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The Pulse of the Nation

Fondly known to all generations of Bangladeshis as ‘Lever Brothers’, ‘Lux Company’, we have been part of their daily lives since 1962. Following the independence of Bangladesh in 1971, the company was incorporated as Lever Brothers Bangladesh Ltd. on July 5, 1973, and it would remain so for many years until 2004 when it officially changed its name to Unilever Bangladesh Limited (UBL).

Today we produce more than 95% of our portfolio locally and positively impact the lives of 9 out of 10 Bangladeshi households every day through local household favourites like Lifebuoy, Lux, Wheel, Sunsilk, Vim, Horlicks, Surf excel, Glow & Lovely and many more.

Zaved Akhtar, CEO and Managing Director of UBL, visits a local retailer

The challenging start

The business of Fast-Moving Consumer Goods (FMCG) is about high volume and frequent, rapid consumption. The most important aspect about the FMCG industry is that you need to be able to anticipate and correctly predict the pulse of the market in real-time, and beyond that. It is important to achieve economies of scale in this business and a large consumer base is probably something all FMCG companies dream of. This logic can be further strengthened by the fact that all big companies are now focusing heavily on large base markets like China and India.

With a consumer base of over 160 million people with increasing purchasing power, 10% + CAGR since 2010s, a Growing Middle and Affluent Class (MAC) Population and an already established market of USD 4 Billion turnover per year, Bangladesh has all the potential and indications to becoming the next global FMCG growth hub.

It is an ordinary understanding that FMCG landscape of a country would reflect the economic and social change pattern. However, this growth of Bangladesh FMCG industry, where Unilever is alone operating with 28 Brands is a story of resilience, innovation and passion- even more remarkable compared to the economic growth. Even in 2000, our per capita income was USD 415, one fifth of our current per capita income of USD 2135.

The market, even in the 2000s, was so basic that a competitor brand claimed multi-utility of their washing soap- with tv commercials on 'ek sabane kapor kacha, shei saban e gosol'. Back then, only two percent of people in our country used toothpaste, and this was probably nothing compared to the challenges of the 1980s and 1970s!

Recently, we were trying to document Unilever’s long journey in Bangladesh, and we came to know about many interesting stories! Right after the Liberation War, during the early 1970s, there were not enough foreign reserves in the country for importing goods and raw materials. We ran out of raw materials, to the point where the entire production had to be stopped for a while. We had to switch from our usual red-coloured packaging of Lifebouy because we couldn’t import colour and opted for black-and-white packaging! There was a time when rationing of the product was so high that the local magistrate had to be present at our Distribution House to sell Lifebuoy and Wheel!

In the FMCG business, Purchasing Power Parity (PPP), Quality of Lifestyle, Household Penetration and Distribution Coverage are key market parameters. If I compare our 1970s numbers today, it will show us how far we, especially the mass people of our country, with resilience and passion, built and transformed our economy from a position where we had to stop production due to low foreign currency reserves to a launchpad to become Global Top 30 Economy by 2030. This too, happened with massive logistical, societal, lifestyle and behavioral transformation of the people of the country facilitated and contributed by the FMCG companies.

FMCG Industry played a leading role not only in shaping consumer lifestyle- through quality, affordable, easy-to-use products but also through continuous investment throughout the value chain- through import reducing capacity development, partner capability development and job creation. FMCG Industry played a key role in the developing industrial capacity of the nation, reducing import and created supporting, backward linkage industry, creating and supporting millions of employment in the process.

The growth journey

If we consider FMCG innovation, Bangladesh is one of the most adaptive, fast and bold markets of the world. This fast and rapid expansion was possible due to several indigenous and exogenous factors. Rapid Urbanization, Industrial Growth and Government’s focus on infrastructure development and health, hygiene and& empowerment related societal development played an important role in the FMCG industry growth. While the government intervention somewhat created an industry launchpad- the operators worked with Distribution Network, Product Innovation, Brand Development and Behavioral Change to fuel and expand the industry to over USD 4 Billion turnover per year.

