Unilever was arguably the world's first packaged goods manufacturer, and is still one of the global leaders, with operations in every corner of the globe and an especially strong profile in emerging markets. It was one of the original pioneers in household detergents - products today include Omo and Persil - and it remains the world #1 in personal wash and deodorants, with brands including Dove, Rexona and Axe/Lynx. Following a series of high-profile acquisitions, including US-based Bestfoods, it is also a major force in foods, and a global leader in sectors such as culinary foods, ice cream, arine and tea. Brands include Knorr, Lipton and Magnum. Yet Unilever also struggled for several years to adapt to the faster-moving business environment of the 21st century. In the late 1990s, the group initiated a strategy to prune its vast portfolio, disposing of regional products and rebadging others in order to concentrate on a smaller roster of global power brands. That mammoth task finally began to deliver results from 2005. So much so, perhaps, that in 2017, Unilever was shaken by an unexpected bid approach from fast-expanding predator Kraft Heinz. The approach was quickly defeated but has prompted an internal review of operations to deter further such attacks. The group has traditionally operated through two main divisions, Unilever Home & Personal Care and Unilever Foods. However the home and personal care divisions are to be separated during 2018.
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Adbrands Weekly Update 22nd Mar 2018: Unilever announced a corporate restructuring that could presage a dramatic change of strategy. As had been widely expected, it will abandon its long-established dual structure, under which it operates two separate holding companies, one in the UK and one in the Netherlands, that between them jointly own the various operating businesses around the globe. In most cases, with a few exceptions, Unilever NV of the Netherlands has the controlling stake, while Unilever plc of the UK has only a minority holding. As a result, it was perhaps not too surprising that the Netherlands, not the UK, will be home to the consolidated group's new corporate HQ. Dutch corporate laws also give more protection from potential hostile takeover bids, like that attempted by Kraft Heinz last year. However, the UK's Sunday Times newspaper argued that the changes will also prepare the ground for a new and much more aggressive acquisition drive that could potentially include bids for smaller competitors such as Colgate-Palmolive or Estee Lauder. Unilever has said that it will restructure as three operating divisions, separating household products and personal care as two distinct units, with foods serving as the third. The latter, widely seen as Unilever's weakest, could well be divested, possibly even to Kraft Heinz. That would generate resources to fund an approach to competitors in household products or personal care. The group denied that Brexit had contributed to the transfer of the corporate HQ to Rotterdam; the household products and personal care will retain their own divisional HQs in London.
Adbrands Weekly Update 15th Feb 2018: Unilever CMO Keith Weed - recently named as the World Federation of Advertisers' Global Marketer of the Year 2017 - threw down the gauntlet to the social media industry, warning that it will reduce advertising on Facebook, YouTube and other such sites unless they do more to combat fake news and divisive content. "We will prioritize investing only in responsible platforms that are committed to creating a positive impact in society," he told an IAB conference in California. "Social media should build social responsibility." He acknowledged that most sites have taken "meaningful" steps towards combating hate-based content over the past year, but that more needs to be done, especially in relation to content that is likely to be seen by children. That view is shared by other major advertisers, not least AT&T which has still not returned to YouTube almost a year after it suspended advertising over its proximity to hate-based content. That furore erupted in March last year following an investigation by The Times newspaper in London that revealed that ads from blue-chip advertisers were being displayed regularly alongside extremist videos on YouTube and on the websites of neo-nazi, homophobic, Islamic terrorist and other hate groups.
This week, YouTube suspended advertising on channels operated by vlogger Logan Paul, who became notorious earlier this year for showing a dead body in a video shot in a notorious Japanese suicide forest. Despite a stern warning from YouTube, there were two more incidents this month, in which he tasered a dead rat and encouraged his 16m followers to "do the Tide Pods challenge" (in other words, eat a Tide detergent capsule). "After careful consideration, we have decided to temporarily suspend ads on Logan Paul's YouTube channels," said YouTube. "This is not a decision we made lightly. However, we believe he has exhibited a pattern of behaviour in his videos that makes his channel not only unsuitable for advertisers, but also potentially damaging to the broader creator community." Separately, this week, Facebook began testing a new "downvote" option - the closest it is ever likely to get to a "dislike" button - in which users can mark content or comments as "offensive", "misleading" or "off topic".
