He says one of the reasons for making a trip to Pakistan despite all the uncertainty in the country in present times was to recognise the work done in the past four years by Unilever Pakistan. “We have a brilliant organisation here which has produced results and I have come here to say thank you to them.” Unilever Pakistan has doubled its size in the past four years.
But Polman warns that the market has many challenges ahead. For one, the prevalence of counterfeit items remains a problem for the company. “This is harmful to the company and to people when it comes to food items.” He said that countries like China take this issue much more seriously and prosecute people. As much as 7% to 10% of the total consumption is counterfeit.
The Unilever CEO says that the government is not pursuing the matter “as vigorously as it should.” Another problem is smuggling, which has cut into the company’s tea sales. In this again, the government is deprived of revenues and the legal companies face an uneven playing field and reduced sales.
Despite this, the market remains attractive for companies like Unilever. “Recognise the potential of Pakistan. There are 165 million people and half of the population is below 19 years old,” says the Unilever chief, adding “there is tremendous potential for companies like ours to expand our business here.” Interestingly, much of the expansion is in the rural areas, where incomes have risen.
Personal care products as well as food products by Unilever have done particularly well in recent years. This is a market where brands can compete.
Polman says the introduction of a VAT will work if there is transparency and equity. “The rate of the VAT can come down in the coming years if its administered correctly,” he said, adding that the VAT was not the biggest challenge for the corporate sector.
He said that one of the biggest strengths of Unilever Pakistan was its people. “We have some of the best people. The workforce is highly motivated.” The company is one of the major employers in Pakistan. 60 per cent of the company’s employees were women. “One woman employee told me that she could reach her best potential in this company. For me that was a compliment.”
For the challenges ahead, Polman said he wants the company’s products to be “more available” which means better coverage of markets. He said the second challenge would be to continue to develop the market. “Half of the population has a washing machine. This means the other half is a market we need to develop.” The company is also looking at exploring other segments.
Published in the Express Tribune, June 2010.
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