Coca-Cola's approach to distributing its products in hard-to-reach urban and peri-urban areas in Africa identifies and engages independent entrepreneurs that distribute and sell its beverages in small, specific geographical areas. MDCs are typically located in areas where a lack of stable roads and infrastructure makes it difficult for delivery trucks to travel, which helps the company secure hard-to-reach markets while creating wealth and job growth in those communities. Those who set up MDCs employ others in the area, who then sell and distribute beverage products to retailers, often by bicycle or pushcart. The MDCs account for over 80% of the company's sales in East Africa.
The research study, titled "Developing Inclusive Business Models", reviewed the current operations of the MDC model in Dar es Salaam, Tanzania and Addis Ababa, Ethiopia as a way to discover new opportunities for scaling up the MDC Model and fulfilling the company's commitment to the Business Call to Action, an initiative that mobilizes large companies to help reach the Millennium Development Goals by harnessing core business competencies.
The research study identified a number of opportunities to further enhance the MDC approach. These include:
As part of the study launch, Muhtar Kent, Chairman and CEO of the Coca-Cola Company, Bill Clinton and Pat Woertz, Chairman, CEO and President of Archer Daniels Midland Company, discussed ways business can play a role in creating value for both shareholders and society during a panel discussion at the Brookings Institution on 13 May. "For Coca-Cola, the MDCs are a wonderful example of the way business can focus on meeting its consumers' and customers' needs while supporting the sustainability of communities," said Muhtar Kent. "It has long been our philosophy to look at our business system holistically and determine where we can have the greatest impact on advancing initiatives that are critical to the communities and stakeholders that we rely on."
According to Jane Nelson of the Harvard Kennedy School, "there is a growing recognition in the corporate and international development communities that the most sustainable contribution companies can make to poverty alleviation is to carry out their core business activities in a profitable, responsible and inclusive manner." And IFC Director Toshiya Masuoka argues that the study “demonstrates the potential of large corporations to build economically viable business linkages with small enterprises in their value chains, which can also have development benefits."
Coca-Cola is currently in discussion with potential development partners to assist in pursuing some of these opportunities to further strengthen the model. The company’s goal is to double the program and its impact by 2010.
Additional readings:
The Role of the Food & Beverage Sector in Expanding Economic Opportunity
The economic model Coca Cola is promoting is truly laudable. But, are they supporting local businesses in becoming distributors for Coca Cola's soda and other sugar based beverages? If so, is this really a model of "sustainable development", if the product itself is something that is not good for people. In particular, if people don't have access to good dental care, is selling them soda a good thing? While things are not generally good/bad, right/wrong, what are the ethics of promoting economic development when it entails marketing something that is detrimental to people's well-being. Just tryin' to keep things honest as we consider "sustainable development".
Posted by: Julie Manga | May 27, 2009 at 05:32 PM