Adbrands Weekly Update 21st Dec 2017: Deals, deals, deals. The arrival of Christmas always acts as a pressing motivational factor to get deals done and out of the way in time for the holidays. It was one deal out and one deal in this week for Unilever. The more significant of the two by far was a long-awaited agreement to exit the margarine business. Private equity fund KKR is to acquire Unilever Baking Cooking & Spreads, the self-contained entity that houses the group's extensive global collection, for €6.8bn. Brands include Country Crock and I Can't Believe It's Not Butter in the US, Rama and Stork across much of Europe, and Flora and Becel in multiple global markets, among other brands. Unilever is the world's biggest margarine producer by far - indeed virtually the only international branded manufacturer - but sales have been in steady decline for years as a result of the spectacular resurgence of butter.
Meanwhile, in a much smaller step in the opposite direction, Unilever added yet another brand to its increasingly voluminous US-based beauty portfolio. Specialist deodorant and body wash manufacturer Schmidt's Naturals uses - as the same suggests - only natural ingredients in its products, no chemical additives. This has become one of the US market's hottest segments; P&G acquired rival natural deo producer Native last month. Schmidt's sells sold mostly direct to consumer online or through selected outlets of Target and Kroger. No terms were disclosed, but Schmidt's is expected to hit $90m in revenues next year. Unilever has been on a buying streak in the beauty market recently. This year alone, it has completed deals for beauty and personal care manufacturers Sundial Brands, Carver, Hourglass Cosmetics and Living Proof, and launched a string of new brands and line extensions.
Adbrands Weekly Update 19th Oct 2017: Quarterly results from Nestle and Unilever showed the importance of emerging markets in driving what little growth both groups are experiencing. On an organic basis, Nestle reported 0.8% growth from developed markets, compared to 5.1% in emerging markets. Higher prices contributed almost a third of the combined overall lift. North America was one of Nestle's weakest markets with sales more or less flat year on year, while Western Europe reported very slight growth. Unilever suffered a continuing decline in underlying sales in developed markets of 2.3%, offset by 6.3% growth in emerging markets. North America was down by 2.9% and Europe by 1.6%. In Unilever's case almost all the combined group's 2.6% underlying growth was contributed by higher pricing.
Adbrands Weekly Update 20th Jul 2017: Unilever delivered an impressive 22% jump in reported net profits for the first half of 2017 to €3.3bn as careful cost controls began to lift operating margins. Even at constant rates the rise was a healthy 18%. Reported turnover rose 5.5% to €27.7bn, Excluding the soon to be divested or demerged spreads business the rise would have been 6.0% to €26.2bn. As usual with Unilever, all of the gains came from emerging markets, where underlying sales rose 5.5% in the half, offsetting a 0.8% decline in Europe and a weak 0.3% lift in North America.
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Free for all users | see full profile for current activities: This giant business was formed by the effective merger in 1930 of Dutch company arine Unie and Britain's Lever Brothers. William Hesketh Lever founded Lever Brothers in 1885 after working in his father's wholesale grocery business. (His brother James, an invalid for many years, received credit in the corporate name but in fact only ever played a minor role in the business). Soon afterwards Lever introduced the world's first packaged, branded laundry soap, which he called Sunlight, backing it with a large-scale advertising campaign. Sunlight was enormously successful and Lever quickly established factories in Europe, North America, Australia and the Far East. To get hold of the vegetable oils required to make soap, the company also established a string of plantations in British colonies around the world. In recognition of his extraordinary business achievements, Lever was knighted by Queen Victoria, and took on the title of Lord Leverhulme. (That name was another personal invention: Hulme was his wife's maiden name).
During the First World War, Leverhulme also began to diversify into foods, making arine, and later acquiring fisheries, canned foods, meat and ice cream businesses. Towards the end of his career, however, his business strategy had become increasingly erratic, leading the company into what proved to be considerably less profitable areas. The most dramatic of these was the establishment of the United Africa Company, a general trading merchant based in Nigeria, which became a huge drain on the group's resources. After Leverhulme's death in 1925, the Lever board led by Francis D'Arcy Cooper attempted to restructure to counter the effects of these diversifications, but with only limited success.
The move into foods had brought Lever Brothers into competition with arine Unie, a European food manufacturer founded by two Dutch family-owned companies, Jurgens and Van den Bergh, around their respective brands Stork and Blue Band. Each family had run their own butter and arine companies since the mid-19th century, before combining forces in 1927 to exploit the UK and other European markets. By the late 1920s, there was a compelling argument for Lever and arine Unie to find ways of working together. Lever offered sales and manufacturing operations all over the globe, but lacked financial stability. arine Unie had extensive interests throughout Continental Europe, and a very strong balance sheet. After almost two years of negotiations, the two companies joined forces in 1930, combining most of their international businesses.
