Unilever pulling out of Zimbabwe after 80 years

Unilever, one of the world's leading consumer goods companies, is pulling out of Zimbabwe after 80 years of operation.

The company, which had reaffirmed its long-term commitment to the country in 2018 by opening a new Royco plant, is now shifting its strategy. The move is part of Unilever's broader plan to scale back its operations in certain African markets, a decision that highlights the growing challenges faced by investors in Zimbabwe's unstable economic environment.

Back in 2018, Unilever's Africa Vice President, Bruno Witvoet, had expressed strong confidence in Zimbabwe's future, stating, "We have been in Zimbabwe for the last 75 years and believe in the country's future. Our confidence is very high." However, Unilever's recent decision signals a significant change in outlook.

The company announced that it will transition to a new business model in Zimbabwe, relying on local distributors rather than maintaining its own operations.

"Unilever will move to a new model that serves Zimbabwean consumers through a network of Zimbabwean distribution firms rather than through Unilever-owned operations by the end of the year," Unilever stated in an internal memo. The company believes this approach will be more efficient and will stimulate business growth, create jobs in sales, logistics, and merchandising, and better serve Zimbabwean consumers with popular Unilever brands.

This strategic shift will result in the closure of Unilever Zimbabwe's operations, marking the end of decades of direct involvement in the country's economy. While Unilever assures that its brands will remain available during the transition, the company plans to reassess its long-term strategy for Zimbabwe, aiming to align with national efforts to empower local businesses and contribute to economic development.

Unilever's exit from Zimbabwe has been anticipated for some time, as the company has steadily reduced local production since the early 2000s. Currently, Unilever relies on Distributed Group Africa (DGA), a subsidiary of Axia Corporation, to distribute products manufactured outside the country. DGA also handles distribution for other major brands like Colgate Palmolive, Nestlé, Johnson & Johnson, and Tiger Brands.

The challenges facing formal retailers in Zimbabwe, exacerbated by government policies and weak consumer spending, have put additional pressure on companies like Unilever. Last year, DGA reported losses due to the crisis in the formal retail sector, where shoppers have increasingly turned to the informal market. As a result, DGA has shifted its focus toward supplying informal traders, bypassing traditional supermarkets, which were once key customers for Unilever.

Unilever's decision to exit Zimbabwe follows a broader trend among multinational companies scaling back operations in Africa. In 2023, Unilever ceased the production of home-care and skin-cleansing products in Nigeria, opting to import these items instead to maintain profitability. Similarly, Nestlé has been reducing its operations in Kenya, downgrading its factory to focus on packaging imported goods rather than local production.

Unilever's departure from Zimbabwe marks the end of an era for the country's formal retail sector and raises questions about the future of multinational investments in the region. As the company navigates its strategic shift, Zimbabwe's economy will need to adjust to the changing landscape of consumer goods distribution.