Fast moving: Unilever eyes emerging markets

Anglo-Dutch consumer goods giant Unilever is readying to take on low-cost competitors in the form of private labels in key regional and emerging markets from where it sees the next billion shoppers coming in.

The company which sees strong prospects in emerging markets has been focussing on widening the accessibility quotient of its brands beyond hypermarkets and supermarkets as well as supporting its penetration into regional markets in the East with a comprehensive technology and market distribution strategy.

“While we are doing this, we will always face the threat of low-cost regional competitors and private labels across product categories. To overcome this, we recognize the need to stay cost-competitive,” Unilever CEO Paul Polman said in Bangalore on Thursday.

The maker of instant recall brands like Lux, Pepsodent, Dove and Lipton tea expects the emerging markets to fetch 75 per cent of its revenues up from 56 per cent now by 2020.

Roughly 60 per cent of Unilever’s business and 85 per cent of Unilever’s turnover today come from what Colman calls “the aspiring markets”. “This is a huge shift in our traditional customer base, which makes us an emerging market company,” Colman said.

On a visit to inaugurate Unilever's global enterprise support and information technology centre at exurban Whitefield, Polman noted that the key to staying resilient in a challenging marketplace is to ensure that the group’s operations stay cost-competitive.

“The stock market likes us because we take $1.4 billion in costs out of the system every year,” Polman remarked.

The 2.20 lakh sq foot tech support centre in Bangalore will be the largest operating hub for Unilever and will support all the consumer goods and services lines of Hindustan Unilever Ltd (HUL) as well as the global business, Unilever Chief Operating Officer Harish Manwani said.

Company officials said that the centre currently employs 1,400 people since it started operations in May this year, of which 800 are Unilever employees with the rest comprising employees of co-located IT partners.

Polman said Unilever has added 10 billion euros to its topline in the last three years alone. The group is aggressively pushing its personal care and health brands in emerging markets in Asia. “When we are talking of a 10-12 per cent growth peg in these markets, we are talking of a base of $35 billion,” Polman said, adding that Unilever’s biggest investment continues to be in people.

On a base of $35 billion, the group has been growing at a 10-11 per cent peg, which is double that of its competitors. Unilever has added euro 10 billion more to its topline in the past three years compared to its competitors, Polman said.

HUL posted net sales growth of 12 per cent year-on-year to Rs 6,155 crore for the second quarter of fiscal 2013 ended September 30. Net profit for the quarter grew 25 per cent year-on-year to Rs 805 crores.

The domestic consumer business grew at 16 per cent year-on-year led by underlying volume growth of 7 per cent. On a segmental basis, Soaps and Detergents registered 23 per cent annual growth, personal products 8 per cent, beverages 10 per cent and packaged foods 10 per cent.