The Ceos’ Room

With its 1,000 products in 18 categories in the rapid consumption products Unilever is able to take the pulse of the sector. İzzet Karaca, the board chairman of the company, says that in the last few years there has been an incredible change both in the consumer and in the modes of doing business. “The economic environment and competition have begun to become difficult,” he says and continues: “The market environment today makes it necessary to conduct business with low margins and make money much more from operations. There is definitely no speculative business environment.”

“It is becoming more difficult to do business in Turkey”

Consumption is undergoing incredible change all over the world. In high income countries such as in Europe, trends such as healthy lifestyles, looking better and making oneself feel better are turning people towards healthy lifestyle products. These global trends are also making themselves felt in Turkey. Companies are rapidly launching healthy lifestyle products on the market and increasing their turnovers as a result. One of these companies is Unilever…

The company has around 1,000 products in 18 categories and is able to monitor the pulses of both consumers and the sector. The innovative products that the company has launched over last few years have been quite eye-catching. In addition, its strategy of earnings based on demand, which it has applied since the end of 2002, has increased its turnover. As a result of this strategy, over the last 3-4 years the company has increased its tonnage by 2-3 fold and last year recorded growth of 20 percent on a YTL basis.
İzzet Karaca, the company’s board chairman, says that its innovative products, a strong sales organization supported by a financial team, and the importance given to human resources have played as important a role in this growth as the strategy of earnings based on demand. Karaca says: “We are moving onwards and upwards as a complete organization.” At the core of the movement upwards mentioned by Karaca lies the restructuring of Unilever’s organization in the light of consumer trends and developing new market conditions. The company continually restructures its organization in line with changes on the market.

Unilever Board Chairman İzzet Karaca gave the following answers to our questions about the changing consumer, a changing Turkey and a  Unilever:

* Turkey is changing. The rules of doing business are being redefined. In such an environment, what is happening with the consumer?
There is a world of difference between the Turkey of 2002 and the Turkey of today. Crises arrive a little late in the rapid consumer goods sector and they leave a little late. At the end of 2001 and the beginning of 2002 there was a contraction in the purchasing power of the consumer, and the result was a business environment in which the unregistered economy grew and cheap, low quality products multiplied. When national income rose, the consumer’s preferences changed. The Turkish consumers were not satisfied with cheap products. Because they did not meet their expectations.
We also made some sacrifices in terms of our prices and applied a strategy earnings based on demand. I mean, we pursued a strategy of making our profits by selling more in total and earning less money on individual units. As a result, from the middle of 2002 onwards our policy began to coincide with that of the consumer and sales recovered to
close to our old tempo.

* What kind of changes were there in consumer trends during this process?
Consumer trends are changing. In fact, these changes are like fashion: they come and they go. But this time it looks as though the trends will be more long-lasting. The consumer trends that are coming to the fore are those of a healthy lifestyle, dieting, looking better and feeling better. Countries which are very rich and which have a high income had already begin to shift towards diet products, organic products, functional foodstuffs and natural products.

On the other hand, there were many people in the work who were hungry for basic foodstuffs. One of the responsibilities of companies such as ours is to support polices which increase production for the poor. The result is that, on the one hand we are offering products which priced more suitably for poor people, and on the other we are able to provide foodstuffs which have been produced in a more natural environment, and healthy diet products which are needed in high income countries such as in Europe.
Moreover, people have begun to devote more time to themselves than in the past. This fact has come more to the fore recently.

As a result, in the light of these trends, Unilever launched, and is continuing to launch, innovative products. We are in a development process. In fact, Turkey is a very good example of our global strategy.

* Unilever has recorded double digit growth for the last two years. What was the strategy that produced this growth?
Last year we grew by 20 percent on a YTL basis and by 27 percent on a Euro basis. Last year our growth in Euro terms made us the world champion at Unilever. We overtook Brazil, Mexico, Russia and China to become the fastest growing country in the world. Of course, the basic element in this growth was economic stability.

In addition to this, there was also growth as the result of an increase in population. Our strategy of earnings based on demand meant that we recorded growth of 20 percent on a YTL basis, while overall economic growth in Turkey was 6-7 percent. Our innovations, strong sales organization, the financial team which supports it, and the importance we attach to human resources all played their part in this growth. We are moving forwards and upwards as a complete organization.

Transferring From Koç To Unilever Was The Hardest Decision Of My Life

I Worked At Koç For 11 Years
 Next year will be my 30th in management. The most difficult decision I have made during these 30 years was the one to move from Koç to Unilever. I think that it was the most important decision of my life. It was 1988. I was working at Otosan. My career was going very well. I wanted to work abroad and to learn what was happening on the global market. It was because of my desire to work abroad that I transferred from Koç, where I had been working for 11 years, to Unilever. I began by working in the internal auditing department in Unilever in Germany.

My Boss Apologized
 It was a very interesting job. I had not used my German for 20 years. My wife was working and unfortunately she had to give up her job. You are going to a new country and a new company and, what is more, you are going to audit for the Germans. In fact, being a Turk made the job a little difficult. You had to criticize what they had done. I mean, it was a difficult job. As a result, the decision I made was very difficult. I experienced some considerable difficulties. But the good thing about working in Germany is that the moment they begin to have faith in your abilities their attitude towards you quickly changes and they apologize to you. My boss apologized to me.

Ebru Firat
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