Unilever (ULVR), the world’s second biggest consumer goods company, is starting to manufacture food seasoning in Myanmar as it prepares to spend 500 million euros ($656 million) in the country over the next decade.
The company, which has been selling in Myanmar through third-party distributors since 2010, has a roadmap to “go deeper with fewer categories” such as savories, seasonings, shampoos and laundry and then build on it, Chief Operating Officer Harish Manwani said in an interview on Bloomberg Television at Naypyidaw.
Unilever joins Coca-Cola Co. (KO:US) and Ford Motor Co. in starting operations in the southeast Asian nation, which reopened its borders last year to foreign investment. Companies are looking to tap the potential of rising consumer spending in a country where the economy is estimated by the International Monetary Fund to expand at a faster pace this fiscal year from the previous 12 months.
“It is a large market, fast growing, young population,” Manwani said. “The excitement is about growth.”
Myanmar has an estimated 46 million people between the age of 15 and 64, out of a total of more than 60 million people, according to a report by McKinsey Global Institute.
The number of people in the country with sufficient income for discretionary spending could rise to as many as 19 million in 2030 from 2.5 million now, thereby potentially tripling consumer spending to $100 billion, McKinsey said. This pace would be achieved if Myanmar’s economy expands at 8 percent annually, it said.
Unilever will start making food seasonings under its Knorr brand at a plant in Yangon in a few weeks. The company will increase its staff to 270 by end of this month and hire an additional 200 people by early 2014, it said in an e-mailed statement.
“We have a certain repeatable model for how we want to win in developing markets,” Manwani said. “The critical success factor here is not market share, it’s going to be market development.”
President Thein Sein has allowed more political freedom and loosened economic controls since coming to power two years ago, prompting the U.S. and other nations to ease sanctions.
The country opening up is likely to boost tourism. AirAsia Bhd. (AIRA), the region’s biggest budget airline, plans to carry as many as 30 percent of tourists visiting Myanmar for business or leisure travel, Chief Executive Officer Tony Fernandes said in an interview. The southeast Asian nation may have about 3 million tourists this year, he said.
Unilever and Coca Cola are among attendees at the three-day World Economic Forum on East Asia hosted by Myanmar this week.
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