Double business for Unilever in the country By Afshan Subohi

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Double business for Unilever in the country By Afshan Subohi

Thursday, 03 Jun, 2010

KARACHI: The experience of a leading multinational in Pakistan defies the general perception about the nation and its economy. Despite challenges and moderated average GDP growth rate Unilever Pakistan grew by 20 per cent in Pakistan over the past four years, doubling the volume of their business in the country over the period.

The trend becomes more intriguing and exciting when compared to the performance of Hindustan Lever that has taken a hit on its business during the same period and has actually shrunk in galloping India.

Post-2006 GDP growth in Pakistan moderated that grew at an average rate of around three to four per cent over the last four years. In contrast, India, the second most populous country of the globe, reported high average GDP growth of over six to seven per cent.

Paul Polman, Chief Executive Officer, energized by his interaction with his team in Pakistan and business partners was all praise for the country.

“Despite challenges Pakistan has proved to be a country with immense growth potential. People are socially aware and market more matured. There is a steady increase in our consumer base and business of our company has expanded in all segments and in most categories.”

“Besides the purchasing power parity in the country has increased from Rs1800 in 2000 to Rs2400 in 2010. So people are using improvement in their income to attain higher quality of life for themselves and their families by opting for better hygiene and credible products,” Paul who took charge of the company in 2008 and is currently visiting Pakistan told Dawn in Karachi in an exclusive interview.

The chief of the company behind many leading consumer products brands had no ready answer as to why the company performed differently in India and Pakistan.

“I believe the food inflation in India has led to a decline in the middle income consumers’ disposable income. It was reflected in declining sale volumes of many well established products in toiletries and personal hygiene, laundry, hair care and food products in India,” he tried to explain unconvincingly.

As to why the impact of food inflation during the high commodity price phase was not the same in Pakistan where consumers turned to market in bigger numbers, Paul felt that Pakistan’s rural economy could have actually benefited as suppliers of farm products fetching higher prices.

Paul said that the company produces 98 per cent of its products locally and was contemplating to expand its production operations to cater to demands of growing brands in Pakistan.

“Unilever Pakistan is a truly local company with global vision. We have been investing all through the period of growth and intend to accelerate the trend. I see no reason why Unilever would not improve on the rate of growing keeping dynamism of Pakistani society in view. We will continue to invest in Pakistan,” he remarked.

Replying to a question about the segment of business that Unilever finds most challenging, the CEO mentioned the issue of smuggling that he said was eating into company’s tea sales and counterfeiting that costs the company as high as about six to seven per cent of total volume of sale in some product categories.

“The government needs to show more commitment in containing anti-market anti-government elements causing great harm.”

Another product that has performed not well enough was ice-cream. “If only we get uninterrupted supply of electricity, the ice-cream business could do much better.”

He said the issue of sustainable framework of business is high on the company’s agenda and the company is striving to lead in corporate social responsibility initiatives.

“We focus on shared value and not shareholders value as we believe that a more responsible long term approach is more rewarding. The interest of companies and the country should merge to take the society forward.”

Beside market dynamics, he attributed the success of Unilever Pakistan to his team, led by the country head Ehsan Malik.

He termed his trip to Pakistan ‘energizing and useful’.

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