Unilever's Indonesia Headache Worsens with Boycott as Local Brands Seize the Day

January 9, 2025 | 04:06 pm

TEMPO.CO, Jakarta - A boycott against Unilever and other multinationals operating in Israel has worsened the global consumer company's loss of market share in Indonesia, Southeast Asia's largest economy, where it is battling smaller, often cheaper local rivals.

Unilever, like other big consumer goods companies, has been under fire in many Muslim-majority countries for what some shoppers see as tacit support of Israel's military offensive in Gaza through business activity.

Unilever first said last February that sales growth in Southeast Asia had been hurt by shoppers in Indonesia boycotting its brands in response to the geopolitical situation. In October, it revealed its market share in Indonesia had declined to 34.9% in the third quarter from 38.5% a year before.

The group's Jakarta-listed business brought in $2.39 billion in 2023, contributing 3.8% to group sales, but the trading environment is difficult. Despite owning major brands including Axe deodorant, Cornetto ice creams and Royco seasoning powder, Unilever has struggled to grow market share for nearly a decade as shoppers switch to cheaper local brands.

According to research firm Kantar, Unilever's Royco, Lifebuoy and Sunlight brands were among Indonesia's top 10 consumer brands in 2020. During the COVID-19 pandemic, earnings reports show Unilever raised prices sharply to keep up with rising costs. By 2023, only Royco remained in the top 10 with local laundry detergent SoKlin maker Wings Group and Roma biscuit maker Mayora Indah stepping in.

Unilever is also facing competition from homegrown halal beauty firm Paragon's Wardah, Aice, which makes ice cream, and new international players such as Skintific from China.

At a local online store, a 400-millilitre bottle of liquid soap made by Wings Group's Nuvo brand was selling for about 20% less than Unilever's Lifebuoy liquid soap in the same size. A 700-ml bottle of Wings' SoKlin liquid laundry detergent was about 7% less than Unilever's Rinso detergent.

'SOCIETAL CHANGE'

Unilever's pricing challenges in Indonesia come as recent data shows that the size of Indonesia's middle class shrank between 2019-2024 due to layoffs and lower job opportunities, prompting demand for cheaper groceries, according to local retailers' association Tutum Rahanta.

Unilever executives said in October they are trying to give their Indonesian brands a makeover given the "significant societal change" taking place, with people increasingly shopping online and looking for better prices. They expect to see an improvement in the next six months, they said.

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