Unilever reveals plans to return to growth and new…

Rozani Roja
October 27, 2023 – 6:00 a.m

In particular, the company’s food and ice cream products performed below expectations (Credit: Adobe Stock)

This week, Unilever announced changes to the company’s structure, as well as a plan to return the business to growth on a global scale. The CEO of the company, Hein Schumacher, begins his message by praising the greatness of the business: the portfolio of “big brands” used by 3.4 billion people every day is number one or two in the category for 80% of the turnover.

However, he admits that “despite these strengths, our performance in recent years has fallen short of our potential,” adding that the quality of growth, performance and profitability have been lacking.

“Today we are launching our action plan to close this gap. We will achieve faster growth by strengthening the innovation and investment behind our powerful brands; we will have greater simplicity and productivity by leveraging the power of our operating model; and we will continue to improve our performance culture through strong leadership and expanded goals,” the CEO said.

The new CMO

From a management perspective, something new is the selection of Argentine Fernando Fernández, who became CEO of Unilever Brasil, as Chief Financial Officer (CFO) starting in January. Today, he is president of the global beauty and wellness division and will replace Graham Pitkettley, who has announced his decision to retire.

Essie Eggleston Bracey, who heads North American operations and is also head of personal care in that market, will take over from Dutchman Connie Braams, but in the role of chief growth and marketing officer. She will be responsible for a global marketing budget of US$8.3 billion, which makes Unilever the ninth largest advertiser in Ad Age – and CEO Hein Schumacher has already made it clear that investment in advertising will become a bigger priority for the company under her leadership , in an attempt to regain market share in certain categories.

The executive who ran the US company is now the new chief development and marketing officer (Credit: Getty Images)

Two business unit executives whose performance was below expectations are leaving the company: Hanneke Faber, president of Nutrition, and Matt Clowes, president of Ice Cream (who will remain until the end of 2023, ending a 31-year career with the company). . While the executive who will take over the food division has yet to be announced, Peter ter Kulve will take over as president of Ice Cream. The home care division will be headed by Brazilian Eduardo Campanello.

Action plan

Among the announced initiatives to return Unilever to the right growth path, Hein Schumacher highlights ten themes, divided into three areas:

“Faster Growth”

  1. First, focus on the company’s 30 most powerful brands – those that account for more than 70% of revenues
  2. Drive unmissable brand advantage by addressing all elements of consumer preferences
  3. Scaling innovation – driving market creation and premiumization
  4. Increase brand investment and revenue – focus investment on areas that create impact
  5. Selectively optimize your portfolio – no big or transformational acquisitions

“Performance and Simplicity”

  1. Gross Margin Recovery – Moving from Gross Savings to Net Productivity
  2. Focuses on sustainability commitments – driving impact in four priority areas
  3. Take advantage of a new organizational model – providing accountability from a single point

“Performance Culture”

  1. The updated team is the leader of the change
  2. Drive and celebrate high performance – with a new reward structure.

Unilever also commented on the current performance of its various markets, with a positive highlight in “emerging markets”, which increased underlying sales by 8.3%, with volume growth increasing to 2.6% and price growth of 5. 6%. In Latin America, underlying sales growth was 14.0%, with volumes improving further to 6.2%, while price growth slowed to 7.4%. South Asia grew in the single digits, with price growth slowing as prices for leather and fabric cleaners eased. The Chinese market is recovering more slowly than expected, with third-quarter sales falling to mid-single digits, while Southeast Asia grew to low single digits.

On the other hand, the so-called “developed markets” rose only 0.8%, thanks to a 6.3% increase in prices, with a drop of -5.2% in volume. North America and Europe grew in the low single digits, driven by price. Prices remained high in Europe, with more impact on food and ice cream, which continue to drive inflation and are the most affected by the reduction in consumer spending. This led to a double-digit decline in volumes in Europe.

Presence in Russia

Among the many topics published or analyzed this month, Hein Schumacher even talked about the war between Russia and Ukraine. The CEO stated that he reviewed the business presence in Russia after listening carefully to his stakeholders and experts on the subject. “After a detailed analysis of the situation, it becomes clear that the containment measures we have taken minimize Unilever’s economic contribution to the Russian state. However, I understand why there are calls for our company to leave the country, and we continue to analyze our options in a context that has become more complex following recent regulatory developments in Russia,” he noted. And Schumacher concludes by saying that Unilever remains firm in its position of condemning the war in Ukraine.

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