A boycott of Unilever and other large multinational companies operating in Israel has caused Unilever to lose market share in Indonesia, Southeast Asia’s biggest economy, where it faces competition from smaller, often cheaper, local brands.
Like other major consumer goods companies, Unilever has faced criticism in many Muslim-majority countries, where some consumers believe the company indirectly supports Israel’s actions in Gaza through its business dealings. In February, Unilever acknowledged that the boycott in Indonesia had impacted its sales in Southeast Asia. By October, it reported a drop in its market share in Indonesia from 38.5% a year earlier to 34.9%.
Unilever’s Indonesian business earned $2.39 billion in 2023, making up 3.8% of the company’s total sales. However, the market remains tough. Despite owning well-known brands like Axe deodorant, Cornetto ice creams, and Royco seasoning, Unilever has struggled to grow its market share for almost ten years as customers shift to cheaper local options.
Research by Kantar shows that Unilever’s Royco, Lifebuoy, and Sunlight brands were among Indonesia’s top 10 consumer brands in 2020. During the pandemic, Unilever raised prices to deal with rising costs. By 2023, only Royco remained in the top 10, with local brands like Wings Group’s SoKlin detergent and Mayora Indah’s Roma biscuits taking their place.
Unilever is also facing competition from local halal beauty brand Wardah by Paragon, Aice ice cream, and new international brands like China’s Skintific. For example, a 400ml bottle of Nuvo liquid soap from Wings Group’s brand was priced around 20% lower than Unilever’s Lifebuoy soap in the same size. Similarly, Wings’ SoKlin detergent was about 7% cheaper than Unilever’s Rinso.
Shifting society
Unilever’s pricing problems come amid data showing a shrinking middle class in Indonesia between 2019 and 2024 due to job losses and fewer opportunities, leading to higher demand for cheaper products, according to the local retailers’ association Tutum Rahanta.
Unilever executives noted in October that they are working to update their brands in Indonesia to reflect the “significant societal changes” happening, including a shift to more online shopping and price-conscious consumers. They expect improvements in the next six months. Unilever’s Indonesia president, Benjie Yap, said, “We understand the challenges we face, and we know the steps we need to take to navigate them while adapting to a rapidly changing market.”
Yap added that the company had lost market share across almost all categories due to factors like negative consumer sentiment. Unilever plans to address this by offering more consistent pricing, expanding product availability in more and better stores, and improving inventory management and online sales.
Boycotts have an impact.
Unilever admitted in October that the boycotts had hurt sales but did not provide specific details. PT Unilever Indonesia Tbk reported an 18.2% drop in quarterly sales to 8.4 trillion Indonesian rupiah ($533 million) in October. About 87% of Indonesia’s 280 million people are Muslim, and pro-Palestine groups have urged boycotts of brands like Unilever.
A review of the global “No Thanks” app, developed by the pro-Palestine group BashSquare, shows that shoppers are encouraged to avoid products from brands like Ben & Jerry’s while supporting local options like Indomie noodles. The app lets users scan product barcodes and recommends purchases based on the company’s stance on the conflict. It claims to have 7 million users on Instagram.
Riska Rahman, a 31-year-old mother, shared that she had stopped buying Unilever products like Rinso detergent, Pond’s moisturizer, Rexona deodorant, and Pepsodent toothpaste in protest of the company’s operations in Israel. “We cut everything straight away,” she said. Analysts reported that local and international competitors have seen strong growth in categories where Unilever once led, including food, beauty, and home care.
The Indonesian home care market is expected to grow by 11.5% to $3.4 billion this year, while the packaged food market is estimated to increase by 11.7% to $21.8 billion, according to Euromonitor International. Meanwhile, Unilever’s sales in-home care and personal goods fell 20.8% in the third quarter, and food and beverage sales dropped 13.3%. “Local and international brands took advantage of this opportunity with aggressive promotions, especially on e-commerce platforms,” said Cheria Widjaja, an analyst at DBS Bank. Recently, the brokerage downgraded Unilever’s Indonesian business from “fully valued” to “hold.”
