Social goodness as the larger purpose
Published in May-Jun 2015
AURORA: What is the difference between UPFL and Unilever Pakistan Limited?
FARIYHA SUBHANI: Unilever Pakistan Foods Limited (UPFL) is a separate entity; it was set up when Unilever acquired Rafhan Best Foods. Going back into history, Rafhan was a local company founded by three brothers, who later went into partnership with Best Foods – and Knorr was a major brand of Best Foods. Then in 2000 Unilever acquired Best Foods, mainly because of the Knorr brand which was then a $ 4.5 billion brand. Even today Knorr is Unilever’s biggest brand and is now a five billion plus dollar brand. In a merger different functions merge in different phases – management, sales and eventually the books – and finally it all becomes one company. With Best Foods we have merged everything except the books, which is why the company is separately listed. On the Stock Exchange, Unilever Pakistan Limited (UPL) and Unilever Pakistan Foods Limited (UPFL) are listed as two entities. UPFL has a separate board and is still a listed company, whereas UPL was delisted in 2013.
A: Unilever is a multinational company, yet Rafhan is very much a local name. Is it the case that when consumers see a Rafhan labelled product, they may not necessarily know it is actually a Unilever product, and does this impact sales?
FS: Our strategy is that consumers buy brands. So when people buy a Rafhan brand, they are buying it for the Rafhan values and heritage. In fact, the Unilever logo is not displayed up front on the packaging, so consumers may not know these are Unilever brands.
A: So what advantages did the Rafhan portfolio draw from this acquisition?
FS: The advantages come from our distribution network. Our brands are among the most widely distributed, and being able to get close to the consumer through direct reach is a massive advantage. A lot of companies have to go through wholesalers because they can’t get to retail directly. Our biggest advantage is point of purchase visibility and control – we add value for the consumer at the point of purchase. The other advantage is that Unilever has more organised systems, relative to local companies, to create advertising communication and build long term ideas around the brand.
A: Is Rafhan a premium brand?
FS: Rafhan is not a cheap product, neither is it a very premium product. However, because there are not many other brands in the category, Rafhan has a 70 to 80% share in the custards and jellies market.
A: Knorr noodles have proved to be quite the success strory in the last few years. What has driven this success?
FS: A few things have worked together. It has helped to understand the consumer and the market. When there is no market for a product, you have to source growth from parallel categories, and the important thing is to build those consumer insights into the mix, whether it is the packaging or the price. The most important aspect is to consistently stay on track over time without changing the story or the positioning. Finally, there was the strength of our distribution network and our ability to touch the consumer directly.
A: Is this success typical to Pakistan, or is it true of other markets?
FS: The category is much more developed in South East Asia and the benefits have become category generic, so you will find a lot of mass market brands entering the market there. In South Asia, noodles are a fairly new phenomenon. In the bigger markets, like Europe and the UK, they have pot noodles and a million other hot snacks. In Pakistan, the success story also comes from the fact that noodles are the cheapest as well as the only hot option which work midway between a meal and a snack, as well as being a healthier option.
A: Will you be introducing more variants?
FS: We are exploring various options, but we are not in a tearing hurry to innovate; there is still a big job to be done in further opening up the noodle market here; there is still a huge opportunity. We do keep an eye on possibilities but we are not inclined at this stage to introduce something with a higher price point.
A: In terms of SEC, how deep is the penetration of the noodle category?
FS: Roughly speaking about 60 to 70% of the market comes from the A segment and decreases as you go down the SECs. In the rural areas the penetration is still not that much.
A: Is price an inhibiting factor in the rural areas?
FS: Not necessarily. Twenty- two to 24 rupees is not that much. I don’t think it has to do so much with price as it does with availability and awareness, although price can be a factor. Look at the penetration of mobile phones; most households, even in the rural areas, probably have more than one mobile phone. It really makes you think about what to market, how to market and what is relevant. It is about making a product relevant to the consumer and in that sense you are not even competing in your category or with extended categories, you are competing for a share of overall volumes.
A: Why hasn’t the soup category benefited from the same success as noodles have?
FS: I think this is because soup is not part of our main meal. In Turkey, for example, people open their fast with soup; it is considered as a part of the main meal and the Knorr soup business is huge there. In Pakistan, at best, soup is consumed in winter and sometimes as a snack, but it is not considered food as such.
"The food market in Pakistan is huge. Pakistanis spend nearly 50% of their household income on kitchen items. Yet, at the most, branded foods constitute 22 to 25% of that market. So companies are going to go for the main categories – milk, water, juices. There is also a huge opportunity with masalas."
