Cleaning Up In Emerging Markets: Heinz and Unilever

As we start the New Year, where else does one start but with emerging markets?

The math is simple. You go where there are more mouths to feed and more rising household incomes.

Before, those rich, developed markets of the US and Western Europe carried the coal for so many multi-national firms from the 1950’s even until the 1990’s, a tremendous forty year run.

But even those great commercial dynasties eventually run out of steam. Look what happened to the Soviet Union after 68 years.

Now every business worth its salt wants to sit at the top of the table and build a new house of business out of BRICs (Brazil, Russia, India and China). And a critical way to the feast is through product quality.

Take that humble condiment: ketchup.

Mexico consumes more ketchup in the world than eight other countries. Heinz used to have a less than 1% share of the Mexican market. Odd, yes? Especially since Heinz makes really good ketchup. So what does the company do?

It buys a private label supplier of ketchup to such outlets as Domino’s Pizza, Burger King and Kentucky Fried Chicken, gains a toehold in the business and then goes on to demonstrate its product superiority. Most Mexican ketchups contain starch. So you go around doing a demo where you drop a drop of iodine on local ketchup and it turns black. Then you put a drop on Heinz ketchup and it stays red. No starch fillers. Quality wins. Heinz now has a 12% share of the market.

When I was marketing director for Unilever in Japan, we launched Domestos, the first bleach toilet cleaner. All the other toilet cleaners in Japan were acid cleaners. We did a side by side demo, running an acid cleaner down one side of a soiled tile and Domestos down the other side. The Domestos side was whiter than the streak down a skunk’s back. The other side, not so clean. Domestos became a market leader.

The lesson: The way to win in emerging markets is by demonstrating superior quality to markets hungry for better qualities of life.