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Unilever Peru’s CEO: “We want to get closer to our consumers”

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Every time a transnational CEO or manager visits Lima, one of the first things they do is visit a market. Why?

Because in a market you can see how your product is handled, but also the behavior of its consumers. What, how and how much the consumer buys. Countries like Chile, Argentina or even cities like London have a market, but none of them compare to those in Caquetá or Ciudad de Dios. There you can confirm, for example, that Peru is one of the top countries still consuming deodorant sachets, and how important it is for consumers to have this product presentation. These experiences help me understand in what stage the Peruvian consumer is right now.

So, in what stage is the Peruvian consumer?

The economic growth in Peru has encouraged the resurgence of a new middle class. Today, the social structure is no longer a pyramid but a pentagon. The middle part has widened and the bottom part has shrunk. In this last segment there is still a lot of people that are not consuming products and that is something that doesn’t happen in other countries. When it comes to deodorants, the average penetration is 95 percent, but in Peru it doesn’t surpass 30 percent. In other words, only one out of every three Peruvians uses deodorant monthly. We need more people to enter this category and, those who are already using deodorants, to start consuming more modern products as air-spray, roll-on, for example.

Quoting Eben:

"Peru’s economic growth has encouraged the resurgence of a new middle class."

"One out of every three Peruvians uses deodorant monthly."

"While a Chilean consumer uses 20 teabags a month, a Peruvian consumer uses two, at most."

"Peruvians consume a lot of anise and lemongrass, that’s why in 2010 we incorporated these flavors into our tea products."

"Peru is the only country in Latin America where we still sell deodorants in packets."

What happens with the other segments?

This is also interesting. Middle-high class consumers that have more resources look for products with additional benefits. For example, products from Dove brand are the ones that grow the most. Despite it is a premium category its sales increase two digits annually. Deodorants are another of our star products. We introduced recently a product for the arm pits so they don’t stain with depilation. This was unthinkable five years ago. In the past, our head office would have asked, “But you are still selling sachets.” But market demands of a high segment are such that we are giving them the same products offered to our Argentine or Chilean consumer.

Whith such uneven behavior, how do you decide where to invest?

That is one of our biggest challenges. And I’m not only referring to the segment but also to the product and distribution channel. In other countries we clearly know what has more weight, but here things are different. Modern distribution channels are as important as the small grocery store, the bodega, and the market, because it is through these places that our products are consumed for the very first time. We analyze this monthly.

What are your objectives during your management period in Peru?

Develop the market and double our business size in five years.

How are you going to achieve that?

Increasing penetration and consumption. For example, Peru and Chile have the same level of tea penetration; the majority of people buy boxes. The difference is that, while a Chilean consumer uses 20 teabags a month, a Peruvian consumer uses two, in the best of cases. This is something we want to change. For this to happen, we will continue to launch campaigns such as the one we did last year with Rexona [deodorants], in which beyond the brand positioning, we stress the fact that we are able to fulfill any kind of need; not only protection against perspiration, but smoothness and anti-stain.

In what categories do you have a low-level penetration?

I’d rather talk about consumption. Other than tea and deodorants, we feel there is a lot space to grow in the consumption of margarines, soaps and post-shampoos. In actuality, for every three shampoos used, one post-shampoo is used. As a matter of fact, this is a relatively new category that we will give priority to.

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Dove brand product’s sales in Peru increased two digits in 2010, according to Eben. (Photo: Internet)

How was 2010?

It was great. We exceeded our growth expectations in almost all our categories. Shampoo, deodorant, and soap consumption expanded two digits. Shampoo was the most dynamic of all, due to the introduction of new brands. Margarines didn’t work that well due to the significant progress of butter.

Is it difficult to compete with local corporations such as Alicorp, that snatched the leadership from you with their mayonnaise?

Alicorp is a company that deserves respect and admiration. I think they have done a good job. The way they develop, conceive and present their brands has a high level. That’s why the mayonnaise battle was a hard one.

Alicorp’s general manager, Leslie Pierce, said that when they achieved leadership in the mayonnaise category, one of their strengths was that they know very well what a Peruvian consumer wants on his plate. Have you seen the need to adapt your products to the local market?

Sometimes the company wins and other times we don’t do that well, because we don’t consider some factors. What we have done during these years is to adapt our formats to the market. Peru, for example, is the only country in Latin America where we still sell deodorants in packets. When it comes to flavors it is something we’re putting more attention to, because we want to be in better contact with our consumers. This is happening in our soups but also with our teas. Peruvians consume a lot of anise and lemongrass, that’s why in 2010 we incorporated these flavors into our tea products.

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