Unilever targets emerging markets

04 September 2009

MUMBAI: Emerging markets like India and China will become the key "engines of growth" for Unilever, the FMCG company, in the future, but also present a range of unique challenges, Harish Manwani, president of its Asia, Africa, Central and Eastern Europe operations, says.

Manwari reported that 51% of Unilever's turnover in the first quarter of this year was delivered by the "developing and emerging world", the first time these areas had been responsible for a majority of this total.

This was indicative, he argued, of a broader "shift in the centre of gravity from the developed world to the developing world."

Asia, in particular, is "emerging as a powerhouse which is going to take over North America in consumer spending in PPP terms in the next year or so," he said.

Alongside China, India and Indonesia, a number of nations in Africa, as well as Russia and a variety of states in Eastern Europe, are currently enjoying upticks in domestic demand.

These markets are "relatively more volatile and less predictable" according to Manwari, but also offer substantial opportunities for companies which know how to respond effectively.

Moreover, they are now "far more resilient than we have seen in the past", with rapidly-developing infrastructures and increasing levels of consumer confidence.

Overall, Manwari described packaged food as "a nascent and big opportunity" in the BRICs and other similar countries, where under 25% of food consumed currently comes from this source.

To succeed in this context, brands must focus on "market development" rather than "market share", in order to gain an insight into how to "get people to use more, buy more, pay more, which is uptrade," he advised.

Achieving this aim requires an understanding of "affordability and value", and establishing "the right level of entry points into categories" for consumers.

Manwari defined Unilever's strategic approach as "think local, act global", as "all consumers are local. Our ability to satisfy them by using our global scale and might brings us a competitive advantage."

For example, if the Anglo-Dutch firm is launching a product, it first seeks to establish the needs of shoppers in a specific nation, and then to use its "global scale to provide the best solution globally – not a global solution."

Manwari, who is also non-executive chairman of Hindustan Unilever, added that rural India is currently the "biggest white space in the world."

He estimated that there are around 700 million people living in the Indian countryside, but their consumption levels are an "absolute fraction of what you see anywhere else in the world."

"Without a doubt the game in the next ten years is going to be how you get better in serving the needs of the rural consumer," predicted Manwari.

This is a complex problem, as one audience could have a "middle income" lifestyle, while another will have a considerably smaller amount of money to spend.

As such, Hindustan Unilever has diversified its product range to suit the needs of each of these diverse groups, in order to tap into the growing "momentum" in rural markets it has witnessed in the last three or four few years.

One example of this is in the laundry sector, where its sells Wheel, a mass-market brand, and the category leader by volume sales, as well as Rin, a mid-market brand, and Surf, a premium product.

Data sourced from Hindustan Times; additional content by WARC staff