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Unilever (UK)

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The UK is a major operational centre for the giant Anglo-Dutch FMCG company Unilever, home to the larger of the group's two corporate centres, as well as two world-leading research centres and almost 18,000 employees. Unilever UK is the group's biggest regional subsidiary after the US, with sales of around £2bn. Over the years, the group's various trading units have been gradually amalgamated. By 2004 this process had led to the creation of just three units: Unilever Foods (previously Unilever Bestfoods, and responsible for chilled and ambient food products), Unilever Ice Cream (the frozen foods division known as Birds Eye Walls was sold in 2006, becoming Iglo Birds Eye) and Unilever Home & Personal Care (HPC) (previously Lever Faberge). These three units were in turn combined in 2007 to form a single corporate business, although the group continues to maintain separate foods and HPC operating divisions. See also other Unilever group and brand profiles on Adbrands.

Advertising

Who handles Unilever's advertising? Click here for agency account assignments. Ebiquity (for The Grocer) estimated total spend of £119m in 2015 and ranked the top spending brands as Dove (£10.6m), PG Tips (£5.6m), Colman's (£5.6m), Bertolli (£4.6m), Lynx (£4.1m) and Flora (£4.0m).

Brands & Activities

Unilever's two UK research centres are located in the company's heritage town of Port Sunlight, Merseyside and in Colworth, Bedfordshire. Unilever Port Sunlight drives the innovation of the company's range of haircare, deodorants, oral, household and laundry brands. Unilever Colworth is one of the largest food research and development centres in the world, and is the group's major research centre for tea, ice cream and frozen foods.

In addition to its main international brands, the UK arm of Unilever still manages a few "local jewels", the company's term for brands with special regional appeal but limited international exposure. Within foods, the biggest of these was for many years the Birds Eye frozen range, one of the country's best-known products. However that business was sold in 2006 because of falling sales and low profit margins. Other food and beverage products marketed exclusively or primarily in the UK include traditional Bovril beef extract, Marmite savoury spread and snacks, Colman's mustards & sauces, Elmlea cream alternative, Pot Noodle snack pots and of course PG Tips, Brooke Bond and Scottish Blend teas, as well as Lyons tea in Ireland. PG Tips was for many years the UK's most popular tea brand until overtaken by rival Tetley in 2003. It remained in second place for several years before finally clawing back the first place in 2008, largely as a result of the immensely popular Al & Monkey marketing campaign. It has remained the top-selling tea ever since then. Nielsen estimated sales of £129m (year ending Jan 2016, The Grocer), compared to £110m for Twinings and £89m for Tetley. In 2017, the group introduced premium tea brand Pure Leaf to the UK. That range is already marketed in the US under Unilever's Lipton tea banner. Another new addition to the portfolio in 2017 was UK-based premium herbal tea brand Pukka, aquired for an undisclosed sum.

Pot Noodle was the next best-seller of the local jewels with sales for ye Jan 2016 (Nielsen, The Grocer) of £101m, maintaining its place among the Top 100 supermarket brands. Local food sauces Chicken Tonight and Ragu were absorbed into the Knorr masterbrand during the mid-2000s, but then later sold off in 2011 to Symington's. Peperami meat snacks, and their manufacturing site in Germany, were sold in 2014 to US company Jack Link's. Meanwhile, Knorr itself has gradually extended its influence over UK cooks, building sales of £67m by ye 2014, still outside the Top 100 but growing steadily. Another strong food brand locally is Hellmann's, offering a variety of traditional and flavoured mayonnaises. Sales for ye Jan 2016 were £112m.

Unilever's Wall's business has long dominated the UK ice cream market. Its top brand Magnum powered up to sales of £152m in ye Oct 2015. It is the UK's top-selling handheld ice cream by a considerable margin, outselling all other brands combined. Cornetto was the country's #2 brand at £36m, while Twister cane in 3rd at £16m. Ben & Jerry's is the top-selling branded tub ice cream at £93m, with Carte D'Or #2 with £52m. In Ireland, the group's ice cream business is still known as HB.

For years, Unilever's biggest food business was its collection of margarines. However, the group gradually saw its comfortable lead in yellow fats whittled away by Arla Foods' faster-growing Lurpak, which became the #1 in the sector in 2008, and has retained that position ever since. Unilever's Flora margarine now holds second place. The group began repositioning the product in 2011, with greater emphasis on its role as a family favourite rather than on its health benefits. A more dramatic change followed in 2012 when Unilever changed the recipe for Flora, reducing the level of vegetable trans-fat with a new "cool blending" process. However, the new version didn't go down well with all customers, with some complaining that the reformulated product "tasted funny". Sales of the new formulation Flora slumped by more than 12% during the course of the 12 months to May 2013, resulting in an embarrassing u-turn in summer 2013. Unilever agreed to restore the original flavour of Flora, although it maintained the new manufacturing process, but sales have continued to fall. For the year to Oct 2016 (Nielsen, The Grocer), Flora's sales slipped by another 17% to £126m, despite new variants including Gold from Flora, a blended mixture of butter and margarine, and dairy free plant-based Flora Freedom.

