Unilever may hold line on prices, sees boost from tax reform program
UNILEVER Philippines, Inc. said it hopes to absorb higher costs where possible instead of passing them on to consumers, adding that it expects the tax reform program to have a positive impact overall on consumer spending.
It added that it expects the main drivers for higher consumer goods prices to be rising crude oil prices and the increased cost of Chinese raw materials.
Vice- president for Sustainable Business and Communications Ed Sunico on Tuesday said: “Crude oil went up to around $ 60/ barrel [ so] that will affect us. The tax reform law, not much really. We’re now looking at the crude oil price… plus the raw materials coming from China have been increasing in cost also so that will have an impact on price,” he added.
“We’re looking forward to the good side of that should be an increase in consumer spending. [ On balance] it’s positive so it’s good for us.”
Mr. Sunico said that the only segment that will be affected by the first tax reform package is the Lipton iced tea brand, which he described as a small part of Unilever Philippines’ business. The first tax package imposes an excise tax on sugarsweetened drinks, as a health measure.
“As much as possible we don’t expect to pass on the higher prices. We try to look for way to keep the price [ low] so we might do some hedging, find some areas to save on costs. That has always been the agenda for marketing just to make sure that the prices are kept to a minimum. It’s something that we’re looking at.”
Mr. Sunico said Unilever remains confident that overall growth will be in the “high single digits” in 2018.
“All products have been growing but last year has been very good for us in our foods and ice cream business because they were saying that we had a pretty long summer last year. The foods category is around 20% of our business,” he added.
Mr. Sunico said that the company is set to unveil its largest distribution center in the Philippines in Cabuyao, Laguna in the first quarter.
It also hopes to adopt more widely a German technology called CreaSolv, which will recycle sachet packaging, helping reduce waste and plastic pollution.
CreaSolv separates the plastic components of sachets from the metal parts, generating plastic pellets than can be remanufactured.
Pilot testing is under way in Surabaya, Indonesia.
If found viable, the recycling service will be offered to outside parties.
“We plan to offer that to the industry, not just for ourselves, because it requires a big input of waste. It’s more of an industry effort, not just a company effort. That’s how big the facility is,” Mr. Sunico said.
He said a recycling plant is being planned around the supply of seven tons of plastic sachets per day. —