Unilever Asia prices to rise on high oil costs
Unilever Asia prices to rise on high oil costs
Phelim Kyne, Dow Jones/Jakarta
Anglo-Dutch consumer product giant Unilever will have to increase
prices in Asia to cope with high crude oil prices, a company
executive said recently.
Products with petrochemical components, including laundry
detergents, are likely to bear the brunt of those pending price
increases, Unilever Asia Pte. Ltd. Group Vice President Tex
Gunning told Dow Jones Newswires.
"All businesses around the world see that their chemical-based
products costs are increasing and we're no different," Gunning
said. "Some price increases have to be passed on at some point,
like the airlines, like everybody else."
Unilever will implement "step-by-step...product-by-product"
price increases, Gunning said, without providing specific details
on the size or timing of those increases.
Even as the company plans price increases on personal care,
household maintenance and food products, the maker of Surf
detergent and Dove beauty products expects its sales to be
insulated from damaging effects of those price rises.
"Our products are very basic products, so where is the
consumer going to cut (purchases)?" Gunning said on the sidelines
of the Asian Forum on Corporate Social Responsibility in Jakarta.
"I don't think people will leave their laundry products or
toothpaste products out (of their usual purchases) very quickly."
Indonesian consumers are likely to feel a bigger pinch than
many of their Asian peers due to the pending elimination of fuel-
price subsidies.
Despite the new pressure on consumers' wallets, however,
Gunning said the fuel-price subsidy cuts will likely only hit
Unilever's premium product line, which is "a small part of the
business" the firm does in Asia.
The government is moving to eliminate the budget-crippling
subsidies that could cost Rp 138.6 trillion (US$13.86 billion)
this year because of record high oil prices.
Nymex October crude oil prices are up 4 cents from Monday's
floor close to $63.88 per barrel at 01:28 GMT on Tuesday.
Fuel-price subsidies drained Indonesia's coffers of $7.4
billion, equivalent to 3 percent of gross domestic product, last
year.
While the short-term impact of higher oil prices on Unilever's
sales may be limited, the longer-term effects are more difficult
to determine, Gunning noted.
"I think in the whole of the world, and in Asia particularly,
we don't know what this whole (crude oil) price increase is going
to mean," he said. "In previous oil crises...we've always seen 10
to 24 months later the effect of (them)."