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Knorr (Germany)

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Unilever's single biggest brand is Knorr, the soups and seasonings business it acquired as part of Bestfoods in 2000. Despite its extensive portfolio of products, Unilever had comparatively few with a truly global footprint prior to the Bestfoods deal. Certainly none even came close to matching Knorr's widely spread international profile. The brand is now sold in almost 90 countries, and its product range covers a huge collection of soups, sauces, bouillons and prepared pasta, rice and potato meals. Several other Unilever brands have been migrated into the Knorr masterbrand since 2002.

Competitors

Knorr's main global competitors in the culinary sector are Nestle's Maggi and, to a lesser extent, Gallina Blanca of Spain. More specialized or regional rivals include Premier Foods, Dr Oetker and Ajinomoto. See Food Sector index for other companies and brands

Advertising

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Brand & Analysis

Knorr serves as the bedrock for Unilever's food portfolio, a global powerhouse with an interest in countless different segments of the food market. Not only does the brand have the potential to serve as a valuable springboard for further brand extensions, but Unilever has yet to realize Knorr's true potential in several markets, such as the US in particular, where Knorr has traditionally been a niche product used mainly by the Hispanic community, or the UK. It continues to be Unilever's biggest product, with sales of around €4bn. It is gradually being established as the company's umbrella brand for culinary products, covering an extensive range of seasonings, sauces, dried and fresh soups, meal kits, dressings, and frozen foods.

Until the purchase of US food group Bestfoods, virtually all of Unilever's foods were strong in one or a small number of territories, but almost invisible elsewhere. This was largely the legacy of the group's historical international expansion strategy, which had focused on buying up comparatively small regional companies and bolting them together. This created strong regional groups, but very few global megabrands. Out of a portfolio of literally thousands of food products, Unilever's most international food products were the comparatively anonymous margarine Rama and cocktail sauce Calve. Arguably only pasta sauce Ragu could have been called a megabrand, but with limited international availability, while Lipton tea outsold them all as the group's sole $1.5bn food or beverage product.

The purchase of Bestfoods changed the balance within Unilever's food cupboard considerably. In order to get regulatory approval for the Bestfoods deal, Unilever was obliged to sell off a clutch of its existing competing brands. Both Batchelors and Oxo were long-standing rivals to Knorr in the soup and sauce/bouillon markets respectively. Neither ever came close to matching Knorr, and they were sold off to Campbells Soup in 2001. (They are now owned by Premier Foods). Since then the biggest challenge has been to grow the Knorr brand outside its traditional stronghold of sauces and dried soups.

Growth has come from a combination of organic development, through the launch of new products, and the introduction of the range into new markets in the Middle East and eastern Europe. In addition, the Knorr umbrella has gradually extended to cover many of Unilever's existing local food brands. Between 2001 and 2004, for example, the group's Colman's, Chicken Tonight and Ragu sauces in the UK were absorbed into the Knorr masterbrand (Chicken Tonight and Ragu were later sold in 2011 to Symington's), as were Unox soups and sauces in continental Europe, Starlux bouillon cubes in Spain and others. In 2003, the Knorr brand also absorbed the substantial Cica brand in Brazil (now KnorrCica). Side dishes marketed in the US under the Lipton name came under the Knorr umbrella during 2005. At the same time, the Knorr brand message was refined to give greater emphasis to healthy eating and nutritional goodness, including the launch of sub-brand Vitality. The only significant territory where the Knorr brand has not absorbed Unilever's existing food products is Australia, where products branded as Knorr elsewhere have been transferred instead into the group's strong local masterbrand Continental. (See Unilever Australia profile).

Knorr's biggest markets are Germany, Mexico, France, South Africa, Poland, France and Brazil. Among culinary products it has the #1 or #2 position in more than 50 countries. In Germany, the brand extends across a bewildering variety of products and has spun out a number of sub-brands which are also available in other markets. These include Knorr Activ healthy snacks, Knorr Spaghetteria pasta sauces, tomato products, salad ingredients, Knorr Snack Bar pots and cooking kits. There are also prepared pasta, rice and potato side dishes, and countless liquid or dehydrated soups, jar and packet sauces, stocks and bouillons. In several markets, Maizena corn starch is also managed under the Knorr umbrella. The group is always looking for new ways to expand the range. For example, among more innovative recent introductions is Knorr Vie, a range of fresh vegetable and fruit drinks. The brand's weakest markets are the US, where it has very low availability, and also the UK where it is present but has limited popularity beyond stock. In the latter territory, Unilever has made a bold attempt since 2008 to push the brand further upmarket by taking on celebrated chef Marco Pierre White as its endorsement partner.

