Ukraine open for business: Unilever channels €20M investment into new Kyiv personal care factory

17 Mar 2023 --- Unilever has invested €20 million (US$21.3 million) in a new personal care production facility in the Kyiv region of Ukraine, expressing its “long-term commitment to the country.” Construction will start this year, with the factory expected to open in 2024.

The initiative is a reflection of the wider international business community’s trust in the war-impacted economy, which has weathered unprecedented supply chain disruptions and blocked trading ports for more than a year since Russia’s conflict escalation.

The new factory will manufacture personal care products including shampoos and shower gels for brands such as Dove, Axe, TRESemmé and Clear. Involving 100 new jobs, the hub will predominantly supply the local market.

Unilever highlights its future potential to export to European markets. PersonalCareInsights has reached out to the multinational for further comment.

The new factory will manufacture personal care products including shampoos and shower gels for brands such as Dove, Axe, TRESemmé and Clear (Image credit: Unilever).“This investment shows our long-term commitment to the country and its people, including our employees, customers and partners. It is also a fitting way to mark the 30th anniversary of our business in Ukraine, which we will celebrate later this year,” remarks Vasyl Bovdilov, general manager, Unilever Ukraine.

“Our new manufacturing facility will create new jobs, increase our production capacity and above all serve the needs of Ukrainian consumers with high quality, sustainable products.”

Humanitarian sentiments
The factory will also be built to environmental standards using renewable energy technologies, contributing to Unilever’s target of net zero emissions across its value chain by 2039.

Unilever currently employs more than 100 people in Ukraine.

The conglomerate has donated more than €15 million (US$18.2 million) of support and essential Unilever products to the humanitarian relief effort, working closely with United Nations agencies and local NGOs. It plans to continue offering humanitarian aid.

Unilever publicly condemned the war in Ukraine last February and addressed calls to leave Russia.

Since March 2022, the company has ceased all imports and exports into and out of Russia and stopped all media and advertising spending. However, Unilever maintains the sentiment that the best option is to allow the business in Russia to run under strict constraints.

In its February financial report, Unilever disclosed that underlying sales in its Personal Care division were up 7.9%, driven by strong pricing. Volumes grew in Deodorants, but declined in other categories.

Oral Care achieved price-led growth, helped by the relaunch of Pepsodent with increased naturals and efficacy credentials in South East Asia, Africa and the Middle East, partially offset by a sales decline in Europe. Sales of Dollar Shave Club declined during the year, and an impairment charge was recognized related to the business. 

Unilever publicly condemned the war in Ukraine last February and addressed calls to leave Russia (Image credit: Unilever).Broad economic impact
The destructive effect of Russia’s invasion has impacted virtually all of Ukraine’s business sectors. According to reports by the International Rescue Committee (IRC), 90% of businesses suffer as a result of reduced demand as the purchasing power of Ukrainians has dropped by almost 50%. 

“Logistical challenges linked to destruction of the critical infrastructure, limitations linked to exports, loss of human capital, disruptions in supply and demand, as well as continuing instability continue to erode livelihoods across the country,” states the IRC.

The analysis emerging from the IRC’s labor market assessment conducted in Zaporizhzhia, Odesa and Dnipro reveals a staggering 71% of surveyed businesses face difficulties due to supply chain disruptions.

“It is difficult to speak of rebuilding the Ukrainian economy at a time when the ongoing war is actively damaging infrastructure, forcing people to flee in search of safety, and disrupting everyday life and business operations,” comments Josie Scott, IRC’s emergency economic recovery and development coordinator in Ukraine.

Weaning from Russia and innovating for resilience
The Ukraine conflict is one of the global economy’s trifecta of crises that continues to weigh down on international beauty suppliers and brands, which continue to shoulder unprecedented knock-on effects and inflationary pressures.

The European Commission (EC) recently rolled out the EU Innovation Agenda, which aims to “advance digitalization” and “secure an environmentally sustainable future” for the beauty and personal care industries, among others, amid uncertain times.

The agenda embodies the EC’s attempt to “wean itself” away from Russian fossil fuel dependence, encourage circular economy principles and hasten clean energy technology development.

By Benjamin Ferrer