There can be five Unilevers in Bangladesh: Zaved Akhtar
Zaved Akhtar, CEO and MD of Unilever Bangladesh Ltd.
Photo: Salahuddin Ahmed/TBS
The fast-moving consumer goods (FMCG) market in Bangladesh has now surpassed Tk.30,000 crore. The annual growth is about seven to eight percent.
With rapid urbanization and increasing income, there is a lot of potential for this market in Bangladesh. Unilever Bangladesh Ltd. tops the largest segments like beauty and personal care, home care and foods and refreshments, with an aggregate share of around 60 percent.
Zaved Akhtar, the Chief Executive Officer and Managing Director of Unilever Bangladesh Ltd, sat down with The Business Standard and spoke about the country's rapidly expanding FMCG market and Unilever's contribution and potential in the market.
The Business Standard: First, we want to know about the FMCG market of Bangladesh. What possibilities do you see?
Zaved Akhtar: Unilever made a humble start in the market with just soap in 1964. From there, we have seen our market grow exponentially.
Higher disposable income, accelerated digitisation, media proliferation, the growing workforce and urbanisation are the critical drivers behind this growth.
Despite the relatively large size, there is significant headroom for the growth of FMCG in Bangladesh. For instance, in the categories where Unilever operates in Bangladesh, the per capita consumption is $23. In India, it is about $40. In the Philippines, it is more than $100.
So you can imagine the opportunity we have in the market here. In fact, we could create four or five more Unilevers in Bangladesh, but that will still be the tip of the FMCG iceberg if you know what I mean.
In our business, we look at a de-averaged Bangladesh and divide the country into two deltas, i.e., East of Padma and Brahmaputra and West of Padma and Brahmaputra.
If we look over the last few decades, most of the FMCG growth has come from the East. As many of our megaprojects came to fruition and we connected the West with the rest of the country we will see a huge change in disposable income and this will lead to a consumption increase. So in short the opportunities for growing FMCG in Bangladesh is boundless.
Zaved Akhtar, CEO and MD of Unilever Bangladesh Ltd. Photo: Salahuddin Ahmed/TBS
TBS: Tell us about your products and position in the FMCG market in the country.
ZA: We are present in ten categories and are market leaders in nine of those. We have 28 purpose-led brands under those categories and have more than 335 SKUs (Stock Keeping Units). About 95 percent of our portfolio is manufactured in Bangladesh and we have a total of eight manufacturing hubs.
From the imported portfolio we source Dove soap the most from Germany. Similarly, many of the premium shampoos are sourced from India, the Middle East and Thailand. Besides, there are also some variants of Ponds, liquid detergents and toilet cleaners that are imported.
If we think about households, then we can say around nine out of ten households have our products. Directly we reach around 55 lakh retail stores and ensure that our products are available at every corner in Bangladesh.
The mantra behind growing our brands is through mental and physical reach. Through mental reach, we create consistent positioning and awareness of our brands and through physical reach, we ensure the availability of our brands.
To ensure that we cater to the demands of consumers, we consider the socio-economic pyramid so that we have something to offer to all consumer segments. For example, for basic and accessible cleaning we have 'Wheel' which is at the bottom of the brand pyramid. While for the growing middle-income households of Bangladesh we have 'Rin' and 'Surf Excel'.
TBS: The products you produce are used on the human body, are there health risks involved with the consumption of the products? There are many inferior and imitator products proliferated in the market. How do you see this in that context?
ZA: Unilever globally spends more than a billion dollars on R&D. This investment is made to ensure that we are designing and developing products that cater to the consumer needs and are adapted for the local consumers and market.
For example, a skin cream is developed taking into consideration the local skin type and the climatic condition. Moreover, shampoos are designed considering different hair types and the problems that consumers have. These products not only adhere to international standards but also with local regulators, like the BSTI (Bangladesh Standard and Testing Institute) and the BFSA (Bangladesh Food Safety Authority).
The challenge in the market is with the spurious products that do not take consumer health and safety into consideration. These products are made out of hazardous chemicals that can have a long-term detrimental effect on our health.
For instance, there is widespread availability of mercury or hydroquinone based creams in the market. While these provide immediate results they have a long-term impact on health as they are all carcinogenic.
We have been working closely with the law enforcement agencies of the country to thwart all these knockoff brands and ensure consumer protection. Many of our brands carry consumer awareness campaigns to raise awareness as it is critical to stop the spread of such harmful products.
Zaved Akhtar, CEO and MD of Unilever Bangladesh Ltd. Photo: Salahuddin Ahmed/TBS
TBS: Is the decision to call a shampoo halal or hijab-centred necessary to cater to religious consumers or is there another explanation?
ZA: If you look at Unilever's products, you will see that those are conceptualised to solve human problems. This is the same argument for the 'Hijab Refresh' shampoo.
Our heads are constantly accumulating sweat. When someone is wearing a hijab, then the sweat gets trapped inside and does not evaporate and creates musty hair. Our hijab-focused shampoo is designed to solve the aforementioned problem. Our philosophy has always been to understand a consumer's problem and then look for ways to solve it.
TBS: How did Covid-19 affect your business? How did you face it?
