While most Sri Lankans know of Sunlight washing powder, not all may be familiar with Unilever Sri Lanka, the local arm of a vast international company vested with the care of this and many other of the nation's most popular products.
Unilevers many years ago |
From Sunlight to Signal toothpaste, to Lux and Sunsilk toiletries and more than 20 other brands, "research suggests that 99% of Sri Lankan families use at least one of our brands at least once a year", according to the company's Chairman, Amal Cabraal. Considering their products to be "everyday brands", Mr. Cabraal goes on to reveal that Unilever is a Rs. 30 billion annual turnover company, with 95% of turnover being the result of products manufactured locally, which has direct employment of 1,155 and indirect employment of more than 10,000 comprising suppliers, partners and others.
Today, on the verge of relocating from its historic, 70-year old manufacturing facility at Grandpass in Colombo to a Board of Investment zone in Horana, Unilever Sri Lanka has begun a two-year programme to centralise much of its production while at the same time expand and update its existing capacity to the tune of Rs. 4 billion. However, this transition into the future does not come without dredging up the company's distinguished past. With some parts of the Grandpass factory sure to be taken along, the legacy of Unilever and even its predecessor, Lever Brothers, will continue to live true at the company's new Horana facility. As even Mr. Cabraal contends, with a nod to the past, "we are only dominant because of our forefathers believed [in] building the relationship between brands and consumers".
Roots: Sunlight 125 years old.
An employee smells a cake of soap from the production line |
From roots set deep in colonial times, previous incarnation Lever Brothers' flagship product Sunlight recently celebrated 125 years in the local market, Unilever's business model shifted in the 1930's when quantities sold made it more cost efficient to mnufacture "on shore" rather than import. Since that time Unilever's turnover and number of offerings has grown steadily, Lux and Lifebuoy were added in the 1940's and Signal toothpaste in the 1950's. However, it was during the closed economy of the 1970’s that the company faced its "most difficult time," says Mr. Cabraal. Having joined Unilever only in the 1980's, Mr. Cabraal's understanding of that period stems from conversations he had with one of his predecessors, former Unilever Chairman Stanley Jayawardena, who had repeatedly asserted that the company had shown its resiliency despite tough import restrictions which forced many other multinationals to exit local shores.
While being forced to withdraw some brands such as Lux, because of quality issues; many of Unilever’s stalwarts such as Sunlight, Lifebuoy and Rinzo still remained in the local market; while brands which were withdrawn were often replaced by newly created alternatives such as Reward soap (to cater to Lux consumers).
In addition, again according to Mr. Cabraal, this was a time of unique innovation, made necessary at the time due to lack of raw materials; for example, selling toothpaste in paper wrapping and washing powder by the bag. Accordingly, it was a time when growth was severely restricted and profitability was near zero, but it was also when a lot of “local innovation happened", a time which prompted local management to utilise their "creative juices" to get by virtually everyday, says to Mr. Cabraal.
Struggle in the 1970s.
Amal Cabraal |
Adding to Mr. Cabraal's recollections are those of Unilever's current Industrial Relations Manager, B.G. Somatilaka, who joined the company as an Engineering Supervisor in 1975. He noted that the order of the day for staff during the closed economy (in 1970-77) was risk-taking. For example, because spare parts could not be imported, parts had to be manufactured locally, which was no easy task. And, if unfixable, the manually operated machines of the time which were imported many years prior to this had to even be replaced by local machines of inferior quality, no matter the resulting cost or inconvenience.
The same situation also applied to perfumes which were frequently unavailable, so much so that a perfume manufacturing facility had to be set up and even included plants being grown from which scents could be harvested.
He also went on to add that during this period the factory was visited by Unilever staff from Bangladesh and elsewhere, all eager to learn the measures which helped the local operation survive such a tough economy; a clear indication of the high esteem in which the Sri Lankan operation was held even back then.
In due course, the setbacks of the 1970’s were eclipsed by the company’s “vibrant” resurgence in the 1980’s, a period which ultimately resulted in the company reintroducing many brands such as Lux in 1982. Growth has more or less continued unabated since then and today has culminated in what Mr. Cabraal refers to as “gradually growing demand” which has led to Unilever’s current record of eight consecutive years of double digit growth, and a doubling of its business between 2001 and 2005 and again between 2006 to 2010.
With its overarching plan to grow into a Rs. 50 billion turnover company by 2015, Unilever’s main objective continues to be to gradual growth in existing categories according to Mr. Cabraal. Because consumptions patterns in this segment are fairly steady, no big spikes in demand can be expected: For example, five years ago, the cosmetics business was “nascent” but today that market is growing fast.
The same situation applies to Unilever’s supermarket trade and products such as deodorants, hand wash, liquid soap, etc, all new promising avenues pegged as future growth areas for the company. In the meantime, Unilever’s new site in Horana allows the company a setting where it can plan its next 15 years of growth and, at the same time, be more environmentally friendly in its production.
Future
And what of his company’s plans for the North and East? According to Mr. Cabraal, in the North, “trade infrastructure has only existed in pockets”. He adds that Unilever is currently working with the government to develop a retail network and thus facilitate the trade channels essential for his and other consumer-oriented businesses. Meanwhile, because the East already has some degree of retail infrastructure, the company continues to experience “good growth” here. He adds that, in the past, during the best of times, the North and East have accounted for 10% of the company’s sales and, at its most difficult, just 5%. |
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