Unilever targets Asia growth

14 June 2011

JAKARTA: Unilever is focusing on category development as a tool to make progress in crucial Asian markets like Indonesia and India.

The consumer goods group currently generates a majority of sales from fast-growth economies, which are assuming an integral role in its plans.

"Developing and emerging markets are obviously critical for Unilever," Hanish Manwani, Unilever's president, Asia, Africa and Central & Eastern Europe, told CNBC.

"We are fortunate that 55% of our business actually comes from emerging markets, which is probably the widest footprint amongst any of our peers. That, I think, positions us very well in terms of where the people are and where the money is going to be going into the future."

Asia, which accounts for increasing numbers of affluent, aspirational shoppers from India and China, holds particular promise for the owner of Dove and Knorr.

"Asia, emerging Asia, is a very important part of it. I'm very excited about business prospects in Asia," said Manwani.

"We do believe that markets like India [and] China are extremely important markets going forward for every company."

As well as engaging customers, positive relationships with governmental are also vital in countries such as China, where Unilever was fined 2m yuan for mentioning an intention to raise prices to the media.

"We really don't see any issue going forward in terms of being able to run our business in the most sustainable way," Manwani stated.

His optimism was especially high for China, not least because demand has hardened dramatically in the recent past.

"Our commitment in China is to build a business four-or-fivefold," said Manwani. "Our business has been growing steadily about 18% to 19% per annum."

Indonesia constitutes another highly attractive nation, thanks to its strengthening "consumer class" boasting rising incomes and evincing surging levels of confidence.

Manwani reported Indonesia is one of Unilever's "jewels", and already delivers annual revenues topping $2bn.

"We have been operating in Indonesia now for over 80 years, and therefore we are pretty much embedded in the communities of Indonesia, and understand the consumers as well, I guess, as any business can possibly do," he said.

While industry observers often emphasise Brazil, Russia, India and China, commonly known as the BRICs, Manwani argued Indonesia cannot be ignored.

"This is a market that I truly believe has fantastic potential, and in many ways probably underrated where there are discussions about BRIC countries," said Manwani.

"We do believe that this is not about BRIC, it is about BRICI, and therefore Indonesia has a very important part of this, with such a large population base, great demographics and so on."

As is the case in several Asian outlets, competition is quickly intensifying in Indonesia, but these trends may yield broader benefits.

"We have market leadership in most of the categories in which we operate," said Manwani. "The biggest opportunity in markets like Indonesia is market development.

"The biggest prize for us is to make sure we are able to develop the market. In many ways therefore we compete for non-consumption rather than consumption.

"How do we get more users in? How do we get more usage? How do upgrade and premiumise our consumer base? That is the big opportunity."

Rising commodity costs also pose a problem, but Manwani suggested efficiency savings, deriving new formulations and leveraging a stable covering numerous segments and brands are all essential.

"We have a portfolio of brands, and we have a portfolio of categories, which allows us to really be more flexible in the way we manage the cost increases," he said.

Data sourced from CNBC/Bloomberg; additional content by Warc staff