Unilever’s Justin Apsey talks future plans, state of the South African consumer

Unilever, a global consumer goods giant, is navigating through the challenging landscape of Southern Africa, particularly South Africa, amidst rising inflation and significant pressure on consumers. In a recent interview with CNBC Africa, Justin Apsey, the CEO of Unilever Southern Africa, discussed the current market conditions and the company's strategies to overcome these hurdles. Despite being in a closed period and unable to disclose specific financial details until Q1, Apsey provided insights into the broader economic trends in the region. He highlighted that while Southern Africa, excluding South Africa, is experiencing notable growth from a GDP perspective, inflation remains a key concern impacting consumer demand and profitability. Apsey emphasized Unilever's long-term commitment to serving consumers in the region and adapting to their evolving needs. One of the major challenges discussed during the interview was the persistent inflation affecting various product lines and consumer segments. Apsey noted that inflation has fluctuated across different products in the past year, putting pressure on the bottom of the pyramid consumers who allocate a significant portion of their spending on food and groceries. Despite the challenges, Apsey commended consumers for their resilience in adjusting their habits and making lifestyle changes to cope with the inflationary environment. He also mentioned that manufacturers are responding by offering smaller-sized products and better value options to help consumers manage their expenses. However, Apsey cautioned that inflation is likely to persist, especially in South Africa, due to currency fluctuations and energy challenges in the country. The discussion then shifted to the economic situation in South Africa, characterized by power shortages, low consumer confidence, and overall economic strain. Apsey acknowledged the tough conditions faced by consumers and emphasized the need for businesses to remain flexible and consumer-focused to weather the storm. He expressed optimism about the collaboration between businesses and the government to address key issues like energy, logistics, and corruption. Despite the current challenges, Apsey encouraged businesses to stay nimble and prioritize consumer needs to ensure sustainability in the long run. The topic of capital expenditure (CAPEX) also came up during the interview, with Apsey emphasizing the importance of continued investment in Africa for future growth. He reiterated Unilever's commitment to serving the mainstream consumer and highlighted the significance of maintaining manufacturing capacity to support local production. Apsey stressed the need for FMCG manufacturers in Southern Africa to invest in infrastructure and capacity to avoid relying on imports in the future. Finally, the conversation touched on product innovation and diversity, with Apsey acknowledging the balance between meeting core product demands and driving innovation. While challenges like energy constraints may temporarily hinder innovation, Apsey underscored the critical role of innovation as the lifeblood of the business. He expressed confidence that as conditions improve, there will be more opportunities for new products and offerings to enter the market.