Brand Lao - linking smallholders to international markets, the Lao PDR experience

The Nation Consultancy answer – make it more profitable
For the farmer, producer, community, everyone along the value chain.
©TheNationConsultancy
SECTION 1
How to encourage better and more sustainable
land use ?

The Nation Consultancy answer – make it more profitable.
But how?
land use ?
Product &
producer
- Consumer
in shop.
- Consumer
at home
from ‘fork to field’….
then from ‘field to fork’ –

The Nation Consultancy answer – make it more profitable.
Two sections:
1. The methodology to use
2. The Qi history
3. The example from Lao PDR
land use ?

The CORE idea:
• Use effectively branded exports to allow farmers/producers at every stage
of the value chain to EARN more money for sustainable products
How?
• By targeting the "Ethical“ consumer – in affluent societies (so with more
disposable income) – who cares about environmental issues,
sustainability, traceability, authenticity, naturalness, etc.
Continued…
SECTION 2
The Methodology
The Nation Consultancy’s IEMED™ Methodology

1. Identify optimum consumers to target – within affluent International ethical
consumer.
2. Identify the product sectors with potential competitive international
advantages in the eyes of the target consumers.
3. Identify the National – or regional – competitive marketing advantage.
And..
• …specify a Total value chain to deliver brands featuring real competitive
advantages, and imaginative imagery (national, tribal, cultural) etc…
• …to the shops/homes/kitchens of the target consumer
Continued…
Steps involved

Identify the competitive marketing advantage that links what the smallholder
produces, to what the (foreign) consumer will pay more for. Bringing
 Better incomes to farmers – and every level in the value chain.
 A new appreciation of the land’s value, and of authentic, natural produce.
 Sustainable & profitable clean alternatives to slash/burn, intensive crops.
Continued…
Steps involved (continued)

So, competitive advantage & Marketing process produce a consumer-determined
Total Value Chain,
…Improving incomes at every stage, thus….
 Protecting biodiversity & community land-use rights, developing rural
economies; entrenching responsible standards of behaviour
 Making farmers more prosperous
 Making communities more prosperous
 Mitigating migration from country to city
Using proven analytical and marketing methodologies of successful businesses. But
adapted to the produce and needs of a nation.
Steps involved (continued)

©TheNationConsultancyLtd.
Qi teasProduct &
producer
- Consumer
in shop.
- Consumer
at home
Capacity building
Logistics and sales
SECTION 3
A Value Chain example – from China’s Golden Mountains

Product &
producer
- Consumer
in shop.
- Consumer
at home
Qi teas
A Consumer-Driven Value Chain example –
from China’s Golden Mountains

©TheNationConsultancyLtd. Qi teas
A Consumer-Driven Value Chain example –
from China’s Golden Mountains
ONE TOTAL VALUE CHAIN
• One central selling mechanism
• One central data source
• One central production and quality control
• But several independent-minded cooperatives

The Total Value Chain - a case study:
from China’s Yellow Mountains

How we created a market for organic green tea in Europe;
and livelihoods for communities in China in so doing.
The Jiangxi Tea farmers case history

PRODUCTION.
Until 1997, green tea had been sold by state-run
cooperatives as a low-priced commodity.
Then the cooperatives were dissolved;
management disappeared: the farmers were
abandoned.
MARKET
In 1997 Europe, green tea was almost unknown.
In the UK' people drank mainly cheap black tea,
with milk and sugar. Tea culture and ritual had
almost disappeared….

Qi teas - One supply chain.
Rigorous, consistent, Western-trained Chinese management.
Now produces superb teas – Wins UK Great Taste Gold Award!
PRODUCTION. Created a co-operative across 13 mountain villages, WITH
social and commercial arms. Constructed Tea factories
The cooperatives’ tea production now
• Exceeds all E.U minimum standards for production and employment.
• Provides full traceability, Benefits from full organic/other
certifications: e.g. Fair Trade; Ecocert Organic; ISO, HACCP, etc.
• Supports Roads, Schools, English teaching, Hospitals .
MARKET
• In 1997, demand beginning for white teas, organic
products, Fairtrade Labelling International began.
• Qi launched the first Chinese organic green tea -
• With professional branding, design, packaging

Has it helped
the villagers
and farmers?
Last years sales
of tea had a
value of $3.25
Million USD.
Economic – The farmers get higher
prices and guaranteed minimum
prices and advance warning how
much of each type is needed.
Employment: More direct jobs in
the village – secondary processing,
packing factory,– all Fairtrade
registered.
Livelihoods: These in turn create
local livelihoods – printers,
packagers, cooks, accountants,
lawyers, cleaners, drivers.

Putting The Nation Consultancy’s IEMED™ Methodology into practice
Use the power of the International ethical consumer
to achieve social goals, sustainable growth and inclusive prosperity
SECTION 4
The Brand Lao – For Better Livelihoods programme

CONVINCING FOREIGN CONSUMERS TO BUY THE ETHICAL BRAND NEEDS
– LOGIC AND EMOTION
– PRODUCT BENEFITS AND POWERFUL PROVENANCE
– CERTIFICATION AND STANDARDS.
CONVINCING FOREIGN CONSUMERS TO PAY A PREMIUM NEEDS –
DIFFERENTIATING LAOS AND ITS PRODUCE (&TOURISM) FROM INTERNATIONAL COMPETITION:
SO…..
Brand Lao - for better livelihoods.
The Lao programme

Brand Lao
Product &
producer
- Consumer
in shop.
- Consumer
at home
Capacity building
…for maximum sustainable profit
and consumer loyalty
Logistics and sales
The Consumer-Driven Value Chain –
…for better and more sustainable land use by
achieving higher prices/profits on existing
sustainable production

