I agree with the author’s (and other commenters’) point about how BATs will generally impact all competitors within an industry evenly, so there isn’t much need to worry. But I think one element of that discussion which has not been explicitly mentioned is that this argument only holds true if the consumer is relatively price inelastic. I think it would be safe to assume that Adidas/Nike’s response to added BAT would be to pass that cost along to their customers through higher prices, but they are likely somewhat insulated in that there are not acceptable, cheaper substitutes readily available. This dynamic puts a little extra pressure on the branding to carry additional value for the consumer, who would now need to justify paying a higher price for the same pair of shoes they may have bought a year ago.
Similar to Fede’s response, my thoughts on the most likely outcome of the situation you describe is that it will lead to further and more rapid consolidation in the beer industry. It seems that the efficiency of water usage will become such a competitive advantage that the major players will be able to scoop up microbreweries who cannot achieve the same type of scale without being under the umbrella of a larger brewer.
I am not convinced that consumers would be willing to pay a higher enough price for craft brews compared to national brands to offset the widening cost base, particularly because of their lack of knowledge of the issue. I wonder if the BA could play a role in educating beer drinkers on the impact of water sourcing on the prices of their beers. At least if a consumer can rationally understand why their Spotted Cow costs more than a Bud Light, they may be more willing to accept the price disparity.
What I find most interesting about the shift in power dynamics here is the increased leverage this gives Walmart over their suppliers (a relationship that is already tipped pretty heavily in Walmart’s favor). Walmart already has a good understanding of their consumer, and they use those insights to influence their suppliers’ product assortment, new product development, pricing, and more. If they can harness the power of even more precise customer data, just think of how much more targeted and persuasive their demands of their suppliers could become.
Walmart’s supply chain efficiency is already such a big competitive advantage, I can only imagine how powerful they could become with the data to become even more agile. But I think one watch-out will be whether or not this can translate to improved agility across the entire supply chain. How will manufacturers, who typically rely on the scale of large, less frequent production runs, keep up with Walmart’s demands to become more dynamic and reactive to customer data? An entire supply chain can only be as quick as the slowest link in the chain, so Walmart may soon need to turn their attention upstream to enable the downstream effects they are looking for.
I think the biggest barrier Tyson has with the more radical approach you laid out is consumer willingness to accept meat-substitute products. To take the issue one level deeper, I would argue that most consumers are not even aware of the scale of the environmental impact that meat production has. So without full consumer awareness of the problem, Tyson has an even bigger hill to climb in encouraging a change in consumption behavior.
I also think it’s interesting to look at what other companies are doing to address this issue without turning to meat-free substitutes by adopting meat sourcing practices that are more sustainable. Take EPIC for example: they are committed to converting more ranches towards holistic land management practices. Transforming the way ranchers rotate grazing patterns among their herds can have restorative effects on grass growth, which will reduce the amount of fertilizer and chemicals they are introducing to their land as well as contribute to removing carbon dioxide from the atmosphere. Although companies like EPIC are still small, just think of the impact this type of thinking could have if adopted by larger meat producers.
I agree with Shooter that there is a lot of upside to 3M further integrating with its customers’ R&D processes as a way to add more predictability into its own supply chain. Especially as a company with a large B2B segment, they have the opportunity to develop meaningful partnerships with a more consolidated set of large customers. Co-creation should result in supply chain partners that are more aligned to preserving the best interests of both parties rather than only optimizing for themselves.
One of the main risks I see is that partnering with customers could potentially limit 3M’s own innovation as they would need to shift resources away from its R&D initiatives and towards its customers’ projects. 3M has historically been a driver of innovation in the market, but without the focus and resources dedicated to their own projects, will they lose that competitive advantage?