Japan is now the only world market where the brand is not wholly controlled by Unilever. It is marketed there under long-term license by Ajinomoto. In 2002 Unilever bought out Ajinimoto's share of a joint venture marketing the Knorr brand in several other Asian markets.

Background

Carl Heinrich Knorr inherited his father's agricultural wholesaling business in Germany in the first half of the 19th century. As the coffee trade began to boom, he built a factory in 1838 to dry and grind chicory as a ingredient for coffee. This introduced him to the problems of managing, and in particular feeding, a large workforce. He began to experiment with drying other vegetables which could be used easily to feed his workers a nutritional but inexpensive daytime meal, and these preserves became the main ingredient in a range of substantial soups and stews. After his soups proved popular with his own workers he began packaging them for sale, first to other manufacturing plants, and then from 1873, to the ordinary public as Victoria Soup. When Knorr died two years later, his dried soups had become a substantial business in their own right within Germany.

Under the control of his sons, the company expanded rapidly, diversifying into cereals and flaked potatoes, and also compressing its dried vegetables into handy squares, an early form of bouillon cube. In 1889 the company introduced Knorr Erbswurst, a seasoned pea soup concentrate packed in a sausage casing, which could be added to boiling water to make soup or eaten dry as a highly portable convenience snack. It was a huge success. By the end of the century, when CH Knorr floated on the German Stock Exchange, the company employed more than 800 people, and sold more than 40 different soups. In 1907, the company opened a factory in Switzerland, followed by Austria in 1909. Knorr introduced a number of innovations including the first commercial European sauce mix in 1908, and in 1912 the first bouillon cubes in the form that we know them now. During the 1920s, the group forged what was to become an increasingly significant partnership with an American company then dipping its toe into the international market. CPC specialised in corn oil, but had also begun to experiment with sauce mixes and bouillon cubes. In 1926, CPC's German subsidiary, Maizena, bought a 10% stake in its German rival.

Two World Wars brought inevitable problems for German companies such as Knorr, but the real difficulties took place in the years that followed. As a result of the shortage of fresh vegetables in Europe following World War II, there was a huge demand for Knorr's dried products. However, in order to satisfy this demand, the company over-expanded, and quality dropped severely. Customers began to complain about the standard and the taste of company's products, sales plummeted and by the late 1940s, Knorr was hovering on the brink of bankruptcy. A major turning point was the company's adoption of glutamate, a strongly flavoured food concentrate originally developed by the Japanese company Ajinomoto. Better packaging also protected Knorr's foods from environmental damage in storage and transportation. The company's first glutamate-based product, a chicken noodle soup introduced in 1948, was a massive success and restored the company to health.

Other products followed in the 1950s, and the company expanded into Belgium in 1950, France in 1951, Italy in 1952, and the UK and Holland in 1957. In 1958 CPC, which had gradually increased its shareholding in Knorr since the 1920s, engineered a three-way merger with another US competitor, The Best Foods Company. In the years that followed Knorr expanded both its product range and its distribution, adding potato meals, wet soups, rice and pasta dishes, and spreading its net around the world. Knorr was introduced to Latin America in the early 1960s. In 1964, Bestfoods and Ajinomoto formed a joint venture to introduce Knorr soups to Japan. These proved an enormous success, and were gradually extended throughout Asia. However after Bestfoods was targeted by corporate raiders in the 1980s, the American company sold its shares in Knorr Japan back to Ajinomoto, which took control of the business (although operations in other Asian countries remained a joint venture).

More recent innovations have included include Spaghetteria Mealkits (in Germany), Knorr Temera Melhor (in Brazil), Cup-a-Soup (in the Philippines), Goracy Kubek XXL (Poland), Frozen Soups (Austria), Doy Pasta sauce (Nordic countries) and Aseptic Soup (Mexico). In one bizarre development, the brand came under fire in Finland in 2002. Among the products held within the Knorr portfolio there is Turun Sinappi, the country's oldest and best-selling mustard, widely regarded in Finland as a national treasure. Unilever announced plans to shift production of the mustard to Sweden as part of a plan to develop sales outside Finland. However this was greeted by national protest. Workers at more than 20 unrelated companies mounted a one-day strike, and staff within Unilever's Finnish division even promised to destroy the secret recipe before they would allow it to be handed "to the Swedes".

In early 2003, Unilever agreed to reacquire all of Ajinomoto's shares in their six Asian joint venture businesses (for around $381m) to bring the business back under group control. Also that year the group merged its Cica foods brand in Brazil into the Knorr portfolio.

Last full revision 6th April 2016

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