ZA: The pandemic had taken agility to a whole new level. So when it broke out, we had to quickly adapt and pivot to a new one based on five pillars.
The first of those was around people. We gave utmost importance to this so that our inner and outer core team stayed protected against the pandemic.
Secondly, we saw how demand patterns had changed. So we shifted focus to products for which demand had increased and contained those that had seen a decrease in consumption. People were keener on hygiene and nutrition solutions and investing less in discretionary categories like beauty.
The fourth is about cash. During any crisis, we must conserve cash. As a business, we looked at all opportunities to cut down discretionary spending, delay some capital expenditure and ensure that we can direct investment and expenses for the most relevant tasks.
Fifth was that we worked with the community. We took initiatives to raise health awareness at a community level, supplied critical health-related materials like testing kits, BiPAP machines to ICDDRB and Sajida Foundation and oxygen concentrators to the civil surgeons' offices across all 64 districts in the country.
We partnered with 36 small and big partners like Niketon, BRAC, UNWOMEN, UNICEF, the Army Welfare Trust and many more. During the coronavirus period, Unilever Bangladesh spent Tk100 crore for the community.
TBS: Now that Omicron is sweeping through the world. How do you assess the new threat in the way of economic recovery?
ZA: We are likely to be moving from pandemic to endemic and we now have to learn to survive with these. No one knows when the pandemic will end.
Maybe something new will come after Omicron. We cannot afford to continue to be completely insular and stay at home. We must find ways of adapting preventive behaviour and become more hygiene conscious so that we can continue our lives and livelihood.
TBS: How do you view your business after acquiring GSK?
ZA: It was an investment of Tk2,200 crore which we made amidst the Covid-19. We have been able to successfully integrate the business and leverage the scale and expertise of the business to make it grow exponentially.
Just for perspective, the market capitalization post-acquisition has grown by 57 percent. Horlicks is a fantastic product and it is committed to fighting all sorts of malnutrition in this country. We are very optimistic about the portfolio.
TBS: Unilever is listed in almost all countries of the world. Why is it not the same case for Bangladesh?
ZA: Unilever Consumer Care Limited, the erstwhile GSK Bangladesh Limited is a listed company in Bangladesh. On the other hand, Unilever Bangladesh is a private limited company with 39.25 percent ownership by the Government of Bangladesh while the rest is held by Unilever Global. Typically listing is done to raise capital for expansion.
Unilever Bangladesh has so far been fortunate enough to expand its footprint using its own fund and hence the need did not arise to list. Should there be a need at an opportune moment in the future I am sure the Unilever Bangladesh board will evaluate.
TBS: What is the investment climate in the country and what are your plans?
Zaved Akhtar, CEO and MD of Unilever Bangladesh Ltd. Photo: Salahuddin Ahmed/TBS
ZA: We started in 1964 with only one soap line, and today we have got eight manufacturing hubs across the country.
The potential and opportunities of Bangladesh are immense, and we are at a fantastic point where the demographic dividend itself will give us phenomenal returns. On top of it, the cost of entry is phenomenally low with a high return.
So, I believe Bangladesh is the next destination for any investor to really come in and enter now. Because if you do not enter, you will be too late, as simple as that.
I am a born optimist and I believe there is an opportunity within imperfection, and the reality is that today's world is filled with all the uncertainties. And Bangladesh is very similar and not different from operating anywhere else.
As an investor, I must be mentally prepared and not expect everything to be served on a platter. We are a growing economy, and there will be challenges and difficulties. But throughout all those things, we are able to grow a great business.
As mentioned earlier we bought GSK for Tk2,200 crore, making it the largest transaction in the history of a listed company. We believe that we will continue to invest in Bangladesh given the economic potential in the country and the growth headroom it possesses.
TBS: Unilever has launched 'Ushop' to bring vendors to the digital platform. How can a Bangladeshi retailer without technical knowledge take advantage of this platform?
ZA: 'Ushop' follows a B2C model, where a consumer orders products online and we directly fulfil them. We have a separate eRTM solution that enables the retailer to be connected and order at his own will. Today we have 160 thousand retailers wired up to this network. We believe over the next few years we can build a human-centred interface to leverage technology and ensure superior customer service.
TBS: Environmentalists are concerned with the impact of the proliferation of single and mini plastic packs on the environment. Many of your products are sold using the aforementioned packaging. What do you have to say in this regard?
ZA: Plastic waste is a huge collective challenge and one that needs cross-sector collaboration. We are working on the matter internally and externally.
We now have 50 percent of the packaging circulating a recyclable system, and by the end of 2022, it will become 80 percent. This issue is very close to my heart and I review our plastic commitment progress every month.
Building a circular economy is critical to managing plastic waste and we are working with the government, development partners and other companies to build a circular economy for Bangladesh. Bottles or rigid plastics are already being recycled through various means.
The problem is the small or flexible plastics. In that regard, we are already working with the UNDP and the Narayanganj City Corporation to build a sustainable solution to collect the packages. We are committed to building strong plastic management for our country and bringing innovative solutions. I, as an individual, am committed to my children to help build a better world they can inherit.