Based on TNC’s IEMED™ Methodology
Identifying the competitive advantages linking small-holder production to what the foreign
consumer seeks.
Step 1: identify the most appropriate and sustainable foreign consumer trends:
• the ‘ethical’ consumer (fairness, responsibility, transparency, sustainability, Community support,)
• Interested in premium-priced artisanal, natural produce, ‘real’ food; experiment & ‘experience.’
1.Happening in virtually all sectors – from cafés to ice-cream, gin to cosmetics, beer to snacks…
2.Challenging big business: “People really do care where, and how, things are made” (FT: 04/18)
Step 2: analyse changes needed to product, and value chain, to suit target consumer.
This is where the Donor Community and investors have a fundamental role to play.
Brand Lao - for better livelihoods,
is a unique programme for Lao PDR

1. The NEW consumer is impacting international trade – its artisanal values and
ethics.
2. Big business is buying expensive small, craft, artisanal brands in order to
compete.
• Boston Consulting Group: $22bn in industry sales transferred from large to smaller companies in North
America 2011/ 2016 – similar trend in Europe. Smaller companies’ share of consumer goods market grew
from 23 % to 26 % (FT).
• Craft Gin: Sipsmith’s London dry gin (the first traditional copper gin distillery in London since 1820) bought
by Japanese giant Suntory . Costs £30 v £15 for Gordon's or £20 for upmarket Tanqueray. Sipsmith’s sales
up 60% annually.
• “Large companies are finding it difficult to outperform the markets…[because] large companies are facing
smaller, nimbler, niched competition . . . a ‘one size fits all’ approach is an outdated approach.” [CEO
Reckitt Benckiser].
• …Continued
The Lao programme

The NEW consumer
Shopping habits:
o “People are changing …digital technology has made it easier for
companies without large marketing budgets to reach consumers online,
removing dependence on traditional distribution”
o “One way …to combat such trends has been to innovate, create
desirable new products, and charge more for them.” (FT, Feb 18)
The Lao programme

The purchasing power of the ethical consumer
Some examples
A few statistics about trends in “ethical attitudes” and
consequently “ethical living or behaviour”
Changing values
The statement:
2015 2016
% agreeing % agreeing
! am worried about climate change” 55% 60%
“I try to have a positive impact on the
environment through my everyday
actions”
65% 66%
Source: Euromonitor International’s Global Consumer Trends Survey,
September 2017
Note: over 10% of millennials ranked making a significant
difference in the world as one of their top 3 life priorities

The purchasing power of the ethical consumer
Some examples
A few statistics about trends in “ethical attitudes” and
consequently “ethical living or behaviour”
A couple of examples of the ‘greening’ of the United Kingdom
a) Ethical Food and Drink
2000
£m
2015
£m
% growth
2000 – 2015
Organic 605 1,744 +188%
Fairtrade 33 1,572 +4,664%
Rainforest Alliance n/a 2,048 !
Free range eggs 182 609 +235%
Free range poultry 44 275 +525%
Vegetarian products 479 710 +48%
Freedom Food n/a 1,570 Wow!
Sustainable fish n/a 507
Sub-total: 1,343 9,034 +573%
Source: Ethical Consumer Markets Report 2016 Continued…

Based on The Nation Consultancy’s IEMED™ Methodology
THE Development TRIANGLE
Action by private sector
Strategic direction and coordination from public sector
Initial (only) Technical Advice, Capacity-Building, Support from development partners.
The Lao programme

The differentiating concept
LAOS – THE QUIET HEART OF ASIA
PEOPLE AND PRODUCERS, WHO KNOW THE VALUE OF TAKING TIME –
FOR OTHERS, AND FOR WHAT THEY PRODUCE.
The Lao programme

Testing the concept - and the advertising
UNDP COMMISSIONED HARRIS INTERNATIONAL TO RESEARCH THE REACTIONS OF
INTERNATIONAL ETHICAL CONSUMERS TO THE PROPOSED PRODUCTS, AND THE PROPOSED
PRESENTATION OF LAOS.
The Lao programme

 Validation 1:
YES, there is an opportunity to help people out of poverty via exports
that sell at a PRICE PREMIUM

Brand Lao – for Better Livelihoods
WHAT DID WE FIND OUT?

 Validation 1: YES, there is an opportunity to help people out of poverty via exports that sell at a PRICE
PREMIUM
 Validation 2:
YES, people are willing to pay more for products that are worth it,
because…


 Validation 3: What did we succeed in communicating?
The new Lao Brand captivates the imagination of the consumer
1. The products are authentic, from small producers – so will taste
great. (cf. the ‘Slow-Food’ movement).
2. They support livelihoods and ways of life
3. The credentials satisfy even the cynical ‘ethical’ consumer.
Jointly, ALL THREE POINTS are irresistible.


A reminder:
• The goal: export sales of premium-priced Lao-branded
ethical exports
• The output: profitable sales.
• The outcomes: sustainable livelihoods, poverty
reduction, maintenance of rural communities.
• The method: coordination - creating market-
determined TOTAL VALUE CHAINS
THE STRUCTURE REQUIRED TO ACHIEVE OUR GOALS

SECTION 5
PRACTICAL ISSUES Brand Lao - for better livelihoods.
How the Export Marketing Groups are linked together, and receive
support

Brand Lao - linking smallholders to international markets, the Lao PDR experience

Brand Lao - linking smallholders to international markets, the Lao PDR experience

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