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 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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Recent stories from Adbrands Weekly Update:
Adbrands Daily Update 7th Dec 2018: Unilever's marketing chief Keith Weed, also one of the industry's most high-profile cheerleaders, announced plans to step down in April next year after 35 years at the company. He said he's been planning his departure for over a year, with "exciting challenges to follow", of which more in due course no doubt, along with details of who will follow in his footsteps at Unilever.
Adbrands Daily Update 3rd Dec 2018: Unilever secured the prize in a bidding war for malted drink Horlicks, Boost and other nutritional beverages owned by GlaxoSmithKline. It saw off a rival bid from Nestle. Though Horlicks has only a marginal presence nowadays in Europe, it remains a mammoth brand in India and neighbouring countries with annual sales of around €550m. Under the deal with GSK, Hindustan Unilever will acquire the former's publicly listed local subsidiary GSK Consumer Healthcare India as well as various other operations in India for a combined total consideration of €4.6bn, mostly to be paid in HUL shares.
Adbrands Weekly Update 29th Nov 2018: Unilever CEO Paul Polman will step down at the end of the year, to be succeeded by Alan Jope, a Unilever "lifer" who is currently head of its beauty and personal care business. Polman will stay on for six months to advise Jope. His departure was not unexpected - he has led the group since 2008 - but it follows a bruising battle with institutional investors over a proposed simplification of Unilever's corporate structure. Investors strongly opposed the plan, which would have involved consolidation of the group's legal base in Rotterdam and as a result a de-listing from the UK FTSE stock market. Polman's last big deal at Unilever is expected to be the acquisition of GlaxoSmithKline's nutritional portfolio, led by the malt beverage Horlicks, a mammoth brand in India worth around $3bn. An announcement is expected imminently.
Adbrands Weekly Update 11th Oct 2018: Unilever abandoned a plan to transfer its main corporate base to the Netherlands following opposition from several of its biggest institutional shareholders. The Anglo-Dutch group has been attempting to simplify its structure. Currently it still operates as two separate companies, Unilever plc in London and Unilever NV in Rotterdam, which between them share ownership of the group's various international operating businesses. It said earlier this year it would eliminate the plc entity, which is quoted in the UK, and consolidate all activities under the Dutch entity, quoted on Holland's much smaller stock exchange. However shareholders objected to the proposal, not least because the company's UK listing would be eliminated. Unilever's board finally capitulated. "We recognise that the proposal has not received support from a significant group of shareholders and therefore consider it appropriate to withdraw," it said in a statement. Nevertheless, "the Board continues to believe that simplifying our dual-headed structure would, over time, provide opportunities to further accelerate value creation and serve the best long-term interests of Unilever."
Adbrands Weekly Update 19th Jul 2018: The global market remained challenging for Unilever in 2Q. Underlying sales growth on a like-for-like basis, excluding the divested spreads business, was a sluggish 1.9% for the quarter. However, that was mostly driven by higher volumes rather than prices, which was a positive factor. The Home care division performed best at 2.2%, compared to 1.6% for beauty & personal care and 1.3% for foods & refreshment. One key factor identified by the company was a truckers' strike in Brazil which severely impacted on performance in parts of Latin America. However this was offset by solid growth in Asia and other emerging markets. North America remains challenging, with a modest underlying decline; Europe as a whole was more or less flat. Reported net profit for the first half of the year was down 2%.
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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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