Strategising For a Post Covid-19 Portfolio

AURORA: What were the immediate business challenges Unilever Pakistan faced when Covid-19 first presented as a serious public health issue?

AMIR PARACHA: The immediate challenge was to ensure the safety of our people. Unilever Pakistan employs approximately 21,000 people directly and indirectly, across the length and breadth of the country. We have seven factories manufacturing goods ranging from personal care and hygiene products to food and ice-cream. We have regional offices and a head office that employs 500 odd people. So the biggest challenge was ensuring the health of all our employees, particularly our factory workers who live in remote and low-income areas.

For example, our factory in Rahim Yar Khan employs 1,250 people. Then we have field teams spread across Pakistan, working in different districts, towns and tehsils (townships) as well as about seven to eight thousand salesmen who work alongside our 400 distributors, and ensuring their safety, hygiene standards and overall health was another big challenge. Thankfully, as part of a global organisation, we have strict health and hygiene measures in place and all we had to do was ramp up the controls. Unilever has a four-tier level safety system (four is the highest) and when the pandemic broke we ramped up to level four which means, among other things, no travel by public transport, all employees must have temperature checks at the factory, lunch is divided into three shifts to enable social distancing (a maximum of two people can sit at one table). Now, after five weeks, I am comfortable that we have a good system in place.

A: How difficult has it been to enforce health and hygiene measures on such a large scale, given the number of employees involved?

AP: Unilever has always prioritised safety as a core value, so this was nothing new. Our employees and their families have been very appreciative of the fact that we have provided them with the protection they need in order to come to the factory and the markets. Unilever is the biggest soap manufacturer in Pakistan and we took it as a national duty to keep making and distributing soap because it is one of the major agents that can stop the spread of the virus. The same goes for our disinfectants as well as other essential items such as food and tea. For our employees it was a national duty to go to the factory or out in the field and ensure stocks are available and there is no panic in the market – and doing this during a period when the entire world and their governments were telling people to go into lockdown and stay home; yet here they were stepping out on a daily basis.

A: How are you safeguarding the health and safety of the people in your distribution and retail network?

AP: Although we can manage any infection in our factories by implementing the controls I spoke about earlier, our distributors and retailers are scattered throughout Pakistan. Nevertheless, we have taken a number of measures. Firstly, we have simplified our selling models and largely moved to tele-ordering, so that instead of going from shop to shop, we can take orders either on the phone or online, and where possible we are implementing ERTM (E-Route to Market), whereby our retailers use our app to place orders. Secondly, we have reduced their exposure in the market by cutting the number of operating hours from five to two, either every alternate day or on a bi-weekly basis.

Thirdly, they are all equipped with masks, gloves and sanitizers. Furthermore, we have introduced some creative techniques to reduce exposure. We are working with small dukandaars (shopkeepers) to put in place a layer of plastic film between them and our field force which has a small window they use to hand over a product or cash, otherwise everything else is covered.

A: Have your manufacturing capabilities been affected or are things running as per normal?

AP: We are not running as per normal because we are operating at maximum capacity. We have divided our portfolio into three categories; Covid Core (soap, disinfectants, tea and noodles), essentials (shampoo and detergents) and non-essentials (ice-cream and skincare). The Covid Core products are at maximum capacity because consumer demand has gone up significantly and a lot of welfare organisations are bulk buying hygiene products as well as tea and noodles.

A: Have you been able to keep up with this upsurge?

AP: We have to the best of our abilities. We used to import our sanitizers from China, but due to the upsurge we started producing them locally within two weeks. Demand has gone through the roof and we are trying to meet it as best as possible. A lot of new players making sanitizers have popped up, although their alcohol content is below the 80% prescribed.

A: Which brands have been adversely affected by the crisis?

AP: Three categories. One, skincare, so brands like Ponds and Fair & Lovely – according to a global study all grooming items have taken a hit because people are not stepping out. Two, ice-cream, although we are starting to see an upward trend. Three, UFS (Unilever Food Solutions), which caters to the restaurant industry and has been shut down. These three categories have been most severely hit not only in Pakistan, but globally.

“There is going to be a liquidity crisis in Pakistan and this will lead to a drop in consumer spending across all economic sectors and people are either going to be downtrading or downgrading”

A: In terms of demand, have there been any noticeable variations among urban, semi-urban and rural consumer segments?

AP: The pattern has been largely the same; whether it is urban, semi-urban or deep rural. At the moment, the products that are selling are the essential ones, such as pulses, ghee, milk, tea and hygiene products. The pattern is similar across Pakistan and across the sub-sections of the socio-economic classes.

A: Was this the case before the pandemic?

AP: Pre-Covid-19, the pattern was very different across socio economic groupings as well as across the urban and suburban, rural and deep rural segments. In fact, there has been a dramatic shift. Products which used to be considered a luxury (especially in terms of grooming) have been severely impacted because people are not stepping out and socialising. I think these patterns will change as people become more used to the situation. Already we see a trend of people cooking at home and experimenting with new food items. So trends will change as people start to become used to a new normal.

A: What has the impact been on your online business?

AP: Let me split the country into two parts. In Sindh for the first few weeks, no deliveries were allowed and as a result, several e-commerce companies working on last mile deliveries had to shut down. In the rest of Pakistan deliveries were allowed but in patches (the government allowed deliveries of essential items only) and so we had an upsurge in Punjab. This has given rise to two major challenges. Firstly, we have to work within a restricted time window as well as a restricted portfolio (essential items only), and secondly, the larger e-commerce ecosystem was not geared to deal with such a rapid surge in demand and the quality of the online shopping experience has not been that great. However, given the limited options, people are learning to adjust with it.

