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Unilever`s Purpose-led Brand Strategy: Can Alan Jope Balance Purpose and Profits? |
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When Polman was appointed CEO, Unilever’s fiscal growth was at risk due to the global economic recession. Polman continued with the turnaround process initiated by his predecessor Cescau in 2005, which included overhauling Unilever’s management structure, cutting costs, and merging its two big divisions, food and consumer products, to allow them to share marketing expertise and distribution networks. Polman’s vision was to make Unilever a “truly purpose-driven company”. He made sustainability the core of the company’s corporate strategy, embedding it in every stage of the value chain (See Exhibit III). As part of a bold makeover, Polmon scrapped the CSR department, instructing Unilever’s 169,000 employees to instead embed the company’s extensive social commitments into their business targets. He began acquiring brands known for their ecological credence such as Seventh Generation and Tazo tea... |
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PayPal (9 USD)
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| Polman stepped down as CEO in December 2018. The move came after he was forced to scrap a plan to move the company’s headquarters from London to Rotterdam, following an investor revolt. Unilever had been operating with dual headquarters – one in London (Unilever PLC) and the other in Rotterdam (Unilever NV). In March 2018, Polman announced a plan to create a single structure for the company in the Netherlands. According to some industry observers, a failed hostile bid by Kraft Heinz played a key role in Unilever’s decision to have a single headquarters in the Netherlands, as the country had stronger rules to protect companies against takeovers... |
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| Jope continued with his predecessor’s mission to grow the business in a purposeful and sustainable way. Outlining his vision for the company in June 2019, Jope announced that Unilever would discontinue brands that had failed to articulate a clear social or environmental purpose despite being profitable. He added that brands without a purpose would have no long-term future in Unilever and might be sold off and warned that popular brands such as Marmite, Magnum ice creams, and Pot Noodles, could face the axe. Unilever’s Foods & Refreshment Business generated a turnover of €20.2 billion, accounting for 40% of Unilever’s turnover and 58% of the operating profit in 2018... |
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| As of September 2019, Jope faced a series of challenges including the threat posed by direct-to-consumer brands, rise of discount chains, increasing costs due to tariffs, growing competition, currency volatility and political uncertainty in some global markets, and questions over sustainable business. Moreover, regional players with innovative business models in emerging markets were finding favor with consumers. The growth in the global FMCG sector remained stagnant as consumers were trading down on their FMCG spends either by buying less or choosing private labels. The FMCG market globally grew by an anemic 1.9% in 2017 and there were little signs of improvement in the near future... |
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Exhibit I: Unilever: Key Financials
Exhibit II: Unilever Turnover by Product and Geographical Area
Exhibit III: Unilever Value Creation Model
Exhibit IV:
Unilever Sustainable Living Plan Targets
Exhibit V:
Unilever Underlying Sales Growth and Volume Growth
Exhibit VI:
Operational Review (First Half 2019)
Exhibit VII: The 2018 GlobeScan/SustainAbility Leaders Survey: Companies Leading on Integrating Sustainable Development
Exhibit VIII: Unilever Consolidated Income Statement
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