Unilever Japan
How to grow a company that is well established in a mature market? That challenge faced Unilever Japan CEO Ray Bremner when he took up his post in August 2009.
“In a way, the fortunes of Unilever have followed the fortunes of Japan,” Bremner notes. The company grew strongly in the 1980s, and for some of the 1990s, but for the last decade profits have been flat. Nevertheless, after a spell with Unilever in Singapore, he came to – in his own words – “increase growth and win market share”.
In his favour are the facts that Unilever Japan’s young workforce has an average age of 42 and, highly unusual for Japan, a quarter of its managers are women. Since its 1964 establishment here, the company has built an enviable profile with eight in 10 people aware of the Unilever brand.
Best known are Unilever’s food products such as Lipton teas, which are sold in Japan via partnerships with Suntory and Morinaga Milk Industry. The company also licences Knorr products, such as corn soup, to Ajinomoto.
Unilever has operations in some 180 countries selling 400 home, personal care and food brands, many specially created for particular markets. On any given day, two billion people use its products, giving the British-Dutch multinational a global turnover of €44 billion.
But for Unilever’s own products, “basically, personal care is our business here,” says Bremner. Of 60 brands that Unilever markets globally, 20 are available in Japan. The company also has one brand, Mod’s Hair, which was made for Japan (it is now also available in South Korea).
The world’s largest skincare market
The Japanese market has many distinctive features, not least that it is the largest skincare market in the world. As Bremner points out, “Japanese women use more products on their face than women from any other nation.” On average they apply five skincare products a day; they wear more make-up than women in most other countries; and need stronger products to remove it.
The formulations for Japan are “almost always unique”, says Bremner. Hair products are one example. “Japanese hair is the thickest in the world,” he notes. “It is three-times thicker than average Caucasian hair and needs to be conditioned more. That requires us to have completely different formulations.”
But the localisation of products happily sold across the world can be hindered by the “added complexity” of Japanese regulations that differ from those in the United States and the EU.
“Formulations from our global labs always have to be modified for Japan,” says Bremner. And often that’s not for the good of the customer, he points out.
A case in point are the legally required minimum amounts of active ingredients, which can be considerably more than necessary. The active ingredient in anti-dandruff shampoo, for example, is higher than in other countries. The Japanese authorities, says Bremner, have not taken into account that modern ingredients are more effective, or that people tend to wash more often than they did.
The company’s global target is to double its size, but halve its environmental impact. Bremner summarises his strategy for achieving the growth target as finding more customers, getting them to use more products and giving them more value.
For example, marketing efforts are geared to encouraging men to use facial wash rather than simple soap and water; or encouraging women to use a hair treatment as well as a shampoo and conditioner.
They are also expanding existing brands to new customers, such as Unilever’s range of Dove pro·age personal care products for women in their forties and fifties. And the company has been working to increase retailers’ profits by offering larger packs, multi-packs and more expensive products.
Sixty percent of Unilever product sales are from large drugstores, but the company recently adjusted their marketing to reflect the fact that even shops in the same chain can have quite different types of customer. A drugstore next to a busy railway station in Tokyo may attract young commuters, while one in the remote Japanese countryside may be used by a much older demographic. Helping them is the huge amount of data available to marketers in Japan, says Bremner – far more than anywhere else he has worked.
The internet gives Unilever an unusually direct way to communicate with customers. Luckily for Unilever, which makes many products used in the bathroom, “quite a lot of young people use their mobile phones while bathing,” says Bremner. The company has already had some success with games and sponsored content.
The world’s longest bathing times
Unilever Japan is also making strong progress on the sustainability goals. One-hundred percent of Lipton tea sold in Japan is already bought from certified sustainable farms. And the company has plans for the nation’s bathrooms, where there seems to be plenty of room to reduce greenhouse gas emissions from energy use.
“At the moment, the Japanese have the longest and the hottest bathing times,” Bremner notes. The average bath/shower time in Japan is one hour, meaning that Japanese use considerably more energy washing than other nationalities.
Although people in Japan have reduced their energy use since 11 March, Unilever is looking for ways to help them to further reduce showering time. “If several million people shower for 5% less time each day, that will make a big difference.” That echoes the slogan for Unilever’s ongoing global sustainability campaign: Small actions, big difference.
Unilever has also initiated a number of CSR projects related to the March earthquake and tsunami. As well as sending products, such as 102,000 bars of soap and 31,400 bottles of tea, the company collected donations from its 167,000 employees worldwide and is matching the amount raised.
In April it set up a special website (www.unilever-sabd.jp) which allows visitors to donate ¥1 with a click of their mouse or a single tweet. Over ¥10 million has been raised at the time of writing. The company also organised a volunteering trip for employees to Miyagi prefecture in September (covered on page 24), with more trips planned.
Since the quake, Bremner has given many talks to business groups and at universities on Unilever’s CSR activities. “I think the quake has given a huge impetus to CSR,” he says. “All companies have tried to do something.”