violently opposed aspects of GM crops, not just in developing economies like India but in developed economies such as the US as well.

I believe I’ve listed the major concerns of the anti-GM side of the debate above, with the rider that not everyone on the anti-GM side shares all the concerns equally.

Unfortunately, the debate is neither simple nor clear as emotions and stakes run high on both sides of the debate.

Pro-GM groups and individuals express the view that their opponents are stuck in the past and are standing the way of progress that is urgently needed to solve immediate human problems.

For one, proponents of genetic modification will point out that the humongous increase in human population needs new strains of crops that can grow more with fewer inputs in terms of water, fertilisers and pesticides. Without such crops, we run the risk of widespread food and water shortages around the world. ‘Green’ concerns may also be quoted in favour of GM crops. The argument is that using genetically modified crops would actually do less damage to the environment than conventional crops, for instance by needing lower doses of pesticide, or producing more crop from smaller patches of land.

Another concern quoted by the pro-GM group is that publicly funded organisations do not have the skills, the scale or the funding to undertake massive and rapid research for the breakthrough agricultural solutions needed in the short term, and that fundamental research needs to be carried out by commercial for-profit organisations. Obviously, as an outcome of that, the profit from the intellectual property needs to be protected such that it can provide adequate returns over a period of time.

For now, most governments (including in India) are playing it safe by maintaining the current status, and disallowing the introduction of GM crops, although there are opposing viewpoints even within each government.

As consumers, also, we could take the view, as many consumers are taking, that what exists (or what existed many years ago) is the best and safest option, since it is the most proven. We could give more muscle to producers and sellers of natural, organically grown varieties, by choosing to buy only such merchandise and rejecting GM foods completely.

I wish it was that simple.

I wish we could say that everything artificial is harmful and everything natural is beneficial. I wish we could blithely accepts labels such as ‘Franken-foods’ for genetically modified crops, treating them as a monster creation.

I wish we could say that one side or the other is adopting more robust scientific methods so that we can take clear and well-informed decisions.

As consumers, unfortunately for us, the truth is not so clear. There are pros and cons on both sides, which will get quoted in and out of context, to support different arguments, for and against genetic modifications.

More importantly, both for consumers and the industry, what is not clear is how complete separation of GM and non-GM products can be maintained. Once GM foods enter the supply chain, it is likely that they will mix with non-GM produce, whether at the farm, in storage or in processing. The current compliance standards in the global food sector offer no confidence that the non-GM and GM supply chains can be sealed off from each other and monitored separately, such that retailers and consumers can make their choice with complete confidence that they are buying what it says on the label.

In this case, more time, and a more robust and holistic investigation may be the only solution. The Environment Minister has asked us to ‘watch this space’.

Now what we end up with in terms of individual, social and economic health will depend on what kind of effort and intent goes into that space. Industry, consumers, scientists, farmers, and governments, all have a role to play in shaping that intent. We all choose whether we want the green organic genes – or the other kind, be they blue genes, purple or yellow.

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(Contributed to the BusinessWorld cover story – “What 2 Expect in 2010″, issue of January 4, 2010)

Everything that can be said and assumed about the Indian market is true at some level of granularity. Very simply, in India there is a segment for every product, an opportunity for every service, be it ever so small. But when bubbles are bursting all over, as the Noughties Decade comes to a close, the puzzle that is Indian consumer market also warrants a fresh look.

For most of the Noughties Decade India has seen Generation-C, the “Choice” generation, coming of age. They have moved over from being “secondary customers” consuming off their parents’ incomes, to entering the work-force and becoming customers in their own right.

It may sound trite, but Gen-C customers have grown up with many models of 2-wheelers and 4-wheelers and colour television with multiple channels. They have many more career options and many more opportunities in each career. Not only have they grown up on a diet of choice, they have also grown up with much higher confidence about the future, about their place in the world and what they can expect. And they have infected the outlook of generations older than them as well with a similar confidence.

Therefore, for most of the decade, it has been a distinctly rosy picture for consumer goods marketers and retailers. Business plans routinely expected 20-50% annualised growth, and businesses even delivered those figures on some basis or the other. Organizations as diverse as retailers and management consultants were inspired by India’s age-old image as the Bird of Gold. Supermarket chains mushroomed like never before, department stores and speciality retailers grew their footprints, quick-service and casual dining expanded covers, while electronics, durables, leisure companies, and car brands all counted India among their hottest markets.

Product off-take reflected this outlook. Amongst the FMCG sector, while basic items such as the bath and shower segment demonstrated a steady annualised growth of about 7%, premium cosmetics galloped at almost 20% a year. While the relatively mature 2-wheeler market grew at just over 7.5% annually between 2002-03 and 2008-09, the 4-wheeler passenger vehicle market demonstrated growth of almost 14% a year in the same period.

All this was before the recent rude interruption.

A speed-breaker began showing up in the consumer market in late-2007 and grew larger through 2008. Once the global financial markets melted down in late-2008, media sentiment turned acutely negative about the Indian market as well. And, eventually, with uncertainty prevailing around the world, consumer spending in India did take a hit. Consumers cut back on the frequency of purchases or traded down.

