Unilever regained the top spot in the list of most-admired Indonesian companies, edging out PT Astra International, a diversified group that distributes Toyota Motor Corp. vehicles. In the prior survey, Astra International had ranked most-admired overall, with the consumer-goods company close behind in second place. Readers in the current survey gave third place to processed-food maker PT Indofood Sukses Makmur.
In the prior survey, Unilever was praised for innovation during a booming economy, coming up with products like shampoo for color-treated hair -- a new trend among Indonesia's middle classes.
Now, Unilever, which says it has 40% of the Indonesian market for consumer goods like toiletries, cosmetics, shampoos and detergents, is looking for ways to battle the duller economic picture. Unlike many Asian nations that rely heavily on exports, Indonesia's economy is somewhat shielded by the fact that about two-thirds of its gross domestic product comes from local demand. The International Monetary Fund expects the economy to grow by between 3% and 4% in 2009 as interest rates fall, one of the healthiest clips in the region, although down from a 6.1% expansion last year.
Still, consumer confidence has taken a hit, especially in areas that depend on commodity exports like palm oil and coal, which, despite a recent pick-up in prices, are still well down from last year's highs. Of Indonesia-based respondents to the Asia 200 survey, about 12% said they would spend significantly less this year, and 54% said they would spend somewhat less. About a quarter said they wouldn't change their spending, while 8% said they would spend more.
Unilever is looking for ways to meet that spending challenge by offering value for money, said Eka Sugiarto, head of marketing for the company's skin-cleansing-products division. For instance, the company has reformulated its popular Molto fabric conditioner to need only one rinse, rather than the usual three, allowing Indonesia's poorer households to save on water costs, Ms. Sugiarto says. Unilever is also positioning itself to benefit from the switch away from premium skin-care products. A recent marketing campaign has promoted Unilever's Ponds face cream, cheaper than rivals' offerings, as still high-quality. "This is the time when people will be re-evaluating their choices," Ms. Sugiarto said.
Unilever is also looking ahead to building markets for products that aren't yet popular with most Indonesian consumers, about a third of whom live on less than $2 per day. The company recently launched small sachets of deodorant, considered a premium product in Indonesia. The sachets, which last a week or two, cost 1,500 rupiah, or about 15 U.S. cents, much cheaper than a full roll-on or spray. Unilever also finds it easier to transport these sachets over the nation, a string of 17,000 islands that stretches across the equator over the equivalent distance of that between London and Saudi Arabia. Unilever products can be found in modern shopping malls in Jakarta but also, more commonly, in the small road-side wooden shacks where a majority of Indonesians still do their shopping across the island nation.
Last year, the company paid $40 million to take over the popular Buavita fruit-juice brand from a local company, its first move into juices. Unilever has been building its food business in Indonesia, which also includes Lipton tea, after acquiring a soy-sauce maker earlier this decade. The company's success comes down to effective market research combined with a great distribution network and a wide range of products for different economic segments, said Sarah-Jane Wagg, president of UBS Securities Indonesia. "It's a world-class company operating in Indonesia," she said.
One potential threat to Unilever's dominant market position is the emergence of PT Wings Surya, a non-listed consumer-goods maker set up 60 years ago by Indonesia's Katuari family. Wings has been successful recently in building market share for cheaper detergents and other household products. Unilever has responded to the slower economic growth by bringing the price for its detergent, Rinso, back below 500 rupiah, or 50 U.S. cents, a sachet, after prices increased last year in line with higher material costs, Ms. Sugiarto said.
Founded in 1933 during the Dutch colonial era, the unit of Unilever Group is Indonesia's largest consumer-goods company by sales. Despite the slowdown, sales in the first quarter grew 18% compared with the previous year, to 4.48 trillion rupiah ($448 million), while net profit rose 9% to 769 billion rupiah ($76.9 million). One of the challenges last year was keeping prices down despite high costs for materials like palm oil and higher transportation costs. While raw material costs have fallen recently, Unilever is now under pressure to lower prices.
The company's Bango soy sauce, Lifebouy soap and Pepsodent toothpaste brands are a major part of everyday life for Indonesians. In some areas, the company has huge market shares: It claims 80% of the nation's toothpaste sales and 50% of its shampoo sales. Other foreign consumer-goods companies like U.S.-based Procter & Gamble Co., which slimmed down its presence in Indonesia after the 1997-98 Asian financial crisis, have grown here in recent years to benefit from strong consumer spending. Nestlé SA said last weekend it would spend $240 million in 2009 to develop factories in Southeast Asia, including a small investment in Indonesia.
But Unilever is making the largest outlays here, including the opening of a $50 million factory near Jakarta, the capital, in 2008 to produce skin-care products.
In the Asia 200 survey, subscribers and businesspeople ranked Unilever No. 1 in three of the five categories they are polled on, and they ranked it second in a fourth. The first-place rankings came in the categories of "high-quality services and products," "innovation in responding to customer needs" and "management's long-term vision." It took second in "corporate reputation."
No comments:
Post a Comment