Unilever targets Russia

4 October 2012
MOSCOW: Unilever, the consumer goods group, is targeting both organic growth and potential takeovers in Russia, which is seen as a key emerging market for major brand owners.

Unilever has invested €2bn in Russia over the last 20 years. It is the biggest player in the household care and ice cream sectors at present, and takes second place in areas like sauces, shampoo and tea.

"We have a very good portfolio and that portfolio is doing very well. We are growing shares in most of the categories against very tough competitors," Paul Polman, Unilever's CEO, told Reuters.

Russia is currently among Unilever's ten largest emerging markets by sales, and alongside fuelling like-for-like expansion, the organisation is open to making strategic acquisitions.

In October 2011, it paid approximately €390m to take an 82% share in Kalina, the personal care and beauty manufacturer, which posted annual revenues of around €300m last year.

Kalina's brands include Pure Line, Black Pearl, Silky Hands and 100 Recipes of Beauty. By acquiring the firm, Unilever doubled the size of its non-food business in Russia, Polman said.

"There is no reason why in the future there might not be other opportunities for companies like ours to get together with some of the emerging Russian companies," he added.

Among the main obstacles facing corporations in the country are slow infrastructural development, a complex legal system, difficulties in securing visas for overseas talent and high import tariffs.

However, economic growth and rising affluence are set to drive up retail revenues. PMR, the insights provider, reported that retail sales reached 16.4tr rubles last year, a figure pegged to hit 23.4tr rubles in 2014.

Such a trend should further Unilever's global objective of boosting the share of sales drawn from its emerging markets operations.

"It is now already 56% of our business, and by the end of this decade we expect that to be 70–75% of our business at least," said Polman.

Data sourced from Reuters; additional content by Warc staff
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