By the 1940s, Unilever had established itself as a major force in the United States as well. The devastation of the US farming economy caused by the Great Depression led to a shortage of cooking fats, and Unilever's arine and edible oils business prospered during the 1930s. The group also bolstered other parts of its growing operations there, acquiring the Thomas J Lipton tea business in 1937 and Pepsodent toothpaste in 1944. But in 1946, the laundry division was suddenly faced with a new and cheaper competitor, as a result of the introduction of synthetic detergent Tide by Procter & Gamble. With the benefit of a huge advertising campaign Tide quickly established itself as America's best-selling washing powder, overturning Unilever's lead.
Although the soap and arine businesses remained the core of Unilever's business throughout the company's growth, they became less important over the years. In 1930 they had accounted for 90% of Unilever's profits. By 1980 the figure was down to 40%, and the contribution has continued to dwindle ever since. Meanwhile frozen foods, ice cream, packaged soup, tea and personal products all grew in significance through a series of acquisitions: Birds Eye Foods in the UK in 1957, American ice cream maker Good Humor in 1961, Lawry's Foods in 1979, The Brooke Bond Group in 1984, Ragu in 1986, Cheseborough-Pond's in 1987, and the Faberge/Elizabeth Arden and Calvin Klein fragrance businesses in 1989. Well over 100 further purchases were made between 1992 and 1996, many in smaller local markets. Over half were in foods, and most of the rest were in detergents and personal products. Among the most prominent were the purchase of Helene Curtis (hair care) and Diversey (industrial cleaning), both in 1996. At around the same time, the group extracted itself from several of its original core businesses, selling off its specialty chemicals division in 1997 to ICI for $8bn.
This string of acquisitions resulted in an enormously disparate group of regional businesses. Unilever had a large number of strong local brands, but surprisingly few products with truly international appeal. As a result, in late 1999, the group announced a radical restructuring of the portfolio, the so-called Path To Growth strategy masterminded by CEO Niall Fitzgerald. This promised to reduce the portfolio from 1,600 brands in 2000 to just 400 by 2005. But while it disposed of one set of brands, Unilever also set about adding another collection of new products to the portfolio to strengthen specific strategic sectors. At the end of 1999 Unilever spent £460m to acquire France's leading independent sauces and salad dressings company Amora Maille. This was followed in 2000 by several big US deals, including slimming snacks and drinks company SlimFast for $2.3bn and ice-cream company Ben & Jerry's for $326m. But the biggest purchase of all came when the group offered more than $18bn in cash to acquire food giant Bestfoods. The offer was initially declined, but after several months of negotiation, the two sides agreed on a new price of $20.3bn, making this one of the biggest ever takeovers in the global food industry. Meanwhile the last remaining non-core businesses were divested. Unipath, which marketed the female contraceptive Persona and home ovulation kit Clearplan, was sold in 2001; industrial cleaning company DiverseyLever was sold to SC Johnson in 2002. (Unilever retained a 33% shareholding until 2009); European Bakery Supplies Business was sold in 2000 to Dutch food group CSM; and specialty oils and fats business Loders Croklaan, was sold in 2002 to Malaysia's IOI Corporation.
By the end of 2002, the strategy appeared to have got off to a good start, and there were record profits of €2.8bn in 2003. But a year later there were signs that this mammoth restructuring had also cost the group much of its innovative sparkle. Although several core products within the portfolio continued to blossom (notably Dove, Axe/Lynx and perhaps Knorr), others gradually slipped from prominence. Performance was further hampered by a series of factors beyond the company's control, such as poor weather which affected sales of its ice creams worldwide, and the low-carb diet craze, which severely dented sales of key acquisition Slim-Fast. Unilever promised towards the end of the year to fix these problems with additional marketing and improved new product development. The group's co-chairman Niall Fitzgerald, long established as the public face of Unilever, stepped down ahead of schedule at the same time, and was succeeded by Patrick Cescau . A further overhaul of the senior management team was designed to streamline decision-making, and reduce costs. In particular, the group abandoned its archaic management committee structure headed by two equal co-chairmen, in favour of a more efficient hierarchy. Under another strategy, One Unilever, launched in 2004, the group steadily simplified local operations, combining multiple operating businesses to form single regional management teams. See full profile for current activities
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