Unilever Bangladesh’s Our Personal Product inception in Bangladesh is a classic example of how FMCG innovations transform society and upgrade quality of life while making a strong business case. It was in the 1980's when there was a tiny demand for imported personal products in the country and we thought this could be the market for the future. However, the demand for the products was mostly limited to urban consumers.

For us to grow, we needed the consumer base to grow as well, by making products more accessible and affordable to the people. At that time, three-quarters of the population lived in rural areas, a market largely untapped by any company. For the rural population, or the urban low-income segment, the concept of personal products was not something they could fathom at that time, nor it was not within their purchasing power. The demand had to be created by intervention, and that’s where we decided to be innovative.

We made a small pack size to ensure affordability and trial for shampoos with BDT 1 sachet and the industry was changed, forever. The sachet revolution was so huge that in a few years, we had to build one of the largest personal product factories in South Asia, and introduce newer categories like Skin Cleaning, Oral Care and Home Care. Unilever’s business success was due to trusting the consumers, the economic and social transformation, and the fast and adaptive nature of the market.

There are more examples of small products contributing and facilitating progress. Products like Cerelac helped mothers to fill a nutritional vacuum for mothers at affordable price, products like Spice, Potato Chips, Mango Fruit Drink helped introduce contract farming and empowered millions of farmers and growers.

With all our economic and social progress- RMG Export, Increased Women Economic Participation, GNI Index Improvement- FMCG sector grew and provided lifestyle upgradation, mostly to the bottom or later the middle-graduating segment of our people- with home care, personal care, skin care, nutrition and convenience products. The FMCG brands truly changed the mindset of our people. Today, looking good, feeling smelling good and getting more out of life is considered essential in our country and the FMCG companies are to be credited for this.

FMCG Value Creation Model of Today and Building Future fit Value for Ecosystem

The world we grew up in has changed and it is changing faster than ever. As the key to success in the FMCG industry is to anticipate change of consumer mindset even before consumers feel it- the task is getting more and more difficult everyday as the changes now are rapid and diverse.

The FMCG value creation model designs products for the lowest cost, delivers through the most efficient go to market channels, while ensuring operations are run in the most cost-effective fashion that enables businesses to generate sufficient cash for entering attractive markets or make acquisitions that can complement their organic growth. This simplistic articulation was well captured by McKinsey & Company in the 2018 article- ‘The new model for consumer goods’

However, the challenges of the industry today, from my two decade experience, is far more complex and multidimensional. I sense that the future will be very different from what it is today. From the asset heavy, end to end control of flow of goods- easier awareness and access will likely morph into a completely different play with ecosystem, platform and data let knowledge economy. We will be moving the business from a linear value chain to a dynamic connected ecosystem of Consumer, Customer, and Operations with Data, Tech and Analytics at the center.

There will be significant change in the entire ecosystem and platform. Today we deliver this through a lot of intermediaries and the future will entail transformation by disintermediation and remove any friction in the value chain. This will mean that the el dorado of FMCG will be products being produced for the consumers for the time and being fulfilled at their will. Access to technology just makes this today very common and easy.

The future platforms will need to be ably supported by some distinct ecosystem that creates value for the business- Content ecosystem, Innovation ecosystem, Communication & Customer Ecosystem and Operations ecosystem. All of these will play an integral role of feeding the platforms based on the needs of the platform.

As we get into the platforms and ecosystems economy, we will see how multitude of data will come and overwhelm us. For any business theThe competitive edge will only come when one is able to harness the data as that will reveal the real stories of small data behind the big data.

Zaved Akhtar, CEO and Managing Director of UBL, sits in a local retailer's shop and converses with the proprietor

Data will empower and enable marketeers to customize in a big way and see how they can serve many more bespoke cohorts over mass segments. The quality and the width of signals that we pick up offline and online will only determine how targeted one can go and how efficiently one can market with distinct content and serve them with the most customized solutions. The way we communicate will also change and rather than having ‘cultural stories’ we will be having a lot more micro moments and will need to celebrate those moments more. Within culture we will see more and more newer subcultures that will get formed.

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