Unilever a giant that Middle East shoppers cannot avoid

Unilever's top man in the region, Sanjiv Mehta, talks about expanding the company's already huge Jebel Ali factory and why Arabs prefer tea to coffee - with gallery.

Jars of Hellmann's mayonnaise, produced by Unilever. Chris Ratcliffe / Bloomberg
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Unilever is a company many shoppers have never heard of even though they might use at least one of the global giant's products every day.

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The company sits atop a host of products dotted throughout almost every UAE supermarket while its brands are plastered on billboards along Dubai's Sheikh Zayed Road.

The Anglo-Dutch conglomerate sells so-called fast-moving consumer goods such as personal care, cleaning, food, hygiene and nutrition products.

In the first quarter of this year aloneit recorded global sales of €10.9 billion (Dh57.97bn), with underlying sales increasing by 4.3 per cent compared with the same period last year.

Crucially, the countries fuelling that growth are emerging and developing markets, which increased 9.9 per cent in the quarter.

"Today, we have more than 50 per cent of our business in the developing and emerging markets," says Sanjiv Mehta, the chairman of Unilever North Africa and Middle East.

While half the business comes from these markets, he adds, they constitute three quarters of Unilever's growth.

Hardly surprising then that Unilever has decided to expand its Lipton Tea Factory based in Jebel Ali, which is the company's second-biggest factory, after one in the UK.

In an interview with The National, Mr Mehta describes the company's tea expansion and why total sales this year have been affected by the Arab Spring.

Not many people associate Unilever with tea. How big is Lipton's market share in North Africa and the Middle East?

We have about a 70 per cent market share. There are a lot of small players, but it is very fragmented after Unilever. If you look at tea bags, we have more than 80 per cent share.

Nearly a monopoly. Is coffee consumed more than tea?

No, we say we have about a two thirds share of the throat. Whatever goes in your throat, we have a two thirds share. Tea is far more popular than coffee.

Why do you think that is?

One of the reasons is that historically many of these markets were British territories. The British drank a lot of tea, but it is also now the most common drink among Arabs.

So are you expanding your tea factory to meet growing demand?

Yes, we are expanding the factory because we are growing. We have a tea business that is worth €300 million in sales a year and it is growing at a very rapid pace. Last year we saw double-digit growth in sales and this year we will see nearly double-digit growth again.

Does that growth outstrip the highest GDP figures in the region?

Absolutely. Today Jebel Ali is the second-largest Unilever tea factory in the world, and at the rate at which we are going, it will become the largest. The biggest is in the UK. The Brits still drink a lot of tea.

They do. But Unilever's PG Tips brand is more popular than Lipton?

Yes in the UK, PG Tips is certainly bigger than Lipton. But here, in this part of the world, if you go into many tea shops, Lipton is synonymous with tea bags. They will ask you if you want tea or Lipton. Tea is normally the brewed tea and tea bags is Lipton, the generic word.

If we put tea in perspective for a second, how much does it make up of total revenues for Unilever in North Africa and Middle East?

We saw about US$1.5bn (Dh5.5bn) in sales last year. Tea was a shade under U$400m, so it's about quarter. Tea is big business and it is very clearly one of our biggest categories.

So this region is a big revenue driver for the company, which brings added responsibility for you?

It's an exciting job. If you look today at a developed market such as Western Europe, then 2 to 3 per cent growth is good. In this part of the world, if you do 3 per cent, then it would be an anaemic story.

Do you expect strong growth to continue?

In the last four years, we have grown double digits in sales across our total portfolio in the region. So very clearly, the centre of gravity is shifting as the Middle East, China and India keep growing.

Has the Arab Spring affected sales across the region?

There's no getting away from the fact that we have been hit by the crisis, but the important bit is that we are gaining market share. But yes, the crisis does have an impact. The factors that affect us are consumer confidence and private consumption. When there is strife in a country, then not only does consumer confidence go down but importantly, so does inventory. [The Arab Spring] has had an impact but you have to realise that many of our categories are daily necessities so we tend to bounce back very fast.

Why do you think you have seen strong sales growth in the past four years?

Let me give you an example. In our part of the world, if everyone were to brush their teeth twice a day, the toothpaste market would be eight times bigger than it is today.

So there is great potential then?

This is not just restricted to the toothpaste market. This is for every category. Our job is to develop the market, it's not about getting a bigger share of the pie, it's about growing the pie.

How do you grow the pie, so to speak?

We need to either get new customers in each category, and old ones consuming more, or upgrading to higher quality products. We have 340 million people in my region and an economy that is close to $2 trillion and growing at 2 per cent. We are also adding 6 million people each year. There is huge potential.

Where do Unilever's brands sit in terms of market share?

In 70 per cent of our turnover we are the market leader. In 30 per cent of the business we are considered number two. If I look at the categories that we are the market leader, first is beverage and another is skin. We have skin cleansing, we have hand, body and face care, all through our products such as Dove, Lux and Vaseline, as well as toothpaste such as Signal and Close Up.

So which brand of toothpaste do you use?

I use both Signal and Close Up.

Of course, why wouldn't you?

Absolutely. One in the morning and one in the evening. Brushing is important. We actually have a very comprehensive agenda when it comes to dental care education. We have a Signal campaign in schools, teaching thousands of children oral hygiene. The purpose for many of our brands is very clearly linked to the social course of health and well-being.

For a company such as Unilever, sustainability and corporate social responsibility have become fashionable words. What else are you doing in the region?

We are saying we will decouple our growth with the environmental agenda. We aim to double our growth and half our carbon footprint at the same time by looking at the whole value chain from sourcing to consumption.