Developing & emerging markets
In 2008, 47% of our sales were in developing and emerging markets and we expect to see this figure increase as population and purchasing power grow - particularly in Asia.
Developing new business models
Our business and sustainability strategies are starting to come together. We are finding that addressing society's concerns holds the potential for business growth and success. One such opportunity is to meet the needs of low-income consumers in developing and emerging markets.
For example, it is estimated that 1 billion people will rise out of poverty in the next ten years, notably in China and India. Our deep roots and early engagement in these markets have given us valuable insights into the needs of these consumers at the base of the 'economic pyramid'.
Our aim is to satisfy the needs and aspirations of consumers at all levels with quality products. Whether it is through new distribution channels, using smaller formats or creating new products, we are trying to develop business models to reach the poorest members of society. However, producing and selling products for a few cents while making adequate margins is extremely difficult.
Continuing our efforts to bring oral health care within the reach of low-income consumers, during 2008 we launched a quality, low-cost toothbrush. Pepsodent Smart Clean is priced at just 10 rupees in India (equivalent to 16 euro cents) and 1,850 rupiahs in Indonesia (approximately 13 euro cents).
Our Pureit in-home water purifier provides affordable and safe drinking water for middle-income families in India. One rupee can buy you 3.5 litres of Pureit safe drinking water (including the initial one-off cost of the purifier unit). This makes it a more affordable alternative to boiling water, where one rupee will buy you 2.5 litres, or bottled water where one rupee will buy you just 0.3 litres. Pureit also creates jobs in its distribution chain, by employing women to sell the product door to door.
Replicating this approach across a broader range of brands is a much bigger task. Nonetheless, finding more ways to reach consumers at the 'base of the pyramid' makes business sense and enhances our ability to improve the lives of the poorest communities.
Some trade-offs are currently inevitable, however, in trying to meet all our social, economic and environmental commitments. Making products available in small-pack sizes and single-dose sachets brings quality brands to some of the world's poorest consumers, but it also contributes to litter in markets where waste management infrastructure cannot always provide facilities for reuse and recycling. We are working with stakeholders on how best to solve this dilemma without affecting the affordability and accessibility of our products.
Supporting economic development
Among suppliers
Allanblackia trees grow largely in the wild in Central, East and West Africa and have traditionally been harvested on a subsistence basis. Allanblackia seeds produce an oil that is ideal for use in our spreads.
In 2002 we co-founded the Novella Partnership, a programme to scale up production of allanblackia oil in Africa and at the same time to reduce poverty and promote sustainable enterprise. The partnership comprises Unilever, the World Conservation Union (IUCN), the Netherlands Development Organisation (SNV), the World Agroforestry Centre (ICRAF) and others. By 2008, around 40 000 allanblackia seedlings had been raised in Ghana and Tanzania for planting in farmers' fields. Around 10 500 people in these countries are taking part as farmers and planters and as collectors of seed from trees growing in the wild. Plans are also in place to accelerate allanblackia development in Nigeria.
Since 2002 we have invested €7 million in the programme, which has enabled us to secure important supplies of allanblackia's high-quality oil and created a new source of income for poor farmers. Farmer incomes have already been boosted by an estimated €100 000 in total. By 2017 the partnership aims to have 200 000 farmers and to plant 25 million trees, leading to an estimated doubling of farmer household incomes from $1 to $2 a day as a result of allanblackia cultivation.
In 2008 we reached an important milestone as the European Commission approved the use of allanblackia oil in spreads.
Stakeholder view: "SNV and Unilever are working to strengthen the capacity of, and linkages between, small-scale producers and local processors and traders. Local production, income and employment are all benefiting from the invaluable international marketing perspective Unilever provides." Roy van der Drift, Senior Strategy Adviser, SNV, East Africa and Southern Africa Region |
In distribution
Our Shakti initiative, launched in India in 2000, creates micro-enterprise opportunities for rural women to sell Unilever products door to door. By the end of 2008 there were more than 45 000 Shakti entrepreneurs covering 3 million homes in 100 000 villages. For Hindustan Unilever the initiative has doubled direct rural reach. For the women, Shakti earnings typically double household incomes, and also boost their sense of self-esteem. We now have similar initiatives running in Sri Lanka, Bangladesh and the Philippines.
Across the value chain
Unilever is a partner in a project run by the World Economic Forum's Business Alliance against Chronic Hunger. It involves other multinationals together with Kenyan companies and banks. We have seconded one of our former country leaders to head the project. The aim is to work with smallholder farmers in a poor region of Kenya to strengthen their businesses and increase their earning potential. The initiative looks at developing markets for their products to encourage economic development across the value chain.