A: Will this upsurge sustain itself once the crisis is over?

AP: It will jump-start the online business. For argument’s sake, if the upsurge has been to the tune of 100, it will not remain at that level, but will certainly stabilise at 50 or so, and I anticipate we will retain approximately 50 to 60% of the business online post Covid-19. These customers will stick around because they enjoyed the experience and overcame their earlier inhibitions about shopping online.

A: Has the upsurge in online ordering been confined to the big cities or has it spread to the second tier cities as well?

AP: It has been all over Pakistan, but more so in the metros because the ecosystem there is better – more riders and better connectivity. So it is more a matter of the ecosystem and less a matter of desire. I think the desire to purchase online is as much in the semi urban or rural areas as it is in the metros. It just happens that the infrastructure is not available there yet, but it will be soon, and then online will take a bigger leap in those areas compared to the metros – if only because the full portfolio of products is available in brick and mortar shops in the metro cities, whereas it is not in the semi-urban and rural towns, although the desire to purchase is there.

A: What exactly is a restricted portfolio?

AP: A restricted portfolio only includes the daily essentials as contained in the Essential Goods Act announced by the government. For example, in the first two weeks of the lockdown, we had problems selling our ice-cream because the law enforcement agencies were stopping our ice-cream trucks on the basis that ice-cream did not fall under the Essential Goods Act.

A: To what degree will the economy be impacted and what strategies are you looking at to deal with the post-lockdown situation?

AP: There is going to be a recession and the signs are that Pakistan is heading towards a GDP contraction for the first time in 68 years. Businesses have been closed for the last 40 days and there is ongoing talk about loss of jobs, salary cuts and layoffs. Daily wagers have not been earning for the last 40 days. Small and medium sized enterprises have also been shut for the last 40 days and credit lines have been broken. There is going to be a liquidity crisis in Pakistan and this will lead to a drop in consumer spending across all economic sectors and people are either going to be downtrading or downgrading. In light of this, organisations such as ours which fall under the CPG (consumer packaged goods) classification are reassessing our portfolio with a view to developing a ‘Covid relevant’ portfolio to address the new economic realities.

The good news is that as an organisation we have always been aware of the importance of straddling the pyramid in terms of portfolio management and which is why we have both top and mid tier brands and different price points and SKUs. In other words, our portfolio is adaptable to both boom and bust times. In my opinion, this crisis is going to be a lot more severe than any we have experienced before and we are adjusting our portfolio to make it both relevant and recession proof.

A: Will this mean adding new products or will it be about making adjustments within existing product offerings?

AP: Predominantly making adjustments to our existing product line (our portfolio is already very vast) and introducing new pack sizes and prices. However, where there is a gap we will bring in new products. For example, Domex used to be just a toilet cleaner, but as a result of the pandemic, within seven days we launched Domex multi-surface cleaner which contains hypochlorite. We are looking at entering this hygiene space, but with products that are organic rather than chemical based.

A: Do you anticipate changes in your communication strategy?

AP: It has already changed. I am very proud of the fact that Unilever was both the first company and the first brand in Pakistan to develop a brand agnostic campaign for Lifebuoy, whereby we promoted other brands and encouraged consumers to use any soap because soap kills the virus. This is a time when brands should be running public awareness messages rather than going into the competitive space and saying “my product is better than yours.” Ever since Unilever launched Lifebuoy in the 19th century, the vision has been to introduce products that help fight disease. Unilever is about sustainability and spreading goodness – it is part of our DNA and has nothing to do with Covid-19. Yes, at the moment we are dialling up a lot more on Covid-19, but our philosophy has always been about the larger purpose – for the community, the environment and peoples’ lives. Today, we are communicating these values in a much bolder way.

A: What have been the challenges of WFH for an organisation as large as Unilever Pakistan?

AP: Surprisingly WFH has made people a lot more productive, creative and effective, and of course it is also much more cost effective compared to running big offices with high utility bills and support staff. For the last five weeks about 500 people, including myself, have been working from home. It has been amazing; I did not think I would be running such a huge organisation remotely for the last five weeks. Of course, different people have different experiences and some have found it a bit overwhelming because a lot of the stuff we had previously outsourced, we now have to do ourselves.

Before we could outsource our child’s education to a day care centre or school, now it has become our responsibility. The same goes for household chores and food and meals – and people who don’t have the right support at home can feel a little overwhelmed. However, purely on a work front, it has been very productive and creative. There are trade-offs, of course, and one is the lack of social interaction; sharing a cup of tea with someone, cracking a joke with a colleague or walking together down the corridor; the emotion is missing. I suppose as human beings, we are never satisfied and if something changes we start missing it, but I think once things normalise, people will start to balance things better.

A: Do you think that when this crisis is over, the WFH model will be here to stay?

AP: Even before a lockdown was imposed in Pakistan, the conversation at Unilever globally was about agile working and flexi hours, so it is nothing new for us, although people did have their reservations about it and the current enforced WFH has given people a chance to test out their reservations. The world is increasingly going online and the cost of doing business is going up; WFH is one way of cutting costs as well as contributing to a greener world and reducing our carbon footprint. WFH is another step that will help towards more sustainability.

Amir Paracha was in conversation with Mariam Ali Baig. Interview conducted on April 24, 2020.

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