Unilever Considering a New Factory in Colombia, a Market It Calls One of the Best Opportunities in Latin America
Consumer products giant Unilever, encouraged by the possibility of peace in Colombia, is thinking about putting a new factory in the country. In a recent interview with local newspaper La Republica, the company’s Andean region chief, Ignacio Hojas, said that he sees a new plant as something that could drive of growth in a country whose consumer activity still doesn’t match its large population. “We consider it as one of the countries with the greatest opportunity in Latin America because there is still a lagging consumption,” said Hojas.
But since Unilever wants the factory to produce goods for export — in addition to local sales — Colombia is not a sure bet. The site selection process is ongoing, with Mexico being mentioned as the other likely location. Hojas noted the drawbacks of Colombia, including the high cost of importing capital goods and an onerous tax burden. “It has an array of taxes heavier than in other countries in the region,” Hojas told La Rebublica.
Unilever, which has dual headquarters in London and Rotterdam, grew by 4.5% globally last year, and the company was encouraged by its double-digit growth in Colombia in 2015. Performance has held around that rate during the first half of this year, Hojas said in a separate interview with Colombian magazine Portfolio.
The company introduced its Tresemmé product line in Colombia last year and believes personal care products have a lot of potential. Its Pond’s line of moisturizers has been successful, but facial creams, deodorants, and hair care still have a low penetration rate in the nation of 48 million. According to Hojas, people in Japan use more than five times as many face care products as those in Colombia, while Argentines spend three times as much as Colombians on Unilever products.
Despite the enthusiasm for Colombia, the company did recently sell off one of its successful brands in Latin America. In early June, Coca-Cola, along with Coca-Cola FEMSA, its biggest Latin American bottler, bought Unilever’s soy drink brand AdeS for $575 million USD. Though popular in Brazil, Argentina, and Chile — with overall sales of 284 million in sales in 2015, according to Bloomberg — the product had little market share in Colombia.
More than lacking enthusiasm for the Latin American market, the move seems in line with Unilever’s global strategy to move away from the food and beverage segment. In recent years, it has sold off its Ragu, Bertolli, Skippy, Wish-Bone, and Slim Fast brands for more than $3 billion USD.
“This sale is a step in reshaping our portfolio in Latin America to deliver sustainable growth for Unilever and enables us to sharpen our focus,” said Miguel Kozuszok, EVP Latin America Unilever, after the sale.
As it places more emphasis on Colombia, Unilever is also trying to follow its worldwide goal of reducing its environmental impact. It has already made a lot of local progress, according to the company, but is aiming to lower its overall carbon footprint even more.
“In Colombia, in the last five years, we have reduced our carbon footprint by 75%, and we want to bring it to zero,” Hojas told Portfolio. “To do this we have an investment project so that all the sources of energy we use are 100% renewable. We are looking for developers to invest in solar energy for all our plants. The project is in design.”
(Photo: The Unilever House in London. Credit: Cnbrb)