Unilever Bangladesh to acquire 20 acres of land to scale up production

Highlights:

• Unilever plans to buy land at Kalurghat to set up manufacturing plant
• It aims produce import substituted items 
• Its imported items are shampoos, variants of Ponds, liquid detergents 
• Unilever Bangladesh is a joint venture with the govt holding 39.25% stake

Unilever Bangladesh is in talks to purchase a 20-acre industrial plot in Chattogram's Kalurghat as part of its plan to expand production capacity and reduce dependency on imports for its eight categories of products marketed here, ranging from soap and moisturizing cream to water purifier.

The leading multinational fast-moving consumer goods (FMCG) giant said in a recent notice, "This is to inform all concerned that National Iron and Steel Industries Limited has agreed to sell all the piece and parcel of land measuring 20 acres to Unilever Bangladesh Limited subject to permission from the Chittagong Development Authority."

The land acquisition plan signals the company's intent to expand its manufacturing plant as its main factory, also located in Kalurghat heavy industrial area, has reached its limit. 

This move marks Unilever's largest investment in its nearly 60-year history in Bangladesh.

Officials of the company are not willing to disclose specific investment figures and product details. They did say that Unilever has been consistently investing annually to expand its capacity and capitalise on market opportunities.

"Since the inception of our company, we have been investing and expanding our operation to offer world-class products under our loved and trusted brands and serve the consumers of Bangladesh," said Shamima Akhter, director of Corporate Affairs, Partnerships and Communications at Unilever Bangladesh Ltd.

Unilever Bangladesh is a joint venture, with the government holding a 39.25% stake and the rest owned by Unilever Global. The company began its journey in the Bangladeshi market in 1964 with a single product: soap.

According to industry insiders, the company may invest in Bangladesh to manufacture certain liquid items that serve as substitutes for imports.

"Our imports primarily comprise items from the Pureit portfolio, specific variants of moisturizing creams, lotions, shampoos, liquid detergents, and a few specialized products, as well as roughly 80% of our raw materials," Shamima Akhter added.

In Unilever Bangladesh's imported portfolio, Dove soap is predominantly sourced from Germany. Additionally, several premium shampoos are imported from India, the Middle East, and Thailand. There are also imported variants of Ponds products, liquid detergents, and toilet cleaners, the company's CEO Zaved Akhtar said in a previous interview with TBS.

Unilever Bangladesh Limited has been operating in this country for over six decades. It currently produces, markets and distributes products under eight categories through its portfolio of 26 brands. The majority of products are manufactured across seven local facilities, she said.

Earlier in 2020, Unilever Overseas Holdings BV bought 82 % shares of GlaxoSmithKline (GSK) Bangladesh Ltd at Tk2,020.75 crore through the Dhaka Stock Exchange (DSE).

GSK's share acquisition took place as part of its global investment. 

At present Unilever uses the GSK factory located in Chattogram to produce several health drinks, including well-known Horlicks.

Unilever's corporate affairs director Shamima told TBS "We believe that Bangladesh's FMCG market has significant potential, and Unilever has been making strategic investments in the market, both greenfield and brownfield investments. These are reviewed from time to time based on our ability to invest and the strategic opportunity of the market."

Globally, Unilever continues to introduce superior and future-fit products to meet consumers' evolving demands, she said. 

"Our models have been to seed through imports, develop the market, and when demands reach a critical mass, we move to local production," Shamima added. 

Local FMCG market grows 8% per year

The market size of FMCG in Bangladesh, in terms of gross sales value, stood at around $4 billion or Tk40,000 crore at the end of 2022 with an annual growth of about 7-8%.

Despite the entry of over 30 companies into the FMCG business, Unilever's stake is still more than 50%.

Despite Bangladesh's consistent economic growth for over a decade, per capita FMCG consumption is lower than in many countries.

Per head consumption of FMCG is only $24, 45% less than India's $44 and in the Philippines, it is more than $100, according to Unilever.

Zaved Akhtar during a previous interview with TBS had said, "You can imagine the opportunity we have in the market here. In fact, we could create four or five more Unilevers in Bangladesh, but that will still be the tip of the FMCG iceberg, if you know what I mean."