Liking Cotton Price Increases to Consumer Goods Sales Growth in Pakistan

An article in bloombergbusinessweek (Oct 17,2011) describes a global cotton driven supply chain. The rising cotton prices worldwide, doubling the past year, has increased spending capacity among  Pakistan’s farmers. But the biggest beneficiaries are global consumer goods manufacturers Unilever and Colgate, who report growths in Pakistan of 15% and 29 % respectively. Such growth has spurred increased salespeople in rural communities  to sell shampoo, soap and toothpaste, albeit in small packs.  Given the tight link between cotton prices and rural demand, how should consumer goods companies plan to adjust if cotton prices drop ? Will introduction of stripped down brands now enable competitive offerings during downturns while preserving brand equity? Will effective rural supply chains developed by Unilever and Colgate in Pakistan be a barrier to entry for other consumer goods multinationals ?

About aviyer2010

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