Flora is supported by a collection of other brands. However these too have suffered sharp declines in sales. Between 2011 and 2016, sales of what was previously Unilever's #2 brand I Can't Believe It's Not Butter halved to £36m (ye Oct 2016), prompting a change of name in early 2017 to I Can't Believe It's So Good. As a result it slipped behind Bertolli spreads (down to £41m), but remained just above Stork margarine (£30m). Combined sales of the Unilever BCS portfolio were £233, equivalent to 23% share. (Arla had 37%, own label 18% and Dairy Crest 15%)

Marmite also contributes around £32m a year and Bovril just £8m. Colman's mustard generated £22m and its cooking sauces a further £14m. The group licenses out several of its brands to other companies, including Princes, which produces cooking oils under the Flora and Olivio brands. In total Unilever had a 25% share of the yellow fats sector in ye 2014, behind Arla with 33%, and ahead of Dairy Crest with 16%. In 2015, the group split out the global spreads business into a separate unit. Unilever Baking Cooking & Spreads (or BCS) in order to boost performance. However, investors saw this as a sign that Unilever may be preparing the business for divestment at some point in the future.

The best-known local brand within Unilever HPC is Persil laundry detergent (see separate profile). It is the country's best-selling laundry detergent brand, though it faces fierce competition from P&G's Ariel. Nielsen estimated sales of £247m for Persil for the year to Jan 2016 (ahead of £174m for Ariel). It is supported by second-string brand Surf, with sales of £130m. The latter has delivered strong support in recent years, climbing into the UK's Top 100 supermarket brands for the first time in 2008, and delivering further strong growth ever since, especially after the introduction of "glamour fragrances" like vanilla & black orchid or jasmine & black gardenia, and higher pricing. For ye 2015, Nielsen, estimated sales of £131m. Fabric conditioner Comfort was overtaken by P&G's Lenor as the top-selling fabric softener in 2010, but fought back the following year with an aggressive marketing campaign, regaining its lead. For ye Jan 2016, Nielsen estimated £180m for Comfort to Lenor's £163m. The group is the #2 in household cleaning (behind Reckitt Benckiser) with brands Domestos (approx £62m) and Cif (approx £49m).

The Axe men's grooming range is marketed in the UK as Lynx; Rexona deodorants are known as Sure. Together with Impulse body spray and spin-offs from the Dove and Vaseline brands, the company dominates the UK's deodorant sector with around 65% share. Sure and Lynx are the two leading brands with 22% and 19% share respectively. IRI estimated retail sales of £113m for Sure in the year to Sept 2015 (The Grocer), £95m for Lynx and £69m for Dove deodorant. (Closest competitor Nivea had just £56m, and Henkel's Right Guard £36m).

The group's presence in haircare has wilted steadily over the past two decades as what was once a commanding lead was erased by first Procter & Gamble and then L'Oreal. Mintel placed Unilever as the local #3 in the hair wash segment in 2010, with 11% market share, including 5% from Dove, 4% from Timotei and 2% from Sunsilk. However the purchase of Alberto Culver, and especially its Tresemme brand, propelled the company back into the #2 spot with around 20%. Sales were around £54m (ye Oct 2015). Other products include VO5 haircare products (around £45m) and men's styling gel Brylcreem. The Simple brand, acquired in 2010 as part of Alberto Culver, is now a close #2 in facial skincare with sales of £77m (ye Sept 2014, IRi, The Grocer), just behind P&G's Olay at £78m. (However, L'Oreal leads the sector, with multiple brands including L'Oreal Paris and Garnier).

The group had until recently been the local #2 in the soap and bodywash sector with Dove, Lynx and Vaseline-branded products. In 2009, Mintel estimated around 16% share behind market leader Sara Lee. The purchase of the latter's personal care portfolio was designed to push Unilever into clear leader with a combined 38% share, well ahead of nearest rival PZ Cussons (with 15%). However, EU regulators ruled that Unilever must sell on Sara Lee's Sanex to another company, although it kept hold of Radox and other lesser brands. Sanex was acquired by Colgate-Palmolive for €672m. Radox has remained a major brand within the Unilever portfolio with sales of around £68m for the year to Sept 2016 (IRi, The Grocer).

Financials

Unilever doesn't break out results for its UK business, but researcher OC&C estimated local turnover of £2.12bn in 2015, with operating profit of £78m.

Statutory accounts for Unilever UK Ltd showed turnover of £1.99bn in 2015, down 7%. Net profit rose 4% to £83.0m. Those figures included a contribution from what is now a separate legal entity, Unilever Baking Cooking & Spreads UK, which reported turnover of £120m and net profit of £7m.

Background

See other Unilever group and brand profiles on Adbrands.

Last full revision 11th October 2016

* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *


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