Despite the Turmoil, Pakistan Wants Soap

Rural demand for consumer goods is growing, thanks to cotton prices

Haji Mirbar, who grows cotton on a five-acre farm with his four brothers in a village outside the town of Matiari in southern Pakistan, says his family’s income grew fivefold in the year through June. That’s allowed him to splurge at bathtime. He now uses Unilever’s Lifebuoy for his open-air baths under a hand pump instead of the handmade soap he used before. “We had a great year because of cotton prices,” explains Mirbar, 28. “As our income has risen, we want to buy nice things and live like kings.”

Increased income among rural dwellers like Mirbar is fueling demand for branded products, allowing consumer goods makers to defy the turmoil in Pakistan, where terror attacks have killed at least 35,000 people in the past decade, according to its government. Big foreign companies such as Unilever and Colgate-Palmolive are sending salespeople into rural farming areas of the world’s sixth most-populous nation, where demand for consumer goods such as Sunsilk shampoo, Pond’s moisturizers, and Colgate toothpaste has boosted local units’ revenue.

“The rural push is aimed at the boisterous youth in these areas, who have bountiful cash and resources to increase purchases,” says Shazia Syed, vice-president for customer development at Unilever Pakistan. “Rural growth is more than double that of national sales.”

Consumer-goods companies forecast growth in Pakistan even as an increase in violence in Karachi has made 2011 the deadliest in 16 years for the country’s biggest city and financial center. Economic growth nationally slowed to 2.4 percent in the 12 months through June, from a record 9 percent six years ago. Still, brand awareness is growing in the country of 177 million, says Misbah Iqbal, an analyst with AKD Securities in Karachi. “I don’t see any reason why companies operating in Pakistan won’t cash in on the growing opportunities.”

One reason: cotton prices, which almost doubled last year as demand for the fiber outpaced production. In Pakistan, prices rose as much as fourfold. Consumer goods makers have been big beneficiaries. Sales at Unilever’s Pakistan unit rose 15 percent, to 24.8 billion rupees ($284.3 million) in the first half of 2011. Colgate-Palmolive Pakistan’s sales grew 29 percent in the six months through June, to 7.6 billion rupees.

Unilever is pushing beauty products in the countryside through a program called Guddi Baji, an Urdu phrase that means “doll sister.” It employs “beauty specialists who understand rural women” and travel in vans filled with samples, Syed says. Women in villages are also employed as sales representatives because “rural is the growth engine” for Unilever in Pakistan, she says. While the bulk of spending for rural families goes to food, about 20 percent “is spent on looking beautiful and buying expensive clothes,” she says.

Colgate-Palmolive, the world’s largest toothpaste maker, will pursue more sales outside Pakistan’s cities by tripling the number of villages where its products are sold, from the current 5,000, says Syed Wasif Ali, rural operations manager at the local unit. To boost sales among low-income consumers, its detergents Bonus Tristar and Brite are packed in sachets of 20 grams or less and priced as low as 5 rupees (6¢).

Unilever plans to increase the number of villages where its products are sold to almost half of the total 34,000 within three years. Its merchandise, including Dove shampoo, Surf detergent, and Brooke Bond Supreme tea, is available in about 11,000 villages now.

— With assistance by Haris Anwar, and Luzi-Ann Javier


    The bottom line: Pakistan’s growing rural income has helped boost Unilever’s revenue there by 15 percent and Colgate-Palmolive’s by 29 percent.

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