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Unilever partners with rival in Myanmar

News, 05 May 2017
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YANGON: Unilever has cut a joint venture deal with consumer goods rival Europe and Asia Commercial Co in Myanmar, combining home and personal care businesses in a bet to increase sales in the newly open emerging market.

In a new partnership with Europe and Asia Commercial Co, the two companies now enjoy sales of €100m. In addition, the deal brings both parties enhanced rural reach, a complimentary portfolio, and increased manufacturing capability.

The move is part of an attempt to triple sales in the country to an estimated €300m by 2020, Unilever's president for South East Asia and Australia, Pier Luigi Sigismondi told Reuters.

In what was described by one executive quoted in the Financial Times as the "land-grabbing phase," the deal sees Unilever hedge its bet on the country's market of 50m people.

"We felt that maintaining organic growth alone will take us far," says Sigismondi, "but not as far as joining forces with EAC."

Though Unilever has been in the country since 2010, its reach and market share has been relatively small. However, following the lifting of sanctions last year, the company has rapidly expanded its presence.

The political climate in Myanmar has improved considerably since the political transition that saw Aung San Suu Kyi's government take power last year. Unilever's previous operations in Myanmar were nationalised by the military in 1965, at the beginning of what would become a long military dictatorship.

Even for large multinationals, breaking into a heavily nationalised market has been hard, the FT notes, citing the example of Heineken and Carlsberg's competition with Myanmar Brewery, a company with an estimated market share of 80%.

Myanmar has, since opening up its economy, enjoyed the fastest growth of any South East Asian country. The Asian Development Bank forecasts the country's economy to grow at 7.7% in 2017 and by 8% in 2018.

The opportunity was not lost on Sigismondi, who praised the growth of the economy and the promise it held for Unilever.

"The combination of a growing economy, increased political stability and strong demographics make Myanmar a strong market opportunity for the long term," he told CNBC.

"For companies like Unilever, Myanmar could be the next Vietnam."

Data sourced from Reuters, Financial Times, Asian Development Bank; additional content by WARC staff

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