On the trade side, retail businesses began acknowledging that stores were performing below plan and went into rationalisation mode. For branded suppliers, where some of the growth had come from stuffing the pipeline and filling new shelves, wholesale order books became thinner.

Yet, as painful as the economic scenario might have appeared, the Indian consumer market has shown remarkable resilience. Demand in smaller cities and towns has remained robust. Regional brands, especially, found plenty of opportunity to grow in markets and geographical regions where they were under-penetrated or absent.

And as the mood lifted through the latter half of 2009, consumer demand clearly moved back up. The speed at which the demand rebounded would suggest that the Indian market was relatively sheltered from the global economic storm.

However, there are some critical differences to understand.

On the one hand, Gen-C’s confidence shook for the first time – a generation that has only seen upward mobility, witnessed job cuts and salary freezes or declines even if only second-hand. Comparisons with the Great Depression may be exaggerated but it is a scenario they can now imagine as a possibility. At least three new professional academic batches have or will have moved into the job market under these sober conditions. On the other hand, tremendous inflation in basic costs supports some amount of uncertainty about the future. The fact that many of the Gen-C would have just begun or would be about to begin families serves to only heighten such anxiety.

So, let’s recognise two immutable facts about the Indian consumer market in the current environment.

First: that the ancestral “steel safes” are back, at least figuratively if not literally. Customers do want to save more for now. And if they are spending, they want to feel that they are extracting far more value than the price they are exchanging across the counter, value that will last long after the transaction at the store. In recent years, this inherent ‘value orientation’ of the Indian consumer was neglected by many. Now every product, service or brand must aim to deliver this sustainable value, and demonstrate the value repeatedly.

Secondly, each business needs to look at the lifetime value of a customer if it can. Rather than cutting the golden bird open and trying to extract all the golden eggs at once, one needs need to keep the bird well-fed, happy and healthy, and enjoy its rewards over several years. Rather than creaming the market, pricing, branding and distribution need to be structured for a sustainable relationship with the customer.

Some businesses will work better than others in this market, and strategies will need to be adapted. A lifecycle approach may handy in identifying the business segments which might meet the steel safe criterion, or the golden goose criterion, or both.

The first segment that comes to mind is weddings. Wedding expenditure is seen as a “social investment” for both the families, and the actual items bought are an investment into the couple’s future together. So, bridal trousseaux and wedding wardrobes, wedding arrangers and catering, and household goods provide significantly more tangible and intangible value than the money spent.

Similarly, “first child” isn’t usually a segment in any marketing handbook, but should be. The couple’s first born, especially if the baby is the first in its generation will usually get a disproportionate amount of attention and spending on clothing and utilities. A baby’s growth into a child, of course, can provide a relationship and marketing opportunity that can last for years, but the first 2-3 years are specifically valuable. What’s more, given India’s demographic dividend in the form of a sustained under-30 age group, baby products have a sustained and growing value as a market.

As the child grows, there are clear indicators of current and future value that can drive purchases. While base schooling is an essential expenditure, extra-classes and tuitions are a high-value discretionary investment that parents are choosing to make. Sports, on the other hand, however essential they may be to a child’s development are often seen as a distraction. That is, unless the child is attending sports coaching and the parents have an eye on helping the child create a career from it – in which case, a coach who is apparently good, branded equipment and kit are definitely worth investing in. So a cricket coaching franchise might just be the ticket to fortune, while a toy company may struggle. Some may decry the decline in art, craft, philosophy and fundamental sciences, but these are not on the list of priority of most parents. In the short to medium term, parents would continue to disproportionately push their wards into academic disciplines that are seen to develop marketable skills and pay well. Expect continued growth in the engineering, medical and management education market, but also in other vocational disciplines.

On the other hand, everything is not an investment for the future. Present comforts may also provide extra value, through convenience.

Some of these comforts may be as small as enjoying out-of-home exotic meals (pizza and pasta still qualify as exotic for the bulk of the population). Or if eating out looks out of budget, ready-to-eat and ready-to-cook meals are an easy substitute. Jubilant, Yum, McDonald’s, Haldiram, Sarvana’s, Nirula’s and the thousands of other casual dining and snack food chains have a long clear highway of growth ahead, as do snacks and packaged food companies such as Nestle, Britannia and ITC.

Brown goods and white goods that offer comfort and convenience – coolers, water heaters, convectors, air-conditioners and kitchen gadgets – continue their onward march, despite the huge shortfall in electricity. Even if the big brands struggle with their price points and overheads, regional brands and private labels will continue growing strongly in these segments.

Health is another area for significant investment. With prevalence of lifestyle-ailments, from stiff necks to high blood pressure, basic pharmacists to cardiovascular specialists are all in demand. Anticipate significant growth to continue in over-the-counter medication, medical devices, as well as clinical and hospital care.

