John Murphy, CFO and Former President for Asia Pacific, Coca- Cola Company: Interview

Interview: John Murphy

What are the main trends in the regional sector?

JOHN MURPHY: There is no better time to be in the beverage industry in South-east Asia. With over 600m consumers living in the region’s emerging economies and a growing middle class, there are many reasons to be optimistic about consumer spending. Furthermore, in the Philippines – as in many neighbouring countries – a relatively large proportion of disposable income is spent on food and beverages. As these economies continue to develop we expect to see a greater share of consumer spending move to non-durable goods and services, while the absolute amount spent on food and beverages will continue to experience healthy growth.

In what ways will the Fourth Industrial Revolution (4IR) affect the industry in South-east Asia?

MURPHY: The convergence of the multiple technological breakthroughs that are defining the 4IR are dramatically changing, and in certain areas even disrupting, the consumer goods sector. Customers have access to an increasing array of goods and have more options to learn about, select and pay for a service or product – all at a speed and a level of efficiency that we have not encountered before.

In some countries, including Singapore, it is possible to undertake the majority of marketing digitally, by reaching consumers on their phones which they then use to select, pay for and receive goods and services. In a country with an ageing population, where the majority of consumers commute, this has significantly helped improve their day-to-day lives. This trend has likewise increased productivity and changed the way we deliver products, with retailers working more with large e-commerce players who manage home delivery services. In addition, the ability to leverage big data to reach consumers directly and quickly has changed not only how companies contact consumers but also how new products are developed and advertised.

Where are there opportunities for further convergence between manufacturers and retailers?

MURPHY: The e-commerce segment is set to grow in the coming years and thus retailers and manufacturers are having to increasingly pursue an omnichannel strategy to stay relevant and competitive in both the online and offline world. Retailers are working together to ensure that consumers are having as good a consumer experience online as they do in physical stores. Customisation is an increasingly relevant trend and with the help of technology consumers are able to digitally order distinct and unique products or even co-create new products – for example, apparel, or even a mix of beverages – that they can then collect at the physical store or have delivered to their home.

In addition, with digital shopping there is more information and the potential for greater product offerings because there is no physical limitation on space. Consumers have the ability to educate themselves more and be more discerning about what they are buying, by accessing information on products and ingredients and by being able to quickly compare prices. All this points to brand owners, manufacturers and retailers being able to better service consumer needs and ensure that they do so successfully.

How do you expect rising trade protectionism and competition to affect manufacturers?

MURPHY: This topic is receiving an increasing level of attention given the current geopolitical environment. Regarding the broader trade environment, the benefits of global trade are a net positive for everybody. Trade deals can always be improved, but increased trade is invariably better. Providing better outcomes will therefore be achieved by working together to improve the trade deals that already exist. As for competition, it is positive in all markets. It keeps companies, even multinationals, on their toes and ensures that they continually seek to improve operations.