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28 March 2024

Unilever sees double-digit growth, raises market share

Sanjiv Mehta (PATRICK CASTILLO)

Published
By Rami Eljundi

Manufacturers of fast moving consumer goods (FMCGs) are weathering the financial storm better than many companies in other sectors. Consumers have to use such products in their daily lives, downturn or no downturn.

Unilever, which owns dozens of leading global bands ranging from Persil detergent to Cif cleaning products and Signal toothpaste, is a case in point. Dubai-based Sanjiv Mehta, Chairman, Unilever, North Africa and Middle East, told Emirates Business that the international financial crisis has made no difference to the company's target of maintaining its competitive position.

"I believe in FMCGs, which are not recession-proof but are recession-resistant," he said.


How would you describe your company's performance amid the international financial crisis?

Our market share is growing and we achieved double-digit growth last year. The most important thing for us has been maintaining our competitive position. We grew by 20 per cent in the GCC last year. If we take into account all the categories in which we operate we have nearly 40 per cent of the market. And though we already had a large share of the market we increased our share by 100 basis points in 2008 compared with 2007. The UAE had the highest growth rate in the region I cover, while Morocco had the lowest with single-digit growth. I believe in FMCGs, which are not recession-proof but are recession-resistant.

How does your growth rate so far in 2009 compare with the same period last year?

Our turnover grew by more than 10 per cent in the first two months of 2009 compared with the same period in 2008. We have been growing our market share. We are in an industry where we meet the daily needs of consumers regardless of the current downturn in many business sectors in a wide range of markets. A person will not stop cleaning his or her teeth or drinking tea just because there is an economic slowdown.

How would you respond to those who say the financial problems are bad news for almost every sector?

Different industries have different growth drivers. It is a fact that sectors such as cars, banks and real estate are in bad shape, but those industries differ from the FMCG sector. Our products are used by consumers on a daily basis. If you have great brands and straddle the price benefit pyramid the brands can have sustainable growth. We have not reduced our advertising expenditure, we are still investing in the brands.

Do you think the fall in the cost of raw materials may affect the retail prices of your products?

Our margins have not yet returned to 2007 levels. Commodity prices rose so high that the price increases we introduced last year did not cover the rise in costs, we were able to cover only part of the increase. It is too early to say whether the reduction will enable us to reduce our prices. Our growth was broad-based, we had very good growth in food, home, personal care and hair products and beverages. It is not about more consumers using products, but upgrading what they have been using. Despite the rise in the cost of raw materials the business has been growing with high rates of customer satisfaction.

What is Unilever's current trade volume and what are your expectations for 2009?

We have trade volume of more than $1 billion (Dh3.7bn) in the Middle East and North Africa and I expect our trade volume to grow by a double-digit amount. I expect the UAE, Egypt, Saudi Arabia and Algeria to have the highest growth rates. Our industry is relatively recession-resistant. We know that disposable incomes are going down and consumers will ration their spending. But what consumers look at now is no longer going to brands where they are not sure about delivery and availability. If you offer strong functional benefits it is important to provide value to consumers. Companies are in a better position if they ensure that the consumer remains in its family of brands. With shampoos, for example, we have brands at different price levels. A consumer who was using a certain brand can switch to one at a lower price.

What is Unilever's strategy in terms of coping with consumers' expectations in a downturn?

It involves diversity, offering different functional benefits at different price points and maintaining value for the consumer. We have not shied away from advertising and will invest more in advertising this year than in 2008. But we cannot ignore the fact that we are experiencing tough times. We are in an industry where we offer day-to-day products where the impact of the downturn is comparatively small. We are in a part of world where countries' GDPs are still growing.

What would you say to your competitors in the FMCG sector and representatives of other sectors?

We have to keep focusing on business fundamentals. Different industries are being affected in different ways. The brief we have given to our team is that as far as growth is concerned it's business as usual, but where costs are concerned it is business unusual.


PROFILE: Sanjiv Mehta Chairman, Unilever, Middle East and North Africa

Mehta was born in Kanpur, India, in July 1960 and grew up in Mumbai. He is a chartered accountant with a degree in commerce and has completed Harvard Business School's Advanced Management Programme.

In 1992, he joined Unilever Arabia as a commercial manager after working for Union Carbide in India. He worked for Unilever Arabia for six years in a number of roles before moving to the board of Unilever Bangladesh as Commercial Director.

Three years later he was promoted as Chairman of Unilever Bangladesh.

In 2007, he moved to Manila as Chairman of Unilever Philippines and in 2008 took over the Chairmanship of Unilever, North Africa and the Middle East.