Cooking oil is the biggest value food category and within that ghee is the largest. Now everyone has jumped on the snacks bandwagon. These are the main trends in Pakistan. So coming back to soups, Unilever will have to do the work to create this market – and we will do it one day.
A: To what extent have Pakistani consumers changed their food consumption behaviour in terms of health and convenience?
FS: It is more of an urban consciousness. Certainly, digital and social media have made consumers much more aware and brands are working on this. When you deal with a population of 200 million people, you have to segment them not only according to their buying habits, but according to their psychographics and an urban-rural distribution. Of course not all of them are on the health bandwagon yet, but the time is right to start talking about these things. Take Blue Band. It is fortified and we have added various vitamins so it provides a relatively lower option when it comes to saturated fat.
A: Are there regional variations?
FS: Yes absolutely. People in Punjab, Sindh, Balochistan, KP, all have different eating habits; the spice levels are different. And within these regional configurations you have to segment by lifestyles and obviously the upper LSMs have more of a premium lifestyle which is also more health conscious, and yes people overall are becoming more health savvy. I believe brands should lead trends; one of the responsibilities of a brand is to take people to the next level. It is our contribution to society.
"All businesses have to sell, but to do this responsibly, from a perspective of social goodness as the larger purpose, is what drives me."
A: You mentioned Blue Band, what happened to the Flora initiative?
FS: The household penetration for packaged margarine is very, very low, so you really have to focus on building the category. When we introduced Flora, we were importing it and added to the relatively low volumes, there were issues with the sell-by expiry dates and Unilever is a very responsible company. The timing was not right to educate consumers about two similar brands, so we decided to focus on Blue Band. The need is to make Blue Band available more widely and this can only be done through extending our chilled chain distribution. We are working on making this goodness available to more people.
A: Against which brand does Blue Band compete?
FS: Consumers were not buying anything instead of Blue Bland. Yes, in an indirect way you could say there was conversion from home made butter or cream. In a sense, in Pakistan Blue Band is a bit like Marmite in the UK. It is a new habit; a new kind of spread.
A: In terms of your communication strategy, how much of it is global versus local?
FS: We work with, global teams. Some brands ideas are global and the challenge is to engage with our local consumers and make those ideas relevant to them. For example, Knorr’s global idea is to make meal time more ‘special’ and the more functional brand idea is ‘cooking expertise.’ That Knorr is a cooking expert and a brand that will help you enhance meal times for your family. In the local context, Knorr adapts these ideas of ‘cooking expertise’ and of ‘making meal times special.’
A: Was the Boriyat bhaghao campaign global?
FS: No, Boriyat bhaghao was completely locally crafted; there is no global footprint on it. Now Unilever is talking about taking it global from Pakistan! Globally Knorr noodles are not that big; in fact Pakistan was the first market for Knorr noodles in South Asia.
A: What about the communication for Blue Band?
FS: It was developed globally, but it is based on a universal truth – child growth. Some brand ideas are based on universal truths and it doesn’t matter where they were originally crafted. The work is done in a country or group of countries where brands try to find the universal truth and then the local relevance. As far as Blue Band is concerned although the idea is global, the ads were shot in India and mostly in Pakistan. The idea is about growth. Over the last three or four years the idea is expressed as a child’s desire to grow up quickly, which is also a universal truth, no matter where you live in the world. But the idea must work; I will not blindly run a communication if I feel it will not work. With Knorr cubes we had to localise the communication quite a bit. I can’t put beef stroganoff or spaghetti carbonara on the table; most people will not know what these dishes are. So I have to do a daal, for example. If a brand is about chefmanship, then we have to identify the main meals and top dishes and then find the interventions, whether they are flavour enhancers or basic masalas. Rafhan’s communication is all local. Magnum, of course, is a very global idea. However, higher LSMs or the higher lifestyle groups tend to think and behave in a similar way across countries. So Magnum borrows from a global concept, although there is a local component in terms of the celebrities we use.
A: What about Lipton Tea?
FS: Until two or three years ago we used a lot of their global advertising, but we have started to develop a lot of work locally for the brand again.
A: Did you find it worked better?
FS: We did; although, sometimes the global approach works as well. The beauty of Unilever is that we will test and if a piece of communication doesn’t connect with the consumer we will not run it.
Fariyha Subhani was in conversation with Mariam Ali Baig.
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