Unilever eyes Indonesian growth

29 May 2012

JAKARTA: Unilever, the FMCG group, expects to double its sales in Indonesia in the near future, reflecting the favourable trends currently at work in the country.

Peter Ter Kulve, the firm's executive vice president, Southeast Asia and Australasia, told the Jakarta Post it had invested $620m in the Asian market during the last five years. "This has been a very wise investment," he added.

More specifically, Unilever is hoping to exploit two trends reshaping the domestic operating climate, the first of which, according to Ter Kulve, is increasing affluence in large metropolitan centres.

"In the big cities, consumers are getting richer and they are upgrading their products from basic products to more premium products, and this has big impacts on us," he said.

As well as shoppers trading up, Ter Kulve argued "whole new categories are opening up", for example as improving real estate standards boost interest in household cleaning lines. "This upgrade is really important and a fantastic opportunity," he said.

This shift is accompanied by a growing demand at the entry level from customers in rural parts of Indonesia, such as Sumatra, Sulawesi, meaning a broad brand portfolio is essential.

"Where the consumers in big cities are upgrading from more basic to very premium products, countryside consumers are moving from proxies into first FMCG products," said Ter Kulve. "So, both places are very relevant places for us."

There are some 240m shoppers in Indonesia, around half of which are in the emerging middle class. Sales of fast moving consumer goods also now stand at over $10.8bn a year.

Unilever's turnover in the rapidly-expanding economy reached $2.3bn in 2011, from a global total of $46.5bn, with the rate of acceleration locally almost twice the worldwide equivalent.

"Unilever Indonesia doubled its size over the last five years and there's no reason why it could not double again over the coming years," Ter Kulve continued.

"Our job is not about growing market share, because in most categories we are already the leader. Our job is figuring out how to build consumption, how to make sure that our market growth is good for us, and also for the industry, retailers and our customers."

Perhaps the biggest long term obstacle the company faces, for Ter Kulve, is the slow development of Indonesia's infrastructure, as investment has lagged economic growth, particularly in terms of transportation links.

Data sourced from Jakarta Post; additional content by Warc staff