case W01C42 April 20, 2022 Ted London Unilever Ethiopias Shakti Initiative: Building a Rural Sales Channel Ethiopia is one of the least urbanized countries on earth. Eighty percent of the population still lives in rural villages and is not accessible to us. If we want to achieve our ambition of creating a successful and lasting business, we need to find commercially viable ways to serve the communities in rural areas. With our established route to market, thats not possible; its not commercially viable. --Tim Kleinebenne, managing director of Unilever Ethiopia Tim Kleinebenne, managing director of Unilever Ethiopia, and Buks Akinseye, a Unilever senior global sustainability manager based in the Rotterdam headquarters, sipped their coffees in Unilevers offices in Addis Ababa, capital city of the northeast Africa nation. With Akinseye in town for a week in March 2020, Kleinebenne was organizing a strategic planning session focused on the companys efforts to build a new rural sales channel. Called Shakti, this new channel delivered fast-moving consumer goods (FMCGs) for sales in rural communities. To develop this channel, Unilever Ethiopia and its partners had recruited and trained a network of 1,000 women to sell a basket of FMCGs within their communities. The women, referred to as Shakti entrepreneurs, each sold an average of 1,700 Ethiopian Birr (or 50 Euros) of products per month. A key partner in this initiative was Kidame Mart, an Ethiopian social distribution enterprise that Unilever had engaged to establish and manage this new distribution channel. While Unilever and Kidame Mart were proud of what had been accomplished over the first three years of the Shakti initiative, they also recognized the challenges ahead to enable it to become self-sustaining. A factor pressing on their minds was that the start-up financial support from Unilevers Global Sustainability Department was likely to conclude at the end of the year. The Shakti program was not only a new sales channel, but also a source of pride for Unilever Ethiopia. For Kleinebenne and his country team, this channel offered the potential to positively transform lives in rural communities throughout Ethiopia. Recruiting local women to become entrepreneurs offered them a viable path to greater income and empowerment. And, by providing previously unavailable health- and nutrition-related goods, the channel could also improve the quality of life in rural households. The Unilever Ethiopia and Kidame Mart teams had organized a strategic planning session to identify and address key roadblocks that had limited growth and impact to date. Prior to this session, Kleinebenne and Akinseye wanted to first reflect on Shaktis journey so far and gain a clearer understanding of the lessons learned in trying to build a last-mile distribution channel in Ethiopia. With that in mind, they settled into their chairs and began to review the history of the Shakti initiative and discuss how program activities had unfolded since the launch of the pilot in Ethiopia in 2017. Unilever: A Multinational Leader in High-Impact Goods Unilevers heritage still shaped the way it did business more than 120 years later. In the 1890s, William Hesketh Lever, founder of Lever Brothers, wrote down his ideas for Sunlight Soapa product that helped popularize cleanliness and hygiene in Victorian England. It was to make cleanliness commonplace; to lessen work for women; to foster health and contribute to personal attractiveness, that life may be more enjoyable and rewarding for the people who use our products. That sense of purpose and mission was always a central part of Unilevers culture. Unilever had approximately 160,000 employees worldwide. The company owned over 400 brands in categories ranging across food, personal care, cleaning, and beauty categories, with products reaching over 150 countries. In 2017, 13 of its brands were among the top 50 FMCG brands, the highest number for any company. 1 These top 13 brands were among the few with a global annual turnover (i.e., revenue) of over one billion euros. 2 With products used daily by over 2.5 billion people worldwide, Unilever served diverse markets with both global and localized brands. Building a sustainable business was central to Unilevers strategy (see Exhibit 1). In 2010, Unilever formalized its Sustainable Living Plan (USLP) as a blueprint for sustainable growth. It was a value-creation model to serve a range of stakeholdersconsumers, customers, employees, and shareholders, as well as the planet and society at large. The plan incorporated three main goals to align the companys financial performance with its social and environmental impacts: 1. By 2020, Unilever will help more than one billion people take action to improve their health and well-being. 2. By 2030, Unilever will halve the environmental footprint of the making and use of Unilever products even as the company continues to grow its business. 3. By 2020, Unilever will enhance the livelihoods of millions of people as the company grows its business. With these efforts, Unilever believed it had established itself as a leader in sustainability in the FMCG industry and beyond. For nine consecutive years, Unilever occupied the number one position in the GlobeScan Sustainability Leaders Survey, based on expert opinion regarding an organizations progress on sustainability measures. 4 In 2019, CEO Alan Jope said the company would use its influence to drive change throughout the value chain and make its brands a vehicle for positive social and environmental impact. One of the programs helping to fulfil Unilevers sustainability ambitions was the Shakti initiative. The Shakti Initiative: A Global Effort to Reach Rural Consumers In 2000, Unilever launched the Shakti initiative to better reach rural markets in India. The initiative aimed to create a new last-mile sales channel for Unilever products by engaging local women as sales agents. These Shakti entrepreneurs sold a basket of hygiene, nutrition, and other branded products, including soap, detergent, oral and skin care, and fortified foods to address unmet needs of their communities. Growing to more than 120,000 agents, the Shakti initiative in India was a commercial success that inspired at least 10 other Unilever country offices, including those in Pakistan, Myanmar, Colombia, and Egypt, to launch Shakti models adapted to their own local contexts. The Shakti sales channels were both a route-to-market (RTM) and a social initiative. The balance between the two objectives varied from country to country and affected how success was measured. The Shakti channel was expected to be financially sustainable (breakeven) while also positively contributing to USLP goals on enhancing livelihoods and improving health. To support country offices in implementing the Shakti model, in 2017 Unilevers Global Sustainability team along with the non-profit consulting firm BoP Innovation Center (Bopinc) formed a Center of Excellence for the Shakti sales channel. ... Moving Forward Kleinebenne and Akinseye settled into their chairs to ponder next steps. While the revenue from the Shakti channel remained a small part of Unilever Ethiopias overall revenue, the impacts on womenseconomic empowerment were exciting and the channel offered a great opportunity for an international company committed to reaching rural markets. The channel itself, however, was still operationally inefficient and financially unsustainable. Unilever had recognized that reaching rural Ethiopia would be cost-intensive. Yet, growth had been slower and costs higher than anticipated. The expectation had been that Kidame Mart would be self-financing by the end of 2020 and a profitable channel for Unilever Ethiopias sales by 2022. So far, the results were not being met. In advance of their strategic planning session with the larger team, Kleinebenne and Akinseye needed to frame the conversation. What had they learned since 2017 and how should it inform the future strategy for Kidame Mart, Unilever Ethiopia, and the Shakti initiative? With global funding winding down, it was more pressing now than ever to strategize the plan forward. Question: 1. What type of case? (evaluation, problem solving, or decision making) 2. what recommendations can you give to the case?