At the other end of the scale, with decent and adequate public transport lacking in most cities, we can expect personal vehicles to increase multi-fold, despite the small blip in 2008-09. About 60 million 2-wheelers and over 10 million passenger vehicles have already been added during the decade, and the growth trend looks set to resume from 2010, unless there are significant oil price or vehicle taxation shocks delivered by the government.

And as consumer confidence resurges, more overt displays or personal spends will return as well, including apparel, footwear, home products, accessories, vacations, fitness and recreation, but we would expect them to follow behind the higher priority “safe” or “geese” segments.

Finally, the one thing that marketers in any product need not be really concerned about whether there is a future in this market. Even, Hindustan Unilever, a mature FMCG company with very high distribution penetration built over decades, still counts less than 60% Indians as its customers.

Surely most companies have a much longer road ahead before they need to be worried about their markets becoming saturated.

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Following on our article (“Numbers and Stories”, 23 November 2009), our friends at Retailwire.com thought it would be interesting to run a poll to ask the Retailwire community what they thought about retailers using research. The original discussion is here on Retailwire, but we’ve reproduced the comments and the poll results as they stand today (16 December 2009).

As evident from the graph below, the short answer is “no, companies don’t use research well”; only 15% of the respondents felt that companies are “good” in using research, at their best. Should we blame the companies or the researchers? The comments seem to suggest that the blame needs to be shared equally.

Comments below:

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In a recent workshop on fashion styling, we were discussing how the retail seasons have evolved. In the developed economies, from the traditional two seasons – spring-summer and autumn-winter – the number of seasons grew as fashion brands discovered or invented (take your pick!) sub-seasons to create and satisfy distinct demand in specific time periods. For many companies, the number of “seasons” has grown to 10-12 now including transitions and “promo season” series.

India, you would think, essentially has two seasons, the summer and the festive season. However, in the last decade or so, as exposure to the global culture has increased, other “seasons” such as the “Valentine’s Day” have emerged and proved important for retailers.

In fact, events such as the “Sabse Sasta Din” (“the cheapest day”) on the 26th January (India’s Republic Day) created by Kishore Biyani’s Big Bazaar in 2006 should also qualify as seasons, given the huge sales upsurge during the event. In fact, the impact has been such that many other retailers and brands have also taken this concept rather seriously this year. In fact, after a rather dull consumer response in the festive season in 2008, many of our clients reported rocking sales in the last week of January 2009 on the back of heavy promotional campaigns.

More recently while voter awareness campaigns such as “Pappu can’t vote” have been effective marketing initiatives to get many of us out of our comfort zones and exercise our voting rights, many retailers and brands have also seized this opportunity of citizens’ awakening by offering up to 20% discounts to those who have voted. The economic slowdown is certainly getting people to think differently and more creatively. So, “Jago re” (awaken) brands, retailers and countrymen – go ahead and fashion your own season!

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Wal-Mart has just opened a new store Supermercado de Walmart in Houston (Texas). The Houston Chronicle reports that the Supermercado aims to reach out to the Hispanic population, tailoring the foods more to Hispanic tastes and needs and adding signs in Spanish. Wal-Mart is also reportedly planning to open a Mas Club this summer, based on its Sam’s Club warehouse outlet, but focussed again on Hispanic customers. (The original article is here: Wal-Mart gives its Supermercado concept a tryout).

Going by some of the negative comments attracted by the article, it is legitimate to ask: what will Wal-Mart’s existing customers think, and how will they behave?

I guess the answer is clearly not black or white (or beige, red, yellow or brown for that matter).

Wal-Mart is segmenting and localizing its offer as a smart information-rich retailer should.

Some customers who hold a tightly parochial view may feel alienated when they read about this development and may stop shopping at Wal-Mart, but most probably won’t bother as long as their local Wal-Mart continues to deliver what they want at prices they like.

Vibrant societies and economies are true melting pots; rather than exclude, filter and ensure conformity, they imbibe and blend newness. The fact is that real assimilation causes both to change – the ones coming in and the society / geography taking them in – and we have to accept that change often brings some pain with it, as expressed by the reader commenting on Houston Chronicle’s website.

The first waves of European settlers created a change when they started landing in North America 500-odd years ago, and so has every wave of immigrants since – Chinese, Japanese, German, Irish, Italian, Eastern European, Korean, Indian, Caribbean and so on. The first settlers will always be suspicious and exclusive in their approach towards the second set, the second lot of the next and so on.

The wave of economic homogenization driven by the post-war baby boom and infrastructure expansion was possibly one of the largest in recent history (other than the Soviet Union and the Chinese Cultural Revolution, which were more political than economic). However, we’ve seen the US market grow in diversity in the last 2-3 decades – not only because of differences due to race or country of origin, but also due to geographic, economic and otherwise cultural differences.

Today many of the diverse segments today in the US are large enough to express their unique needs, and expect them to be fulfilled. While the cookie-cutter approach served well during the years of national expansion across homogenized markets, that approach is counter-productive today. A retailer like Wal-Mart can’t be expected to ignore that fact.

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