LIPTON Teas and Infusions’ Post

Transcript

Gen Z are in power. There is a saying don't let your mouth write a check that your body cannot cash. It's an old expression that essentially means don't promise something you are unable or just unwilling to deliver. The average time as CEO is in charge is just seven years and falling. Politicians have a similar tenure. So when they promise a net zero future, they will probably have at least three successors before 2050. They can say anything today, safe in the knowledge that someone else will have to deal with the consequences. And we wonder, why have people lost trust in leaders? The preeminent force driving tomorrow's global economy, reshaping industries and politics is Gen Z. A generation that is more skeptical than any before. Born between the late 90s and the early 2010s, Gen Z has experienced a perma-crisis throughout their lives so far. Hyper connected and deeply immersed in digital realm, all information and misinformation is at their fingerprints in seconds. So there is no surprise that they do not trust the world around them. They are loud in championing the social and environmental causes they believe are creating positive change. They are swift to express opinions on and offline. And their visible and vocal engagement is already influencing other generations, which heralds a more activist feature for everyone. Gen Z are the architects of tomorrow. They will soon be 1/4 of the world's population, more than 2 billion people. They will represent nearly 1/3 of the workforce in Europe. Their incomes with skyrocket and multiply by more than seven over the next 10 years, and their consumption expenditures will be multiplied by more than six. But Gen Z are more than a statistic. They are forerunners of change. And the champions of progress. Gen Z will soon become the defining generation of humanity. I recently became CEO of the world's largest tea company, LIPTON Teas and Infusions. Tea speaks to many Gen Z demands. It's enjoyable without compromise. It's natural and has the lowest carbon footprint after tap water. It's healthy and accessible to all. And yet tea is not without its challenges. Decades of commoditization have destroyed the value in the industry worldwide. When the average price of a tea bag was a little as two cents, why were we surprised that the standards we expect for how tea is grown and harvested were not met? This is not an unusual story in the food and drink sector. As the global leader in our category, informed by the Gen Z influence, LIPTON Teas and Infusions bears the immense responsibility of driving a transformation for the 13 million people dependent on the sourcing of tea worldwide. To guide this transformation I have a mantra and a method. My mantra is to create shared value for all. I have learned long ago that sustainable success requires mutual benefits. In a world plagued by growing inequality, everyone must receive a fair share of the value created. My method is to take Gen Z as the compass for all our decisions. By 2050 I will be 85 years old. God willing. So what can I, what can we promise Gen Z to build confidence that what we say will be delivered? Three things. Number 1: action. We must deliver action now, not just vague, aspirational promises. Authenticity. Through transparency in everything we do. And alliances, recognizing that impact is rarely achieved alone. Let me tell you a story about Kenya. Tea is a major part of Kenya's economy. It���s their number one source of foreign exchange. But it's also a country of many small producers. 60% of tea is grown in family farms. We are the largest buyer of tea in the world and half of what we source comes from Kenya. This is to say, our footprint on the Kenyan economy is big. A little over a year ago, we were spending millions of shows annually on certifications. They were not fundamentally changing production methods, our relationship with workers or the quality of tea. It was all about compliance checks, and administration. An outsourcing of trust. A little over a year ago, we had to protect the machines that allow us to gather the tea leaves efficiently because they were being set on fire. Set on fire by angry people under the watch of authorities who let it happen. An absence of trust. It was clear we needed to fundamentally transform the way of doing things. Business as usual would not meet the demands of Gen Z. They are the demands of the world. I had the honor to meet the President of Kenya, Doctor William Ruto, when he was in the Netherlands. What was meant to be just a short introductory meeting turned into a 2 hour working session. He shared his challenges of transforming a country already facing the realities of climate change. His worries were the same as those we all face, although at different scales. We worry about the same basic things for our families and our communities: Education, health and work. And this would be addressed only by massive investments. They are truths that are always good to hear. From that moment we started a global transformation program. Our first promise to Gen Z is to take action now. Education has been our starting point. Earlier this year, I was pleased to inaugurate the Lipton Tea Innovation and Research Academy alongside President Ruto. We will train thousand of farmers at the University of Kabianga with short vocational courses up to the highest level of education, including bachelors, masters and doctoral degrees. The curricula have been structured to create the highest cultivation, harvesting and processing standards. It will include advanced scientific research and technological innovation. We are licensing the intellectual property we have gained from decades of scientific developments, including using AI for precision farming and breeding varieties that are climate resilience, all for free. Our second promise is authenticity. We have built a set of new standards together with producers that recognize genuine progress rather than just compliance. Climate impact is a critical issue for Gen Z. They don't just care about the planet, they are proactive and vocal in their will to save the planet. Gen Z also prioritize inclusion and social justice and expects to hold companies accountable as employers and product providers. Working with farmers, we are combining rigorous social and environmental protections with measures that improve tea. Pursuing quality rather than quantity. Through greater quality and being transparent with all stakeholders we will fund the transformation needed. Gen Z are already looking beyond advertising campaigns and press releases, and they are holding companies accountable for real, meaningful change. We will stop funding international certifications and putting the stamps on our packs that have become little more than a marketing exercise, and instead we will allocate that money to farmers who are concretely improving quality. Put simply, we will pay more to any producer with meeting our higher standards. And our third promise is that we are building alliances. We have chosen to sign a long term partnership and transfer our own tea estates to a trusted global tea producer, making them the world's leading tea exporter and the first to deploy our new standards. As part of this partnership, 15% of the business is being offered to local communities in the region where we operate at a substantial discount with guaranteed dividends. This will create accessible communal equity and mutually aligned economic participation. President Ruto welcomed the transaction as good for the tea industry. And good for Kenya. You cannot imagine the energy that such a transformation requires. I forgot to share with you a critical piece of information. That LIPTON Teas and Infusions is owned by a private equity fund. There have been incredibly supportive through this journey, even pushing us to go further by suggesting we reinvest the proceeds into East Africa to strengthen the region further. We are putting some of the money into our Academy to make skills trainings accessible to even more people and infuse the education programs worldwide through a new e-learning platform. And we will invest in climate change mitigation projects such as green fertilizers, which will create skilled jobs, reduce cost for farmers and dramatically cut the primary cause of tea���s greenhouse gas footprint��� already very small. These actions benefit the entire region and impact the global tea industry. We are creating value for all. I am committed to ensuring that our industry is transformation is guided by the compass of Gen Z. We are acting today with authenticity and in partnership with others. We are stopping whatever lacks sincerity. Gen Z will not accept only stories. I am very proud to share with you today what our teams have managed to achieve in just one year. I'm also very proud of the impact we are having as a company. Taking Gen Z as a compass is profoundly transformative. Gen Z guides our vision and our actions. The power of Gen Z obliges us all to act now and further and faster than ever before. They are the vanguards of a new era. Gen Z are already in power. Taking Gen Z as a compass is as healthy for our companies as drinking 2 cups of tea daily is for our bodies. Thank you.